Inspire Medical Systems reported fourth‑quarter 2025 revenue of $269.1 million, up 12% year‑over‑year, and adjusted earnings per share of $1.65, a 143% beat over the consensus estimate of $0.68. The upside was driven by a higher mix of Inspire V system sales, which command a premium price, and disciplined cost management that preserved operating leverage as the company scaled its commercial deployment.
Full‑year 2025 revenue reached $912.0 million, a 14% increase from $812.0 million in 2024. The growth was supported by continued adoption of the Inspire V platform and a 3 Tesla MRI‑compatible version that broadened the device’s clinical appeal.
Management revised its 2026 outlook to a revenue range of $950 million to $1.0 billion, adjusted EPS of $1.85 to $2.35, and GAAP EPS of $1.23 to $1.81. The downward adjustment reflects uncertainty around a new coding rule that could reduce physician reimbursement by 10% to 50% of the base rate, as the company now must bill under CPT 64582 with a –52 modifier.
The coding clarification was explained by CEO Tim Herbert: “The key challenge for the business is the coding of the Inspire V procedure… we received clarification regarding the coding that should be used for the Inspire V procedure. Currently, health care centers and physicians should bill the most recent health care policies, be it a MAC or a commercial payer.” He added, “The reduction to the professional fee associated with applying the –52 modifier could range from approximately 10% to 50% of the base rate.”
Investors reacted negatively to the announcement, citing the coding headwinds and the more cautious 2026 outlook. The company’s guidance now reflects a broader range of possible impacts that may be experienced throughout the year, as stated by Herbert: “We have revised and widened our full‑year revenue guidance for 2026 to reflect the broad range of possible impacts that we may experience throughout the year.”
Management emphasized its commitment to working with payers to mitigate the reimbursement impact: “We will work with payers, including the MACs, government agencies, commercial payers and physician societies to attempt to minimize the impact to the physician fee from this change.”
The Q4 results also highlighted a gross margin of 86.6%, up from 84.5% in the prior year, driven by the higher mix of Inspire V sales. However, the company projects a 2026 adjusted operating margin of 6% to 8%, down from 17.5% in Q4 2025, reflecting the expected compression from the coding change. Despite these headwinds, the company’s strong cash position and ongoing product pipeline—including FDA approval for 3 Tesla MRI compatibility and development of Inspire VI—provide tailwinds that could sustain growth if reimbursement challenges are managed.
In summary, Inspire Medical Systems delivered a robust Q4 performance and a revised 2026 outlook that acknowledges significant reimbursement uncertainty. The company’s ability to navigate the coding change and maintain product demand will be critical to sustaining its growth trajectory.
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