Inspire Medical Revenue Falls 7.9% on Reimbursement Headwinds; 2026 Outlook Narrowed to $850-$860 Million
Inspire Medical Systems swung to a third-quarter loss as revenue fell 7.9% on U.S. coding and reimbursement problems, but the sleep apnea device maker narrowed its full-year sales outlook and pointed to a return to growth in 2027.
Revenue fell to $206.7 million from $224.5 million a year earlier, according to its 8-K filed Monday. The company said the decline came mainly from the U.S., driven by "the adverse impacts of coding and reimbursement challenges."
Inspire posted a net loss of $24.4 million, or 84 cents a share, compared with net earnings of $9.9 million, or 34 cents, a year ago. Adjusted EPS was 14 cents, down from 37 cents.
Restructuring weighs on costs
Operating expenses rose 12.8% to $206.6 million, including $24.1 million of restructuring charges tied to Project Horizon, a $7.0 million legal settlement and higher legal fees, partly offset by lower marketing and stock-based compensation expense. The operating loss was $28.7 million, while adjusted operating income was $1.9 million.
Gross margin edged up 20 basis points to 86.0%, helped by a higher mix of the Inspire V system, which carries a higher margin than Inspire IV.
Outlook
Inspire narrowed its 2026 revenue guidance to $850 million to $860 million from $835 million to $875 million, keeping the $855 million midpoint. It now expects adjusted operating margin of 4.5% to 5.5%, GAAP EPS of a loss of 36 cents to a loss of 10 cents, and adjusted EPS of $1.20 to $1.40.
"We are pleased to have delivered sequential growth in the third quarter, with U.S. performance coming in ahead of our expectations," Chairman and CEO Tim Herbert said. He said the company plans "for a return to growth in 2027."
Herbert also pointed to the American Medical Association CPT Editorial Panel's approval of new Category I codes for single-lead hypoglossal nerve stimulation, including Inspire V, which take effect Jan. 1, 2028.
Cash position
Operating cash flow was $46.4 million, down from $68.5 million, which the company tied to lower earnings and a prior-year boost from catch-up collections on receivables. Cash, cash equivalents and investments rose $48.5 million from the end of 2025 to $453.1 million.
By the numbers
- $206.7 million revenue, down 7.9%
- $(0.84) GAAP EPS, versus $0.34
- $0.14 adjusted EPS, versus $0.37
- $24.1 million restructuring charges
- $850 million to $860 million narrowed 2026 revenue guidance
Sources
- Inspire Medical Systems Form 8-K with third-quarter 2026 results, filed Nov. 2, 2026 (accession 0001609550-26-000051)
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