Inspire Medical Systems Inc at Piper Sandler Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Adam Maeder - Piper Sandler - Analyst : Maybe just to start, I wanted to ask about the Q4 guidance and some of the puts and takes there. You had a very strong Q3 print. You beat the top line, I think, by $5 million. You crushed numbers on EPS. But the full year guidance raise was only about $2.5 million at the midpoint and the implied Q4 guidance does suggest a deceleration in growth. I think you called out hurricanes, IV solution shortage, perhaps some just kind of typical conservatism. But maybe just unpack the Q4 outlook for us in a little bit more detail.

Question: Adam Maeder - Piper Sandler - Analyst : Okay. Perfect. It's that time of the year. I think you referenced the tree lighting, Tim, but I'm going to ask about 2025. So I think on the Q3 earnings call, you said you were comfortable with where the consensus stood for 2025 revenue. I think that's $950 million or so. Is that still the case today? And then just high-level puts and takes as we think about the top line for next year?

Question: Adam Maeder - Piper Sandler - Analyst : Okay. Perfect. And I guess a similar question on 2025 P&L expectations. I have -- the Street modeling GAAP EPS of $1.95. Hopefully, that's a good figure. Any reaction there? And obviously, the leverage this year has been fantastic. Just how do we think about leverage in '25 and going forward?

Question: Adam Maeder - Piper Sandler - Analyst : Okay. Let's move on to Gen 5. Obviously, a lot of questions there. And I guess the first question that I'll throw at you guys is where are we in terms of launch at this point? You have FDA approval. Have you officially commenced the limited launch? Have you done the implants? How is it going thus far? Just any comments there?

Question: Adam Maeder - Piper Sandler - Analyst : Okay. Great. So it sounds like, Tim, no comment on soft launch, whether that started or hasn't started.

Question: Adam Maeder - Piper Sandler - Analyst : Okay. Perfect. One of the questions that we often get on Gen 5 is just reimbursement strategy. Specifically what code you're going to use now that you no longer have the pressure sensor lead, which you just talked about. So anything more that you can tell us at this point in time around reimbursement, coding, strategy?

Question: Adam Maeder - Piper Sandler - Analyst : Okay. Great. And I think you've said you're not going to take price with Gen 5, but you've also said that gross margins should benefit from the Gen 5 system accretive to margins. Rick, maybe just any finer point that you want to put on that commentary? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 5:00PM, INSP.N - Inspire Medical Systems Inc at Piper Sandler Healthcare Conference

Question: Adam Maeder - Piper Sandler - Analyst : One of your earlier comments, Tim, is around kind of having inventory levels ready to kind of push firmly out of the gates. I'll try my luck here. I know it's a 2025 event, but any finer point that you want to put on it, how is kind of the manufacturing of the system going? Are you happy with it? Or are there potential bottlenecks there?

Question: Adam Maeder - Piper Sandler - Analyst : That's good color. I wanted to talk about another tailwind that I think could impact the business in '25, and that's predictor and removal of DISE from the funnel, at least for some patients. So I guess multipart question here. Are you happy with the data that was presented at ISSS a couple, I guess, months ago at this point now? Do you see opportunity to further improve those figures? And then you have had a couple of payers remove DISE from policy. So maybe just double-click on kind of where you stand and how quickly other payers could convert?

Question: Adam Maeder - Piper Sandler - Analyst : That's great color. One follow-up there would be, so Tim, I think you said patients BMI of less than 32, most likely do not need sleep endoscopy or DISE, if you were to look at kind of the clinical literature that's out there, I mean, what proportion of your kind of target patients does that comprise? Is it 50%, 70%, anything?

Question: Adam Maeder - Piper Sandler - Analyst : That's good color. You touched on one of the limitations to your business right now, capacity constraints related to number of surgeons. And there's a lot of demand for this procedure. That's clearly not the issue. It's getting more surgeons trained. Just talk about kind of the initiatives that you're pursuing to kind of train more docs. I think you're focused on training more residents, more ENTs more broadly. Just talk about the progress you made there. And does Gen 5 help with making the procedure more attractive to ENTs.

Question: Adam Maeder - Piper Sandler - Analyst : Very helpful response. Thanks for that. About five minutes left, a couple more topics to hit. Maybe we can switch over to competition. I'll actually ask you, Tim, about LivaNova, we saw some recent data from their hypoglossal nerve stimulation trial, just snippets of it. But Tim, any reaction, thoughts on the data of that technology that you want to share at this time? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 5:00PM, INSP.N - Inspire Medical Systems Inc at Piper Sandler Healthcare Conference

Question: Adam Maeder - Piper Sandler - Analyst : Yeah. Okay. That's totally fair. I feel obligated to ask about GLP-1s. Anything that you're hearing from customers at this point in time regarding GLP-1s around funnel disruption, elongation of the funnel or nothing really to speak of at this point.

Question: Adam Maeder - Piper Sandler - Analyst : Yeah. Very clear. Maybe one question for Rick, just to work you back into the fold. So remind us of kind of the key lever points for P&L leverage going forward. And one of the questions that I had is just direct-to-consumer spend. What are you spending in '24? How do we think about spend in '25? I know that's been a source of leverage. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 5:00PM, INSP.N - Inspire Medical Systems Inc at Piper Sandler Healthcare Conference

Question: Adam Maeder - Piper Sandler - Analyst : Perfect. 30 seconds or so left. I guess I'll kind of just slip it over to you, Tim. Anything that we didn't touch on today that you're particularly excited about or that you want to communicate to the audience?

Question: Adam Maeder - Piper Sandler - Analyst : Perfect. Well, that's a great place to stop, and thank you again for coming.