Inspire Medical Systems Inc at Wells Fargo Healthcare Conference Transcript

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

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : So Rick, let's start off with the outlook you provided on the Q2 call. At the time, you were comfortable with the consensus in the third and fourth quarter. Are you still comfortable with those figures since they've climbed a bit, I think, since the earnings call?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : And when we look at the raised 2024 guidance, it still seems a bit conservative, especially in Q3, given your aspiration to increase utilization quarter over quarter. Talk about what's assumed in your second half outlook for things like the Inspire V launch, competition, price -- so what are some of the puts and takes on the guidance? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:00PM, INSP.N - Inspire Medical Systems Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Understood. And Rick, what about the key puts and takes for '25?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : That's helpful. But we'll get to PREDICTOR in a bit, if that's okay. Rick, one other financial question. Probably the biggest surprise on the Q2 call was the margins and the raised guidance for earnings. We backed into an operating margin in Q4 just under 9% for Q4 of this year based on the guidance. Is that a good starting point for 2025 in terms of profitability? Or how should we be thinking about the pace of improving operating leverage over the next few years?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : No revenue kind of -- you're not paying at a certain revenue point.

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Right. Right. Okay. Let's switch gears to commercial activities. You're expecting 52 to 56 new centers per quarter in the second half. The recent run rate is higher. Why do you expect to slow down in new center adds?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : That's helpful. International, Rick, you touched upon it. You had a nice quarter in Q2. It looks, what was it, $8 million? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:00PM, INSP.N - Inspire Medical Systems Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Up almost 70% year over year. You gave a range for the year of 3% to 4% of revenues, I think. It's a big range, actually, when you do the math. With brands coming on, do you feel like you could be closer to the high end of that range?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Good to hear. All right. So look, Inspire V is approved. So that's an exciting opportunity for the company. So why don't we talk about that a little bit. Just maybe talk about the soft launch and what you hope to accomplish.

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : When do you expect the first implants commercial?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : And full launch, if you're doing this soft launch later this year, how long will that last? When can we expect the full launch?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : And the reimbursement, Rick, the coding, is that -- that's all in place?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Got it. And the inventory you talked about, you expect centers that have inventory of Inspire IV on hand to work that down?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : I can see how Inspire V increases utilization, the time savings. I've heard the same anecdotes, Carlton, that you talked about, the lead, the central lead. Do you have any evidence that this will bring new surgeons on board? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:00PM, INSP.N - Inspire Medical Systems Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : So Rick, just before we move on, I just want to button up the coding part. You're confident that the physician fee and the facility fee, the hospital and ASC, whatever code you go with, it's not going to be meaningfully different from the (multiple speakers) today.

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Okay. You're confident in that?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Potentially value accretive. Okay, interesting. And pricing, Rick, will that be determined for the soft launch or --?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Full launch?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : So we'll learn that with the soft launch or the full launch?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Got it. Okay. Carlton, I know you've been champing on the bit to talk about PREDICTOR.

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : That's helpful. So ISSS will be -- you said the full data set?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Got it. Okay. So GLP-1s, Rick, you talked about earlier -- or Carl, but you alluded to it, Rick, earlier about 2025 starting to bring patients into the funnel. I guess the question is, do you think in '25, it starts to be a net positive? I mean, I think we can see how it expands the long-term TAM or the long-term opportunity. The question is just timing. You think that in '25, it can be a net positive? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:00PM, INSP.N - Inspire Medical Systems Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : And I guess just a follow-up, why you don't expect a short-term slowdown in procedure demand as GLP-1s move into the OSA treatment paradigm?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Okay. And since the data was presented at ADA, there's nothing anecdotal that you're seeing in the field today. It's a little early.

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : That's helpful. All right. Competition, Rick, you touched upon that also earlier. How are you thinking about competition from other hypoglossal nerve stimulation technologies?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : So you don't think -- so some of these coverage decisions are for hypoglossal nerve stimulation. So I guess the question is you don't think that these competitors are going to be able to piggyback on those coverage policies. I mean --

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Also with me -- I mean, we've seen other categories. I can think of sacral neuromodulation when Axonics came out and they probably -- I think they probably piggybacked on Medtronic, I don't know. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 7:00PM, INSP.N - Inspire Medical Systems Inc at Wells Fargo Healthcare Conference

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : That makes sense. I'm just saying, do you think they'll be able to leverage the coverage?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : You alluded to it, Carl, earlier about the dream trial that (inaudible) what you'll be looking for, we've only seen kind of top-line results. What specifically are you -- explants? What are you specifically looking for in the full data set?

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Well, I'm done with my -- through with my questions. You guys are very efficient. So I don't know, Rick, I'll give you or Carl the last word here.

Question: Larry Biegelsen - Wells Fargo & Co - Analyst : Perfect. Thanks so much for being here.