Inspire Medical Systems Inc Q1 2025 Earnings Call Summary

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

Question: Travis Steed - Bank of America Corporation - Analyst : First, congrats on profitability this quarter, but I actually wanted to focus on the Q2 revenue guidance and the destock and the patient warehousing that you mentioned, I think it's in the 10-K as well or 10-Q. First of all, maybe just like what happens kind of versus expectations there? Is the impact in the quarter, basically the kind of $12 million delta between your 2Q guidance and the Street number? And how do you rate the full year guidance? Do you expect that to kind of be made up in Q3 and Q4 to be able to reiterate the full year guidance.

Question: Danielle Antalffy - UBS Securities LLC - Analyst : Congrats on a really strong start to the year. Just if I could follow up on the cadence commentary for the year. I guess, how much confidence do you have in as far as how much Inspire IV inventories in the marketplace right now? And I guess sort of that number you're putting out there for Q2 and that you can sort of make up for some of that in Q3 and Q4. Just curious about what level of visibility you guys have into that? And how confident can we be because obviously, back half loaded guidance can sometimes make people a little nervous. So just wondering if you could give a little bit more color.

Question: Robbie Marcus - J.P. Morgan Chase & Co - Analyst : Great. I'll add my congratulations on a nice quarter. Sorry to keep on this, but maybe just a follow-up on the question there. And is the way we should be thinking about this, you had very good procedure volume growth in sales in first quarter. There is some lower number of procedures in second quarter, call it, the $10 million to $15 million that's getting -- that's lower than the Street, but maybe not quite as much as that because you're eating into existing inventory? And then we'll get that restocking in third and into fourth quarter? And I guess the question I really have is, how should we think about the balance of restocking? And how should we think about the sizing of the pent-up demand? And is the system ready? Is it a big amount of patients that are being warehoused that gives you the confidence in the back half of the year? And it's just you're seeing some lead down of inventory and some delay of procedures, and that's why you're not raising guidance for the year.

Question: Adam Maeder - Piper Sandler & Co - Analyst : Congrats on a nice quarter and the full launch of Gen V this month. I wanted to ask maybe just one more on Gen V the level of confidence that you have to kind of take that next step from a launch standpoint, really, just around manufacturing, reimbursement and device performance. Presumably, you're pleased with the progress you made in each of those different areas. But there has been some speculation around why the rollout hasn't gone faster. So I just wanted to give you the opportunity to add a little bit more color there with what you're seeing and the progress that you're making in those different areas?

Question: Richard Newitter - Truist Securities Inc - Analyst : Nice first quarter here. Maybe you can frame for us the reiterated revenue range for the year. One, when you originally provided that guidance, what was assumed or were you assuming any transition situation that would require kind of inventory work out. And then B, can you talk to the bottom and top end of your range right now. We're just trying to figure out what kind of cushion is built in and how much you into what normally is a cushion provided guidance range. So if you could just talk to what gets you to the upper end, what gets you to lower end with respect to the various components of capacity, Inspire V and enabling increased capacity and kind of some of the dynamics now that you're introducing with the 2Q revenue push out. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 9:00PM, INSP.N - Q1 2025 Inspire Medical Systems Inc Earnings Call

Question: Kallum Titchmarsh - Morgan Stanley - Analyst : From your initial rollout of Inspire V and the limited launch, I assume the majority of these surgeons were Sleep specialists. But I'm curious if you were able to target any of those generalist ENTs that you think could eventually be the driver of a broadening surgeon, Paul. Just maybe talk us through how you plan on onboarding these generalist ENTs as you enter the full market launch in May and how that may differ from your strategy with the bulk of active implants today?

Question: David Rescott - Robert W. Baird & Co - Analyst : Congrats on the start to the year here. Wanted to ask about so far and what's implied in the guide. If you look at the last couple of quarters, you've grown OpEx well below half of that about the top line is. And if you continue that for the rest of the year, you're getting somewhere ahead of what the guidance for 2025 is at this point. So I'm just curious on what your assumptions are in the implied guide on EPS this year and whether or not we should be thinking about some incremental step-up or acceleration and spend behind the Inspire V launch.

Question: Michael Sarcone - Jefferies LLC - Analyst : Just one on the Inspire V launch and CPT code 64568, it's been a few months of the limited market release now. I was wondering if you could just give us some commentary on how physicians are responding to the lower professional fee that comes with the 64568 code and are you seeing any increased procedures in a day to offset that. Would love to hear what the experience has been so far.

Question: Shagun Singh - RBC Capital Markets LLC - Analyst : Great. Just a couple of quick ones for me. So what was the impact of pausing in inventory dynamics in Q1? On Q2, any color on EPS versus prior consensus at $0.41. And then I have a follow-up.

Question: Shagun Singh - RBC Capital Markets LLC - Analyst : Got it. And what was the impact of pausing an inventory dynamic in Q1?

Question: Shagun Singh - RBC Capital Markets LLC - Analyst : Got it. And then just as a follow-up. I was wondering if you can comment on profitability. It seems like we've gotten mixed feedback on that. And I'm just wondering why don't you think that could be a bad year to broader option?

Question: Chris Pasquale - Nephron Research LLC - Analyst : Tim, you talked about some early data on Inspire V being presented at some of the upcoming meetings. Curious what you expect that to show. Most of the focus has been on the increased convenience of this form factor. But I think you've also said that you think the accelerometer can actually do a better job with respiratory gating. So do you expect that to manifest in any tangible outcome improvements?

Question: Larry Biegelsen - Wells Fargo & Co. - Analyst : Tim, just a multipart question. So when do you expect to complete the transition to Inspire V, last call it was Q4. And so my question is, why won't these factors that you mentioned impact also Q3, given the full launch won't complete until Q4? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 9:00PM, INSP.N - Q1 2025 Inspire Medical Systems Inc Earnings Call And second, Tim, our checks also suggest just linking the Inspire V CPT code to the ICD-10 code for sleep apnea can also slow things down. What are you seeing on that as well?

Question: Antony Petrone - Mizuho Securities USA LLC - Analyst : Congrats on the quarter here. Maybe just a question on capacity into the second half. Specifically, you mentioned, Tim, you're adding ENT general surgeons. And obviously, we had a little bit of backlog that's pushed into the second half. Just wondering where that ENT capacity sits today. And is it enough to handle this bolus of volumes in the second half. And the quick follow-up there would just be if you can give us any update on sleep sync and how that's evolving or front end of the funnel?

Question: Jonathan Block - Stifel Financial Corp - Analyst : Great. Maybe two parter of the 1,500 centers, Tim, what was like the sort of incoming where delays were or are taking place. And I'm just curious, was it a couple of hundred centers heard about ? Was it much more pervasive than that and across most of the centers? Any details would be appreciated. And then this is sort of a follow-up to a prior question, but I just want to make sure I've got it clear. So the prior plan was to have, I think, on the last call, all the centers trained by the end of 2025. I think you were citing like full conversion by the end of '25. Are you now talking about full conversion by, call it, end of 2Q? And if so, what gives you the confidence and at the end of the day that you're still able to put patient safety and patient priority first?

Question: Brett Fishbin - KeyBanc Capital Markets, Inc - Analyst : Just wanted to switch gears a little bit to the marketing strategy for Inspire V. It sounds like you're going to be stepping up the DTC spend a little bit ahead of the launch which makes sense? And really just curious like how you're thinking about changing the external messaging to potential patients, if you're going to be focusing on specifically some of the improvements to the procedure or if that's like you and the weeds for general consumption. Maybe just like a little bit more about how you're thinking about that?

Question: Mike Polark - Wolfe Research LLC - Analyst : Two quick ones. How many Inspire V implants to date worldwide, if you said it, I missed it. I'm just curious for the evidence base, the size of it ahead of launch. And then -- with all of the sequential phasing discussion, I'm interested if you're willing to put a finer point on 3Q. I hear the 2Q guidance. If I look at the last two years, 31 has been up low single digits versus 2Q. 2Q sounds suppressed, should we compare our 3Q to 1Q and do it that way? Or what kind of progression growth-wise, what you expect? And I'm really getting to like how loaded the guide is into 4Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 9:00PM, INSP.N - Q1 2025 Inspire Medical Systems Inc Earnings Call

Question: Brett Gasaway - Leerink Partners LLC - Analyst : This is Brett on for Mike. Congrats on a good quarter. So the inventory days, obviously, we've spoken about this at length on this call, but it increased by almost a full quarter's worth of inventory. So I just want to see how you're thinking about the progression of gross margin over the course of the year as this Inspire V mix increases?

Question: Brett Gasaway - Leerink Partners LLC - Analyst : Understood. That's helpful. And if I can get one follow-up, just on the OUS side. I don't know if we touched on it too much. But obviously, you had a tough comp, and it was down sequentially. So was there any FX that was impacting that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 05, 2025 / 9:00PM, INSP.N - Q1 2025 Inspire Medical Systems Inc Earnings Call