Key Highlights

  • INSP reported third-quarter 2026 Revenue of $206.7 million, down 7.9% from $224.5 million a year earlier and up 3% from the second quarter.
  • The company posted a net loss of $24.4 million, or $0.84 per diluted share, versus net Earnings of $9.9 million, or $0.34, a year ago.
  • Adjusted Diluted Earnings per Share were $0.14, and adjusted Operating Income was $1.9 million versus $10.9 million.
  • Full-year 2026 revenue guidance was narrowed to $850 million to $860 million.
  • Cash and investments totaled $453.1 million at Sep 30, 2026, with no debt.

Coding Disruption Pulls Third-Quarter Revenue Below Last Year

Inspire Medical Systems (NYSE:INSP) reported results for the third quarter ended Sep 30, 2026 on Nov 2, 2026, with revenue of $206.7 million, down 7.9% from $224.5 million a year earlier but up about 3% sequentially. U.S. revenue was $197.5 million, while international revenue was $9.2 million, down 8.9%.

The company makes the Inspire system, a hypoglossal nerve stimulation therapy for patients with moderate to severe obstructive sleep apnea. Management attributed the decline mainly to billing and reimbursement uncertainty around the latest Inspire V device and estimated that coding and reimbursement problems cost about $30 million of third-quarter revenue and about $120 million for the full year.

For the nine months, revenue was $611.9 million, down 4.8%, with delays tied to a Medicare prior-authorization pilot adding to the pressure.

Restructuring and Legal Charges Turn Operating Income Into a Loss

Gross Margin edged up to 86.0% from 85.8% as a higher mix of Inspire V, which carries a stronger margin than the prior version, offset lower volume. Operating expenses were $206.6 million, up $23.5 million, including $24.1 million of restructuring charges and a $7.0 million legal settlement.

The operating loss was $28.7 million compared with operating income of $9.6 million a year ago. Adjusted Operating Expense fell to $176 million from $181.8 million, and adjusted operating income was $1.9 million versus $10.9 million.

Adjusted EBITDA margin declined 130 basis points to 18.3%. The effective tax rate was 2.5%, versus 26.7% a year earlier, largely because of the pretax loss and discrete tax charges tied to the restructuring.

Project Horizon Frees About $30 Million a Year for Patient-Flow Investment

Announced on Aug 3, 2026, Project Horizon consolidates production, streamlines the organization and is expected to bring about $25 million of pre-tax charges, with $24.1 million recorded this quarter. It is designed to create roughly $30 million of annualized capacity for growth spending.

Management said the funds will go toward field roles in about 40 high-potential markets, targeted patient outreach and better prior authorization support. The company had 279 U.S. sales territories and 306 field clinical representatives at quarter end.

A new Category I billing code for single-lead hypoglossal nerve stimulation was approved in September 2026 and takes effect on Jan 1, 2028. Management said Inspire V now makes up the vast majority of procedures and that a final 2027 hospital outpatient payment rule was expected within days.

Narrowed 2026 Guidance and a Low-Single-Digit 2027 Growth Target Frame the Fourth Quarter

Inspire now expects 2026 revenue of $850 million to $860 million, adjusted Operating Margin of 4.5% to 5.5%, a diluted loss of $0.10 to $0.36 per share and adjusted earnings of $1.20 to $1.40 per share. Management expects a significant sequential revenue increase in the fourth quarter, a seasonally strong period, and low-single-digit revenue growth for full-year 2027.

Operating cash flow was $46.4 million for the quarter and $82.5 million year to date, supporting a debt-free Balance Sheet with $453.1 million of cash and investments.