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Here's Why You Should Retain INSP Stock in Your Portfolio for Now
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Key Takeaways
Inspire Medical's growth prospects benefit from strong Inspire V adoption and expanding clinical evidence.
Coding issues hit INSP's third-quarter revenues by $30 million, while a new CPT code takes effect in 2028.
Project Horizon freed up $30 million for growth investments, supporting a low-single-digit recovery in 2027.
Inspire Medical Systems (INSP - Free Report) is well-positioned for solid growth over the next few quarters as it navigates a significant product transition.
Shares of this Zacks Rank #3 (Hold) company have declined 32.5% in the year-to-date period against the industry’s 20.7% growth and the S&P 500 Index’s 8.7% gain.
Inspire Medical, a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea (OSA), has a market capitalization of $1.86 billion.
The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 117.6%.
Image Source: Zacks Investment Research
Factors Driving INSP’s Prospects
Strong Clinical Evidence & Inspire V Adoption: Inspire Medical continues to strengthen its clinical value proposition through growing evidence supporting Inspire therapy. Recent studies, including the full results of the Inspire V trial, a secondary analysis of STAR trial data, a TriNetX meta-analysis and the PREDICTOR study, further support the therapy's efficacy. Inspire V demonstrated improved inspiratory overlap compared with Inspire IV, while median AHI declined significantly at six months. The STAR analysis showed a significant reduction in hypoxic burden, while the TriNetX analysis associated Inspire therapy with significantly lower odds of stroke, heart attack and atrial fibrillation compared with CPAP. Adoption of Inspire V has been strong, and the system now accounts for the vast majority of procedures. Its higher gross margin than Inspire IV also supported a 20 basis point year-over-year improvement in third-quarter gross margin to 86%.
Improving Coding Clarity & Reimbursement Outlook: Inspire Medical has made meaningful progress in addressing coding and reimbursement uncertainty. Management noted that implanting centers are becoming comfortable with the temporary billing framework and expects familiarity to improve throughout 2027. The company recently secured approval for a dedicated Category I CPT code covering Inspire V, effective Jan. 1, 2028. The new code is expected to simplify reimbursement across payers by replacing the current complex billing approach. The company has also initiated the RUC valuation and reimbursement review process.
CMS’ finalized CY 2027 reimbursement rules provide greater clarity for hypoglossal nerve stimulation procedures, with the agency finalizing six HCPCS codes covering the implantation, revision or replacement and removal of HGNS systems. The implantation codes for newer systems, including Inspire V, are assigned to APC 5465, the Level 5 Neurostimulator and Related Procedures category. CMS also finalized a 2.3% increase in overall OPPS and ASC payment rates for 2027. These developments could improve reimbursement clarity and support wider adoption of Inspire therapy.
Project Horizon & Expanding Patient Access: Inspire Medical is redirecting resources toward improving patient flow and expanding market penetration through Project Horizon, which created approximately $30 million of annualized growth investment capacity. The company is deploying these resources toward patient education, targeted marketing, prior authorization improvements and treatment navigation. It is also adding support personnel in approximately 40 high-potential U.S. markets to improve patient pipeline and utilization at existing centers and support new center openings. Inspire Medical is further expanding its reach into cardiology to generate referrals from cardiovascular physicians. These initiatives, along with a growing replacement battery opportunity, are expected to support a return to low-single-digit revenue growth in 2027.
Key Challenges for INSP Stock
Persistent Coding & Reimbursement Disruption: Despite recent progress, coding and reimbursement challenges continue to weigh heavily on Inspire Medical's performance. Third-quarter revenues declined 7.9% year over year to $206.7 million, with management estimating that coding and reimbursement issues affected quarterly revenues by approximately $30 million. The estimated full-year impact has reached approximately $120 million. Although centers are becoming comfortable with the temporary billing framework, the company still needs to improve education and utilization across its network. Furthermore, the new Category I CPT code will not become effective until 2028, while its reimbursement valuation remains subject to the ongoing RUC review process.
GLP-1 Adoption & Changing Treatment Patterns: The growing use of GLP-1 therapies remains a near-term headwind for Inspire Medical. Some patients with OSA may initially pursue weight-loss treatment, potentially delaying their decision to undergo Inspire therapy. Management continues to monitor patient flow and believes the impact could eventually turn favorable as weight loss allows previously ineligible patients to qualify for Inspire. However, patients whose OSA resolves through weight loss may not require Inspire treatment. The net impact of GLP-1 adoption on the company's eligible patient pool and procedure volumes remains uncertain.
International Weakness & Modest Growth Expectations: International revenue performance also presents a challenge. Third-quarter international revenues declined 9% year over year, primarily due to destocking activities in Germany, a significant market for the company. Although management expects some recovery and approximately flat year-over-year international revenues in the fourth quarter, growth is expected to remain below earlier levels. Inspire Medical's initial 2027 outlook calls for only low-single-digit year-over-year revenue growth worldwide, reflecting a cautious recovery trajectory. Management also acknowledged competitive developments in the market, which have been incorporated into its outlook.
Inspire Medical is witnessing a stable estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings has moved north 5 cents to $1.29 per share.
The Zacks Consensus Estimate for fourth-quarter 2026 revenues and earnings per share is pegged at $245.2 million and 91 cents, respectively.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Glaukos (GKOS - Free Report) , Intuitive Surgical (ISRG - Free Report) and West Pharmaceutical Services (WST - Free Report) .
Glaukos, currently flaunting a Zacks Rank #1 (Strong Buy), reported third-quarter 2026 adjusted earnings per share (EPS) of 47 cents, which surpassed the Zacks Consensus Estimate by 491.7%. Revenues of $211 million beat the Zacks Consensus Estimate by 25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
GKOS has an estimated earnings growth rate of 155.6% for 2026. The company’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 138.6%.
Intuitive Surgical, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2026 adjusted EPS of $3.00, which beat the Zacks Consensus Estimate by 13.6%. Revenues of $3.05 billion surpassed the Zacks Consensus Estimate by 4.9%.
Intuitive Surgical has a long-term estimated growth rate of 15.5%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.1%.
West Pharmaceutical, currently carrying a Zacks Rank #2, reported a third-quarter 2026 adjusted EPS of $2.66, which surpassed the Zacks Consensus Estimate by 22%. Revenues of $874.5 million beat the Zacks Consensus Estimate by 5.9%.
WST has an estimated long-term earnings growth rate of 17.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 18.6%.
View the Zacks #1 Rank List
Image: Bigstock
Here's Why You Should Retain INSP Stock in Your Portfolio for Now
Key Takeaways
Inspire Medical Systems (INSP - Free Report) is well-positioned for solid growth over the next few quarters as it navigates a significant product transition.
Shares of this Zacks Rank #3 (Hold) company have declined 32.5% in the year-to-date period against the industry’s 20.7% growth and the S&P 500 Index’s 8.7% gain.
Inspire Medical, a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea (OSA), has a market capitalization of $1.86 billion.
The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 117.6%.
Image Source: Zacks Investment Research
Factors Driving INSP’s Prospects
Strong Clinical Evidence & Inspire V Adoption: Inspire Medical continues to strengthen its clinical value proposition through growing evidence supporting Inspire therapy. Recent studies, including the full results of the Inspire V trial, a secondary analysis of STAR trial data, a TriNetX meta-analysis and the PREDICTOR study, further support the therapy's efficacy. Inspire V demonstrated improved inspiratory overlap compared with Inspire IV, while median AHI declined significantly at six months. The STAR analysis showed a significant reduction in hypoxic burden, while the TriNetX analysis associated Inspire therapy with significantly lower odds of stroke, heart attack and atrial fibrillation compared with CPAP. Adoption of Inspire V has been strong, and the system now accounts for the vast majority of procedures. Its higher gross margin than Inspire IV also supported a 20 basis point year-over-year improvement in third-quarter gross margin to 86%.
Improving Coding Clarity & Reimbursement Outlook: Inspire Medical has made meaningful progress in addressing coding and reimbursement uncertainty. Management noted that implanting centers are becoming comfortable with the temporary billing framework and expects familiarity to improve throughout 2027. The company recently secured approval for a dedicated Category I CPT code covering Inspire V, effective Jan. 1, 2028. The new code is expected to simplify reimbursement across payers by replacing the current complex billing approach. The company has also initiated the RUC valuation and reimbursement review process.
CMS’ finalized CY 2027 reimbursement rules provide greater clarity for hypoglossal nerve stimulation procedures, with the agency finalizing six HCPCS codes covering the implantation, revision or replacement and removal of HGNS systems. The implantation codes for newer systems, including Inspire V, are assigned to APC 5465, the Level 5 Neurostimulator and Related Procedures category. CMS also finalized a 2.3% increase in overall OPPS and ASC payment rates for 2027. These developments could improve reimbursement clarity and support wider adoption of Inspire therapy.
Project Horizon & Expanding Patient Access: Inspire Medical is redirecting resources toward improving patient flow and expanding market penetration through Project Horizon, which created approximately $30 million of annualized growth investment capacity. The company is deploying these resources toward patient education, targeted marketing, prior authorization improvements and treatment navigation. It is also adding support personnel in approximately 40 high-potential U.S. markets to improve patient pipeline and utilization at existing centers and support new center openings. Inspire Medical is further expanding its reach into cardiology to generate referrals from cardiovascular physicians. These initiatives, along with a growing replacement battery opportunity, are expected to support a return to low-single-digit revenue growth in 2027.
Key Challenges for INSP Stock
Persistent Coding & Reimbursement Disruption: Despite recent progress, coding and reimbursement challenges continue to weigh heavily on Inspire Medical's performance. Third-quarter revenues declined 7.9% year over year to $206.7 million, with management estimating that coding and reimbursement issues affected quarterly revenues by approximately $30 million. The estimated full-year impact has reached approximately $120 million. Although centers are becoming comfortable with the temporary billing framework, the company still needs to improve education and utilization across its network. Furthermore, the new Category I CPT code will not become effective until 2028, while its reimbursement valuation remains subject to the ongoing RUC review process.
GLP-1 Adoption & Changing Treatment Patterns: The growing use of GLP-1 therapies remains a near-term headwind for Inspire Medical. Some patients with OSA may initially pursue weight-loss treatment, potentially delaying their decision to undergo Inspire therapy. Management continues to monitor patient flow and believes the impact could eventually turn favorable as weight loss allows previously ineligible patients to qualify for Inspire. However, patients whose OSA resolves through weight loss may not require Inspire treatment. The net impact of GLP-1 adoption on the company's eligible patient pool and procedure volumes remains uncertain.
International Weakness & Modest Growth Expectations: International revenue performance also presents a challenge. Third-quarter international revenues declined 9% year over year, primarily due to destocking activities in Germany, a significant market for the company. Although management expects some recovery and approximately flat year-over-year international revenues in the fourth quarter, growth is expected to remain below earlier levels. Inspire Medical's initial 2027 outlook calls for only low-single-digit year-over-year revenue growth worldwide, reflecting a cautious recovery trajectory. Management also acknowledged competitive developments in the market, which have been incorporated into its outlook.
Inspire Medical Systems, Inc. Price
Inspire Medical Systems, Inc. price | Inspire Medical Systems, Inc. Quote
Estimate Trend
Inspire Medical is witnessing a stable estimate revision trend for 2026. In the past 30 days, the Zacks Consensus Estimate for earnings has moved north 5 cents to $1.29 per share.
The Zacks Consensus Estimate for fourth-quarter 2026 revenues and earnings per share is pegged at $245.2 million and 91 cents, respectively.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Glaukos (GKOS - Free Report) , Intuitive Surgical (ISRG - Free Report) and West Pharmaceutical Services (WST - Free Report) .
Glaukos, currently flaunting a Zacks Rank #1 (Strong Buy), reported third-quarter 2026 adjusted earnings per share (EPS) of 47 cents, which surpassed the Zacks Consensus Estimate by 491.7%. Revenues of $211 million beat the Zacks Consensus Estimate by 25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
GKOS has an estimated earnings growth rate of 155.6% for 2026. The company’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 138.6%.
Intuitive Surgical, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2026 adjusted EPS of $3.00, which beat the Zacks Consensus Estimate by 13.6%. Revenues of $3.05 billion surpassed the Zacks Consensus Estimate by 4.9%.
Intuitive Surgical has a long-term estimated growth rate of 15.5%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.1%.
West Pharmaceutical, currently carrying a Zacks Rank #2, reported a third-quarter 2026 adjusted EPS of $2.66, which surpassed the Zacks Consensus Estimate by 22%. Revenues of $874.5 million beat the Zacks Consensus Estimate by 5.9%.
WST has an estimated long-term earnings growth rate of 17.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 18.6%.