Inspire Medical Systems, Inc. Announces Third Quarter 2026 Financial Results
Gross margin improved, but coding and reimbursement challenges weighed on U.S. revenue and quarterly results swung to a loss.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Summary
Inspire Medical Systems (NYSE: INSP) reported third-quarter 2026 revenue of $206.7 million, down from the same period a year earlier. Revenue fell 7.9%, primarily reflecting U.S. coding and reimbursement challenges. Gross margin rose 20 basis points to 86.0%. A $24.4 million net loss, or $0.84 per diluted share, compared with $9.9 million in earnings a year earlier; adjusted diluted EPS was $0.14.
Operating cash flow fell to $46.4 million from $68.5 million. Cash, cash equivalents and investments reached $453.1 million. Inspire narrowed its 2026 revenue outlook to $850 million–$860 million from $835 million–$875 million and expects diluted EPS of $(0.36)–$(0.10), with adjusted diluted EPS of $1.20–$1.40. The AMA approved Category I billing codes for single-lead hypoglossal nerve stimulation, including Inspire V, effective January 1, 2028.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointCategory I billing codes for single-lead hypoglossal nerve stimulation, including Inspire V, were approved, effective January 1, 2028.
- Moderate point. Forward-looking: it has not happened yet and may not happen.2026 adjusted operating margin is expected to be 4.5% to 5.5%.
- Moderate point. Forward-looking: it has not happened yet and may not happen.2026 adjusted diluted EPS is expected to be $1.20 to $1.40.
- Minor pointGross margin increased 20 basis points year over year to 86.0%, primarily from increased Inspire V sales mix.
- Minor pointCash, cash equivalents and investments increased $48.5 million from December 31, 2025, to $453.1 million.
3 minor points
- Minor pointAdjusted operating income was $1.9 million in the third quarter, with a 0.9% adjusted operating margin.
- Minor pointAdjusted net earnings were $4.1 million in the third quarter, or $0.14 per diluted share.
- Minor point. Forward-looking: it has not happened yet and may not happen.Project Horizon is redirecting investment capacity into revenue growth initiatives, with Inspire planning a return to growth in 2027.
Negative
- Moderate pointThird-quarter revenue decreased 7.9% year over year to $206.7 million, primarily reflecting U.S. coding and reimbursement challenges.
- Moderate pointThird-quarter operating loss was $28.7 million versus $9.6 million operating income a year earlier; operating margin was (13.9)%.
- Moderate pointThird-quarter net loss was $24.4 million, or $0.84 per diluted share, versus $9.9 million earnings and $0.34 EPS.
- Moderate pointOperating expenses rose 12.8% to $206.6 million, including $24.1 million restructuring charges and $7.0 million legal settlement expense. 1.2% of market cap
- Moderate pointThird-quarter operating cash flow declined to $46.4 million from $68.5 million a year earlier.
- Moderate point. Forward-looking: it has not happened yet and may not happen.2026 diluted EPS is expected to be $(0.36) to $(0.10).
4 minor points
- Minor pointNine-month revenue fell to $611.859 million from $642.904 million in the prior-year period.
- Minor pointNine-month operating loss was $30.348 million versus $4.843 million operating income in the prior-year period.
- Minor pointNine-month net loss was $35.374 million, or $1.23 per diluted share, versus $9.332 million earnings and $0.31 EPS.
- Minor point. Forward-looking: it has not happened yet and may not happen.2026 capital expenditures are expected to be $35 million to $40 million.
Key Figures
- Q3 revenue
- $206.7 million; down 7.9% year over year
- Third quarter 2026
- Gross margin
- 86.0%; increased 20 bps
- Third quarter 2026 versus third quarter 2025
- Operating loss
- $28.7 million
- Third quarter 2026
- Diluted EPS
- $(0.84)
- Third quarter 2026
- Adjusted diluted EPS
- $0.14
- Third quarter 2026
- 2026 revenue outlook
- $850 million to $860 million
- Narrowed from the previous range of $835 million to $875 million
- 2026 adjusted diluted EPS outlook
- $1.20 to $1.40
- Full year 2026
- New CPT codes take effect
- January 1, 2028
- Single lead hypoglossal nerve stimulation, including Inspire V
Previous Earnings Reports
-
Revenue declined year over year, while the company raised full-year revenue guidance and launched Project Horizon.
-
Revenue grew 1.6% year over year, but full-year revenue guidance was narrowed amid reimbursement headwinds.
-
Revenue grew 10% year over year and diluted EPS guidance was raised.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
hypoglossal nerve stimulation medical
cpt codes regulatory
valuation allowance financial
non-gaap financial measures financial
gaap financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
- Third quarter revenue of
$206.7 million - Third quarter diluted EPS of
$(0.84) ; adjusted diluted EPS of$0.14 - Third quarter operating cash flow of
$46.4 million - AMA CPT® Editorial Panel approved new Category I CPT codes for single lead hypoglossal nerve stimulation, including Inspire V, set to take effect January 1, 2028
MINNEAPOLIS, Nov. 02, 2026 (GLOBE NEWSWIRE) -- Inspire Medical Systems, Inc. (NYSE: INSP) (Inspire, or the Company), a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea, today reported financial results for the quarter ended September 30, 2026.
“We are pleased to have delivered sequential growth in the third quarter, with U.S. performance coming in ahead of our expectations. Results suggest that, despite some lingering headwinds, there is greater comfort among implanting physicians with the current coding dynamic. We will stay disciplined in our education initiatives and focused on executing our strategic priorities as we finish out 2026 and plan for a return to growth in 2027,” said Tim Herbert, Chairman and CEO of Inspire Medical Systems.
“Looking further ahead, we were also pleased with the AMA Editorial Panel’s September approval of a new CPT® code for single lead HGNS devices, including the Inspire V system. When this takes effect in January 2028, a dedicated code set will give physicians and hospitals enhanced clarity around coding and reimbursement and, in turn, further enable patient access to Inspire therapy. With that progress, and the investment capacity we’re redirecting into high-impact revenue growth initiatives through Project Horizon, we believe we are positioned well for growth in the years ahead.”
Third Quarter 2026 Financial Results (Third Quarter 2026 compared to Third Quarter 2025)
- Revenue decreased
7.9% to$206.7 million , driven primarily by a decline in U.S. revenue. The U.S. revenue decline was primarily driven by the adverse impacts of coding and reimbursement challenges. - Gross margin increased 20 bps to
86.0% , primarily due to increased sales mix of the Inspire V system, which has a higher gross margin than the Inspire IV system. - Operating expenses increased
$23.5 million , or12.8% , to$206.6 million , primarily due to$24.1 million of restructuring charges, legal settlement expense of$7.0 million , and higher legal fees, partially offset by lower marketing expenses and lower stock-based compensation expense. - Operating loss was
$28.7 million , and operating margin was (13.9)%. Adjusted operating income was$1.9 million , and adjusted operating margin was0.9% . - The effective tax rate was
2.5% compared to26.7% . The decrease in the effective tax rate was primarily driven by the current period pre-tax loss and discrete tax charges related to restructuring. For the three months ended September 30, 2025, the Company maintained a full valuation allowance against federal and state deferred tax assets, which was subsequently released at December 31, 2025. - Net loss was
$24.4 million and adjusted net earnings was$4.1 million . - Diluted EPS was
$(0.84) and adjusted diluted EPS was$0.14 .
Financial Condition
- Net cash provided by operating activities for the three months ended September 30, 2026 was
$46.4 million , compared to$68.5 million in the prior year period. The change was primarily driven by lower net earnings and lower collections on receivables due to the third quarter 2025 cash recovery following temporary issues with the implementation of a new invoice portal and delivery process in the second quarter of 2025. - As of September 30, 2026, cash, cash equivalents, and investments increased
$48.5 million to$453.1 million as compared to December 31, 2025.
Full Year 2026 Guidance
The Company is narrowing its previously announced revenue outlook to be in the range of
The Company’s outlook assumes an effective tax rate of approximately
Webcast and Conference Call
The Company's management will host a conference call after market close today, Monday, November 2, 2026, at 5:00 p.m. Eastern Time to discuss these results and answer questions.
To access the conference call, please preregister on
https://register-conf.media-server.com/register/BI4b0290b4bb464cecaa0a2b420ca13a02.
Registrants will receive confirmation with dial-in details.
A live webcast of the event can be accessed on https://edge.media-server.com/mmc/p/d84s2zzb/. A replay of the webcast will be available on https://investors.inspiresleep.com starting approximately two hours after the event and archived on the site for two weeks.
About Inspire Medical Systems
Inspire Medical Systems is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first FDA, EU MDR, and PDMA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe obstructive sleep apnea.
For additional information about Inspire, please visit www.inspiresleep.com.
Use of Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, including without limitation, adjusted operating income, adjusted operating margin, adjusted earnings before income taxes, adjusted income tax expense, adjusted effective tax rate, adjusted net earnings, adjusted net earnings per diluted share ("EPS"), adjusted EBITDA, and adjusted EBITDA margin, which differ from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).
We define adjusted operating income as operating income or loss adjusted for items that are not indicative of our ongoing operations. Operating income is the most directly comparable GAAP financial measure to adjusted operating income. We define adjusted operating margin in this release as adjusted operating income divided by revenue. Operating margin is the most directly comparable GAAP financial measure to adjusted operating margin. Adjusted earnings before income taxes is defined as earnings before income taxes, adjusted for items that are not indicative of our ongoing operations. Earnings before income taxes is the most directly comparable GAAP financial measure. Adjusted income tax expense is defined as income tax expense, adjusted for items that are not indicative of our ongoing operations. Adjusted effective tax rate is adjusted income tax expense divided by adjusted earnings before income taxes. Income tax expense is the most directly comparable GAAP financial measure. Adjusted net earnings is defined as net earnings or loss, adjusted for items that are not indicative of our ongoing operations. Net earnings or loss is the most directly comparable GAAP financial measure to adjusted net earnings. Adjusted net earnings per diluted share is calculated as adjusted net earnings divided by the diluted weighted average shares outstanding. Net earnings or loss per diluted share is the most directly comparable GAAP financial measure to adjusted net earnings per diluted share. We define adjusted EBITDA as net earnings or loss, less interest and dividend income, net, plus income tax expense, plus depreciation and amortization, plus stock-based compensation expense, adjusted for items that are not indicative of our ongoing operations. Net earnings or loss is the most directly comparable GAAP financial measure to adjusted EBITDA. We define adjusted EBITDA margin in this release as adjusted EBITDA divided by revenue. Net earnings or loss margin is the most directly comparable GAAP measure to adjusted EBITDA margin. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in this press release.
These non-GAAP financial measures are presented because we believe they are useful indicators of our operating performance and facilitate a more meaningful trend analysis without the distortion of various adjustment items. Management uses these measures principally as measures of our underlying operating performance, trends, and for planning purposes, including the preparation of our annual operating plan and financial projections. We believe these measures are useful to investors as supplemental information and because they are frequently used by analysts, investors, and other interested parties to evaluate companies in our industry. We also believe these non-GAAP financial measures are useful to our management and investors as a measure of comparative operating performance from period to period.
These non-GAAP financial measures should not be considered as an alternative to, or superior to, the most directly comparable GAAP financial measures, as measures of financial performance or cash flows from operations, as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed to imply that our future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA is not intended to be a measure of cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as tax payments, capital expenditures, and certain other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs, and cash costs to replace assets being depreciated and amortized. In evaluating our non-GAAP financial measures, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using non-GAAP financial measures on a supplemental basis. These measures and their definitions are discussed in more detail below and our definition of these non-GAAP financial measures is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements, including, without limitation, statements regarding estimated financial and non-financial impacts from our strategic growth plan (including without limitation, the extent and manner of the use of investments in revenue growth initiatives as well as the time to complete the strategic growth plan) and potential impacts to our business (including potential actions and solutions, such as the new Category I CPT code for Inspire V set to take effect January 1, 2028 and final 2027 Medicare reimbursement payments, as well as timing of these impacts and any related clarity) associated with coding and reimbursement, and our expectations regarding our future growth prospects and full year 2026 financial outlook (including without limitation expectations for the impacts of coding and reimbursement, revenue, expected growth, adjusted operating margin, net earnings or loss per diluted share, adjusted net earnings per diluted share, effective tax rate, adjusted effective tax rate, weighted average diluted shares outstanding and capital expenditures). In some cases, you can identify forward-looking statements by terms such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘anticipate,’’ ‘‘could,’’ “future,” “outlook,” “guidance,” ‘‘intend,’’ ‘‘target,’’ ‘‘project,’’ ‘‘contemplate,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘potential,’’ ‘‘continue,’’ or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.
These forward-looking statements are based on management’s current expectations and involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: our dependency on our Inspire system for revenues; fluctuations in our financial results and the market price of our common stock; our ability to sustain or increase our profitability and our history of operating losses; commercial success and market acceptance of our Inspire therapy; our ability to achieve and maintain adequate and clear levels of coverage or reimbursement for our Inspire system or any future products we may seek to commercialize; competitive companies, technologies, and pharmaceuticals in our industry; our ability to expand our indications and develop and commercialize additional products and enhancements to our Inspire system; our ability to forecast demand and manage our inventory; our dependence on third-parties; risks related to consolidation in the healthcare industry; our ability to expand, manage, and maintain our direct sales and marketing organization, and to market and sell our Inspire system in markets outside of the United States; our ability to manage our growth; risks related to product liability claims and warranty claims; our ability to address quality issues that may arise with our Inspire system; any failure of key information technology systems, processes, or sites or damage to or inability to access our physical facilities; any violations of anti-bribery, anti-corruption, and anti-money laundering laws; future needs for additional financing; risks related to our tax assets and changes in tax laws; our ability to timely commercialize or obtain regulatory approvals or certifications for our Inspire therapy and system; U.S. Food and Drug Administration (FDA) or other United States or foreign regulatory actions affecting us or the healthcare industry generally; our ability to establish and maintain intellectual property protection for our Inspire therapy and system or avoid claims of infringement; and our strategic growth plan may not achieve our intended outcome.
Other important factors that could cause actual results, performance or achievements to differ materially from those contemplated in this press release can be found under the captions “Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations“ in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors page of our website at www.inspiresleep.com. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by applicable law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this press release.
Investor and Media Contact
Brian Johnston or Louisa Smith
Gilmartin Group
IR@inspiresleep.com
| Inspire Medical Systems, Inc. Consolidated Statements of Operations (unaudited) (in thousands, except share and per share amounts) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | 206,695 | $ | 224,501 | $ | 611,859 | $ | 642,904 | ||||||||
| Cost of goods sold | 28,837 | 31,773 | 85,630 | 97,154 | ||||||||||||
| Gross profit | 177,858 | 192,728 | 526,229 | 545,750 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 22,176 | 24,211 | 72,700 | 78,223 | ||||||||||||
| Selling, general and administrative | 184,398 | 158,873 | 483,877 | 462,684 | ||||||||||||
| Total operating expenses | 206,574 | 183,084 | 556,577 | 540,907 | ||||||||||||
| Operating (loss) income | (28,716 | ) | 9,644 | (30,348 | ) | 4,843 | ||||||||||
| Interest and dividend (income), net | (3,897 | ) | (3,973 | ) | (11,377 | ) | (13,521 | ) | ||||||||
| Other expense, net | 191 | 66 | 527 | 2,986 | ||||||||||||
| (Loss) earnings before income taxes | (25,010 | ) | 13,551 | (19,498 | ) | 15,378 | ||||||||||
| Income tax (benefit) expense | (616 | ) | 3,619 | 15,876 | 6,046 | |||||||||||
| Net (loss) earnings | $ | (24,394 | ) | $ | 9,932 | $ | (35,374 | ) | $ | 9,332 | ||||||
| Basic (loss) earnings per share | $ | (0.84 | ) | $ | 0.34 | $ | (1.23 | ) | $ | 0.32 | ||||||
| Diluted (loss) earnings per share | $ | (0.84 | ) | $ | 0.34 | $ | (1.23 | ) | $ | 0.31 | ||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 28,929,352 | 29,332,376 | 28,822,985 | 29,512,495 | ||||||||||||
| Diluted | 28,929,352 | 29,600,223 | 28,822,985 | 29,938,246 | ||||||||||||
| Inspire Medical Systems, Inc. Consolidated Balance Sheets (unaudited) (in thousands, except share and per share amounts) | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 190,803 | $ | 104,813 | ||||
| Investments, short-term | 137,168 | 203,455 | ||||||
| Accounts receivable, net of allowance for credit losses of | 104,706 | 119,692 | ||||||
| Inventories, net | 178,960 | 145,293 | ||||||
| Prepaid expenses and other current assets | 15,988 | 10,399 | ||||||
| Total current assets | 627,625 | 583,652 | ||||||
| Investments, long-term | 125,125 | 96,330 | ||||||
| Property and equipment, net | 85,635 | 97,872 | ||||||
| Operating lease right-of-use assets | 22,125 | 23,532 | ||||||
| Deferred tax assets | 74,196 | 88,667 | ||||||
| Other non-current assets | 18,327 | 17,264 | ||||||
| Total assets | $ | 953,033 | $ | 907,317 | ||||
| Liabilities and stockholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 38,073 | $ | 36,565 | ||||
| Accrued expenses | 59,265 | 59,490 | ||||||
| Total current liabilities | 97,338 | 96,055 | ||||||
| Operating lease liabilities, non-current portion | 28,611 | 29,998 | ||||||
| Other non-current liabilities | 135 | 104 | ||||||
| Total liabilities | 126,084 | 126,157 | ||||||
| Stockholders' equity: | ||||||||
| Preferred Stock, | — | — | ||||||
| Common Stock, | 29 | 29 | ||||||
| Additional paid-in capital | 1,010,235 | 927,159 | ||||||
| Accumulated other comprehensive (loss) income | (1,449 | ) | 464 | |||||
| Accumulated deficit | (181,866 | ) | (146,492 | ) | ||||
| Total stockholders' equity | 826,949 | 781,160 | ||||||
| Total liabilities and stockholders' equity | $ | 953,033 | $ | 907,317 | ||||
| Inspire Medical Systems, Inc. GAAP to Non-GAAP Reconciliations (unaudited) (in thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||
| Gross Profit | Operating Expenses | Operating (Loss) Income | Operating Margin | Other (Income) | (Loss) Earnings Before Income Taxes | Income Tax (Benefit) Expense | Effective Tax Rate | Net (Loss) Earnings | Diluted EPS | ||||||||||||||||||||||||||||
| Reported | $ | 177,858 | $ | 206,574 | $ | (28,716 | ) | (13.9)% | $ | (3,706 | ) | $ | (25,010 | ) | $ | (616 | ) | 2.5 | % | $ | (24,394 | ) | $ | (0.84 | ) | ||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||
| Legal fees1 | — | (3,567 | ) | 3,567 | 1.7 | % | — | 3,567 | 935 | 2,632 | 0.09 | ||||||||||||||||||||||||||
| Legal settlement2 | — | (7,000 | ) | 7,000 | 3.4 | % | — | 7,000 | 2,361 | 4,639 | 0.15 | ||||||||||||||||||||||||||
| Restructuring charges3 | — | (24,138 | ) | 24,138 | 11.7 | % | — | 24,138 | 1,851 | 22,287 | 0.77 | ||||||||||||||||||||||||||
| Share forfeitures4 | — | 4,128 | (4,128 | ) | (2.0) % | — | (4,128 | ) | (1,392 | ) | (2,736 | ) | (0.09 | ) | |||||||||||||||||||||||
| Tax impact of stock-based compensation5 | — | — | — | — | % | — | — | (1,636 | ) | 1,636 | 0.06 | ||||||||||||||||||||||||||
| Adjusted | $ | 177,858 | $ | 175,997 | $ | 1,861 | 0.9 | % | $ | (3,706 | ) | $ | 5,567 | $ | 1,503 | 27.0 | % | $ | 4,064 | $ | 0.14 | ||||||||||||||||
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Gross Profit | Operating Expenses | Operating Income | Operating Margin | Other (Income) | Earnings Before Income Taxes | Income Tax Expense | Effective Tax Rate | Net Earnings | Diluted EPS | |||||||||||||||||||||||
| Reported | $ | 192,728 | $ | 183,084 | $ | 9,644 | 4.3 | % | $ | (3,907 | ) | $ | 13,551 | $ | 3,619 | 26.7 | % | $ | 9,932 | $ | 0.34 | |||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
| Legal fees1 | — | (1,289 | ) | 1,289 | 0.6 | % | — | 1,289 | 320 | 969 | 0.03 | |||||||||||||||||||||
| Adjusted | $ | 192,728 | $ | 181,795 | $ | 10,933 | 4.9 | % | $ | (3,907 | ) | $ | 14,840 | $ | 3,939 | 26.5 | % | $ | 10,901 | $ | 0.37 | |||||||||||
1 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.
2 Legal settlement expense associated with the proposed settlement of a pixel-tracking class action.
3 Restructuring charges related to Project Horizon.
4 Stock-based compensation expense benefit due to share forfeitures related to actions of Project Horizon.
5 The accounting standards codification guidance governing employee stock-based compensation requires that any excess or deficient tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax expense recorded as excess tax expense for stock-based compensation.
| Inspire Medical Systems, Inc. GAAP to Non-GAAP Reconciliations (unaudited) (in thousands, except per share amounts) | |||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||||
| Gross Profit | Operating Expenses | Operating (Loss) Income | Operating Margin | Other (Income) | (Loss) Earnings Before Income Taxes | Income Tax Expense | Effective Tax Rate | Net (Loss) Earnings | Diluted EPS | ||||||||||||||||||||||||||||
| Reported | $ | 526,229 | $ | 556,577 | $ | (30,348 | ) | (5.0)% | $ | (10,850 | ) | $ | (19,498 | ) | $ | 15,876 | (81.4)% | $ | (35,374 | ) | $ | (1.23 | ) | ||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||
| Legal fees1 | — | (8,700 | ) | 8,700 | 1.5 | % | — | 8,700 | 2,611 | 6,089 | 0.21 | ||||||||||||||||||||||||||
| Legal settlement2 | — | (7,000 | ) | 7,000 | 1.1 | % | — | 7,000 | 2,361 | 4,639 | 0.16 | ||||||||||||||||||||||||||
| Restructuring charges3 | — | (24,138 | ) | 24,138 | 4.0 | % | — | 24,138 | 1,851 | 22,287 | 0.77 | ||||||||||||||||||||||||||
| Share forfeitures4 | — | 4,128 | (4,128 | ) | (0.7) % | — | (4,128 | ) | (1,392 | ) | (2,736 | ) | (0.09 | ) | |||||||||||||||||||||||
| Tax impact of stock-based compensation5 | — | — | — | — | % | — | — | (16,011 | ) | 16,011 | 0.56 | ||||||||||||||||||||||||||
| Adjusted | $ | 526,229 | $ | 520,867 | $ | 5,362 | 0.9 | % | $ | (10,850 | ) | $ | 16,212 | $ | 5,296 | 32.7 | % | $ | 10,916 | $ | 0.38 | ||||||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||
| Gross Profit | Operating Expenses | Operating Income | Operating Margin | Other (Income) | Earnings Before Income Taxes | Income Tax Expense | Effective Tax Rate | Net Earnings | Diluted EPS | |||||||||||||||||||||||
| Reported | $ | 545,750 | $ | 540,907 | $ | 4,843 | 0.8 | % | $ | (10,535 | ) | $ | 15,378 | $ | 6,046 | 39.3 | % | $ | 9,332 | $ | 0.31 | |||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense6 | — | (11,155 | ) | 11,155 | 1.7 | % | — | 11,155 | 2,770 | 8,385 | 0.27 | |||||||||||||||||||||
| Legal fees1 | — | (3,025 | ) | 3,025 | 0.5 | % | — | 3,025 | 751 | 2,274 | 0.08 | |||||||||||||||||||||
| Asset impairment charge7 | — | — | — | — | % | (4,046 | ) | 4,046 | — | 4,046 | 0.14 | |||||||||||||||||||||
| Adjusted | $ | 545,750 | $ | 526,727 | $ | 19,023 | 3.0 | % | $ | (14,581 | ) | $ | 33,604 | $ | 9,567 | 28.5 | % | $ | 24,037 | $ | 0.80 | |||||||||||
1 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.
2 Legal settlement expense associated with the proposed settlement of a pixel-tracking class action.
3 Restructuring charges related to Project Horizon.
4 Stock-based compensation expense benefit due to share forfeitures related to actions of Project Horizon.
5 The accounting standards codification guidance governing employee stock-based compensation requires that any excess or deficient tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax expense recorded as excess tax expense for stock-based compensation.
6 Represents accelerated stock-based compensation expense for certain employees who were retirement eligible in accordance with the implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement.
7 Represents a non-cash impairment of a strategic investment.
| Reconciliation of GAAP Net (Loss) Earnings to Non-GAAP Adjusted EBITDA | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net (loss) earnings | $ | (24,394 | ) | $ | 9,932 | $ | (35,374 | ) | $ | 9,332 | ||||||
| Interest and dividend income, net | (3,897 | ) | (3,973 | ) | (11,377 | ) | (13,521 | ) | ||||||||
| Income tax expense | (616 | ) | 3,619 | 15,876 | 6,046 | |||||||||||
| Depreciation and amortization | 5,140 | 3,677 | 14,847 | 10,135 | ||||||||||||
| EBITDA | (23,767 | ) | 13,255 | (16,028 | ) | 11,992 | ||||||||||
| Stock-based compensation expense1 | 26,917 | 29,468 | 88,832 | 102,247 | ||||||||||||
| Legal fees2 | 3,567 | 1,289 | 8,700 | 3,025 | ||||||||||||
| Legal settlement3 | 7,000 | — | 7,000 | — | ||||||||||||
| Restructuring charges4 | 24,138 | — | 24,138 | — | ||||||||||||
| Asset impairment charge5 | — | — | — | 4,046 | ||||||||||||
| Adjusted EBITDA | $ | 37,855 | $ | 44,012 | $ | 112,642 | $ | 121,310 | ||||||||
1 Total stock-based compensation expense.
2 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.
3 Legal settlement expense associated with the proposed settlement of a pixel-tracking class action.
4 Restructuring charges related to Project Horizon.
5 Represents a non-cash impairment of a strategic investment.
| Reconciliation of GAAP Net (Loss) Earnings Margin and Non-GAAP Adjusted EBITDA Margin | ||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||
| Net (loss) earnings margin1 | (11.8)% | 4.5 | % | (5.8) % | 1.5 | % | ||||||
| Interest and dividend income, net | (1.9)% | (1.8)% | (1.9)% | (2.1)% | ||||||||
| Income tax expense | (0.3)% | 1.6 | % | 2.6 | % | 0.9 | % | |||||
| Depreciation and amortization | 2.5 | % | 1.6 | % | 2.4 | % | 1.6 | % | ||||
| Stock-based compensation expense2 | 13.0 | % | 13.1 | % | 14.7 | % | 15.9 | % | ||||
| Legal fees3 | 1.7 | % | 0.6 | % | 1.4 | % | 0.5 | % | ||||
| Legal settlement4 | 3.4 | % | — | % | 1.1 | % | — | % | ||||
| Restructuring charges5 | 11.7 | % | — | % | 3.9 | % | — | % | ||||
| Asset impairment charge6 | — | % | — | % | — | % | 0.6 | % | ||||
| Adjusted EBITDA margin7 | 18.3 | % | 19.6 | % | 18.4 | % | 18.9 | % | ||||
1 Net (loss) earnings margin is calculated as net (loss) earnings divided by total revenue.
2 Total stock-based compensation expense.
3 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.
4 Legal settlement expense associated with the proposed settlement of a pixel-tracking class action.
5 Restructuring charges related to Project Horizon.
6 Represents a non-cash impairment of a strategic investment.
7 Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenue.
| Full Year 2026 Outlook Reconciliation of Full Year 2026 Outlook of Estimated Net (Loss) Earnings per Diluted Shareto Adjusted Net Earnings per Diluted Share | ||||||||||||
| Outlook Full Year 2026 | Tax Rate Outlook Full Year 2026 | |||||||||||
| Low Range | High Range | Low Range | High Range | |||||||||
| Net (loss) per diluted share | $ | (0.36 | ) | $ | (0.10 | ) | ||||||
| Legal fees1 | 0.31 | 0.29 | ||||||||||
| Legal settlement2 | 0.18 | 0.18 | ||||||||||
| Restructuring charges3 | 0.64 | 0.64 | ||||||||||
| Share forfeitures4 | (0.16 | ) | (0.16 | ) | ||||||||
| Tax impact of stock-based compensation5 | 0.59 | 0.55 | ||||||||||
| Adjusted net earnings per diluted share | $ | 1.20 | $ | 1.40 | ||||||||
1 These costs represent legal-related expenses related to (a) a civil investigative demand from the Department of Justice, (b) a patent infringement suit that we filed against Nyxoah S.A. and its wholly-owned subsidiary, Nyxoah, Inc. ("Nyxoah"), and (c) a patent infringement suit brought against us by Nyxoah.
2 Legal settlement expense associated with the proposed settlement of a pixel-tracking class action.
3 Restructuring charges related to Project Horizon.
4 Stock-based compensation expense benefit due to share forfeitures related to actions of Project Horizon.
5 The accounting standards codification guidance governing employee stock-based compensation requires that any excess or deficient tax deduction for stock-based compensation be immediately recorded within income tax expense. Employee stock-based compensation activity, including the exercise of stock options, can be unpredictable and can significantly impact our net earnings, net earnings per diluted share, and effective tax rate. These amounts represent the discrete tax expense recorded as excess tax expense for stock-based compensation.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were Inspire Medical Systems' third-quarter 2026 earnings?
Inspire reported a $24.4 million net loss, or $0.84 per diluted share, on revenue of $206.7 million. Revenue decreased 7.9% year over year. Adjusted net earnings were $4.1 million, or $0.14 per diluted share.
What is Inspire Medical Systems' full-year 2026 guidance?
Inspire expects $850 million to $860 million in revenue and diluted EPS of $(0.36) to $(0.10). The revenue range narrowed from $835 million to $875 million. Adjusted operating margin is expected to be 4.5% to 5.5%, with adjusted diluted EPS of $1.20 to $1.40.
Why did Inspire Medical Systems' operating cash flow decline in the third quarter of 2026?
Operating cash flow declined primarily because of lower net earnings and lower receivables collections. The prior-year quarter benefited from cash recovery after temporary issues implementing a new invoice portal and delivery process in the second quarter of 2025.