[10-Q] Inspire Medical Systems, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Inspire Medical Systems reported Q3 2025 growth with lower profitability. Revenue rose to $224.5 million from $203.2 million as U.S. sales remained the core driver. Gross profit reached $192.7 million, but higher operating costs, including advertising and SG&A, reduced operating income to $9.6 million from $14.3 million.

Net income was $9.9 million versus $18.5 million a year ago, with diluted EPS of $0.34 versus $0.60. For the first nine months, revenue was $642.9 million and net income was $9.3 million. Cash and cash equivalents were $112.8 million, with $209.7 million in short-term investments. Inventories increased to $141.8 million from $80.1 million, reflecting production and demand planning.

The company continued capital returns: it completed an accelerated share repurchase totaling 409,043 shares at an average price of $190.29, repurchased 442,649 shares for $75.0 million earlier in 2025, and bought 552,423 shares for $50.0 million under a new $200.0 million program, leaving $150.0 million authorized. Shares outstanding were 29,053,367 at September 30, 2025.

Insights

Medical technology equity analyst

Solid top-line growth, softer margins, active buybacks.

Inspire Medical Systems delivered higher Q3 revenue of $224.5M, but operating income fell to $9.6M as spending increased in SG&A and advertising. Cost of goods sold declined year over year, supporting strong gross profit of $192.7M, yet opex rose faster than revenue.

Cash stood at $112.8M with $209.7M in short-term investments. Inventories increased to $141.8M, which can support sales but may require careful working-capital management. The company recorded a $4.0M impairment on a strategic investment, modestly elevating other expense year to date.

Capital returns were notable: buybacks included $50.0M in Q3 under a new $200.0M authorization, with $150.0M remaining. Actual impact will depend on expense trajectory and future revenue performance disclosed in subsequent filings.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

________________________________

(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025 or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                             to

Commission File Number: 001-38468

______________________________

Inspire Medical Systems, Inc.

(Exact name of registrant as specified in its charter)

______________________________

Delaware			26-1377674
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
5500 Wayzata Blvd., Suite 1600 Golden Valley, MN			55416
(Address of principal executive offices)			(Zip Code)

(844) 672-4357

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

INSP

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of October 29, 2025, the registrant had 29,056,434 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

Table of Contents

									Page
			Forward-Looking Statements						3
PART I.			FINANCIAL INFORMATION						5
Item 1.			Financial Statements						5
			Balance Sheets						5
			Statements of Operations and Comprehensive Income						6
			Statements of Stockholders' Equity						7
			Statements of Cash Flows						9
			Notes to Financial Statements						10
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations						29
Item 3.			Quantitative and Qualitative Disclosures About Market Risk						40
Item 4.			Controls and Procedures						41
PART II.			OTHER INFORMATION						41
Item 1.			Legal Proceedings						41
Item 1A.			Risk Factors						41
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds						43
Item 3.			Defaults Upon Senior Securities						43
Item 4.			Mine Safety Disclosures						43
Item 5.			Other Information						43
Item 6.			Exhibits						45
			Signatures						46

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact contained in this Quarterly Report are forward-looking statements, including, without limitation, statements regarding our future results of operations and financial position, business strategy, the impact of macroeconomic trends on our business, financial results and financial position, prospective products, international product approvals and commercializations, our expectations regarding reimbursement levels for Inspire therapy procedures, research and development costs, timing and likelihood of success, other insurance providers' plans to begin covering our Inspire therapy, our sales and marketing initiatives, potential supply chain disruptions, and the plans and objectives of management for future operations.

In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties, and assumptions, including, but not limited to:

•our history of operating losses and dependency on our Inspire system for revenues;

•commercial success and market acceptance of our Inspire therapy;

•our ability to achieve and maintain adequate 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;

•future results of operations, financial position, research and development costs, capital requirements, and our needs for additional financing;

•our ability to forecast customer demand for our Inspire system and manage our inventory;

•our dependence on third-party suppliers, vendors, and contract manufacturers;

•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;

•our ability to hire and retain our senior management and other highly qualified personnel;

•risks related to product liability claims and warranty claims;

•our ability to address quality issues that may arise with our Inspire system;

•our ability to successfully integrate any acquired business, products, or technologies;

•changes in global macroeconomic conditions;

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•any failure of key information technology systems, processes, or sites or damage to or inability to access our physical facilities;

•our ability to commercialize or obtain regulatory approvals or certifications for our Inspire therapy and system, or the effect of delays in commercializing or obtaining regulatory approvals or certifications;

•any violations of anti-bribery, anti-corruption, and anti-money laundering laws;

•our ability to use our net operating losses and research and development carryforwards;

•risks related to the increasing and evolving focus on sustainability and environmental, social, and governance initiatives;

•U.S. Food and Drug Administration ("FDA") or other United States or foreign regulatory actions affecting us or the healthcare industry generally, including risks associated with regulatory approvals, certifications, or healthcare reform measures in the United States and international markets;

•our ability to establish and maintain intellectual property protection for our Inspire therapy and system or avoid claims of infringement;

•changes in U.S. and foreign tax laws;

•risks related to our common stock; and

•other important factors that could cause actual results, performance, or achievements to differ materially from those contemplated that are found in "Part I, Item 1. Business," "Part I, Item 1A. Risk Factors," and "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as updated by “Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Part II, Item 1A. Risk Factors" in this Quarterly Report.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Unless the context requires otherwise, references to “Inspire,” the “Company,” “we,” “us,” and “our,” refer to Inspire Medical Systems, Inc. and its subsidiaries.

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PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements.

Inspire Medical Systems, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

						September 30, 2025						December 31, 2024
						(unaudited)
Assets
Current assets:
Cash and cash equivalents						$	112,845					$	150,150
Investments, short-term						209,747						295,396
Accounts receivable, net of allowance for credit losses of     $1,098 and $880, respectively						107,989						93,068
Inventories, net						141,777						80,118
Prepaid expenses and other current assets						14,131						12,074
Total current assets						586,489						630,806
Investments, long-term						88,353						70,995
Property and equipment, net						91,506						71,925
Operating lease right-of-use assets						24,070						23,314
Other non-current assets						17,298						11,343
Total assets						$	807,716					$	808,383
Liabilities and stockholders' equity
Current liabilities:
Accounts payable						$	59,240					$	38,687
Accrued expenses						51,603						49,814
Total current liabilities						110,843						88,501
Operating lease liabilities, non-current portion						30,302						30,039
Other non-current liabilities						111						148
Total liabilities						141,256						118,688
Stockholders' equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; no shares      issued and outstanding						—						—
Common Stock, $0.001 par value per share; 200,000,000 shares authorized; 29,053,367 and 29,740,176 issued and outstanding at September 30, 2025 and December 31, 2024, respectively						29						30
Additional paid-in capital						948,374						981,043
Accumulated other comprehensive income						639						536
Accumulated deficit						(282,582)						(291,914)
Total stockholders' equity						666,460						689,695
Total liabilities and stockholders' equity						$	807,716					$	808,383

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Inspire Medical Systems, Inc.

Consolidated Statements of Operations and Comprehensive Income (unaudited)

(in thousands, except share and per share amounts)

						Three Months Ended September 30,												Nine Months Ended September 30,
						2025						2024						2025						2024
Revenue						$	224,501					$	203,191					$	642,904					$	563,086
Cost of goods sold						31,773						32,398						97,154						86,998
Gross profit						192,728						170,793						545,750						476,088
Operating expenses:
Research and development						24,211						26,083						78,223						83,792
Selling, general and administrative						158,873						130,392						462,684						388,097
Total operating expenses						183,084						156,475						540,907						471,889
Operating income						9,644						14,318						4,843						4,199
Other (income) expense:
Interest and dividend income						(3,984)						(5,890)						(13,536)						(17,695)
Interest expense						11						—						15						—
Other expense (income), net						66						(118)						2,986						77
Total other income						(3,907)						(6,008)						(10,535)						(17,618)
Income before income taxes						13,551						20,326						15,378						21,817
Income taxes						3,619						1,829						6,046						3,532
Net income						9,932						18,497						9,332						18,285
Other comprehensive income:
Foreign currency translation (loss) gain						(59)						259						(168)						86
Unrealized gain on investments						302						1,556						271						814
Total comprehensive income						$	10,175					$	20,312					$	9,435					$	19,185
Net income per share:
Basic						$	0.34					$	0.62					$	0.32					$	0.61
Diluted						$	0.34					$	0.60					$	0.31					$	0.60
Weighted average shares outstanding:
Basic						29,332,376						29,879,621						29,512,495						29,741,720
Diluted						29,600,223						30,633,789						29,938,246						30,566,395

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Inspire Medical Systems, Inc.

Consolidated Statements of Stockholders' Equity (unaudited)

(in thousands, except share amounts)

			Nine Months Ended September 30, 2025
			Common Stock
			Shares						Amount						Additional Paid-In Capital						Accumulated Other Comprehensive Income						Accumulated Deficit						Total Stockholders' Equity
Balance at December 31, 2024			29,740,176						$	30					$	981,043					$	536					$	(291,914)					$	689,695
Stock options exercised			73,491						—						6,441						—						—						6,441
Vesting of restricted stock units and performance stock units, net			199,778						—						(19,192)						—						—						(19,192)
Issuance of common stock			390						—						69						—						—						69
Stock-based compensation expense			—						—						31,056						—						—						31,056
Accelerated share repurchase of common stock			(103,886)						—						—						—						—						—
Share repurchase of common stock			(442,649)						(1)						(75,008)						—						—						(75,009)
Other comprehensive loss			—						—						—						(309)						—						(309)
Net income			—						—						—						—						2,992						2,992
Balance at March 31, 2025			29,467,300						29						924,409						227						(288,922)						635,743
Stock options exercised			43,691						—						2,174						—						—						2,174
Vesting of restricted stock units and performance stock units, net			28,487						—						(1,732)						—						—						(1,732)
Issuance of common stock			490						—						73						—						—						73
Issuance of common stock for employee stock purchase plan			29,509						—						3,255						—						—						3,255
Stock-based compensation expense			—						—						41,724						—						—						41,724
Other comprehensive income			—						—						—						169						—						169
Net loss			—						—						—						—						(3,592)						(3,592)
Balance at June 30, 2025			29,569,477						29						969,903						396						(292,514)						677,814
Stock options exercised			11,685						—						144						—						—						144
Vesting of restricted stock units and performance stock units, net			23,995						—						(1,224)						—						—						(1,224)
Issuance of common stock			633						—						84						—						—						84
Stock-based compensation expense			—						—						29,467						—						—						29,467
Share repurchase of common stock			(552,423)						—						(50,000)						—						—						(50,000)
Other comprehensive income			—						—						—						243						—						243
Net income			—						—						—						—						9,932						9,932
Balance at September 30, 2025			29,053,367						$	29					$	948,374					$	639					$	(282,582)					$	666,460

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Inspire Medical Systems, Inc.

Consolidated Statements of Stockholders' Equity (unaudited)

(in thousands, except share amounts)

			Nine Months Ended September 30, 2024
			Common Stock
			Shares						Amount						Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)						Accumulated Deficit						Total Stockholders' Equity
Balance at December 31, 2023			29,560,464						$	30					$	917,107					$	800					$	(345,423)					$	572,514
Stock options exercised			88,276						—						3,616						—						—						3,616
Vesting of restricted stock units			41,185						—						—						—						—						—
Shares held for tax withholdings			(14,373)						—						(2,848)						—						—						(2,848)
Issuance of common stock			543						—						101						—						—						101
Stock-based compensation expense			—						—						26,322						—						—						26,322
Other comprehensive loss			—						—						—						(676)						—						(676)
Net loss			—						—						—						—						(10,005)						(10,005)
Balance at March 31, 2024			29,676,095						30						944,298						124						(355,428)						589,024
Stock options exercised			88,328						—						5,517						—						—						5,517
Vesting of restricted stock units			21,340						—						—						—						—						—
Shares held for tax withholdings			(10,985)						—						(1,862)						—						—						(1,862)
Issuance of common stock			365						—						85						—						—						85
Issuance of common stock for employee stock purchase plan			30,158						—						3,431						—						—						3,431
Stock-based compensation expense			—						—						32,322						—						—						32,322
Other comprehensive loss			—						—						—						(239)						—						(239)
Net income			—						—						—						—						9,793						9,793
Balance at June 30, 2024			29,805,301						30						983,791						(115)						(345,635)						638,071
Stock options exercised			152,106						—						14,226						—						—						14,226
Vesting of restricted stock units			10,273												—																		—
Issuance of common stock			469						—						65						—						—						65
Shares held for tax withholdings			(4,889)						—						(4,335)						—						—						(4,335)
Stock-based compensation expense			—						—						28,223						—						—						28,223
Other comprehensive income			—						—						—						1,815						—						1,815
Net income			—						—						—						—						18,497						18,497
Balance at September 30, 2024			29,963,260						$	30					$	1,021,970					$	1,700					$	(327,138)					$	696,562

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Inspire Medical Systems, Inc.

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

						Nine Months Ended September 30,
						2025						2024
Operating activities
Net income						$	9,332					$	18,285
Adjustments to reconcile net income:
Depreciation and amortization						10,135						4,072
Accretion of investment discount						(2,512)						(7,317)
Stock-based compensation expense						102,247						86,867
Provision (benefit) for estimated credit losses						218						(1,133)
Impairment of strategic investment						4,046						—
Other non-cash expenses						1,568						1,106
Changes in operating assets and liabilities:
Accounts receivable						(14,599)						1,347
Inventories						(61,659)						(33,547)
Prepaid expenses and other current assets						(2,112)						(4,467)
Accounts payable						18,351						(3,357)
Accrued expenses and other liabilities						(508)						(791)
Net cash provided by operating activities						64,507						61,065
Investing activities
Purchases of property and equipment						(27,843)						(32,096)
Purchases of investments						(177,375)						(337,540)
Proceeds from sales or maturities of investments						248,700						252,753
Purchases of strategic investments						(10,118)						—
Net cash provided by (used in) investing activities						33,364						(116,883)
Financing activities
Proceeds from the exercise of stock options						8,962						23,359
Share repurchase of common stock						(125,008)						—
Payment of taxes on net share settlement of equity awards						(22,350)						(9,045)
Proceeds from issuance of common stock from employee stock purchase plan						3,255						3,431
Net cash (used in) provided by financing activities						(135,141)						17,745
Effect of exchange rate on cash						(35)						48
Decrease in cash and cash equivalents						(37,305)						(38,025)
Cash and cash equivalents at beginning of period						150,150						185,537
Cash and cash equivalents at end of period						$	112,845					$	147,512
Supplemental cash flow information
Cash paid for interest						$	15					$	—
Property and equipment included in accounts payable and accrued expenses						$	5,249					$	3,456

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements (Unaudited) 

(Table amounts in thousands, except share and per share amounts)

1. Organization

Description of Business

Inspire Medical Systems, Inc. is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA"). Our proprietary Inspire system is the first and only United States ("U.S.") Food and Drug Administration ("FDA"), European Union ("EU"), Medical Devices Regulation, and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA. Inspire therapy received premarket approval from the FDA in 2014 and has been commercially available in certain European markets since 2011 and certain Asia Pacific markets since 2021.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial reporting and as required by the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, the results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. All intercompany accounts and transactions have been eliminated in consolidation.

For a complete discussion of our significant accounting policies and other information, the unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We consider events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated as required. There were no material recognized or unrecognized subsequent events.

Cash and Cash Equivalents

We consider all highly liquid securities, readily convertible to cash, that have original maturities of 90 days or less from the date of purchase to be cash equivalents. Cash is carried at cost, which approximates fair value, and cash equivalents, which consist of money market funds, are stated at fair value.

Foreign Currency

Our functional and reporting currency is the U.S. dollar. Our subsidiaries have functional currency in Euro and Yen. The consolidated financial statements are translated to U.S. dollars. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the balance sheet date exchange rate. Sales and expenses denominated in foreign currencies are translated at transaction date exchange rates. Foreign currency transaction gains and losses and the impacts of foreign currency remeasurement are recognized in other expense (income), net in the consolidated statements of operations and comprehensive income. For the three-month periods ended September 30, 2025 and 2024, we recognized $0.1 million of loss and $0.1

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

million of gain, net, respectively. For the nine-month periods ended September 30, 2025 and 2024 we recognized $1.0 million of gain and $0.1 million of loss, net, respectively. Any unrealized gains and losses due to translation adjustments are included in accumulated other comprehensive income within stockholders' equity in the consolidated balance sheets. We had $0.0 million and $0.2 million of unrecognized gain in our accumulated other comprehensive income balance as of September 30, 2025 and December 31, 2024, respectively.

Investments

Our investments are classified as available-for-sale and consisted of the following:

						September 30, 2025
						Amortized						Unrealized Gross												Aggregate
						Cost						Gains						Losses						Fair Value
Short-Term:
Commercial paper						$	21,903					$	24					$	—					$	21,927
Corporate debt securities						45,854						145						—						45,999
U.S. treasury debt securities						141,612						213						(4)						141,821
Short-term investments						$	209,369					$	382					$	(4)					$	209,747
Long-Term:
Corporate debt securities						$	51,977					$	139					$	(10)					$	52,106
U.S. treasury debt securities						36,111						150						(14)						36,247
Long-term investments						$	88,088					$	289					$	(24)					$	88,353

						December 31, 2024
						Amortized						Unrealized Gross												Aggregate
						Cost						Gains						Losses						Fair Value
Short-Term:
Commercial paper						$	19,806					$	25					$	—					$	19,831
Corporate debt securities						47,226						80						(7)						47,299
Certificates of deposit						7,684						10						—						7,694
U.S. treasury debt securities						220,283						346						(57)						220,572
Short-term investments						$	294,999					$	461					$	(64)					$	295,396
Long-Term:
Corporate debt securities						$	23,915					$	59					$	(49)					$	23,925
Asset-backed securities						287						—						—						287
U.S. treasury debt securities						46,818						50						(85)						46,783
Long-term investments						$	71,020					$	109					$	(134)					$	70,995

The following table shows all available-for-sale investments in an unrealized loss position for which an allowance for credit losses has not been recorded and the related gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

						September 30, 2025
						Less than 12 Months												12 Months or Greater												Total
						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss
Corporate debt securities						$	16,455					$	(12)					$	—					$	—					$	16,455					$	(12)
U.S. Treasury debt securities						30,000						(21)						16,003						(10)						46,003						(31)
Total						$	46,455					$	(33)					$	16,003					$	(10)					$	62,458					$	(43)

						December 31, 2024
						Less than 12 Months												12 Months or Greater												Total
						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss						Fair Value						Unrealized Loss
Corporate debt securities						$	11,728					$	(56)					$	—					$	—					$	11,728					$	(56)
U.S. Treasury debt securities						69,402						(220)						—						—						69,402						(220)
Total						$	81,130					$	(276)					$	—					$	—					$	81,130					$	(276)

Investments are classified as available-for-sale and are reported at their estimated fair market values which are based on quoted, active or inactive market prices when available. Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive income within stockholders' equity. We had $0.6 million and $0.4 million of unrecognized gain in our accumulated other comprehensive income balance at September 30, 2025 and December 31, 2024, respectively. Any realized gains and losses are calculated on the specific identification method and reported net in other expense (income), net in the consolidated statements of operations and comprehensive income. We recognized $0 of gross realized gains and losses from the sale or maturity of available-for-sale investments during each of the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025 and December 31, 2024, we had no investments with a contractual maturity of greater than two years. Currently, we do not intend to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. We do not consider those investments to be other-than-temporarily impaired as of September 30, 2025. Each reporting period, we evaluate whether declines in fair value below carrying value are due to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs. Expected credit losses, not to exceed the amount of the unrealized loss, are recorded as an allowance through other expense in the consolidated statements of operations and comprehensive income. The total allowance for credit losses was $0 at both September 30, 2025 and December 31, 2024.

Fair Value of Financial Instruments

We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1: Observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions.

We classify instruments within Level 1 if quoted prices are available in active markets for identical assets, which include our money market funds and U.S. Treasury debt securities. We classify instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or an income approach, such as a discounted cash flow pricing model that calculates values from observable inputs such as quoted interest rates, yield curves and other observable market information. These instruments include our commercial paper, certificates of deposit, corporate debt securities and asset-backed securities. The money market funds and available-for-sale securities are held by two custodians who obtain investment prices from a third-party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class.

The following tables set forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of September 30, 2025 and December 31, 2024. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

						Fair Value Measurements as of
						September 30, 2025
						Estimated Fair Value						Level 1						Level 2						Level 3
Cash equivalents:
Money market funds						$	62,996					$	62,996					$	—					$	—
Total cash equivalents						62,996						62,996						—						—
Investments:
Commercial paper						21,927						—						21,927						—
Corporate debt securities						98,105						—						98,105						—
U.S. government securities						178,068						178,068						—						—
Total investments						298,100						178,068						120,032						—
Total cash equivalents and investments						$	361,096					$	241,064					$	120,032					$	—

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

						Fair Value Measurements as of
						December 31, 2024
						Estimated Fair Value						Level 1						Level 2						Level 3
Cash equivalents:
Money market funds						$	59,606					$	59,606					$	—					$	—
Total cash equivalents						59,606						59,606						—						—
Investments:
Commercial paper						19,831						—						19,831						—
Corporate debt securities						71,224						—						71,224						—
Certificates of deposit						7,694						—						7,694						—
Asset-backed securities						287						—						287						—
U.S. government securities						267,355						267,355						—						—
Total investments						366,391						267,355						99,036						—
Total cash equivalents and investments						$	425,997					$	326,961					$	99,036					$	—

There were no transfers between levels during the periods ended September 30, 2025 and December 31, 2024.

Concentration of Credit Risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash equivalents, investments, and accounts receivable. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.

Our investment policy limits investments to certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. We place restrictions on maturities and concentration by type and issuer. We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the consolidated balance sheets. However, as of September 30, 2025 and December 31, 2024, we limited our credit risk associated with cash equivalents by placing investments with banks we believe are highly creditworthy.

We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base. We generally do not require collateral, and losses on accounts receivable have historically not been significant.

Accounts Receivable and Allowance for Expected Credit Losses

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the general standard being net 30 days. Collateral or any other security to support payment of these receivables generally is not required.

Each reporting period, we estimate the credit loss related to accounts receivable based on a migration analysis of accounts grouped by individual receivables delinquency status and apply our historic loss rate adjusted for management's assumption of future market conditions. Any change in the allowance from new receivables acquired or changes due to credit deterioration on previously existing receivables is recorded in selling, general and administrative expenses. Write-offs of receivables considered uncollectible are deducted from the allowance.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

Specific accounts receivable are written off once a determination is made that the amount is uncollectible. The write-off is recorded in the period in which the account receivable is deemed uncollectible. Recoveries are recognized when received and as a direct credit to earnings or as a reduction to the allowance for credit losses (which would indirectly reduce the loss by decreasing bad debt expense).

The following table presents the changes in the allowance for credit losses related to accounts receivable:

						Three Months Ended September 30,												Nine Months Ended September 30,
						2025						2024						2025						2024
Balance at beginning of period						$	1,229					$	515					$	880					$	1,648
Charges (credits) to the allowance, net						179						96						778						459
Write-offs charged against the allowance						—						—						—						(1,496)
Recoveries of amounts previously reserved						(310)						(96)						(560)						(96)
Balance at the end of the period						$	1,098					$	515					$	1,098					$	515

The write-offs charged against the allowance during the nine months ended September 30, 2024 are related primarily to accounts receivable with two healthcare systems.

Inventories

Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis and consisted of the following:

						September 30, 2025						December 31, 2024
Raw materials						$	21,215					$	22,430
Work in process						9,315						—
Finished goods						111,247						57,688
Total inventories, net of reserves						$	141,777					$	80,118

We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized.

We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, incur charges to write down inventories to their net realizable value. The determination of a reserve for excess and obsolete inventory involves management exercising judgment to determine the required reserve, considering future demand, product life cycles, introduction of new products, and current market conditions. The reserve for excess and obsolete inventory was $1.4 million and $1.0 million as of September 30, 2025 and December 31, 2024, respectively.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following:

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

						September 30, 2025						December 31, 2024
Internal-use software						$	21,680					$	16,553
Manufacturing equipment						49,191						29,117
Other equipment						6,842						4,981
Leasehold improvements						11,619						10,057
Construction in process						26,058						24,975
Property and equipment, cost						115,390						85,683
Less: accumulated depreciation and amortization						(23,884)						(13,758)
Property and equipment, net						$	91,506					$	71,925

Internal-use software costs are capitalized during the application development stage. Costs related to planning and post implementation activities are expensed as incurred. Capitalized internal-use software is amortized, and recognized as cost of goods sold or selling, general and administrative expenses, on a straight-line basis over the estimated useful life of three years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease. Construction in process is comprised primarily of manufacturing equipment. Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to ten years. Depreciation and amortization expense was $3.7 million and $1.9 million for the three months ended September 30, 2025 and 2024, respectively, and $10.1 million and $4.1 million for the nine months ended September 30, 2025 and 2024, respectively.

Strategic Investments

For equity securities without readily determinable fair values, we have elected the measurement alternative under which we measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These securities are presented within other non-current assets on the consolidated balance sheets. The balance of equity securities without readily determinable fair values was $16.4 million and $10.6 million as of September 30, 2025 and December 31, 2024, respectively. During the three months ended September 30, 2025, we invested $7.0 million in a minority interest of a private company, and during the nine months ended September 30, 2025 we invested a total of $9.0 million in minority investments in two private companies. We recognized an impairment charge of $4.0 million during the nine months ended September 30, 2025 in other expense (income), net in the consolidated statements of operations and comprehensive income due to an observable price change of one of the equity securities that had an original carrying amount of $10.0 million. There were no adjustments to the carrying amounts during the three months ended September 30, 2025 or the three or nine months ended September 30, 2024.

Impairment of Long-lived Assets

Long-lived assets consist primarily of property and equipment, operating lease right-of-use assets, and strategic investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that an asset be tested for possible impairment, we compare the undiscounted cash flows expected to be generated by the asset to the carrying amount of the asset. If the carrying amount of the asset is not recoverable on an undiscounted cash flow basis, we determine the fair value of the asset and recognize an impairment loss to the extent the carrying amount of the asset exceeds its fair value. We determine fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. Our cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors. We did not record any impairment charges on long-lived assets, other than the $4.0 million discussed above in the Strategic Investments section, during either of the three or nine months ended September 30, 2025 or 2024.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

Accrued Expenses

Accrued expenses consisted of the following:

						September 30, 2025						December 31, 2024
Payroll related						$	36,641					$	40,162
Income tax payable						1,000						1,612
Product warranty liability						572						933
Operating lease liabilities, current portion						2,274						1,754
Other accrued expenses						11,116						5,353
Total accrued expenses						$	51,603					$	49,814

The following table shows the changes in our estimated product warranty liability accrual, included in accrued liabilities:

						Three Months Ended September 30,												Nine Months Ended September 30,
						2025						2024						2025						2024
Balance at beginning of period						$	550					$	1,431					$	933					$	1,100
Provisions for warranty						150						(402)						(39)						396
Settlements of warranty claims						(128)						(207)						(322)						(674)
Balance at the end of the period						$	572					$	822					$	572					$	822

Revenue Recognition

We derive our revenue from sales of our products in the U.S. and internationally. Customers are primarily comprised of hospitals and ambulatory surgery centers, with distributors being used in certain international locations where we do not have a direct commercial presence.

Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms. Our standard shipping terms are free on board shipping point, unless the customer requests that control and title to the inventory transfer upon delivery. In those cases where shipping and handling costs are billed to customers, we classify the amounts billed as a component of cost of goods sold.

Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The majority of our contracts have a single performance obligation and are short term in nature.

Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.

Variable consideration related to certain customer sales incentives is estimated based on the amounts expected to be paid based on the agreement with the customer using probability assessments.

We offer customers a limited right of return for our product in case of non-conformity or performance issues. We estimate the amount of our product sales that may be returned by our customers based on historical sales and returns. As our historical product returns to date have been immaterial, we have not recorded a reduction in revenue related to variable consideration for product returns.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

See Note 8 for disaggregated revenue by geographic area.

Cost of Goods Sold

Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers. The overhead costs include the cost of material procurement, depreciation expense for manufacturing equipment, and operations and quality supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel.

Research and Development

Research and development expenses consist primarily of product development, clinical and regulatory affairs, quality assurance, consulting services, and other costs associated with products and technologies in development. These expenses include employee compensation, including stock-based compensation, supplies, materials, prelaunch inventory, consulting, and travel expenses related to research and development programs. Clinical expenses include clinical study design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical studies.

We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized.

Stock-Based Compensation

We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of restricted stock units ("RSUs"), performance stock units ("PSUs"), and non-statutory and incentive stock options to employees, and RSUs, PSUs, and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan ("ESPP") which allows participating employees to purchase shares of our common stock at a discount through payroll deductions.

We recognize equity-based compensation expense for awards of equity instruments based on the grant date fair value of those awards as expense in the consolidated statements of operations and comprehensive income. We estimate the fair value of stock options using the Black-Scholes option pricing model and the fair value of RSUs and PSUs is equal to the closing price of our common stock on the grant date. The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is the vesting period or term to become eligible for a qualified retirement for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs. We account for award forfeitures as they occur.

Advertising Expenses

We expense the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $36.4 million and $23.3 million during the three months ended September 30, 2025 and 2024, respectively, and $82.1 million and $72.1 million during the nine months ended September 30, 2025 and 2024, respectively.

Leases

Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses, and operating lease liabilities – non-current portion in our consolidated balance sheets. ROU assets represent our right to use an

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments, and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on our consolidated balance sheets.

Income Taxes

We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As we have historically incurred operating losses, we have recorded a full valuation allowance against our net deferred tax assets. We will continue to maintain a full valuation allowance until we are more certain than not that the deferred tax assets will be realized. We record a federal, state, and foreign tax provision, which includes a foreign tax reserve relating to uncertain tax positions. Our policy is to record interest and penalty expense related to uncertain tax positions as other expense in the consolidated statements of operations and comprehensive income.

Comprehensive income

Comprehensive income consists of net income and changes in unrealized gains and losses due to interest rate fluctuations and other external factors on investments classified as available-for-sale and foreign currency translation adjustments. Accumulated other comprehensive income is presented in the accompanying consolidated balance sheets as a component of stockholders' equity.

Income Per Share

Basic net income per share is computed by dividing the net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing the net income by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The amendments in ASU 2023-09 are effective for us in fiscal 2025, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We are evaluating the impact of the standard on our income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income-Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The guidance requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

statement line item. ASU 2024-03 also requires disclosure of the total amount of selling expenses and our definition of selling expenses. The ASU is effective for our annual reports beginning in fiscal 2027, and interim period reports beginning in fiscal 2028 either on a prospective or retrospective basis. Early adoption is permitted. We are currently evaluating the impact of adopting ASU 2024-03 on our financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software. This ASU modifies the criteria for when software costs may be capitalized by eliminating consideration of software project development stages and by enhancing guidance for the "probable-to-complete" threshold. This ASU is effective for our annual reports beginning in 2028, and interim periods within those annual reporting periods. Early adoption of this ASU is permitted. We are currently evaluating the impact that adoption of this ASU may have on our financial statements and disclosures.

We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures.

3. Leases

We lease approximately 106,000 square feet of office space for our corporate headquarters under a noncancelable operating lease with a noncancelable lease term through May 31, 2035. In October 2024, we entered into an amendment on this lease which provides approximately 10,000 square feet of additional space.

We entered into an additional warehouse and office space lease for our corporate headquarters under a noncancelable operating lease in August 2023. This space includes approximately 22,000 square feet and a noncancelable lease term through May 31, 2035. In March 2024, we entered into an amendment on this lease which commenced in January 2025 which provides for approximately 18,000 square feet of additional space.

Each lease described above includes options to renew for up to two additional periods of five years each at the then-prevailing market rates. The exercises of the lease renewal options are at our sole discretion and were not included in the lease term for the calculation of the ROU assets and lease liabilities as of the lease modification date as they were not reasonably certain of exercise.

In addition to base rent in these leases, we also pay our proportionate share of the operating expenses, as defined in the leases. These payments are made monthly and adjusted annually to reflect actual charges incurred for operating expenses, such as common area maintenance, taxes, and insurance.

The following table presents the lease balances within the consolidated balance sheets:

						September 30, 2025						December 31, 2024
Right-of-use assets:
Operating lease right-of-use assets						$	24,070					$	23,314
Operating lease liabilities:
Accrued expenses						$	2,274					$	1,754
Operating lease liabilities, non-current portion						30,302						30,039
Total operating lease liabilities						$	32,576					$	31,793

As of September 30, 2025, the remaining lease terms were 9.7 years and the weighted average discount rate was 4.9%. The operating cash outflows from our operating leases were $0.9 million and $0.5 million for the three-month

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

periods ended September 30, 2025 and 2024, respectively, and $2.5 million and $0.9 million for the nine-month periods ended September 30, 2025 and 2024, respectively.

4. Employee Retirement Plan

We sponsor a defined contribution employee retirement plan covering all of our full-time employees. The plan allows eligible employees to defer a portion of their eligible compensation up to the maximum allowed by IRS Regulations. We make voluntary matching contributions of 50% of the first 6% of each participating employee's contribution, up to 3% of eligible earnings. Our match contributions are made to funds designated by the participant, none of which are based on Inspire common stock. Our matching contributions to the plan totaled $1.3 million and $1.1 million for the three months ended September 30, 2025 and 2024, respectively, and $4.6 million and $3.7 million for the nine months ended September 30, 2025 and 2024, respectively.

5. Stockholders' Equity

Share Repurchase Program

In August 2024, our Board of Directors authorized the repurchase of up to $150.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means (the “2024 share repurchase program”). We were not obligated to repurchase any specific number of shares and the program could be modified, suspended, or discontinued at any time. The share repurchase program was set to expire in August 2026, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.

In November 2024, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a large financial institution to repurchase common stock as part of the 2024 share repurchase program. Under the ASR Agreement, the financial institution delivered a portion of shares to us at contract inception and delivered the remaining shares at settlement. We made a prepayment of $75.0 million and received an initial delivery of 305,157 shares of common stock. We retired the initial shares delivered and recorded a $75.0 million reduction to additional paid-in capital. We accounted for the variable component of shares to be delivered under the ASR Agreement as a forward contract indexed to our common stock, which met the criteria for equity classification, and therefore, was accounted for as a component of equity.

In January 2025, we were notified of the early termination of the ASR Agreement. Upon final settlement in January 2025, we received an additional 103,886 shares of common stock from the financial institution. The final number of shares received was based on the volume-weighted average price of our common stock during the term of the ASR Agreement, less a discount and subject to adjustment pursuant to the terms of the ASR Agreement. The total shares repurchased under the ASR Agreement was 409,043 shares with the average share price of $190.29.

During the three-month period ended March 31, 2025, we purchased an additional 442,649 shares for $75.0 million under Rule 10b5-1 under the 2024 share repurchase program. As of March 31, 2025, no amount remained available for future repurchases under the 2024 share repurchase program.

In August 2025, our Board of Directors authorized the repurchase of up to $200.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means (the “2025 share repurchase program”). We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. The 2025 share repurchase program will expire in August 2027, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice. During the three-month period ended September 30, 2025, we purchased 552,423 shares for $50.0 million under Rule 10b5-1 under the 2025 share repurchase program. As of September 30, 2025, $150.0 million remained available for future repurchases under the 2025 share repurchase program.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

6. Stock-Based Compensation

As of September 30, 2025, there were 4,663,118 shares reserved for issuance under our equity incentive plan, of which 1,380,904 shares were available for issuance.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is the vesting period or term to become eligible for a qualified retirement for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs, and is reduced by actual forfeitures as they occur. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock-based awards.

During the nine-month period ended September 30, 2025, we recorded accelerated stock-based compensation expense of $11.2 million for employees who are 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. No accelerated stock-based compensation expense related to the implementation was recorded during the three-month period ended September 30, 2025.

Stock Options

Stock options are granted to employees at the exercise price, which is equal to the closing price of our stock on the date of grant. The stock options include a four-year service period and 25% vest after the first year of service and the remainder vest in equal monthly installments over the next 36 months of service. Unvested options are forfeitable in the event of termination other than for death, disability, or qualifying retirement. Upon death, disability or qualifying retirement, all outstanding and unvested options accelerate and become fully vested. The stock options have a contractual life of ten years.

The fair value per share of options is estimated on the date of grant using the Black-Scholes option pricing model. There were no stock options granted during the three and nine-month period ended September 30, 2025.

Stock Option Activity

						Options						Weighted Average Exercise Price												Weighted Average Remaining Contractual Term (years)						Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2024						2,160,149									$	168.33								6.4						$89,052
Granted						—									$	—
Exercised						(149,997)									$	71.25														$13,168
Forfeited/expired						(78,203)									$	226.23
Outstanding at September 30, 2025						1,931,949									$	173.49								5.7						$39,568
Exercisable at September 30, 2025						1,633,700									$	164.40								5.3						$39,568

The aggregate intrinsic value of options exercised is the difference between the estimated fair market value of our common stock at the date of exercise and the exercise price for those options. The aggregate intrinsic value of outstanding options is the difference between the closing price as of the date outstanding and the exercise price of the underlying stock options. As of September 30, 2025, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2028 related to unvested stock options is $34.0 million, which we expect to recognize over a weighted average period of 1.5 years.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

Restricted Stock Units

RSUs are share awards that entitle the holder to receive freely tradable shares of our common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture in the event of termination other than for death, disability, or qualifying retirement. Upon death or disability, all outstanding and unvested RSUs accelerate and become fully vested and settled. Upon qualifying retirement, all outstanding and unvested RSUs remain outstanding and settle in accordance with the original vesting and payment terms applicable to such RSUs. The RSUs granted to employees include three- or four-year service periods and vest in equal installments on each anniversary of the date of grant. The RSUs granted to the board of directors include one- or three-year service periods and vest in equal installments on each anniversary of the date of grant. The fair value of the RSUs is equal to the closing price of our common stock on the grant date.

A summary of RSUs and related information is as follows:

						Restricted Stock Units						Weighted Average Grant Date Fair Value												Aggregate Intrinsic Value (in thousands)
Unvested at December 31, 2024						679,905									$	195.63								$	126,041
Granted						615,205									$	177.70
Vested						(237,439)									$	201.42								$	38,698
Forfeited						(71,963)									$	188.45
Unvested at September 30, 2025						985,708									$	183.56								$	157,004

The aggregate intrinsic value of unvested RSUs was based on our closing stock price on the last trading day of the period. The aggregate intrinsic value of vested RSUs was based on our closing stock price on the date of award vesting. As of September 30, 2025, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2028 related to unvested RSUs was $131.5 million which we expect to recognize over a weighted average period of 1.8 years.

Performance Stock Units

We grant PSUs to officers and key employees. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the respective three-year periods from the date of grant. The expense is recorded on a straight-line basis over the requisite service periods based on an estimate of the number of PSUs expected to vest. Management expectations related to the achievement of the performance goals associated with PSU grants are assessed each reporting period. The number of shares earned at the end of each of the three-year periods will vary based on actual performance, from 0% to 200% of the number of PSUs granted. If the performance conditions are not met or not expected to be met, any compensation expense recognized associated with the grant will be reversed. PSUs are subject to forfeiture in the event of termination other than a termination due to death, disability, or qualifying retirement occurring after the first 12 months of the applicable performance period. Upon such a termination due to death or disability, a prorated amount of the target number of PSUs will accelerate and become fully vested. Upon such a qualifying retirement, a prorated amount of the PSUs will be eligible to vest and settle based on the actual performance achievement in accordance with the original vesting and payment terms applicable to such PSUs.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

A summary of PSUs and related information is as follows:

						Performance Stock Units						Weighted Average Grant Date Fair Value												Aggregate Intrinsic Value (in thousands)
Unvested at December 31, 2024						323,302									$	220.82								$	59,934
Granted						236,333									$	199.70
Vested						(143,518)									$	228.48								$	26,759
Forfeited						(39,957)									$	217.76
Unvested at September 30, 2025						376,160									$	205.07								$	59,915

The fair value of the PSUs is equal to the closing price of our common stock on the grant date. The aggregate intrinsic value of unvested PSUs was based on our closing stock price on the last trading day of the period. As of September 30, 2025, there was $25.1 million of unrecognized stock-based compensation expense related to outstanding PSUs that is expected to be recognized over a weighted-average period of 1.6 years.

Employee Stock Purchase Plan

Employees may participate in our ESPP provided they meet certain eligibility requirements. The purchase price for our common stock under the terms of the ESPP is defined as 85% of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. There were 1,354,931 shares available for future issuance under the ESPP as of September 30, 2025. The current purchase period under the ESPP began on July 1, 2025 and ends December 31, 2025.

7. Income Taxes

At both September 30, 2025 and December 31, 2024, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position. We recorded income tax expense of $3.6 million and $1.8 million for the three months ended September 30, 2025 and 2024, respectively, and $6.0 million and $3.5 million for the nine months ended September 30, 2025 and 2024, respectively. The income tax expenses reflect federal, state, and foreign income tax expense in both of the nine months ended September 30, 2025 and September 30, 2024.

We filed our 2024 U.S. federal income tax return during the third quarter of 2025. Upon filing our return, our gross federal net operating loss carryforward as of December 31, 2024 was $51.3 million, which is not subject to expiration. In addition, net operating loss carryforwards for state income tax purposes of $88.0 million, of which we estimate that $4.1 million of Minnesota net operating loss will expire unused in 2025. We also have gross R&D credit carryforwards of $16.6 million as of December 31, 2024, which will expire at various dates beginning in 2030.

Utilization of the net operating loss carryforwards and R&D credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Code and similar state provisions. During 2025, we finalized an updated analysis to determine whether an ownership change had occurred through December 31, 2024, and if a limitation exists. It was determined that December 11, 2018 was the only date on which we experienced an ownership change. The study concluded that none of the $126.5 million of federal net operating losses nor the $1.7 million of federal R&D credits that were accumulated on December 11, 2018 will expire unused solely due to the limitations under Sections 382 and 383 of the Code.

Realization of the deferred tax assets is dependent upon the generation of future book income, if any, the amount and timing of which are uncertain. Based on available objective evidence, we believe it is more likely than not that the deferred tax assets are not recognizable and will not be recognizable until we have sufficient evidence to support their recognition. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance.

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Inspire Medical Systems, Inc. 

Notes to Consolidated Financial Statements (unaudited) 

(Table amounts in thousands, except share and per share amounts)

On July 4, 2025, the enactment of the One Big Beautiful Bill Act ("OBBBA") into law, marked a significant legislative development, resulting in substantial modifications to the U.S. tax code. The OBBBA influences multiple facets of taxation, including, but not limited to, bonus depreciation, the current-year expensing of research and development costs, and international tax regulations. The income taxes reported for the three months ending September 30, 2025 incorporates all relevant tax provisions of this new law.

We had $0.1 million of tax payable on unrecognized tax positions as of both September 30, 2025 and December 31, 2024. We do not anticipate significant changes to our unrecognized tax positions in the next 12 months.

We file income tax returns in all applicable jurisdictions. The tax years from 2022 to 2024 remain open for examination by the tax authorities to which we are subject.

8. Segment Reporting and Revenue Disaggregation

We operate our business as one operating segment. An operating segment is defined as a component of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. Our CODM is the Company's President, Chief Executive Officer, and Chair of the Board of Directors. Reportable segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Our segment revenues are derived from the sales of our product, the Inspire system, to hospitals and ambulatory surgery centers in the U.S. and in select countries in Europe and the Asia Pacific region. We do not have any intra-entity sales or transfers.

Our CODM uses consolidated net income as the measure of profit or loss. Our CODM assesses performance for the segment and allocates resources and monitors budget versus actual results using consolidated net income and operating income. The monitoring of budget versus actual results are used in establishing management's compensation. The measure of segment assets is reported on the balance sheet as total consolidated assets.

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2025						2024						2025						2024
Revenue						$	224,501					$	203,191					$	642,904					$	563,086
Less: (a)
Cost of goods sold						31,773						32,398						97,154						86,998
Research and development expense						24,211						26,083						78,223						83,792
Selling, general and administrative expense (excluding advertising expense)						122,464						107,111						380,619						315,997
Advertising expense						36,409						23,281						82,065						72,100
Operating income						9,644						14,318						4,843						4,199
Other income (b)						(3,907)						(6,008)						(10,535)						(17,618)
Income taxes						3,619						1,829						6,046						3,532
Segment net income						9,932						18,497						9,332						18,285
Reconciliation of profit or loss
Adjustments and reconciling items						—						—						—						—
Consolidated net income						$	9,932					$	18,497					$	9,332					$	18,285

(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to our chief operating decision maker.

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INSPIRE MEDICAL SYSTEMS, INC. 

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 

(Table amounts in thousands, except share and per share amounts)

(b) Other income represents the consolidated amounts for interest and dividend income, interest expense, and other expense, net, as shown on our consolidated statements of operations and comprehensive income.

For the three-month periods ended September 30, 2025 and 2024, depreciation and amortization expense was $3.7 million and $1.9 million, respectively, and for the nine-month periods ended September 30, 2025 and 2024, depreciation and amortization expense was $10.1 million and $4.1 million, respectively, and is included within the segment expense captions of cost of goods sold, research and development expense, and selling, general and administrative ("SG&A") expense.

For the three-month periods ended September 30, 2025 and 2024, stock-based compensation expense was $29.5 million and $28.2 million, respectively, and for the nine-month periods ended September 30, 2025 and 2024, stock-based compensation expense was $102.2 million and $86.9 million, respectively, and is included within the segment expense captions of cost of goods sold, research and development expense, and SG&A expense.

Revenue by geographic region is as follows:

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2025						2024						2025						2024
United States						$	214,394					$	195,828					$	615,150					$	539,407
All other countries						10,107						7,363						27,754						23,679
Total revenue						$	224,501					$	203,191					$	642,904					$	563,086

Long-lived tangible assets by geographic location were as follows:

						September 30, 2025						December 31, 2024
United States						$	90,661					$	71,008
All other countries						845						917
Total long-lived tangible assets						$	91,506					$	71,925

9. Income Per Share

Basic net income per share is computed by dividing the net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing the net income by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period.

The components of net income per share are as follows:

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INSPIRE MEDICAL SYSTEMS, INC. 

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 

(Table amounts in thousands, except share and per share amounts)

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2025						2024						2025						2024
Numerator:
Net income						$	9,932					$	18,497					$	9,332					$	18,285
Denominator:
Weighted average number of common shares outstanding — basic						29,332,376						29,879,621						29,512,495						29,741,720
Dilutive effect of stock options						248,368						536,641						349,384						624,931
Dilutive effect of restricted stock units						8,067						61,608						69,071						66,600
Dilutive effect of performance stock units						11,412						141,734						3,804						128,416
Dilutive effect of shares issuable under the ESPP						—						14,185						3,492						4,728
Weighted average number of common shares outstanding — diluted						29,600,223						30,633,789						29,938,246						30,566,395
Net income per share:
Basic						$	0.34					$	0.62					$	0.32					$	0.61
Diluted						$	0.34					$	0.60					$	0.31					$	0.60

The following common stock-based awards were excluded from the computation of diluted net income per common share for the periods presented because including them would have been antidilutive:

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2025						2024						2025						2024
Stock options						1,417,098						1,465,714						1,433,667						1,519,841
Restricted stock units						954,933						313,776						515,639						50,582
Shares issuable under the ESPP						12,610						—						4,203						—
Total						2,384,641						1,779,490						1,953,509						1,570,423

10. Related Party Transaction

In December 2023, we entered into an agreement with an entity controlled by our Chief Executive Officer (the "Entity"), pursuant to which we agreed to share the costs of a corporate suite at a sports and entertainment venue (the "Venue") (the “Suite”) (the “Cost Sharing Agreement”). In August 2023, the Entity entered into an agreement with the Venue, pursuant to which the Entity acquired certain rights to use the Suite for specified sporting and other events at the Venue through August 2026. Pursuant to this agreement, the Entity agreed to pay $0.2 million per year, with each year beginning September 1 and ending August 31, and the fee increasing by 5% for each succeeding year. Under the Cost Sharing Agreement, we will reimburse the Entity 50% of the cost of the Suite in exchange for the right to use the Suite for 50% of the specified events at the Venue through August 2026. We recognized expense of $0.1 million for the use of the suite in SG&A expense in our consolidated statements of operations and comprehensive income during each of the three months ended September 30, 2025 and 2024, respectively, and $0.3 million and $0.1 million during the nine months ended September 30, 2025 and 2024, respectively.

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INSPIRE MEDICAL SYSTEMS, INC. 

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 

(Table amounts in thousands, except share and per share amounts)

11. Commitments and Contingencies

We are involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which may not be covered by insurance. We evaluate all matters and record liabilities for losses from legal proceedings when we determine that it is probable that the outcome will be unfavorable and the amount, or potential range, of loss can be reasonably estimated. An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations or cash flows.

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Inspire and two of its executive officers were named as defendants in a purported federal securities law class action filed in the United States District Court for the District of Minnesota, captioned City of Hollywood Firefighters’ Pension Fund v. Inspire Medical Systems, Inc., et. al., Court File No. 0:23-cv-03884 (the "City of Hollywood Lawsuit"). The plaintiff filed an amended complaint on April 19, 2024, which alleged violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5, which alleged violations related to certain prior disclosures of Inspire about the effectiveness of a program intended to help certain customers establish independence in seeking prior authorization from payors for our Inspire therapy. The plaintiff sought to represent a class of shareholders who purchased or otherwise acquired Inspire common stock between May 3, 2023 and November 7, 2023. On June 28, 2024, the defendants moved to dismiss the amended complaint in its entirety. On March 24, 2025, the Court granted defendants' motion to dismiss, and dismissed the amended complaint with prejudice. The dismissal is now final.

On July 16, 2024, a stockholder derivative lawsuit was filed in the United States District Court for the District of Minnesota, purportedly on behalf of Inspire against certain of our present and former officers and directors and Inspire (as a nominal defendant), captioned Lawrence Hollin v. Herbert, et al., Court File No. 0:24-cv-02716 (the “Hollin Lawsuit”). The Hollin Lawsuit arose out of the same subject matter as the City of Hollywood Lawsuit and alleged the following claims under common law and the Exchange Act: (1) breach of fiduciary duty; (2) unjust enrichment; (3) waste of corporate assets; and (4) as against the officer defendants, contribution under Sections 10(b) and 21D of the Exchange Act. The lawsuit sought unspecified damages. On September 5, 2024, counsel for Mr. Hollin filed a motion for voluntary dismissal of the Hollin Lawsuit, and the court administratively closed the case.

In addition, on January 17, 2025, we received a civil investigative demand (“CID”) from the Department of Justice U.S. Attorney’s Office for the District of Minnesota pursuant to the False Claims Act in the course of the government’s investigation concerning allegations of false claims, including false claims arising from violations of the Anti-Kickback Statute, submitted to government payors in connection with our implant. The CID requests information relating to the marketing, promotion, and reimbursement practices associated with our products. We are cooperating with the investigation. No assurance can be given as to the timing or outcome of the government’s investigation.

On May 30, 2025, Inspire initiated a legal action against Nyxoah SA and its subsidiary Nyxoah, Inc. (collectively “Nyxoah”) in the United States District Court for the District of Delaware, alleging patent infringement. The complaint asserts that Nyxoah's Genio product infringes on certain of Inspire's U.S. patents related to neurostimulation therapy for obstructive sleep apnea. Inspire claims that Nyxoah's Genio device utilizes technology covered by Inspire's patents without authorization. Inspire seeks a judgment of patent infringement, a permanent injunction to prevent Nyxoah from manufacturing, using, or selling the Genio device in the U.S., and monetary damages including lost profits.

On September 15, 2025, Nyxoah filed a lawsuit against us in the United States District Court for the District of Delaware alleging that the Inspire IV and Inspire V devices infringe certain of Nyxoah’s patents. We intend to defend the claims in this lawsuit vigorously and believe we have good and substantial defenses to them, but there is no guarantee that we will be successful in these efforts. The lawsuit is in its early stages. Given the complexity of the issues in the lawsuit and the inherent uncertainty of litigation, we are unable to make any predictions about the ultimate outcome of this matter.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, the discussion under "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part I, Item 1. Business” sections included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, such as information with respect to our plans and strategy for our business and the impact of macroeconomic factors on our business, financial results and financial condition includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the "Part I, Item 1A. Risk Factors" section of our Annual Report and in the "Part I, Item 1A "Risk Factors" section of this Quarterly Report, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.

Overview

We are a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA"). Our proprietary Inspire system is the first and only FDA, European Union ("EU") Medical Devices Regulation ("MDR"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA. We have developed a novel, closed-loop solution that continuously monitors a patient’s breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level.

We sell our Inspire system to hospitals and ambulatory surgery centers ("ASCs") in the U.S. and in select countries in Europe and Japan through a direct sales organization and we sell our Inspire system in Singapore and Hong Kong through distributors. Our direct sales force engages in sales efforts and promotional activities primarily focused on ENT physicians and sleep centers. In addition, we highlight our compelling clinical data and value proposition to increase awareness and adoption amongst referring physicians. We build upon this top-down approach with strong direct-to-consumer marketing initiatives to create awareness of the benefits of our Inspire system and drive interest through patient empowerment. We believe this outreach helps to educate thousands of patients on our Inspire therapy.

Although our sales and marketing efforts are directed at patients and physicians because they are the primary users of our technology, we consider the hospitals and ASCs where the procedure is performed to be our customers, as they are the purchasing agents of our Inspire system. Our customers are reimbursed according to the coding and correlated payment by various third-party payors, such as commercial payors and government healthcare programs. Our Inspire system is currently covered on a per-patient basis for patients insured by commercial payors, under Local Coverage Determinations for patients insured by Medicare and Medicare Advantage, and under U.S. government contract for patients who are treated by the Veterans Health Administration. As of November 3, 2025, we have secured positive coverage policies with many U.S. commercial payors, including all large national commercial insurers, covering more than 300 million lives in the U.S. In addition, all seven Medicare Administrative Contractors provide coverage of Inspire therapy when certain coverage criteria are met.

Reimbursement in other countries can often be established through a combination of private (commercial insurance) and public funding sources, or at the hospital level through innovation budgets.

For the nine months ended September 30, 2025, 95.7% of our revenue was derived in the U.S. and 4.3% was derived outside of the U.S. No single customer accounted for more than 10% of our revenue during the nine months ended September 30, 2025.

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We rely on third-party suppliers to manufacture our Inspire system and its components. Many of these suppliers are currently single source suppliers. Currently, all of our manufacturing is done in the U.S. and most components for our Inspire system are sourced in the U.S. We have experienced supply disruptions in the past.

We typically seek to maintain higher levels of inventory to protect ourselves from supply interruptions, and, as a result, we are subject to the risk of inventory obsolescence, excess, and expiration, which could lead to inventory impairment charges. For example, during the nine months ended September 30, 2025, we recorded a charge of $2.1 million for excess component parts related to our Inspire IV system.

Our products are shipped directly to our U.S. customers and to our Singapore and Hong Kong distributors on a purchase order basis, primarily by a third-party vendor with a facility in Tennessee, although we do ship some products from our facility in Minnesota. Warehousing and shipping operations for our European customers are handled by a third-party vendor with a facility located in the Netherlands, and warehousing and shipping operations for our Japanese customers are handled by a third-party with a facility in Japan. Customers do not have the right to return a non-defective product, nor do we place product on consignment. Our sales representatives do not maintain trunk stock.

Since our inception in 2007, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our former credit facility, and equity offerings of our common stock. We have devoted significant resources to research and development activities related to our Inspire system, including clinical and regulatory initiatives to obtain marketing approval, and sales and marketing activities. For the three months ended September 30, 2025, we generated revenue of $224.5 million with a gross margin of 85.8% and had a net income of $9.9 million compared to revenue of $203.2 million with a gross margin of 84.1% and a net income of $18.5 million for the three months ended September 30, 2024. For the nine months ended September 30, 2025, we generated revenue of $642.9 million with a gross margin of 84.9% and had a net income of $9.3 million compared to revenue of $563.1 million with a gross margin of 84.5% and a net income of $18.3 million for the nine months ended September 30, 2024. Our accumulated deficit as of September 30, 2025 was $282.6 million.

We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our Inspire therapy. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of our Inspire therapy and to support regulatory submissions. We continue to make investments in research and development efforts to develop our future generations of Inspire systems and support our future regulatory submissions for expanded indications and for new markets such as additional European countries and the Asia Pacific region. For example, in August 2024, we received approval from the FDA for our next generation Inspire V system ("Inspire V,") which we fully launched in the U.S. in May 2025.

Beginning late in the first quarter and continuing into the third quarter of 2025, in connection with awareness gained during our ongoing limited market release of the Inspire V system, we observed that some patients and physicians were delaying Inspire therapy until Inspire V is available at their location. Although Inspire V was fully launched in the U.S. in May 2025, an implanting physician and center must meet training, contracting, and onboarding criteria prior to purchasing and implanting Inspire V. We expect to continue to see patients delay Inspire therapy until centers meet these criteria and Inspire V is available at their location through the end of 2025 or early 2026. Additionally, beginning late in the first quarter and continuing into the third quarter of 2025, we observed that some of our customers were using their existing inventory of our Inspire IV system ("Inspire IV") prior to purchasing Inspire V systems. We continued to observe this during the remainder of the third quarter and into the beginning of the fourth quarter of 2025. While we cannot quantify the impact at this time or predict if these patterns may change, we anticipate that the occurrence of patients and physicians delaying Inspire therapy and the destocking by some of our customers of their existing Inspire IV inventory may impact our consolidated revenue until Inspire V is fully available at our customer locations and our customers have used their existing Inspire IV inventory, which we expect to primarily occur in the remainder of 2025 and early 2026. We have continued to make Inspire IV systems available in the U.S. since the Inspire V launch and expect to continue to make Inspire IV systems available moving forward as inventory levels allow, and outside the U.S., subject to our receiving the appropriate regulatory clearances for Inspire V in foreign markets.

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Our direct-to-consumer marketing program's goals are therapy awareness, connecting patients with providers, and supporting the patient through their path to Inspire from start to finish. Our investments in advertising are designed to increase patient awareness and encourage them to visit our website. On our website, patients can explore educational materials and videos about sleep apnea, learn about the benefits of Inspire therapy, find physician and clinical site contact information, and stay informed about community awareness events. We also use the Inspire Sleep app as a valuable tool for patient education. Moving forward, we plan to refine and optimize our outreach strategies, with an emphasis on expanding digital advertising efforts to reach more qualified patients. We expect our direct-to-consumer expenditures to increase significantly over 2024 levels during the remainder of 2025.

We have a call center which we refer to as the Inspire Advisor Care Program. The primary purpose of this program is to assist patients with making a connection with a qualified healthcare provider based on their specific needs. In 2022, we initiated a digital scheduling program to facilitate and streamline patient access to care. We intend to continue to enhance and expand this scheduling capability during the remainder of 2025.

We also continue to make significant investments in our sales and marketing by increasing our direct-to-consumer marketing efforts in existing and new markets and increasing the number of U.S., European, and Japanese sales representatives and sales support personnel. As of September 30, 2025, we had 336 U.S. sales territories and 268 field clinical representatives, as compared with 335 U.S. sales territories and 230 field clinical representatives as of December 31, 2024.

Since 2023, glucagon-like peptide 1 ("GLP-1s"), a class of drug indicated for diabetes and obesity, has continued to gain popularity as a weight-loss drug. In late 2024, Zepbound (tirzepatide), which was FDA approved for weight loss in 2023, was also FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA. If GLP-1s are used to treat OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be reduced. OSA is a multifactorial disease with many independent factors including age, gender, weight, and neck circumference. Inspire is designed to address antero-posterior airway collapse, also known as tongue base collapse. In contrast, patients with a higher BMI are subject to a larger neck circumference and present predominantly with lateral-wall collapse. A combination of tongue base collapse and lateral wall collapse is identified as a complete concentric collapse of the upper airway. Inspire is contraindicated for complete concentric collapse. In 2024, Eli Lilly and Company ("Lilly") published results from its SURMOUNT-OSA trial demonstrating a 50.7% reduction in Apnea-Hypopnea Index ("AHI") for patients in the therapy arm of the study using tirzepatide, a GLP-1 injection, and that 43% of participants treated with tirzepatide at the highest dose met criteria for disease resolution. In this context, "disease resolution" means achieving an AHI of fewer than 5 events per hour, or an AHI of 5 to 14 events per hour and an Epworth Sleepiness Scale ("ESS") score of ≤10. ESS is a standard questionnaire designed to assess excessive daytime sleepiness. Given a baseline AHI of 50.3, and based on these results, we believe that most patients enrolled in the study will continue to have residual moderate to severe OSA that will require treatment and fall within Inspire’s FDA-approved indication. While weight loss may help reduce a patient’s AHI and other OSA symptoms, numerous other studies have shown that weight loss alone will not resolve OSA for the vast majority of patients. We expect GLP-1s may help patients address their lateral wall collapse, making them a potential candidate for Inspire therapy to the extent they also have tongue base collapse. Based on our ongoing ADHERE patient registry, the average BMI of patients treated with Inspire therapy is 29 and the American Academy of Sleep Medicine guidelines recommend weight loss prior to surgery for patients with BMI over 35 and nonsurgical solutions for patients with BMI over 40. In October 2025, we conducted a survey of over 200 sleep physicians to better understand their treatment paradigm for OSA since the introduction of GLP-1s. The survey findings suggest that some physicians will prescribe a GLP-1 to patients prior to considering Inspire therapy. The survey findings also suggest that, with the availability of GLP-1s to treat OSA, the number of patients seeking diagnosis and treatment for OSA is increasing. We believe that some of these patients will see a reduction in their BMI into our indication, and that some of those patients will not have their OSA fully resolved and will require further treatment. This reinforces our belief that the overall number of patients eligible for Inspire therapy will increase due to the availability of GLP-1s, although there can be no assurance of such benefit at this time.

Macroeconomic Environment

The global economy continues to experience increased inflationary pressures and market instability. Higher interest rates and capital costs, higher shipping costs and new or increased tariffs, regulatory changes, including changes to

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government funding of entitlement programs, increased costs of labor, international conflicts and terrorism, and weakening foreign currency exchange rates are creating additional economic challenges. These conditions may cause our customers to decrease or delay orders for our products.

Components of Our Results of Operations

Revenue

We derive primarily all of our revenue from the sale of our Inspire system to hospitals and ASCs in the U.S. and in select countries in Europe and the Asia Pacific region. We recognize revenues from sales of our Inspire system when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms.

Our revenue has fluctuated, and may continue to fluctuate, from quarter to quarter due to a variety of factors. For example, we have historically experienced seasonality in our first and fourth quarters. We have also previously experienced adverse impacts on our revenue due to the prior delay in obtaining EU MDR approval of our silicone-based leads and foreign currency exchange rates. In addition, we believe our revenue growth has been adversely impacted by lack of ENT surgeon capacity. If such impacts continue, our revenue growth may be further adversely impacted.

Our business has grown rapidly in recent years, resulting in substantially increased revenues, and we expect that our business will continue to grow. However, our revenue growth rate has generally decelerated in recent periods, and it may continue to do so as a result of the difficulty of maintaining growth rates as our revenues increase to higher levels.

Cost of Goods Sold and Gross Margin

Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap, and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers. The overhead costs include the cost of material procurement, depreciation expense for manufacturing equipment, amortization of internal-use software, and operations and quality supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel. We expect cost of goods sold to increase or decrease in absolute dollars primarily as, and to the extent, our revenue grows or declines, respectively.

We calculate gross margin as gross profit divided by revenue. Our gross margin has been and we expect it will continue to be affected by a variety of factors, including manufacturing costs, the average selling price of our Inspire system, the implementation of cost-reduction strategies, inventory obsolescence costs, which generally occur when new generations of our Inspire system are introduced, and to a lesser extent the sales mix between the U.S. and countries outside of the U.S., as our average selling price in the U.S. tends to be higher than in other countries. Our gross margin may increase slightly to the extent our production volumes increase and we receive discounts on the costs charged by our contract manufacturers, thereby reducing our per unit costs, and when we implement price increases on our products, thereby increasing our revenue. On the other hand, our gross margin may decrease slightly to the extent our yields decrease, or materials and labor prices increase due to supply chain issues and inflation, thereby increasing our per unit costs. However, our gross margin may also fluctuate from quarter to quarter due to seasonality and foreign currency exchange rates.

Research and Development Expenses

Research and development ("R&D") expenses consist primarily of product development, engineering, clinical studies to develop and support our products, regulatory expenses, quality assurance, testing, consulting services, prelaunch inventory, and other costs associated with the next generation versions of the Inspire system and SleepSync™, a cloud-based patient management system. These expenses include employee compensation, including stock-based compensation, supplies, materials, consulting, and travel expenses related to research and

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development programs. Additionally, these expenses include clinical study management, payments to clinical investigators, data management and travel expenses for our various clinical studies.

We expense prelaunch inventory as R&D expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable, and we also expect future economic benefit from the sales of the product candidate to be realized.

We expect R&D expenses to increase in the future as we develop next generation versions of our Inspire system and SleepSync™ and continue to expand our clinical studies to further expand positive coverage policies from private commercial payors in the U.S. and enter into new markets including additional European countries and the Asia Pacific region. We expect R&D expenses as a percentage of revenue to vary over time depending on the level and timing of initiating new product development efforts and new clinical development activities.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses consist primarily of compensation for personnel, including base salaries, stock-based compensation expense and commissions related to our sales organization, finance, information technology, human resources, and legal functions, as well as spending related to marketing, sales operations, and training and reimbursement personnel. Other SG&A expenses include training physicians, travel expenses, advertising, direct-to-consumer promotional programs, conferences, trade shows and consulting services, professional services fees, audit fees, insurance costs and general corporate expenses, including facilities-related expenses.

We expect SG&A expenses to continue to increase as we expand our commercial infrastructure to both drive and support our planned growth in revenue and as we increase our headcount and expand administrative personnel to support our growth and operations as a public company including finance, legal, and human resources personnel and information technology services. Additionally, we anticipate an increase in our stock-based compensation expense with grants of restricted stock units, performance stock units, and shares of our common stock purchased pursuant to our employee stock purchase plan.

Other Income, Net

Other income, net consists primarily of interest and dividend income, minimal interest expense, the impacts of foreign currency transactions and remeasurements, gains and losses on investments, and an impairment charge related to a strategic investment.

Seasonality

Historically, we have experienced seasonality in our first and fourth fiscal quarters, and we expect this trend to continue. In the U.S., we have experienced, and may in the future experience, higher sales in the fourth quarter as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs. Conversely, in the first quarter, many U.S. patients' insurance deductibles reset, requiring more out-of-pocket costs, which negatively impacts our sales during this period. We have also begun to experience some seasonality during summer months in the U.S. and Europe, which we believe is attributable to the postponement of elective surgeries due to summer vacation plans of physicians and patients.

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Results of Operations

						Three Months Ended																								Nine Months Ended
						September 30,																								September 30,
						2025						2024						$ Change						% Change						2025						2024						$ Change						% Change
						(in thousands, except percentages)
Revenue						$	224,501					$	203,191					$	21,310					10.5		%				$	642,904					$	563,086					$	79,818					14.2		%
Cost of goods sold						31,773						32,398						(625)						(1.9)		%				97,154						86,998						10,156						11.7		%
Gross profit						192,728						170,793						21,935						12.8		%				545,750						476,088						69,662						14.6		%
Gross margin						85.8%						84.1%																		84.9%						84.5%
Operating expenses:
Research and development						24,211						26,083						(1,872)						(7.2)		%				78,223						83,792						(5,569)						(6.6)		%
Selling, general and administrative						158,873						130,392						28,481						21.8		%				462,684						388,097						74,587						19.2		%
Total operating expenses						183,084						156,475						26,609						17.0		%				540,907						471,889						69,018						14.6		%
Operating income						9,644						14,318						(4,674)						(32.6)		%				4,843						4,199						644						15.3		%
Other income, net						(3,907)						(6,008)						2,101						(35.0)		%				(10,535)						(17,618)						7,083						(40.2)		%
Income before income taxes						13,551						20,326						(6,775)						(33.3)		%				15,378						21,817						(6,439)						(29.5)		%
Income taxes						3,619						1,829						1,790						97.9		%				6,046						3,532						2,514						71.2		%
Net income						$	9,932					$	18,497					$	(8,565)					(46.3)		%				$	9,332					$	18,285					$	(8,953)					(49.0)		%

Comparison of the Three Months Ended September 30, 2025 and 2024

Revenue

Revenue increased $21.3 million, or 10.5%, to $224.5 million for the three months ended September 30, 2025 compared to $203.2 million for the three months ended September 30, 2024. These results reflect an increase in sales of our Inspire system of $18.6 million in the U.S. and an increase of $2.7 million outside of the U.S. compared to the same prior year period. Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Revenue information by region is summarized as follows:

						Three Months Ended September 30,
						2025												2024												Change
						Amount						% of Revenue						Amount						% of Revenue						$						%
						(in thousands, except percentages)
United States						$	214,394					95.5		%				$	195,828					96.4		%				$	18,566					9.5		%
All other countries						10,107						4.5		%				7,363						3.6		%				2,744						37.3		%
Total revenue						$	224,501					100.0		%				$	203,191					100.0		%				$	21,310					10.5		%

Revenue generated in the U.S. was $214.4 million for the three months ended September 30, 2025, an increase of $18.6 million, or 9.5%, compared to the three months ended September 30, 2024. Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our

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Inspire system, partially offset by ENT surgeon capacity constraints and some patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Revenue generated outside of the U.S. was $10.1 million in the three months ended September 30, 2025, an increase of $2.7 million, or 37.3%, compared to the three months ended September 30, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.

Cost of Goods Sold and Gross Margin

Cost of goods sold decreased $0.6 million, or 1.9%, to $31.8 million for the three months ended September 30, 2025 compared to $32.4 million for the three months ended September 30, 2024.

Gross margin was 85.8% for the three months ended September 30, 2025 compared to 84.1% for the three months ended September 30, 2024. Gross margin for the three months ended September 30, 2025 was higher primarily due to increased sales volume as well as increased sales mix of the Inspire V system, which is less expensive to manufacture and therefore has a higher gross margin than the Inspire IV system.

Research and Development Expenses

Research and development expenses decreased $1.9 million, or 7.2%, to $24.2 million for the three months ended September 30, 2025 compared to $26.1 million for the three months ended September 30, 2024. This change was primarily due to a decrease of $5.3 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our physician programmer, and our SleepSync™ platform, and a decrease of $0.1 million in regulatory submissions and clinical studies expenses, partially offset by an increase of $3.5 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense.

Selling, General and Administrative Expenses

SG&A expenses increased $28.5 million, or 21.8%, to $158.9 million for the three months ended September 30, 2025 compared to $130.4 million for the three months ended September 30, 2024. The primary drivers of this change were an increase of $16.7 million in marketing costs, mainly for advertising, and $9.7 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount. In addition, general corporate costs increased $1.7 million primarily due to legal fees, computer equipment and software expense, and depreciation expense. Travel expenses also increased $0.4 million.

Other Income, Net

Other income, net decreased by $2.1 million, or 35.0%, to $3.9 million for the three months ended September 30, 2025 compared to $6.0 million for the three months ended September 30, 2024. The change was primarily due to a decrease of $1.9 million in interest and dividend income due to lower cash, cash equivalents, and investment balances. Also contributing to the decrease were foreign currency translation and remeasurement gains, which decreased by $0.2 million.

Income Taxes

We recorded a provision for income taxes of approximately $3.6 million and $1.8 million for the three months ended September 30, 2025 and September 30, 2024, respectively. This $1.8 million increase was primarily due to an increase in federal taxes.

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Comparison of the Nine Months Ended September 30, 2025 and 2024

Revenue

Revenue increased $79.8 million, or 14.2%, to $642.9 million for the nine months ended September 30, 2025 compared to $563.1 million for the nine months ended September 30, 2024. The increase was attributable to a $75.7 million increase in sales of our Inspire system in the U.S and an increase of $4.1 million outside of the U.S. Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Revenue information by region is summarized as follows:

						Nine Months Ended September 30,
						2025												2024												Change
						Amount						% of Revenue						Amount						% of Revenue						$						%
						(in thousands, except percentages)
United States						$	615,150					95.7		%				$	539,407					95.8		%				$	75,743					14.0		%
All other countries						27,754						4.3		%				23,679						4.2		%				4,075						17.2		%
						$	642,904					100.0		%				$	563,086					100.0		%				$	79,818					14.2		%

Revenue generated in the U.S. was $615.2 million for the nine months ended September 30, 2025, an increase of $75.7 million, or 14.0%, compared to the nine months ended September 30, 2024. Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Revenue generated outside of the U.S. was $27.8 million for the nine months ended September 30, 2025, an increase of $4.1 million, or 17.2%, compared to the nine months ended September 30, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.

Cost of Goods Sold and Gross Margin

Cost of goods sold increased $10.2 million, or 11.7%, to $97.2 million for the nine months ended September 30, 2025 compared to $87.0 million for the nine months ended September 30, 2024. The increase was primarily due to product costs associated with the higher sales volume of our Inspire system experienced during the first nine months of 2025, and to a lesser extent, the $2.1 million charge associated with excess components related to Inspire IV.

Gross margin decreased to 84.9% for the nine months ended September 30, 2025 from 84.5% for the nine months ended September 30, 2024. Gross margin for the nine months ended September 30, 2025 was higher primarily due to increased sales volume as well as increased sales mix of the Inspire V system, which is less expensive to manufacture and therefore has a higher gross margin than the Inspire IV system, partially offset by the excess inventory component charges discussed above.

Research and Development Expenses

Research and development expenses decreased $5.6 million, or 6.6%, to $78.2 million for the nine months ended September 30, 2025 compared to $83.8 million for the nine months ended September 30, 2024. This change was primarily due to a decrease of $16.6 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our physician programmer, and our SleepSync™ platform, partially offset by an increase of $10.5 million in compensation and employee-related expenses, mainly as

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a result of increased headcount and stock-based compensation expense, and an increase of $0.5 million in regulatory submissions and clinical studies expenses and quality compliance fees.

Selling, General and Administrative Expenses

SG&A expenses increased $74.6 million, or 19.2%, to $462.7 million for the nine months ended September 30, 2025 compared to $388.1 million for the nine months ended September 30, 2024. The primary driver of this change was an increase of $45.2 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount. In addition, marketing costs increased $18.4 million, mainly for advertising, and general corporate costs increased $7.0 million, primarily due to legal fees, depreciation expense, computer equipment and software expense, and consulting fees. Also contributing to the increase were travel expenses, which increased by $4.0 million.

Other Income, Net

Other income, net decreased by $7.1 million, to $10.5 million for the nine months ended September 30, 2025 compared to $17.6 million for the nine months ended September 30, 2024. The change was primarily due to a decrease of $4.2 million in interest and dividend income due to lower cash, cash equivalents and investment balances and an impairment charge of $4.0 million on one of our strategic investments which occurred in the quarter ended June 30, 2025, partially offset by an increase of $1.1 million in foreign currency translation and remeasurement gains.

Income Taxes

We recorded a provision for income taxes of $6.0 million and $3.5 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. This $2.5 million increase was primarily due to an increase in federal taxes.

Liquidity and Capital Resources

We believe our balance sheet and liquidity as of November 3, 2025 provides us with flexibility, and that our cash, cash equivalents, and investments will satisfy our operating needs and capital expenditures for at least the next 12 months.

Our liquidity and capital structure are evaluated regularly within the context of our annual operating and strategic planning processes. We consider the liquidity necessary to fund our operations, which includes working capital needs, investments in research and development, property, plant, and equipment, and other operating costs. Our sources of capital include sales of our Inspire system and registered offerings of our common stock.

As of September 30, 2025, we had cash, cash equivalents, and available-for-sale debt securities of $410.9 million, a decrease of $105.6 million from $516.5 million as of December 31, 2024. Working capital totaled $475.6 million as of September 30, 2025, a decrease of $66.7 million from December 31, 2024. We define working capital as current assets less current liabilities. The decrease in working capital was primarily due to the following factors:

•a $85.6 million decrease in short-term available-for-sale investments and a $37.3 million decrease in cash and cash equivalents primarily due to the share repurchases made during the first and third quarters under our share repurchase programs, as well as inventory purchases and the payment of taxes on net share settlements of equity awards, partially offset by proceeds from sales of the Inspire system, proceeds from the exercise of stock options, interest and dividend income, and the increase in long-term available for sale investments;

•a $20.6 million increase in accounts payable due primarily to the timing of vendor invoices; and

•a $1.8 million increase in accrued expenses.

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The decrease in working capital was partially offset by the following factors:

•a $61.7 million increase in inventory balances, as we increased inventory levels to support higher sales and the launch of Inspire V;

•a $14.9 million increase in accounts receivable, primarily due to higher sales which occurred during September 2025; and

•a $2.1 million increase in prepaid expense and other current assets.

The primary objective of our investment activities is to preserve our capital for the purpose of funding operations while at the same time maximizing the income we receive from our investments without significantly increasing risk or decreasing availability. To achieve these objectives, our investment policy allows us to maintain a portfolio of certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. At September 30, 2025, we had $178.1 million in U.S. government securities, $63.0 million in money market funds, $98.1 million in corporate debt securities, and $21.9 million in commercial paper. See Note 2 to our unaudited consolidated financial statements in this Quarterly Report for additional information on our investments.

In the nine months ended September 30, 2025, our SG&A expenditures increased significantly over the prior year levels, and we anticipate further increases during 2025. Our SG&A expenditures, primarily for increasing headcount and advertising, may exceed any associated increases in revenues, and therefore would reduce our cash flow from operations. We also anticipate R&D expenses will increase during the remainder of 2025, primarily related to the ongoing development of the SleepSync™ platform and next generation products.

We spent $27.8 million on purchases of property and equipment in the nine months ended September 30, 2025, mainly on manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software. We anticipate further capital expenditures in 2025, primarily for additional manufacturing equipment and our SleepSync™ platform, computer hardware and software, and leasehold improvements on our corporate office buildings.

As of September 30, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

We believe that our existing cash and cash equivalents and investments, which totaled $410.9 million as of September 30, 2025, together with cash flows from operations, will provide liquidity sufficient to meet our cash needs and fund our operations and planned capital expenditures for at least the next 12 months. There can be no assurance, however, that our business will continue to generate cash flows at the same levels achieved in prior periods.

Beyond the next 12 months, our cash requirements will depend extensively on the extent of market acceptance of our Inspire system. Our long-term cash requirements also will be significantly impacted by the level of our investment in commercialization, entry and expansion into new markets, whether we make strategic acquisitions, whether we repurchase more shares of our common stock, and competition. We cannot accurately predict our long-term cash requirements at this time. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity, and financial condition. We may seek additional sources of liquidity and capital resources through equity or debt financings, such as additional securities offerings or through borrowings under a new credit facility. There can be no assurance that such transactions will be available to us on favorable terms, if at all.

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Cash Flows

The following table presents a summary of our cash flow for the periods indicated:

						Nine Months Ended
						September 30,
						2025						2024
						(in thousands)
Net cash provided by (used in):
Operating activities						$	64,507					$	61,065
Investing activities						33,364						(116,883)
Financing activities						(135,141)						17,745
Effect of exchange rate on cash						(35)						48
Net decrease in cash and cash equivalents						$	(37,305)					$	(38,025)

Operating Activities

The net cash provided by operating activities was $64.5 million for the nine months ended September 30, 2025 and consisted of a net income of $9.3 million, non-cash charges of $115.7 million, and an increase in net operating assets of $60.5 million. The non-cash charges consisted primarily of stock-based compensation, which increased mainly as a result of the accelerated recognition of stock-based compensation expense for employees who are retirement eligible in accordance with 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, and granting more equity awards to a greater number of employees as compared to the same prior-year period. The remainder of the non-cash charges included depreciation and amortization expense which increased with additional purchases of property and equipment, an impairment of a strategic investment, accretion of investment discount on our available-for-sale investments, a change in the provision for estimated credit losses, and other, net. Operating assets include inventories, which increased as we continue to build inventory levels to support higher sales and the launch of Inspire V, and accounts receivable, which increased primarily due to higher sales which occurred during September 2025. Operating assets also include prepaid expenses and other current assets which increased slightly. Operating liabilities include accounts payable, which increased generally due to the timing of vendor invoice payments, and accrued expenses, which increased slightly.

The net cash provided by operating activities was $61.1 million for the nine months ended September 30, 2024 and consisted of net income of $18.3 million, non-cash charges of $83.6 million, and an increase in net operating assets of $40.8 million. The non-cash charges consisted primarily of stock-based compensation, which increased mainly as a result of granting more equity awards to a greater number of employees as compared to the same prior-year period. The remainder of the non-cash charges included accretion of investment discount due to higher investment balances, depreciation and amortization expense which increased with additional purchases of property and equipment, the benefit for estimated credit losses related primarily to accounts receivable with three healthcare systems, and other non-cash expenses. Operating assets include inventories, which increased as supply chain constraints eased and we increased inventory on hand to support higher sales, and accounts receivable, which decreased due to collections on the higher sales volume we typically experience late in the fourth quarter. Operating assets also include prepaid expenses and other current assets, which increased primarily due to a prepayment to a supplier for inventory components and accrued interest income. Operating liabilities include accounts payable, which decreased generally due to reduced direct-to-consumer marketing and research and development spend in the third quarter of 2024, and accrued expenses.

Investing Activities

Net cash provided by investing activities for the nine months ended September 30, 2025 was $33.4 million and consisted primarily of proceeds from sales or maturities of investments of $248.7 million, partially offset by the purchase of investments of $177.4 million and the purchases of property and equipment of $27.8 million, mainly on

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manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software, as well as $10.1 million for the purchase of strategic investments.

Net cash used in investing activities for the nine months ended September 30, 2024 was $116.9 million and consisted primarily of the purchase of investments of $337.5 million and the purchases of property and equipment of $32.1 million, mainly for testing systems and production equipment for our next generation Inspire system, our SleepSync™ platform, computer hardware and software, and leasehold improvements, partially offset by the proceeds from sales or maturities of investments of $252.8 million.

Financing Activities

Net cash used in financing activities was $135.1 million for the nine months ended September 30, 2025 and consisted primarily of share repurchases of $125.0 million under our share repurchase authorizations and the payment of $22.4 million of taxes paid on net share settlement of equity awards, partially offset by $9.0 million in proceeds from the exercise of stock options and $3.3 million in proceeds from the sale of common stock from our Employee Stock Purchase Plan ("ESPP").

Net cash provided by financing activities was $17.7 million for the nine months ended September 30, 2024 and consisted of $23.4 million in proceeds from the exercise of stock options and $3.4 million in proceeds from the issuance of common stock from our ESPP, partially offset by $9.0 million of taxes paid on net share settlement of equity awards.

Contractual Obligations and Commitments

There have been no material changes to our short-term and long-term anticipated cash requirements under contractual obligations from those described in our Annual Report.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" contained in our Annual Report. There have been no material changes to those critical accounting policies and estimates.

Recent Accounting Pronouncements

A discussion of recent accounting pronouncements is included in Note 2 to our unaudited consolidated financial statements contained in this Quarterly Report.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

The risk associated with fluctuating interest rates is primarily limited to our cash equivalents which are carried at quoted market prices and our short-term investments. We do not currently use or plan to use financial derivatives in our investment portfolio. A hypothetical 1% change in interest rates would have impacted interest and dividend income on our consolidated financial statements by approximately $2.9 million and $3.2 million during the nine months ended September 30, 2025 and 2024, respectively.

Credit Risk, Foreign Currency Risk, and Inflation Risk

For market risks related to changes in credit, foreign currency, and inflation, refer to Item 7A “Quantitative and Qualitative Disclosures About Market Risk” contained in Part II of our Annual Report. Our exposure to these risks has not materially changed from those disclosed in our Annual Report, other than as described below.

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As of September 30, 2025 and December 31, 2024, our cash, cash equivalents, and investments were maintained with financial institutions which we believe have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us, however our cash balances were in excess of insured limits. Market conditions can impact the viability of institutions where our cash is held. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.

Item 4.    Controls and Procedures.

Evaluation of disclosure controls and procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and other procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of the end of the period covered by this Quarterly Report.

Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.    Legal Proceedings.

From time to time, we may be involved in claims and proceedings arising in the ordinary course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain.

The information contained in “Note 11 — Commitments and Contingencies” in the Notes to the Consolidated Financial Statements is incorporated by reference into this Part II, Item 1 of this Quarterly Report.

Item 1A.    Risk Factors.

For a discussion of our potential risks and uncertainties, see the information in "Part I, Item 1A. Risk Factors” in our Annual Report. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, other than the following:

Our financial results may fluctuate significantly and may not fully reflect the underlying performance of our business.

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Our quarterly and annual results of operations have in the past and may in the future vary significantly and future period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance. Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control and, as a result, may not fully reflect the underlying performance of our business. Such factors may include, for example, seasonal variations in our sales or required postponements of elective surgical procedures effected during a health crisis, as was the case with COVID-19. We generally experience and may in the future experience higher sales in the U.S. during the fourth quarter as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs. Alternatively, in the first quarter, many U.S. patients' insurance deductibles reset, requiring more out-of-pocket costs, which negatively impacts our sales during this period.

Other factors that may cause fluctuations in our quarterly and annual results include, but are not limited to:

•changes in coverage policies by third-party payors that affect the reimbursement of procedures using our products;

•challenges experienced by patients in obtaining positive coverage and reimbursement decisions from payers, including necessary prior authorization approvals in advance of treatment;

•timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors;

•patients opting to delay implants of our devices in advance of the commercial launch of new products or product generations;

•unanticipated pricing pressure;

•the hiring, retention, and continued productivity of our sales representatives;

•our ability to expand the geographic reach of our sales and marketing efforts;

•our ability to obtain regulatory clearance, approval, or certification for any products in development or for our current products for additional indications or in additional countries outside the U.S.;

•results of clinical research and studies on our existing products and products in development;

•delays in receipt of anticipated purchase orders; and

•positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry.

Beginning late in the first quarter and continuing into the third quarter of 2025, in connection with awareness gained during our ongoing limited market release of the Inspire V system, we observed that some patients and physicians were delaying Inspire therapy until Inspire V is available at their location. Although Inspire V was fully launched in the U.S. in May 2025, an implanting physician and center must meet training, contracting, and onboarding criteria prior to purchasing and implanting Inspire V. We expect to continue to see patients delay Inspire therapy until centers meet these criteria and Inspire V is available at their location through the end of 2025 or early 2026. Additionally, beginning late in the first quarter and continuing into the third quarter of 2025, we observed that some of our customers were using their existing inventory of our Inspire IV system ("Inspire IV") prior to purchasing Inspire V systems. We continued to observe this during the remainder of the third quarter and into the beginning of the fourth quarter of 2025. While we cannot quantify the impact at this time or predict if these patterns may change, we anticipate that the occurrence of patients and physicians delaying Inspire therapy and the destocking by some of our customers of their existing Inspire IV inventory may impact our consolidated revenue until Inspire V is fully available at our customer locations and our customers have used their existing Inspire IV inventory, which we expect to primarily occur in the remainder of 2025 and early 2026.

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Because our quarterly and annual results may fluctuate, period-to-period comparisons may not be the best indication of the underlying results of our business and should only be relied upon as one factor in determining how our business is performing. These fluctuations may also increase the likelihood that we will not meet our forecasted performance, which could negatively affect the market price for our common stock.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Share Repurchases

The following table presents information with respect to the repurchase of our common stock during the three months ended September 30, 2025:

Period						Total Number of Shares Purchased(1)						Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Program(1)						Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Program (in thousands)
July 1, 2025 - July 31, 2025						—						$	—					—						$	—
August 1, 2025 - August 31, 2025						552,423						$	90.49					552,423						$	150,000
September 1, 2025 - September 30, 2025						—						$	—					—						$	150,000
Total						552,423												552,423

(1) On August 11, 2025, we announced that our Board of Directors authorized the repurchase of up to $200.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means. We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. The share repurchase program is set to expire on August 7, 2027, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.    Mine Safety Disclosures.

Not applicable.

Item 5.    Other Information.

(a) None.

(b) None.

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(c) Adoption or Termination of Trading Arrangements by Directors and Executive Officers

Name

Title

Action

Rule 10b5-1 Adoption/ Termination Date

Aggregate Number of Shares of Common Stock to be Sold

Expiration Date

Shawn T McCormick

Director

Adopt

August 29, 2025

6,200

(1)

August 17, 2026

(1) This number includes shares of our common stock issuable pursuant to unvested restricted stock units (“RSU”) that are scheduled to vest during the term of the 10b5-1 plan, subject to time-based vesting conditions set forth in the applicable RSU award agreement.

There were no other "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements," as each term is defined in Item 408(a) of Regulation S-K, adopted, modified or terminated by the Company’s directors or "officers" (as defined in Rule 16a-1(f) of the Exchange Act) during the three months ended September 30, 2025.

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Item 6.    Exhibits.

Exhibit Number

Description

Form

File No.

Exhibit

Filing Date

Filed/ Furnished Herewith

3.1

Seventh Amended and Restated Certificate of Incorporation of Inspire Medical Systems, Inc.

8-K

001-38468

3.1

5/7/2018

3.2

Amended and Restated Bylaws of Inspire Medical Systems, Inc.

8-K

001-38468

3.2

5/7/2018

10.1

Transition and Separation Agreement by and between Inspire Medical Systems, Inc. and Richard J. Buchholz, dated August 26, 2025.

8-K

001-38468

10.1

8/26/2025

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

**

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

**

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

*

101.SCH

Inline XBRL Taxonomy Extension Schema Document

*

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

*

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

*

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

*

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

*

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*

_______________________________________________________________________________

*    Filed herewith.

**    Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						Inspire Medical Systems, Inc.
Date:			November 3, 2025			By:			/s/ TIMOTHY P. HERBERT
									Timothy P. Herbert
									President, Chief Executive Officer, and Chairperson
									(principal executive officer)
Date:			November 3, 2025			By:			/s/ RICHARD J. BUCHHOLZ
									Richard J. Buchholz
									Chief Financial Officer
									(principal financial officer and principal accounting officer)

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FAQ

How did Inspire Medical Systems (INSP) perform in Q3 2025?

Revenue was $224.5 million (up from $203.2 million). Operating income was $9.6 million and net income was $9.9 million.

What was INSP’s Q3 2025 EPS?

Diluted EPS was $0.34 in Q3 2025, compared with $0.60 in Q3 2024.

What is INSP’s cash and investment position?

As of September 30, 2025, cash and cash equivalents were $112.8 million, and short-term investments were $209.7 million.

Did INSP repurchase shares in 2025?

Yes. It completed an ASR totaling 409,043 shares at an average $190.29, repurchased 442,649 shares for $75.0 million, and bought 552,423 shares for $50.0 million under a new program.

How much remains on INSP’s 2025 share repurchase authorization?

As of September 30, 2025, $150.0 million remained available under the $200.0 million program.

What happened to inventories during 2025?

Inventories increased to $141.8 million from $80.1 million at December 31, 2024.

What were INSP’s nine-month 2025 results?

Revenue was $642.9 million and net income was $9.3 million for the nine months ended September 30, 2025.