10-Q · August 3, 2026
Inspire's Q2 revenue declined 7.6% year over year to $200.6 million as U.S. coding, reimbursement, and Medicare authorization friction outweighed 33.6% international growth. However, gross margin increased 150 basis…
Earnings analysis · 10-Q
INSP earnings analysis
Filed November 2, 2026 · Our reading of the company's report
The latest report
Inspire delivered $206.7 million of third-quarter revenue, a 7.9% year-over-year decline but approximately $2.4 million above consensus, while gross margin improved to 86.0%. Profitability weakened materially: the…
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Inspire delivered $206.7 million of third-quarter revenue, a 7.9% year-over-year decline but approximately $2.4 million above consensus, while gross margin improved to 86.0%. Profitability weakened materially: the company reported a $28.7 million operating loss and $(0.84) diluted EPS, driven largely by $22.8 million of restructuring charges and a $7.0 million legal settlement. Cash generation improved, with nine-month operating cash flow of $82.5 million versus $64.5 million, but reimbursement uncertainty, WISeR delays, and GLP-1 adoption remain significant revenue headwinds. The 10-Q reports no material changes to previously disclosed risk factors and provides no explicit numeric revenue or EPS guidance.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-0.84
What stood out
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Revenue beat consensus despite reimbursement pressure
Third-quarter revenue was $206.7 million, down $17.8 million, or 7.9%, from $224.5 million in the prior-year quarter. Revenue was approximately $5.7 million above the $204.3 million consensus estimate.
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Gross margin continued to improve
Gross margin expanded to 86.0% from 85.8% in the prior-year quarter and 85.5% in the immediately preceding quarter, driven primarily by a higher mix of the higher-margin Inspire V system.
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Operating cash flow strengthened
Nine-month operating cash flow increased to $82.5 million from $64.5 million in the prior-year period, with management attributing the improvement primarily to working capital, particularly receivables and inventories.
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International growth partly offset U.S. decline
International revenue grew 13.4% to $31.5 million for the first nine months of 2026, partially offsetting a 5.7% decline in U.S. revenue to $580.4 million.
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Restructuring targets reinvestment capacity
Project Horizon is expected to create approximately $30 million of annualized growth investment capacity after approximately $25 million of pre-tax restructuring charges, with most actions completed in the third quarter and substantially complete by year-end 2026.
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Clinical support capacity expanded
The company had 306 U.S. field clinical representatives and 279 U.S. sales territories as of September 30, 2026, versus 275 representatives and 295 territories as of December 31, 2025.
What to watch
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Reimbursement uncertainty remains material
Coding and reimbursement challenges reduced U.S. revenue by $16.9 million, or 7.9%, in the quarter, and management anticipates adverse revenue effects will continue during the remainder of 2026. WISeR-related delays also adversely affected revenue during the first nine months of 2026.
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Restructuring and legal costs drove loss
Operating expenses increased $23.5 million, or 12.8%, to $206.6 million in the quarter. SG&A included $22.8 million of restructuring charges and a $7.0 million legal settlement expense, contributing to a $28.7 million operating loss versus $9.6 million of operating income in the prior-year quarter.
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GAAP earnings deteriorated sharply
Net loss was $24.4 million, or $(0.84) diluted EPS, compared with $9.9 million of net income, or $0.34 diluted EPS, in the prior-year quarter. Nine-month net loss was $35.4 million versus $9.3 million of net income in the prior-year period.
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GLP-1 therapies may delay Inspire adoption
Management stated that the increasing prevalence and adoption of GLP-1s is adversely impacting revenue in the short term; Zepbound was FDA-approved for OSA in 2024, and a survey covered over 200 sleep physicians.
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Restructuring and liquidity execution risk
Management expects approximately $25 million of pre-tax Project Horizon restructuring charges, while the company cautions that cash flows may not continue at prior-period levels and that additional equity or debt financing could be needed if business needs arise.
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No formal risk-factor changes
The filing states that, as of September 30, 2026, there were no material changes to the risk factors disclosed in the 2025 Form 10-K and June 30, 2026 Form 10-Q.
Management's outlook
The 10-Q does not provide explicit numeric revenue or EPS guidance. Management expects approximately $25 million of total pre-tax Project Horizon restructuring charges, approximately $30 million of annualized growth investment capacity, and substantial completion of the actions by the end of 2026. Management also expects reimbursement-related revenue pressure to continue during the remainder of 2026 and expects final 2027 Medicare reimbursement rates to be announced in November 2026.
Earlier filings 2
10-Q · May 4, 2026
In the latest quarterly report for Q1 2026, Inspire Medical Systems (INSP) reported a revenue of $204.6 million, a slight increase of 1.6% from $201.3 million in the prior year. Despite this, the net loss widened…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.