Inspire Medical Systems, Inc.

Q2 revenue decreased 7.6% to $200.6 million. Diluted EPS was $0.01 and adjusted diluted EPS was $0.14; adjusted EBITDA margin was 19.4%, down 90 basis points. Management said Q2 was adversely impacted by coding and reimbursement challenges and WISeR by approximately $40 million. For the full year 2026, revenue is now expected to be $835 million to $875 million, adjusted operating margin 4% to 6%, diluted EPS of a loss of $0.42 to earnings of $0.17, and adjusted diluted EPS of $1.05 to $1.45. The company also expects the total 2026 impact from coding/reimbursement and WISeR to be $120 million to $130 million. For Q3, management guided to an 8% to 10% year-over-year revenue decline and approximately breakeven adjusted operating income. Project Horizon is expected to generate $30 million of annualized growth investment capacity, with $20 million to $25 million of pretax restructuring charges, about 90% in Q3. Cash and investments were $415 million, with no debt, and operating cash flow was $23.2 million in Q2 and $36.1 million year to date.

Tim Herbert emphasized that the company is working through what he called a temporary market disruption tied to coding and reimbursement, while seeing improving trends in prior authorization submissions and growing customer comfort with the new billing environment. He said the company is responding with more education and support for high-volume centers, while also pushing longer-term initiatives such as a revised Category 1 CPT code application and broader clinical evidence generation. His tone was constructive and confident, with repeated focus on patient outcomes, long-term growth, and the opportunity to reinvest through Project Horizon.

Matt Osberg highlighted that lower sales were offset by cost discipline and gross profit improvement from a higher mix of Inspire V. He said operating cash flow was $23.2 million in Q2 and $36.1 million year to date, with $415 million in cash and investments and no debt. He also outlined Project Horizon’s expected $20 million to $25 million of pretax restructuring charges, roughly $16 million to $20 million of which are expected to be noncash impairment charges, and said the company expects the actions to be substantially complete by year-end. For the rest of 2026, he guided to $835 million to $875 million of revenue, 4% to 6% adjusted operating margin, and capital expenditures of $35 million to $40 million.

Analysts pressed on the severity of the two MAC regions requiring a -52 modifier, the size of the backlog from paused procedures, and whether WISeR could be removed or expanded. Management said reductions are being minimized when surgeons provide the right documentation, that the company is training the highest-volume centers first and expects most of them to be educated in the third quarter, and that prior authorization submissions are improving. On Project Horizon, analysts asked how the $30 million of capacity would be redeployed and whether it would affect 2026 or 2027; management said most investments will target patient flow and will be more visible in 2027. Questions also focused on GLP-1s, competition, international growth, and replacement procedures; management said GLP-1s do not change long-term demand, competitive impact is not significant today, international had a very good Q2, and replacement procedures remain a relatively small but supported part of the business.