The sleep apnea specialist’s fourth-quarter results surpassed expectations.
Inspire Medical Systems (INSP -0.64%), known for its innovative devices that use neurostimulation to treat sleep apnea, announced impressive fourth-quarter results on Feb. 10. Earnings per share (EPS) came in at $1.15, well ahead of the $0.73 consensus estimate. Revenue climbed to $239.7 million, exceeding the forecast of $236 million.
| Metric | Q4 2024 | Q4 2024 Analysts’ Estimate | Q4 2023 | % Change |
|---|---|---|---|---|
| EPS (diluted) | $1.15 | $0.73 | $0.49 | 134.7% |
| Revenue | $239.7 million | $236 million | $192.5 million | 24.5% |
| Gross margin | 85.0% | N/A | 85.4% | (40 basis points) |
| Operating income | $31.9 million | N/A | $9.3 million | 243% |
Source: Analysts’ estimates for the quarter provided by FactSet.
Company Overview and Strategic Focus
Inspire Medical Systems is a leader in neurostimulation technology for obstructive sleep apnea; its devices are the only ones of their type with FDA approval. The company is now focused on expanding its geographical reach and product offerings. Its strong clinical data and high patient satisfaction have been key factors to its success, as they are crucial for securing insurance reimbursements and driving adoption rates.
Recently, the company has been opening new U.S. centers and sales territories. Its international expansion efforts are also playing a critical role, with foreign revenue increasing by 163% year over year in Q4.
Quarterly Highlights
In the fourth quarter, Inspire achieved a remarkable 242% increase in operating income, reaching $31.9 million. This growth stemmed from strategic investments in infrastructure and personnel, leading to greater sales efficiency. Revenue grew by 24.5% in Q4, and total 2024 revenue was $802.8 million, up by 28% from 2023. U.S. market sales saw a 22% jump in Q4, while international sales surged by 163%.
However, Inspire’s gross margin contracted by 0.4 percentage points to 85.0%, primarily due to increased spending on operational expenses aimed at boosting sales capacity. Operating expenses climbed by 11% to $171.8 million.
During the quarter, the company was preparing to launch its Inspire V device, a more advanced offering it hopes will help it grow its market share. The company also initiated a $75 million accelerated share repurchase program.
Looking Ahead
Management reiterated its full-year guidance for revenue between $940 million and $955 million — an anticipated growth rate of 17% to 19%. Diluted EPS for 2025 is projected to rise to a range of $2.10 to $2.20. Management also expects gross margins for 2025 to remain stable at 84% to 86%.
Inspire Medical Systems’ optimism is buoyed by a strong balance sheet and successful market strategies. Leadership expects continued revenue growth to be supported by the upcoming full launch of the Inspire V system and geographical expansions.
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