Inspire Medical Guides To Only Low Single-Digit 2027 Growth After Billing Changes Hit 2026
The sleep apnea implant maker estimates coding problems cost about $120 million this year, and its CEO says much of the disruption is behind it.
Inspire Medical Systems, which makes an implanted device for obstructive sleep apnea, expects only low single-digit revenue growth in 2027, Chief Financial Officer Matt Osberg said on the company's Monday third-quarter earnings call. He estimated that coding and reimbursement problems reduced 2026 results by about $120 million.
A $120 million estimate
Osberg said the company is "currently estimating" the full-year hit at approximately $120 million, about $30 million of it in the third quarter. He called the figures high-level assumptions with inherent uncertainty.
Third-quarter revenue was $206.7 million, down 7.9% from a year earlier and up 3% from the second quarter. The company narrowed its 2026 revenue outlook to $850 million to $860 million and expects another significant sequential increase in the fourth quarter.
The quarter showed an operating loss of $28.7 million, against operating income of $9.6 million a year earlier. That included $24.1 million of restructuring charges tied to Project Horizon and $7 million of legal settlement expense. Adjusted operating income was $1.9 million, compared with $10.9 million, and adjusted earnings were 14 cents a share; the diluted loss was 84 cents.
International revenue fell, which Osberg attributed mainly to inventory destocking in Germany. He guided fourth-quarter international revenue to roughly flat with a year earlier.
Why Herbert sees a turn
Chairman and CEO Tim Herbert said "much of the disruption is behind us" and that the company is moving "with conviction to drive a return to growth." He pointed to a stable temporary billing framework and a Category 1 CPT code, a dedicated billing code, that takes effect January 1, 2028 for single-lead nerve stimulation, which covers the Inspire 5 device.
For 2027, Osberg cited market growth, steadier coding, investments funded by Project Horizon and "a more significant contribution from battery replacement revenue." Herbert called the replacement split the first time the company had called it out, and said it is "a small part of the overall program."
Herbert said the final 2027 hospital outpatient payment rule is expected later this week. The proposed rule showed a significant increase, but he said the company will confirm only once the final rule is out, and has built in just a small coding increase.
Pressed on how modest the guide is
An Evercore ISI analyst asked whether low single digits was a prudent early view. Herbert said that after a single-digit decline this year it is "the right guide for us to lean into."
A JPMorgan analyst computed implied U.S. market growth of about 7% after adding back the $120 million. Herbert pointed to Project Horizon money redirected toward growth, cardiology outreach, added field staff in about 40 large markets and more patient marketing, and said management expects "to continue to push that growth rate higher." Osberg said the 40 are net additions to support existing territories, not new ones.
Project Horizon created about $30 million of annualized investment capacity, Herbert said. The company ended the quarter with $453.1 million in cash and investments and no debt.
The final 2027 hospital outpatient payment rule, which Herbert expects later this week, will show whether the coding increase he has only lightly built in arrives.
Sources
- Inspire Medical Systems (NYSE:INSP) beats Q3 2026 sales expectations — Yahoo Finance
- Inspire Medical Systems Non-GAAP EPS of $0.14 beats by $0.05, revenue of $206.7M beats by $2.39M (INSP:NYSE) | Seeking Alpha — seekingalpha.com
- schedule 13g - SEC.gov — sec.gov
- Inspire Medical Systems, Inc. Announces Third Quarter 2026 — globenewswire.com
