Inspire Medical Q2 Earnings Beat Estimates, '26 View Raised, Stock Up

Inspire Medical Systems, Inc. INSP reported second-quarter 2026 adjusted earnings per share (EPS) of 14 cents, down 58.8% year over year. The figure beat the Zacks Consensus Estimate of a loss of 22 cents by 163.6%.

GAAP EPS in the quarter was 1 cent compared to GAAP loss per share of 12 cents in the year-ago quarter.

INSP’s Q2 Revenues in Detail

Inspire Medical registered revenues of $200.6 million in the second quarter, down 7.6% year over year. The figure beat the Zacks Consensus Estimate by 2.9%.

Shares of INSP were up 10.3% during after-market trading following the second-quarter results. The stock has declined 43.4% in the year-to-date period compared with the industry’s 8.3% fall. However, the S&P 500 Index has gained 11.4% in the same period.

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The decline in sales was primarily caused by a decrease in U.S. revenues due to coding and reimbursement challenges. This was partly offset by an increase in international revenues.

As of June 30, 2026, INSP operated 280 U.S. sales territories and employed 301 field clinical representatives compared with 295 territories and 275 representatives at the end of 2025.

INSP’s Q2 Revenue Mix Reflects U.S. Pressure

In the quarter under review, U.S. revenues totaled $187.3 million, down 9.6% year over year. Management attributed the weakness primarily to the evolving coding and reimbursement environment, which slowed prior-authorization activity and procedure volumes.

International revenues totaled $13.3 million, up 33.6% year over year. The overseas gain partly offset the domestic decline, but the United States remained the dominant contributor to quarterly sales.

INSP’s Margin Analysis

In the second quarter, Inspire Medical’s gross profit decreased 6% year over year to $171.5 million. The gross margin expanded 150 basis points (bps) to 85.5%, primarily driven by a higher sales mix of the Inspire V system.

Selling, general and administrative expenses decreased 7.7% year over year to $147.3 million. Research and development expenses declined 5.8% to $24.7 million. Operating expenses of $171.9 million decreased 7.4% year over year.

Adjusted operating profit decreased 66.8% year over year to $3.2 million. The adjusted operating margin contracted 280 bps to 1.6%.

Inspire Medical’s Financial Position

Inspire Medical exited the second quarter of 2026 with cash and cash equivalents and short-term investments of $320.7 million compared with $399.7 million at the end of first-quarter 2026.

Cumulative net cash provided by operating activities at the end of second-quarter 2026 was $36.1 million, compared with the cumulative net cash used in operating activities of $4 million a year ago.

Inspire Medical Raises 2026 Outlook

Inspire Medical has updated its revenue and EPS outlook for 2026.

The company raised its revenue guidance to $835 million-$875 million from the previously projected $825 million-$875 million. The Zacks Consensus Estimate is pegged at $844.2 million.

INSP now expects adjusted EPS for 2026 in the range of $1.05-$1.45, up from the prior guidance of $0.75-$1.25. The company projects an adjusted operating margin of 4-6%. The Zacks Consensus Estimate is pegged at 93 cents.

Inspire Medical Systems, Inc. Price, Consensus and EPS Surprise

Inspire Medical Systems, Inc. price-consensus-eps-surprise-chart | Inspire Medical Systems, Inc. Quote

Wrapping Up

Inspire Medical exited the second quarter of 2026 with better-than-expected results. Although revenues declined year over year, disciplined spending, an improved product mix and gross margin expansion supported profitability.

The higher sales mix of Inspire V remained a key positive, helping gross margin expand despite lower revenues. However, coding and reimbursement disruption continued to weigh on U.S. procedure volumes. Management stated that these challenges, including the WISeR program, reduced second-quarter revenues by approximately $40 million.

The previously announced C-codes are now in place and have been incorporated into WISeR across the six applicable states. Management expects the adverse impact from reimbursement-related issues to ease sequentially during the third and fourth quarters.

The launch of Project Horizon is a notable development in this quarter. The initiative is expected to create approximately $30 million of annualized investment capacity through organizational streamlining and supply-chain optimization. Inspire Medical plans to redeploy these funds toward patient access, education and engagement programs aimed at supporting revenue growth.

Looking ahead, the company remains focused on restoring procedure momentum and accelerating growth beyond 2026. Inspire Medical also submitted a revised application for a new Category I CPT code, which is scheduled for review in September. If approved, the code could take effect on Jan. 1, 2028. These efforts should help improve procedure momentum and support a return to stronger growth beyond 2026.

INSP’s Zacks Rank & Key Picks

Inspire Medical currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are West Pharmaceutical WST, McKesson MCK and Cardinal Health CAH, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

West Pharmaceutical reported second-quarter 2026 adjusted earnings per share (EPS) of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

West Pharmaceutical has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.4%.

McKesson reported a fourth-quarter fiscal 2026 adjusted EPS of $11.69, which beat the Zacks Consensus Estimate by 1.1%. Revenues of $96.3 billion missed the Zacks Consensus Estimate by 5.5%.

McKesson has an estimated long-term earnings growth rate of 13.7%. MCK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.1%.

Cardinal Health reported a third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.

Cardinal Health has an estimated long-term earnings growth rate of 17%. CAH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 10.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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