INSP Raises 2026 Outlook as Reimbursement Headwinds Start to Ease

Inspire Medical Systems, Inc. INSP raised its 2026 outlook after second-quarter results exceeded expectations. Better cost control, a richer mix of Inspire V implants and stronger cash generation helped offset a continued decline in U.S. procedure activity.

The update points to improving execution in the second half, but the company is not yet forecasting a return to revenue growth. Coding changes, prior-authorization delays and reimbursement uncertainty remain the main constraints.

Inspire Medical Systems, Inc. Price and Consensus

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

INSP’s Q2 Beat Changed the 2026 Setup

Adjusted earnings per share of 14 cents topped the Zacks Consensus Estimate for a loss of 22 cents, producing a 163.6% positive surprise. Revenues of $200.6 million beat the consensus mark by about 3%.

Revenues still declined 7.6% year over year, showing that the earnings beat came largely from operating discipline rather than a broad demand rebound. Adjusted operating margin was 1.6%, while quarterly operating cash flow improved to $23.2 million.

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Inspire Raised Revenue and EPS Guidance

Inspire lifted its 2026 revenue range to $835-$875 million from $825-$875 million. The company also raised adjusted earnings guidance to $1.05-$1.45 per share from $0.75-$1.25.

The adjusted operating margin outlook is now 4%-6%. Project Horizon is expected to create about $30 million of annualized capacity for growth investments by aligning resources, streamlining the organization and consolidating production.

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INSP’s U.S. Weakness Still Shapes the Outlook

U.S. revenues fell 9.6% to $187.3 million as coding changes, prior-authorization delays and reimbursement uncertainty reduced procedure activity. International revenues increased 33.6% to $13.3 million, but the overseas business remained too small to offset the domestic decline.

Competition is also broadening. LivaNova PLC LIVN received U.S. approval in 2026 for its aura6000 hypoglossal nerve stimulation system, while Nyxoah SA NYXH is developing the Genio platform for obstructive sleep apnea. These alternatives reinforce the importance of reimbursement clarity and reliable patient conversion for Inspire.

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Inspire V Supports Margins and Recovery

Gross margin expanded 150 basis points to 85.5%, primarily because Inspire V represented the large majority of implants and carries a higher gross margin than Inspire IV. The product mix helped cushion the effect of lower sales on profitability.

Inspire V also simplifies the implant procedure by integrating the respiratory sensor into the neurostimulator. New facility C-codes are in place, hospital and ambulatory surgery center reimbursement rates remain unchanged and the codes have been incorporated into the WISeR system across six pilot states.

INSP’s Recovery Depends on Reimbursement Progress

Management expects the adverse effects from coding changes and the WISeR prior-authorization program to ease sequentially in the third and fourth quarters as customers gain experience with billing requirements. Prior-authorization support within the SleepSync platform is one part of that effort.

The recovery is likely to remain gradual. Inspire expects third-quarter revenues to decline 8%-10% year over year, while coding disruption and WISeR are projected to reduce full-year revenues by $120-$130 million.

INSP’s Scores Favor Caution After the Beat

The raised outlook improves the near-term setup, but reimbursement execution remains the key test. Margin gains and better spending control provide support, while the projected third-quarter decline shows that procedure normalization is still incomplete.

INSP currently carries a Zacks Rank #3 (Hold). Its Growth Score of B and VGM Score of B point to favorable growth characteristics, but the Value Score of C and Momentum Score of C are more neutral. The combination supports a measured stance until U.S. procedure trends show steadier improvement. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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