INSP's 28.1% Past-Month Rally Raises a Key Question for Investors

Inspire Medical Systems, Inc. INSP shares have gained 28.1% in the past month, shifting attention to whether improving earnings expectations can support additional upside.

The rally follows a quarterly earnings beat, higher 2026 guidance and favorable estimate revisions. Reimbursement disruption, however, continues to limit procedure volumes and near-term revenue growth.

Inspire’s Earnings Beat Reset Expectations

Second-quarter adjusted earnings per share of 14 cents surpassed the Zacks Consensus Estimate for a loss of 22 cents. Revenues of $200.6 million also exceeded expectations despite declining 7.6% year over year.

Disciplined spending helped offset the sales decline. Adjusted operating income reached $3.2 million, while operating cash flow improved to $23.2 million, showing that Inspire protected profitability and cash generation during a difficult operating period.

Inspire Medical Systems, Inc. Price and Consensus

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

INSP’s Guidance Supports the Improved Sentiment

Management raised its 2026 revenue outlook to $835-$875 million and increased adjusted earnings guidance to $1.05-$1.45 per share. The company also expects an adjusted operating margin of 4%-6%.

The Zacks Consensus Estimate for 2026 earnings increased 34.7% over the past four weeks. That revision helps explain the improved sentiment, although the current consensus estimate of 93 cents remains below management’s adjusted guidance range.

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Inspire V Is Strengthening Gross Margin

A higher sales mix of Inspire V systems lifted second-quarter gross margin 150 basis points to 85.5%. The improvement came even as quarterly revenues declined, underscoring the next-generation platform’s favorable product economics.

Inspire V represented the large majority of implants during the quarter. Continued adoption could support margins as reimbursement conditions stabilize and procedure activity recovers.

INSP Still Faces Reimbursement Friction

Coding challenges and the WISeR prior authorization program reduced second-quarter revenues by approximately $40 million. Management expects a $120-$130 million full-year impact and forecasts an 8%-10% revenue decline in the third quarter.

The pressure also shapes the competitive backdrop. ResMed Inc. RMD remains a major provider of continuous positive airway pressure systems for obstructive sleep apnea, while Eli Lilly and Company LLY markets Zepbound for adults with moderate-to-severe obstructive sleep apnea and obesity. These alternatives can influence treatment sequencing and patient conversion.

Inspire’s Valuation Tests the Rally

INSP trades at about 2.1X forward 12-month sales, below its five-year median of 7.1X and the medical information systems industry’s 5.1X multiple. The discount leaves room for recovery if operating trends improve.

Further gains likely require clearer evidence that U.S. procedure volumes and revenues are normalizing. A low multiple alone may not offset uncertainty around coding, prior authorization delays and the pace of reimbursement improvement.

INSP’s Mixed Scores Temper the Rally

The rally has improved the setup, but the risk-reward picture remains balanced. Earnings revisions, guidance and Inspire V margins support the recovery case, while reimbursement friction argues against assuming that the rebound is complete.

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In the year-to-date period, shares of Inspire Medical dropped 34% compared with the industry’s 5.9% decline. It currently carries a Zacks Rank #3 (Hold). Its Growth Score of B and VGM Score of B point to favorable growth characteristics, but its Value Score of C and Momentum Score of C are less supportive. The combination favors a measured stance after the sharp past-month advance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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