Inspire Medical Systems, Inc. Announces Fourth Quarter and Full Year 2023 Financial Results and Reaffirms 2024 Outlook
- 40% year-over-year revenue growth in the fourth quarter of 2023
- Gross margin of 85.4%
- Net income of $14.8 million in the fourth quarter of 2023
- Reaffirmed full year 2024 revenue guidance of $775 million to $785 million
- 53% increase in revenue for full year 2023 compared to full year 2022
- 53% improvement in net loss compared to full year 2022
- Cash, cash equivalents, and investments increased to $469.5 million as of December 31, 2023
- None.
Insights
The reported 40% year-over-year revenue growth and a 53% increase in annual revenue for Inspire Medical Systems is indicative of robust demand for their minimally invasive solutions for obstructive sleep apnea. The data suggests that the company is successfully scaling operations, as evidenced by the activation of new U.S. centers and sales territories. The gross margin improvement to 85.4% for the quarter, up from 83.9% the prior year, points to increased operational efficiency, likely due to higher manufacturing yields and volume-driven cost leverage.
Investors should note the significant rise in operating expenses, which is a common trend for growth-stage healthcare companies investing in expansion. However, the reported operating income and a shift towards profitability, especially with the anticipation of profitability in the second half of 2024, provides a positive outlook for cash flow generation and a potentially stronger balance sheet in the future.
With the company maintaining its 2024 revenue guidance, it reflects management's confidence in the continued adoption of Inspire therapy. Nevertheless, the market penetration rate and the competitive landscape will be crucial for sustaining this growth trajectory. Investors should monitor the company's ability to maintain high gross margins in the face of potential pricing pressures or increased competition.
The growth reported by Inspire Medical Systems reflects a broader trend in the healthcare sector towards minimally invasive treatments for chronic conditions. As the prevalence of obstructive sleep apnea rises globally, the demand for effective treatments like Inspire's therapy is likely to continue growing. The company's reported milestone of treating over 60,000 patients signifies the clinical acceptance of their technology and the potential for further market capture.
From a research and development perspective, the increase in operating expenses can be partially attributed to continued product development efforts. This is critical for maintaining a competitive edge in the market through innovation. The expansion of coverage policies with commercial payers for expanded indications can also be seen as a positive development, potentially increasing patient access and adoption.
It is important to consider the long-term impact of research investments on the company's product pipeline and its ability to address unmet medical needs in the sleep apnea market. The ability to sustain high gross margins will be contingent upon the company's ongoing investment in R&D and its capacity to innovate ahead of competitors.
The strategic expansion into 78 new U.S. centers and the creation of 13 new sales territories in the fourth quarter are indicative of Inspire Medical Systems' aggressive market penetration strategy. The company's focus on direct-to-patient marketing programs is likely to have contributed to the reported revenue growth by increasing brand awareness and patient engagement.
However, it is essential to analyze the market saturation levels, especially in the U.S. where the majority of revenue is generated. The success of the company's expansion strategy will depend on the continued identification of untapped markets and the effectiveness of their sales and marketing initiatives. Furthermore, the decrease in international revenue by 16% suggests challenges in global markets that may need to be addressed for sustained international growth.
Understanding the competitive dynamics within the sleep apnea treatment market and the potential impact of new entrants or alternative therapies is crucial. The market's response to Inspire's guidance for 2024 will also be telling of investor sentiment regarding the company's growth prospects and operational execution.
Inspire Reports First Quarter with Operating Income and Year-over-Year
Revenue Growth of
MINNEAPOLIS, Feb. 06, 2024 (GLOBE NEWSWIRE) -- Inspire Medical Systems, Inc. (NYSE: INSP) (Inspire), a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea, today reported financial results for the quarter and year ended December 31, 2023.
Recent Business Highlights and Full Year 2024 Guidance
- Generated revenue of
$192.5 million in the fourth quarter of 2023, a40% increase over the same quarter last year, and revenue of$624.8 million in full year 2023, a53% increase over full year 2022 - Achieved gross margin of
85.4% in the fourth quarter of 2023 - Reported net income of
$14.8 million and diluted net income per share of$0.49 in the fourth quarter of 2023 - Activated 78 new U.S. centers in the fourth quarter of 2023, bringing the total to 1,180 U.S. medical centers providing Inspire therapy
- Created 13 new U.S. sales territories in the fourth quarter of 2023, bringing the total to 287 U.S. sales territories
- Reaffirms full year 2024 revenue to be in the range of
$775 million to$785 million , which would represent year-over-year growth of approximately24% to26%
"We are thrilled with our strong performance in the fourth quarter, growing revenue
Fourth Quarter 2023 Financial Results
Revenue was
Gross margin was
Operating expenses increased to
Net income was
Full Year 2023 Financial Results
Revenue was
Gross margin was
Operating expenses were
Net loss was
As of December 31, 2023, cash, cash equivalents, and investments increased to
Full Year 2024 Guidance
Inspire is maintaining its full year 2024 revenue guidance of between
Gross margin for the full year is anticipated to be in the range of
In addition, during each quarter of 2024, the Company expects to activate 52 to 56 new U.S. medical centers implanting Inspire therapy and add 12 to 14 new U.S. sales territories.
Webcast and Conference Call
Inspire’s management will host a conference call after market close today, Tuesday, February 6, 2024, at 5:00 p.m. Eastern Time to discuss these results and answer questions.
To access the conference call, please preregister on https://register.vevent.com/register/BI4da0fb8e7625480f8890c3e09699bec4. Registrants will receive confirmation with dial-in details.
A live webcast of the event can be accessed on https://edge.media-server.com/mmc/p/9hhddszn/. A replay of the webcast will be available on https://investors.inspiresleep.com starting approximately two hours after the event and archived on the site for two weeks.
About Inspire Medical Systems
Inspire is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe obstructive sleep apnea.
For additional information about Inspire, please visit www.inspiresleep.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements, including, without limitation, statements regarding full year 2024 financial outlook, our expectations to activate new U.S. medical centers and add new territories per quarter in 2024 and the impact of such additions, our expectations regarding operating leverage and profitability during 2024, and our strategy and investments to grow and scale our business. In some cases, you can identify forward-looking statements by terms such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘anticipate,’’ ‘‘could,’’ “future,” “outlook,” “guidance,” ‘‘intend,’’ ‘‘target,’’ ‘‘project,’’ ‘‘contemplate,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘potential,’’ ‘‘continue,’’ or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.
These forward-looking statements are based on management’s current expectations and involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, estimates regarding the annual total addressable market for our Inspire therapy in the U.S. and our market opportunity outside the U.S.; future results of operations, financial position, research and development costs, capital requirements and our needs for additional financing; commercial success and market acceptance of our Inspire therapy; the impact of macroeconomic trends; general and international economic, political, and other risks, including currency, inflation, stock market fluctuations and the uncertain economic environment; our ability to achieve and maintain adequate levels of coverage or reimbursement for our Inspire system or any future products we may seek to commercialize; competitive companies and technologies in our industry; our ability to enhance our Inspire system, expand our indications and develop and commercialize additional products; our business model and strategic plans for our products, technologies and business, including our implementation thereof; our ability to accurately forecast customer demand for our Inspire system and manage our inventory; our dependence on third-party suppliers, contract manufacturers and shipping carriers; consolidation in the healthcare industry; our ability to expand, manage and maintain our direct sales and marketing organization, and to market and sell our Inspire system in markets outside of the U.S.; risks associated with international operations; our ability to manage our growth; our ability to increase the number of active medical centers implanting Inspire therapy; our ability to hire and retain our senior management and other highly qualified personnel; risk of product liability claims; risks related to information technology and cybersecurity; risk of damage to or interruptions at our facilities; our ability to commercialize or obtain regulatory approvals for our Inspire therapy and system, or the effect of delays in commercializing or obtaining regulatory approvals; FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry generally, including healthcare reform measures in the U.S. and international markets; and the timing or likelihood of regulatory filings and approvals. Other important factors that could cause actual results, performance or achievements to differ materially from those contemplated in this press release can be found under the captions “Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations“ in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as updated in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 to be filed with the SEC, and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors page of our website at www.inspiresleep.com. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by applicable law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this press release.
Investor & Media Contact
Ezgi Yagci
Vice President, Investor Relations
ezgiyagci@inspiresleep.com
617-549-2443
Inspire Medical Systems, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)
(in thousands, except share and per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | 192,508 | $ | 137,900 | $ | 624,799 | $ | 407,856 | ||||||||
| Cost of goods sold | 28,054 | 22,152 | 96,576 | 66,115 | ||||||||||||
| Gross profit | 164,454 | 115,748 | 528,223 | 341,741 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 31,052 | 21,248 | 116,536 | 68,645 | ||||||||||||
| Selling, general and administrative | 124,105 | 94,835 | 451,958 | 320,688 | ||||||||||||
| Total operating expenses | 155,157 | 116,083 | 568,494 | 389,333 | ||||||||||||
| Operating loss | 9,297 | (335 | ) | (40,271 | ) | (47,592 | ) | |||||||||
| Other (income) expense: | ||||||||||||||||
| Interest and dividend income | (5,870 | ) | (3,369 | ) | (20,560 | ) | (5,050 | ) | ||||||||
| Interest expense | — | — | — | 1,677 | ||||||||||||
| Other (income) expense, net | (73 | ) | (241 | ) | 195 | 49 | ||||||||||
| Total other income | (5,943 | ) | (3,610 | ) | (20,365 | ) | (3,324 | ) | ||||||||
| Income (loss) before income taxes | 15,240 | 3,275 | (19,906 | ) | (44,268 | ) | ||||||||||
| Income taxes | 477 | 125 | 1,247 | 613 | ||||||||||||
| Net income (loss) | 14,763 | 3,150 | (21,153 | ) | (44,881 | ) | ||||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation gain | 144 | 195 | 140 | 89 | ||||||||||||
| Unrealized gain (loss) on investments | 612 | 82 | 746 | (120 | ) | |||||||||||
| Total comprehensive income (loss) | $ | 15,519 | $ | 3,427 | $ | (20,267 | ) | $ | (44,912 | ) | ||||||
| Basic income (loss) per share | $ | 0.50 | $ | 0.11 | $ | (0.72 | ) | $ | (1.60 | ) | ||||||
| Diluted income (loss) per share | $ | 0.49 | $ | 0.10 | $ | (0.72 | ) | $ | (1.60 | ) | ||||||
| Basic weighted average shares outstanding | 29,517,375 | 28,931,271 | 29,302,154 | 28,071,748 | ||||||||||||
| Diluted weighted average shares outstanding | 30,236,821 | 30,209,503 | 29,302,154 | 28,071,748 | ||||||||||||
Inspire Medical Systems, Inc.
Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share amounts)
| December 31, | |||||||
| 2023 | 2022 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 185,537 | $ | 441,592 | |||
| Investments, short-term | 274,838 | 9,821 | |||||
| Accounts receivable, net of allowance for credit losses of | 89,884 | 61,228 | |||||
| Inventories, net | 33,885 | 11,886 | |||||
| Prepaid expenses and other current assets | 9,595 | 5,505 | |||||
| Total current assets | 593,739 | 530,032 | |||||
| Investments, long-term | 9,143 | — | |||||
| Property and equipment, net | 39,984 | 17,249 | |||||
| Operating lease right-of-use assets | 22,667 | 6,880 | |||||
| Other non-current assets | 11,278 | 10,715 | |||||
| Total assets | $ | 676,811 | $ | 564,876 | |||
| Liabilities and stockholders' equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 38,839 | $ | 26,847 | |||
| Accrued expenses | 39,266 | 34,339 | |||||
| Total current liabilities | 78,105 | 61,186 | |||||
| Operating lease liabilities, non-current portion | 24,846 | 7,536 | |||||
| Other non-current liabilities | 1,346 | 146 | |||||
| Total liabilities | 104,297 | 68,868 | |||||
| Stockholders' equity | |||||||
| Preferred Stock, | — | — | |||||
| Common Stock, | 30 | 29 | |||||
| Additional paid-in capital | 917,107 | 820,335 | |||||
| Accumulated other comprehensive income (loss) | 800 | (86 | ) | ||||
| Accumulated deficit | (345,423 | ) | (324,270 | ) | |||
| Total stockholders' equity | 572,514 | 496,008 | |||||
| Total liabilities and stockholders' equity | $ | 676,811 | $ | 564,876 | |||
FAQ
What was Inspire Medical Systems, Inc.'s year-over-year revenue growth in the fourth quarter of 2023?
What was Inspire Medical Systems, Inc.'s gross margin in the fourth quarter of 2023?
What is Inspire Medical Systems, Inc.'s full year 2024 revenue guidance?
What was Inspire Medical Systems, Inc.'s revenue for full year 2023?
How much did Inspire Medical Systems, Inc.'s net loss improve by in full year 2023 compared to full year 2022?
How much were Inspire Medical Systems, Inc.'s cash, cash equivalents, and investments as of December 31, 2023?
