# Inspire Medical Systems Inc. (INSP) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/INSP/thesis · /stocks/INSP/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: INSP
step: "04"
title: Financial Snapshot — 3-Year P&L Summary
created: 2026-05-29
---

### Step 04 — Financial Snapshot (3-Year P&L)

#### Income Statement Summary

| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|--------|---------|---------|---------|---------|
| **Revenue** | $407.9M | $624.8M | $802.8M | $912.0M |
| YoY Growth | ~+92% | +53% | +28% | +14% |
| **Gross Profit** | $341.7M | $528.2M | $679.8M | $778.8M |
| **Gross Margin** | 83.8% | 84.5% | 84.7% | **85.4%** |
| **R&D Expense** | $68.6M | $116.5M | $114.1M | $103.2M |
| R&D % Revenue | 16.8% | 18.6% | 14.2% | 11.3% |
| **SG&A Expense** | $320.7M | $452.0M | $529.6M | $624.6M |
| SG&A % Revenue | 78.6% | 72.3% | 66.0% | 68.5% |
| **Operating Income** | -$47.6M | -$40.3M | $36.1M | $51.0M |
| **Operating Margin** | -11.7% | -6.5% | +4.5% | **+5.6%** |
| **Net Income** | -$44.9M | -$21.2M | $53.5M | $145.4M |
| **Net Margin** | -11.0% | -3.4% | +6.7% | **+15.9%** |
| **EPS (Diluted)** | -$1.60 | -$0.72 | $1.75 | $4.89 |
| **SBC** | $52.0M | $82.5M | $116.0M | $130.3M |
| SBC % Revenue | 12.7% | 13.2% | 14.5% | 14.3% |

**Source:** SEC EDGAR XBRL, CIK 0001609550

---

#### Key Financial Observations

##### Revenue Growth: Exceptional But Decelerating
Revenue has compounded from $28.6M in 2017 to $912M in 2025 — a 10-year CAGR of ~50%+ which is extraordinary for a medtech company. However, the trajectory is clearly decelerating: ~92% growth in 2022 → ~53% in 2023 → ~28% in 2024 → ~14% in 2025 → guidance of -4% to -9% in 2026. This deceleration reflects both law-of-large-numbers effects and specific 2025–2026 headwinds (reimbursement disruption, GLP-1 competition).

##### Gross Margins: Exceptional and Improving
Gross margins of 83.8%–85.4% are exceptional even by medtech standards. The improvement trend reflects:
- Operating leverage on manufacturing (despite outsourced assembly)
- Scale benefits on material costs
- Premium ASPs maintained with Inspire V launch
- Minimal COGS inflation impact given product complexity

These margins are structurally high because the implant is a complex engineered device sold at high ASP with minimal recurring COGS (no reagents, no disposables, minimal service cost).

##### Path to Operating Profitability: Achieved
Inspire turned operating cash flow positive in FY 2024 ($36.1M operating income) after years of losses. This was driven by revenue scaling past the break-even point on the fixed salesforce cost base. FY 2025 operating income improved to $51.0M (5.6% margin).

**Important caveat:** GAAP net income of $145.4M in FY 2025 vs. $51M operating income indicates ~$94M in non-operating income (primarily interest income on the large cash balance + tax benefits). This is not a sustainable GAAP earnings uplift.

##### SG&A: The Dominant Cost and the Moat
SG&A at ~66–79% of revenue is extreme by any standard. This primarily reflects the embedded sales rep model — Inspire employs ~1,000+ therapy consultants and account managers who attend procedures. This is not waste; it is the mechanism of adoption. New centers and new surgeons require intensive hand-holding.

The SG&A ratio has been declining from 78.6% (2022) → 66.0% (2024), demonstrating operating leverage as revenue scales over the fixed sales organization cost base. The 2025 uptick to 68.5% likely reflects salesforce investments that preceded the 2026 guidance reduction.

##### R&D: Tapering as Core Product Matures
R&D fell from 18.6% of revenue (2023 peak) to 11.3% (2025). This reflects: (1) completion of Inspire V development cycle, (2) ADHERE registry maturation, and (3) operating efficiency focus. Ongoing R&D investment includes next-generation IPG development and potential label expansions.

##### SBC: The Elephant in the Room
At 14.3% of revenue ($130.3M in FY 2025), SBC is very high relative to peers. This means:
- GAAP EPS of $4.89 in FY 2025 is after $130M SBC expense
- Cash-adjusted earnings (FCF per share) are a better profitability measure
- Adjusted EPS (non-GAAP) management guides to $0.75–$1.25 for FY 2026

---

#### Adjusted / Non-GAAP Profitability

Management reports non-GAAP adjusted income/EPS, excluding SBC and certain other items. Approximate adjusted metrics:

| Metric | FY 2024 | FY 2025 | FY 2026E |
|--------|---------|---------|----------|
| Adjusted Operating Income | ~$152M | ~$181M | ~$120–140M |
| Adjusted Operating Margin | ~19% | ~20% | ~14–17% |
| Adjusted EPS | ~$4.00 | ~$5.50 | $0.75–$1.25 |

*Note: The wide range on FY 2026 adj. EPS guidance ($0.75–$1.25) reflects significant reimbursement uncertainty. The implied adj. op. income contraction vs. 2025 reflects both revenue decline and continued SG&A investment to preserve salesforce capacity.*

---

#### COGS & Manufacturing

| Year | COGS | Gross Margin | COGS Per Revenue Dollar |
|------|------|-------------|------------------------|
| 2023 | $96.6M | 84.5% | $0.155 |
| 2024 | $123.0M | 84.7% | $0.153 |
| 2025 | $133.2M | 85.4% | $0.146 |

COGS efficiency improved modestly year over year. The Inspire system is manufactured by contract manufacturers with proprietary designs; Inspire does not own manufacturing assets. This asset-light model reduces capital intensity but creates some supply chain risk.

---

#### P&L Bridge: 2023 → 2025

```
                            FY 2023         FY 2025
Revenue                    $624.8M         $912.0M   (+$287M)
Gross Profit               $528.2M         $778.8M   (+$250M)
Operating Expenses         $568.5M         $727.8M   (+$159M)
  SG&A                     $452.0M         $624.6M   (+$173M)
  R&D                      $116.5M         $103.2M   (-$13M)
Operating Income           -$40.3M          $51.0M   (+$91M)
```

The operating leverage is visible: revenue grew $287M, gross profit grew $250M, and OpEx grew only $159M — yielding a $91M improvement in operating income. This is the core investment thesis: as revenue scales, operating leverage is significant given 85% gross margins.

---

#### Conclusion

Inspire is a high-gross-margin, scaling MedTech company that achieved operating profitability in FY 2024 after years of investment-phase losses. The path from FY 2023 (-$40M operating income) to FY 2025 ($51M) was achieved organically through revenue scaling, not cost cutting. The FY 2026 guidance reduction introduces near-term earnings pressure, but the underlying business model — high gross margins, durable clinical demand, underpenetrated market — remains intact.

The central financial risk is whether FY 2026 represents a temporary reimbursement-driven trough or the beginning of a structural deceleration. The answer determines whether INSP is deeply undervalued at ~1.4x EV/Revenue or fairly valued on long-run earnings expectations.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/INSP/fundamental

## Navigation

- Overview: /stocks/INSP
- Financials (this page): /stocks/INSP/financials
- Thesis: /stocks/INSP/thesis
- Investment Memo: /stocks/INSP/memo
- Coverage universe: /stocks