Inspire Medical Systems (NYSE:INSP) management focused much of its fourth-quarter and full-year 2025 earnings call on reimbursement and coding uncertainty tied to the company’s Inspire 5 system, while also highlighting continued revenue growth, improved margins, and operational progress in the U.S. launch. The call, held February 11, 2026, included updates on coding guidance, physician reimbursement risk, the WISeR prior authorization program, and the company’s 2026 outlook.
Coding clarification for Inspire 5 drives a wider 2026 revenue range
CEO Tim Herbert said the company’s “key challenge” since late 2025 has been the coding used for the Inspire 5 procedure. Management reported receiving clarification “in the last week” that the code is expected to transition to CPT 64582 with a -52 modifier for Inspire 5. Herbert said the company estimates the professional fee reduction associated with the -52 modifier could range from approximately 10% to 50%, with variability by Medicare Administrative Contractor (MAC) and uncertainty until sufficient claims data are processed.
Near-term and long-term reimbursement plan
Management outlined a dual-track approach to address reimbursement:
- Short term (2026–2027): Work with MACs, commercial payers, and physician societies to minimize the actual professional fee reduction and drive consistency nationally. Herbert argued there is “strong justification” for a smaller reduction given the higher surgical skill and complexity associated with implanting the stimulation lead versus the sensing lead.
- Long term: Pursue a new Category I CPT code. Herbert said the timeline would likely place a new code into effect around January 1, 2028 following review by the AMA CPT panel and then a Relative Value Scale Update Committee (RUC) process.
Herbert also noted that in 2025, CPT 64568 was used for approximately 10,000 Inspire 5 procedures, which he said provides a basis for professional reimbursement history. He added that while the company is nearing the completion of manufacturing for Inspire 4 systems, it believes it has sufficient Inspire 4 inventory for centers that may elect to continue using that system for the foreseeable future.
On questions about interim coding alternatives, Herbert said the company does not intend to use miscellaneous codes, temporary codes, or Category III codes, citing concerns that those pathways would introduce variability and reduce clarity—particularly for facility reimbursement.
Inspire 5 clinical and launch updates, plus pipeline milestones
Herbert said the company is “excited and energized” by Inspire 5 performance and pointed to data presented from a Singapore study and the U.S. limited market release. He highlighted reduced surgical time and improved “inspiratory overlap,” which he described as essential for closed-loop therapy. Herbert also cited a 79.5% responder rate in the Singapore study using SHER criteria, compared with a 66% responder rate in the STAR Phase III pivotal trial in 2012.
On reliability, Herbert said 2025 data to date showed a 0.5% occurrence of device explants and a 1.5% occurrence of revisions.
Operationally, Herbert said the U.S. Inspire 5 launch progressed significantly in the fourth quarter:
- Physician training completed
- Contracting over 95% complete for centers
- SleepSync onboarding over 90% complete
- More than 90% of centers implanting Inspire 5
He said the company expects stable Inspire 5 inventory through 2026 and anticipates transitioning the existing Inspire 4 IPG line to Inspire 5 later in 2026.
In R&D, Herbert said Inspire began testing a prior authorization feature in SleepSync intended to simplify uploading patient data for submissions. He also said the company received FDA approval for 3 Tesla MRI compatibility. Looking ahead, Herbert said a primary 2026 development program will be Inspire 6, which would include sleep detection and auto activation to turn therapy on when a patient falls asleep and off when they awaken.
Fourth-quarter and full-year 2025 results and cash position
New CFO Matt Osberg said fourth-quarter revenue increased 12% to $269 million, and full-year revenue grew 14% to $912 million, driven primarily by growth at existing centers and new center additions. Osberg said operating margin improved in the quarter and full year due to sales leverage and a higher mix of Inspire 5 systems.
Osberg also highlighted that income tax results were a “significant benefit,” primarily due to a previously disclosed release of the company’s income tax valuation allowance on net deferred tax assets in the fourth quarter of 2025.
Other metrics discussed included:
- Fourth-quarter net income per diluted share: $4.66 (up $3.51)
- Full-year net income per diluted share: $4.89 (up $3.09)
- Fourth-quarter adjusted net income per diluted share: $1.65
- Full-year adjusted net income per diluted share: $2.42
- Fourth-quarter operating cash flow: $52 million; full-year: $117 million
- Share repurchases: $50 million in Q4; $175 million for the full year
- Cash and investments ending balance: $405 million
During Q&A, the company provided geographic detail: Q4 U.S. revenue was $256.9 million and OUS revenue was $12.1 million; full-year U.S. revenue was $872.1 million and OUS revenue was $39.9 million.
2026 outlook reflects coding uncertainty and WISeR disruption
Osberg said Inspire revised 2026 revenue guidance to $950 million to $1.0 billion, representing 4% to 10% growth. He said the range reflects first-quarter impacts from coding uncertainty and the potential outcomes from a 10% to 50% physician fee discount tied to the -52 modifier. The company expects first-quarter 2026 revenue to be approximately flat year over year and expects a net loss in the first quarter, with sequential improvement and the highest revenue and profit in the fourth quarter.
For 2026, Osberg guided to:
- Adjusted operating margin of 6% to 8%
- Net income per diluted share of $1.23 to $1.81
- Adjusted net income per diluted share of $1.85 to $2.35
- Effective tax rate of 44% to 49% and adjusted effective tax rate of 26% to 28%
- Weighted average diluted shares of approximately 29.4 million
- Capital expenditures of $45 million to $50 million
Management also discussed the WISeR program, a prior authorization requirement for Medicare cases in six pilot states that began in mid-January 2026. Herbert said cases have been submitted and approved, but denials have occurred due to issues including “medical criteria inconsistencies in the AI software as well as coding.” He said WISeR affected Medicare procedures in those states in the first quarter, though he emphasized the “primary reason” for the revenue outlook revision was the coding change and physician reimbursement uncertainty.
On commercial payers, Herbert said they currently allow CPT 64568 under their policies and that prior authorization reduces near-term disruption, but he expects commercial payers and Medicare Advantage plans to transition to 64582 with the -52 modifier over time.
Separately, Herbert said the company remains focused on cost discipline and flexibility in spending. On marketing, management said direct-to-consumer advertising is expected to be “flat to slightly up,” with a greater emphasis on social media and digital, while continuing TV advertising.
About Inspire Medical Systems (NYSE:INSP)
Inspire Medical Systems, Inc is a medical technology company specializing in implantable neurostimulation devices for the treatment of obstructive sleep apnea (OSA). The company’s flagship offering, the Inspire® system, delivers targeted stimulation of the hypoglossal nerve to maintain airway patency during sleep, providing an alternative therapy for patients who are intolerant of or inadequately managed by continuous positive airway pressure (CPAP) devices.
The Inspire system comprises an implantable pulse generator, a sensing lead that monitors breathing patterns, and a stimulation lead that activates the hypoglossal nerve.
