10-Q · May 4, 2026
In the latest quarterly report for Q1 2026, Inspire Medical Systems (INSP) reported a revenue of $204.6 million, a slight increase of 1.6% from $201.3 million in the prior year. Despite this, the net loss widened…
Earnings analysis · 10-Q
INSP earnings analysis
Filed August 3, 2026 · Our reading of the company's report
The latest report
Inspire's Q2 revenue declined 7.6% year over year to $200.6 million as U.S. coding, reimbursement, and Medicare authorization friction outweighed 33.6% international growth. However, gross margin increased 150 basis…
Read full summary
Inspire's Q2 revenue declined 7.6% year over year to $200.6 million as U.S. coding, reimbursement, and Medicare authorization friction outweighed 33.6% international growth. However, gross margin increased 150 basis points to 85.5%, the operating loss narrowed to $0.5 million, and EPS turned positive at $0.01. Liquidity trends improved materially, with six-month operating cash flow of $36.1 million, but management expects reimbursement uncertainty and WISeR-related effects to continue weighing on revenue through the remainder of 2026.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
Reported figures
- Earnings per share
- $0.01
What stood out
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Revenue declined 7.6% year over year
Q2 revenue was $200.6 million, down $16.5 million (-7.6%) year over year and down 2.0% from Q1 2026 revenue of $204.6 million. U.S. coding and reimbursement challenges were the principal driver of the decline.
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Gross margin expanded year over year
Gross margin expanded 150 basis points year over year to 85.5% from 84.0%, though it declined 100 basis points sequentially from 86.5% in Q1. Management attributed the year-over-year expansion to a greater mix of higher-margin Inspire V systems.
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Profitability improved despite lower sales
Operating loss narrowed to $0.5 million from a $3.3 million loss a year earlier, improving operating margin to -0.3% from -1.5%; this also improved from -0.6% in Q1 2026. Net earnings were $0.3 million, or $0.01 per share, versus a $3.6 million loss, or $(0.12) per share, in Q2 2025.
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International growth partially offsets U.S. drop
International revenue grew $3.3 million, or 33.6%, to $13.3 million, partly offsetting a $19.8 million, or 9.6%, decline in U.S. revenue to $187.3 million.
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Operating cash flow turned strongly positive
Six-month operating cash flow was $36.1 million, compared with $4.0 million of cash used in the prior-year period, driven mainly by improved receivables and inventory working capital. Free cash flow is not stated because capital expenditures are not separately disclosed in the provided filing text.
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Restructuring funds growth initiatives
Project Horizon is expected to create approximately $30 million of annualized growth-investment capacity, while requiring $20 million to $25 million of pre-tax restructuring charges. Most actions are expected in Q3 2026, with substantial completion by year-end.
What to watch
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New Project Horizon execution risk
This is the sole explicitly updated risk factor versus the 2025 10-K: Project Horizon includes a workforce reduction and production consolidation, with expected pre-tax restructuring charges of $20 million to $25 million. Management cautions that it may not achieve intended benefits or may encounter attrition, lost expertise, and execution costs.
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Coding uncertainty pressures U.S. demand
U.S. revenue fell $19.8 million (-9.6%) in Q2, primarily from coding and reimbursement challenges. For two MACs requiring a -52 modifier, physician reimbursement has ranged from no reduction to approximately 30% below the existing national-average payment; management expects adverse revenue effects through the remainder of 2026.
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WISeR authorization delays persist
The WISeR prior-authorization program began in mid-January 2026 in six pilot states and delayed traditional Medicare procedures in the first half. Management expects an adverse revenue impact for the rest of 2026, albeit less than in the first half.
Management's outlook
The 10-Q provides no quantitative FY2026 revenue or EPS guidance. Management expects Project Horizon to generate approximately $30 million of annualized growth-investment capacity, expects most restructuring actions to be completed in Q3 2026 and substantially all actions by year-end, and expects coding/reimbursement uncertainty to adversely affect revenue for the remainder of 2026.
Earlier filings 1
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.