INSP Stock Plunges Despite Q2 Earnings Beat, Gross Margin Contracts

Inspire Medical Systems, Inc. INSP delivered an earnings per share (EPS) of 45 cents in second-quarter 2025, up 40.6% year over year. The figure topped the Zacks Consensus Estimate by 104.6%.

INSP’s Revenues in Detail

Inspire Medical registered revenues of $217.1 million in the second quarter, up 10.8% year over year. The figure beat the Zacks Consensus Estimate by 0.9%.

Per management, the overall revenue growth was primarily driven by increased market penetration and increased physician and patient awareness of the Inspire system. However, this was partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Shares of this company lost nearly 24.9% in today’s pre-market trading.

Inspire Medical’s Segment Details

Inspire Medical’s operations consist of two geographic regions — the United States and All other countries.

In the quarter under review, U.S. revenues of $207.2 million reflected an increase of 10.3% from the year-ago quarter on a reported basis.

As of June 30, 2025, Inspire Medical had 348 U.S. sales territories and 259 field clinical representatives compared with 335 and 230, respectively, as of Dec. 31, 2024.

Revenues from All other countries totaled $9.9 million, up 23% year over year on a reported basis.

Inspire Medical Systems, Inc. Price, Consensus and EPS Surprise

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

INSP’s Margin Analysis

In the second quarter, Inspire Medical’s gross profit increased 9.9% year over year to $182.4 million. However, the gross margin contracted 74 basis points (bps) to 84%.

Selling, general and administrative expenses jumped 20.8% year over year to $159.5 million. Research and development expenses decreased 9.2% year over year to $26.2 million. Operating expenses of $185.7 million increased 15.4% year over year.

Operating loss totaled $3.3 million against the prior-year quarter’s operating profit of $5.1 million.

Inspire Medical’s Financial Position

Inspire Medical exited second-quarter 2025 with cash and cash equivalents and short-term investments of $300.9 million compared with $369.2 million at the first-quarter end.

Cumulative net cash used in operating activities at the end of second-quarter 2025 was $4 million, against net cash provided by operating activities of $8.8 million a year ago.

INSP’s Outlook

Inspire Medical has lowered its revenue and EPS outlook for 2025.

The company now projects revenues in the range of $900 million-$910 million (representing growth of 12-13% from 2024 levels), lowered from the prior outlook of $940 million-$955 million (representing growth of 17-19% from 2024 levels). The Zacks Consensus Estimate is pegged at $949.1 million.

The company now expects its EPS for 2025 to be between 40 cents and 50 cents, lowered from the prior outlook of $2.20-$2.30. The Zacks Consensus Estimate is pegged at $2.26.

Our Take on Inspire Medical

Inspire Medical exited the second quarter of 2025 with better-than-expected results. The robust improvement of the top and bottom lines was impressive. Strength in year-over-year geographical revenues was promising. The increased market penetration and increased physician and patient awareness of the Inspire system during the reported quarter were encouraging.

However, the gross margin contracted due to rising product costs. This does not bode well for the stock. Also, management’s confirmation about the slower-than-expected progress of the U.S. commercial launch of Inspire V is worrying. Per management, this has resulted in the pushing forward of the timeline to complete the full transition to Inspire V, which will impact financial results for the year.

INSP’s Zacks Rank and Key Picks

Inspire Medical currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are GE HealthCare Technologies Inc. GEHC, West Pharmaceutical Services, Inc. WST and Boston Scientific Corporation BSX.

GE HealthCare, sporting a Zacks Rank #1 (Strong Buy), reported second-quarter 2025 adjusted EPS of $1.06, beating the Zacks Consensus Estimate by 16.5%. Revenues of $5.01 billion outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

GE HealthCare has a long-term estimated growth rate of 5.8%. GEHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.5%.

West Pharmaceutical reported second-quarter 2025 adjusted EPS of $1.84, beating the Zacks Consensus Estimate by 21.9%. Revenues of $766.5 million surpassed the Zacks Consensus Estimate by 5.4%. It currently flaunts a Zacks Rank #1.

West Pharmaceutical has a long-term estimated growth rate of 8.4%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.8%.

Boston Scientific reported second-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 4.2%. Revenues of $5.06 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2 (Buy).

Boston Scientific has a long-term estimated growth rate of 14%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.1%.

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

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