Inspire Medical Systems (INSP) Dropped After Lowering Its Financial Guidance

Baron Funds, an investment management company, released its “Baron Discovery Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Year-to-date, the fund was up 10.75% (Institutional Shares), compared to a 11.65% return for the Russell 2000 Growth Index. The fund was up 2.85% in the third quarter, lagging behind the Index’s 12.19% return.  In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks such as Inspire Medical Systems, Inc. (NYSE:INSP). Inspire Medical Systems, Inc. (NYSE:INSP) is a medical technology company that focuses on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea. The one-month return of Inspire Medical Systems, Inc. (NYSE:INSP) was 1.46%, and its shares lost 61.46% of their value over the last 52 weeks. On October 29, 2025, Inspire Medical Systems, Inc. (NYSE:INSP) stock closed at $75.17 per share, with a market capitalization of $2.223 billion.

Baron Discovery Fund stated the following regarding Inspire Medical Systems, Inc. (NYSE:INSP) in its third quarter 2025 investor letter:

"Inspire Medical Systems, Inc. (NYSE:INSP) is a medical device company offering a treatment option called hypoglossal nerve stimulation for patients with moderate-to-severe obstructive sleep apnea. Shares fell during the quarter as management lowered 2025 financial guidance, citing several factors behind the slower-than-expected rollout of Inspire 5, the company’s next-generation device. These included delays onboarding centers to a new patient management platform, a postponed Medicare reimbursement code that did not take effect until July 1 due to a software update, patients deferring procedures in anticipation of Inspire 5’s availability, and management’s decision to pause marketing efforts and new center expansion. In addition, management noted anecdotal reports of some patients delaying procedures to try GLP-1 medications. We exited our position."

Inspire Medical Systems, Inc. (NYSE:INSP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Inspire Medical Systems, Inc. (NYSE:INSP) at the end of the second quarter, which was 37 in the previous quarter. In Q2 2025, Inspire Medical Systems, Inc. (NYSE:INSP) reported revenue of $217.1 million, an 11% increase from Q2 2024. While we acknowledge the potential of Inspire Medical Systems, Inc. (NYSE:INSP) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Inspire Medical Systems, Inc. (NYSE:INSP) and shared the list of best medical device stocks to invest in. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.