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Inspire Medical (INSP) Q1 Earnings & Revenues Top Estimates

Inspire Medical Systems, Inc. INSP delivered a loss of 53 cents per share in first-quarter 2023 compared with the year-ago loss of 61 cents. The metric was narrower than the Zacks Consensus Estimate of a loss of 70 cents.

Revenues in Detail

Inspire Medical registered revenues of $127.9 million in the first quarter, up 84.3% year over year. The figure surpassed the Zacks Consensus Estimate by 6.1%.

Per management, top-line growth was driven by higher utilization at existing centers. Activation of new centers also complimented the improvement. The top line  benefited from strength in U.S. revenues and revenues outside the United States (All other countries).

Segmental Details

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

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For the quarter under review, U.S. revenues of $124.5 million reflected an increase of 87% from the year-ago quarter on a reported basis. Per management, the upside can be attributed to several factors, including higher utilization at existing centers, addition of implanting centers, expanded direct-to-consumer marketing and a higher number of territory managers.

In the reported quarter, Inspire Medical activated 68 new U.S. centers, thus bringing the total to 973 U.S. medical centers providing Inspire therapy. The company also created 17 new U.S. sales territories in the quarter, bringing the total to 242 U.S. sales territories.

Revenues from outside the United States totaled $3.4 million, up 15% year over year on a reported basis.

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

 

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

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

Margin Analysis

In the quarter under review, Inspire Medical’s gross profit increased 81.9% to $108 million. However, the gross margin contracted 113 basis points to 84.4%.

Selling, general and administrative expenses surged 60.4% to $101.9 million. Research and development expenses jumped 114.9% year over year to $25.5 million. Operating expenses of $127.5 million increased 69% year over year.

The operating loss totaled $19.5 million compared with the prior-year quarter’s operating loss of $16.1 million.

Financial Position

INSP exited first-quarter 2023 with cash and cash equivalents, and short-term investments of $452.1 million compared with $451.4 million at the end of 2022.

Outlook

Inspire Medical has revised its financial outlook for 2023.

The company projects revenues of $580-$590 million (suggesting growth of 42-45% from the 2022 reported levels), up from the earlier projection of $560-$570 million (indicating growth of 37-40% from the 2022 reported levels). The Zacks Consensus Estimate for revenues is pegged at $570.1 million.

INSP plans to activate 52-56 new U.S. medical centers providing Inspire therapy and add 12-14 new U.S. sales territories in each quarter of 2023.

Our Take

Inspire Medical exited the first quarter of 2023 with better-than-expected results. The robust improvement of the top line was impressive. Strength in year-over-year geographic results was promising.

Activation of new U.S. centers and creation of new U.S. sales territories in the reported quarter look encouraging. Management’s expectations of activating more U.S. medical centers and adding new U.S. sales territories in each quarter of 2023 also raise our optimism about the stock.

In March, Inspire Medical received the FDA’s approval to offer Inspire therapy to pediatric patients with Down syndrome. In the same month, INSP announced its receipt of countrywide reimbursement approval in Belgium, effective immediately, at rates consistent with other countries around the world. These also look promising for the stock.

However, dismal bottom-line results were disappointing. Rising operating costs weighed on the gross margin and resulted in its contraction. It also added to the woes.

Zacks Rank and Other Key Picks

Inspire Medical currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation EW, Intuitive Surgical, Inc. ISRG and Merit Medical Systems, Inc. MMSI, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences reported first-quarter 2023 adjusted earnings per share (EPS) of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%.

Edwards Lifesciences has a long-term estimated growth rate of 6.9%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed once and broke even in the other, the average being 1.2%.

Intuitive Surgical reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.

Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed twice, the average being 1.9%.

Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%.

Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.

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