Inspire Medical (INSP) Q3 Earnings Top Estimates, Revenues Lag
Inspire Medical Systems, Inc. INSP delivered a loss of 29 cents per share in third-quarter 2023, narrower than the year-ago loss of 60 cents. The metric was also narrower than the Zacks Consensus Estimate of a loss of 53 cents.
Revenues in Detail
Inspire Medical registered revenues of $153.3 million in the third quarter, up 40.4% year over year. However, the figure lagged the Zacks Consensus Estimate by 1.8%.
Per management, the top-line growth was driven by higher utilization at existing sites. The addition of new implanting centers and U.S. sales territories also complimented the improvement. The top line also benefited from strength in U.S. revenues and revenues outside the United States (All other countries).
Segment Details
Inspire Medical’s operations consist of two geographic regions — the United States and All other countries.
For the quarter under review, U.S. revenues of $147.5 million reflected an increase of 38.8% from the year-ago quarter on a reported basis. Per management, this upside was primarily driven by higher utilization at existing centers. Other growth drivers included the addition of new implanting centers, Inspire Medical’s continuing direct-to-consumer marketing and a higher number of territory managers.
During the reported quarter, Inspire Medical activated 62 new U.S. centers, thus bringing the total to 1,107 U.S. medical centers providing Inspire therapy. The company also created 13 new U.S. sales territories in the quarter, bringing the total to 274 U.S. sales territories.
Revenues from outside the United States totaled $5.8 million, up 99% 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
Margin Analysis
In the third quarter, Inspire Medical’s gross profit increased 44.2% to $128.9 million. The gross margin expanded 222 basis points to 84.1%.
Selling, general and administrative expenses jumped 32.3% to $113.2 million. Research and development expenses increased 38.8% year over year to $29.1 million. Operating expenses of $142.4 million increased 33.6% year over year.
Operating loss totaled $13.5 million compared with the prior-year quarter’s operating loss of $17.2 million.
Financial Position
INSP exited third-quarter 2023 with cash and cash equivalents and short-term investments of $464.2 million compared with $467.1 million at the second-quarter end.
Cumulative net cash provided by operating activities at the end of third-quarter 2023 was $7.4 million against cumulative net cash used in operating activities of $7.7 million a year ago.
Outlook
Inspire Medical has upped its revenue outlook for 2023.
The company now projects revenues in the range of $608 million-$612 million (reflecting growth of 49-50% from 2022 levels), up from the earlier projection of $600 million-$610 million (reflecting growth of 47-50% from 2022 levels). The Zacks Consensus Estimate is pegged at $612.3 million.
INSP continues to plan to activate 52-56 new U.S. medical centers providing Inspire therapy and add 12-14 new U.S. sales territories during the fourth quarter of 2023.
Our Take
Inspire Medical exited the third quarter of 2023 with narrower-than-expected loss per share. The robust improvement of the top line was impressive. Strength in year-over-year geographic results was promising. The gross margin expansion, despite rising product costs, also looks promising.
The activation of new U.S. centers and the creation of new U.S. sales territories during the reported quarter also look encouraging. Management’s expectations of activating more U.S. medical centers and adding new U.S. sales territories during the fourth quarter of 2023 also raise our optimism about the stock.
During the quarter, Inspire Medical’s management confirmed making significant progress with market access by expanding coverage policies with several large national health plans to include the company’s recently expanded indications. Management also stated that the company continued to make investments in its clinical research, as reflected by the PREDICTOR study results. These also look promising for the stock.
However, lower-than-expected revenues and dismal bottom-line results were disappointing. Rising operating costs weighed on the company’s performance and resulted in continued operating loss. This also raises apprehension.
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 Abbott Laboratories ABT, DexCom, Inc. DXCM and Integer Holdings Corporation ITGR.
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted earnings per share (EPS) of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
DexCom reported third-quarter 2023 adjusted EPS of 50 cents, beating the Zacks Consensus Estimate by 47.1%. Revenues of $975 million surpassed the Zacks Consensus Estimate by 4%. It currently carries a Zacks Rank #2.
DexCom has a long-term estimated growth rate of 33.6%. DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.
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Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report
