Inspire Medical (INSP) Q4 Earnings Top Estimates, Gross Margin Up
Inspire Medical Systems, Inc. INSP delivered an earnings per share (EPS) of 49 cents in fourth-quarter 2023, up 390% year over year. The metric compares with the Zacks Consensus Estimate of a loss of 4 cents.
Full-year adjusted loss per share was 72 cents, narrower than the comparable 2022 period’s loss of $1.60 per share and the Zacks Consensus Estimate of a loss of $1.26 per share.
Revenues in Detail
Inspire Medical registered revenues of $192.5 million in the fourth quarter, up 39.6% year over year. The figure beat the Zacks Consensus Estimate by 0.1%.
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.
Full-year revenues were $624.8 million, reflecting a 53.2% improvement from the comparable 2022 period. The figure surpassed the Zacks Consensus Estimate by 0.01%.
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 $189.4 million reflected an increase of 41% 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 78 new U.S. centers, thus bringing the total to 1,180 U.S. medical centers providing Inspire therapy. The company also created 13 new U.S. sales territories in the quarter, bringing the total to 287 U.S. sales territories.
Revenues from outside the United States totaled $3.1 million, down 16% year over year on a reported basis. This was primarily due to the delay of the European Union Medical Device Regulation approval that impeded Inspire Medical’s ability to ship silicon-based leads in Europe during the fourth quarter.
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 fourth quarter, Inspire Medical’s gross profit increased 42.1% to $164.5 million. The gross margin expanded 149 basis points to 85.4%.
Selling, general and administrative expenses jumped 30.9% to $124.1 million. Research and development expenses increased 46.1% year over year to $31.1 million. Operating expenses of $155.2 million increased 33.7% year over year.
Operating profit totaled $9.3 million against the prior-year quarter’s operating loss of $0.3 million.
Financial Position
Inspire Medical exited 2023 with cash and cash equivalents and short-term investments of $460.4 million compared with $451.4 million at 2022-end.
Outlook
Inspire Medical has initiated its revenue outlook for 2024.
The company projects revenues in the range of $775 million-$785 million (reflecting growth of 24-26% from 2023 levels). The Zacks Consensus Estimate is pegged at $780.7 million.
Inspire Medical plans to activate 52-56 new U.S. medical centers providing Inspire therapy and add 12-14 new U.S. sales territories during each quarter of 2024.
Our Take
Inspire Medical exited the fourth quarter of 2023 with better-than-expected earnings and revenues. The robust improvement of the top line and bottom line was impressive. Strength in year-over-year U.S. revenues 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 each quarter of 2024 also raise our optimism about the stock. The gross margin expansion also bodes well.
On the earnings call, Inspire Medical’s management confirmed that the company continued to make investments in its clinical research, as reflected by the PREDICTOR study results. On the same call, management also shared plans to launch its new connected physician programmer in the United States, the SleepSync programmer. These also look promising for the stock.
However, lower revenues from outside the United States were disappointing. Rising operating costs weighed on the company’s performance, raising 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 Elevance Health, Inc. ELV, HCA Healthcare, Inc. HCA and Stryker Corporation SYK.
Elevance Health, carrying a Zacks Rank of 2 (Buy), reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
HCA Healthcare reported fourth-quarter 2023 adjusted EPS of $5.90, beating the Zacks Consensus Estimate by 16.8%. Revenues of $17.30 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently sports a Zacks Rank #1.
HCA Healthcare has a long-term estimated growth rate of 9.7%. HCA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.8%.
Stryker reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.82 billion surpassed the Zacks Consensus Estimate by 3.8%. It currently carries a Zacks Rank #2.
Stryker has a long-term estimated growth rate of 10.3%. SYK’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 5.1%.
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