Inspire Medical Systems, Inc. Announces Fourth Quarter and Full Year 2023 Financial Results and Reaffirms 2024 Outlook
Inspire Reports First Quarter with Operating Income and Year-over-Year
Revenue Growth of 40% in the Fourth Quarter
MINNEAPOLIS, Feb. 06, 2024 (GLOBE NEWSWIRE) -- Inspire Medical Systems, Inc. (NYSE: INSP) (Inspire), a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea, today reported financial results for the quarter and year ended December 31, 2023.
Recent Business Highlights and Full Year 2024 Guidance
Generated revenue of $192.5 million in the fourth quarter of 2023, a 40% increase over the same quarter last year, and revenue of $624.8 million in full year 2023, a 53% increase over full year 2022
Achieved gross margin of 85.4% in the fourth quarter of 2023
Reported net income of $14.8 million and diluted net income per share of $0.49 in the fourth quarter of 2023
Activated 78 new U.S. centers in the fourth quarter of 2023, bringing the total to 1,180 U.S. medical centers providing Inspire therapy
Created 13 new U.S. sales territories in the fourth quarter of 2023, bringing the total to 287 U.S. sales territories
Reaffirms full year 2024 revenue to be in the range of $775 million to $785 million, which would represent year-over-year growth of approximately 24% to 26%
"We are thrilled with our strong performance in the fourth quarter, growing revenue 40% year-over-year and delivering over $14 million in net income. Our growth continues to be driven primarily by higher utilization at existing sites and was complemented by the addition of 78 new U.S. implanting centers and 13 new sales territories," said Tim Herbert, President, and Chief Executive Officer of Inspire Medical Systems. "During the quarter, we worked diligently with commercial payers to update coverage policies for our expanded indications, and we achieved several important milestones, including surpassing 60,000 patients treated with Inspire therapy and reporting our first quarter of operating income. We expect this strong operating leverage to continue and to reach profitability for the second half of 2024.”
Fourth Quarter 2023 Financial Results
Revenue was $192.5 million for the three months ended December 31, 2023, a 40% increase from $137.9 million in the corresponding period in the prior year. U.S. revenue for the quarter was $189.4 million, an increase of 41% as compared to the prior year quarter. Fourth quarter revenue outside the U.S. was $3.1 million, a decrease of 16% as compared to the fourth quarter of 2022.
Gross margin was 85.4% for the three months ended December 31, 2023, compared to 83.9% for the corresponding prior year period. This increase was driven by increased volume and higher manufacturing yields.
Operating expenses increased to $155.2 million for the fourth quarter of 2023, as compared to $116.1 million in the corresponding prior year period, an increase of 34%. This increase primarily reflected ongoing investments in the expansion of the U.S. sales organization, direct-to-patient marketing programs, continued product development efforts, as well as increased general corporate costs.
Net income was $14.8 million for the fourth quarter of 2023, as compared to $3.2 million in the corresponding prior year period. The diluted net income per share for the fourth quarter of 2023 was $0.49 per share, as compared to $0.10 in the prior year period.
Full Year 2023 Financial Results
Revenue was $624.8 million for full year 2023, a 53% increase from $407.9 million in the prior year. U.S. revenue for the full year was $606.2 million, an increase of 54% as compared to the prior year. Full year 2023 revenue outside the U.S. was $18.6 million, an increase of 43% as over full year 2022.
Gross margin was 84.5% for full year 2023, compared to 83.8% for full year 2022.
Operating expenses were $568.5 million compared to $389.3 million for full year 2022, an increase of 46%.
Net loss was $21.2 million compared to $44.9 million for full year 2022, a 53% improvement.
As of December 31, 2023, cash, cash equivalents, and investments increased to $469.5 million from $451.4 million on December 31, 2022.
Full Year 2024 Guidance
Inspire is maintaining its full year 2024 revenue guidance of between $775 million to $785 million, which represents growth of 24% to 26% over full year 2023 revenue of $624.8 million.
Gross margin for the full year is anticipated to be in the range of 83% to 85%.
In addition, during each quarter of 2024, the Company expects to activate 52 to 56 new U.S. medical centers implanting Inspire therapy and add 12 to 14 new U.S. sales territories.
Webcast and Conference Call
Inspire’s management will host a conference call after market close today, Tuesday, February 6, 2024, at 5:00 p.m. Eastern Time to discuss these results and answer questions.
To access the conference call, please preregister on https://register.vevent.com/register/BI4da0fb8e7625480f8890c3e09699bec4. Registrants will receive confirmation with dial-in details.
A live webcast of the event can be accessed on https://edge.media-server.com/mmc/p/9hhddszn/. A replay of the webcast will be available on https://investors.inspiresleep.com starting approximately two hours after the event and archived on the site for two weeks.
About Inspire Medical Systems
Inspire is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea. Inspire’s proprietary Inspire therapy is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe obstructive sleep apnea.
For additional information about Inspire, please visit www.inspiresleep.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking statements, including, without limitation, statements regarding full year 2024 financial outlook, our expectations to activate new U.S. medical centers and add new territories per quarter in 2024 and the impact of such additions, our expectations regarding operating leverage and profitability during 2024, and our strategy and investments to grow and scale our business. In some cases, you can identify forward-looking statements by terms such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘anticipate,’’ ‘‘could,’’ “future,” “outlook,” “guidance,” ‘‘intend,’’ ‘‘target,’’ ‘‘project,’’ ‘‘contemplate,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘predict,’’ ‘‘potential,’’ ‘‘continue,’’ or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.
These forward-looking statements are based on management’s current expectations and involve known and unknown risks and uncertainties that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, estimates regarding the annual total addressable market for our Inspire therapy in the U.S. and our market opportunity outside the U.S.; future results of operations, financial position, research and development costs, capital requirements and our needs for additional financing; commercial success and market acceptance of our Inspire therapy; the impact of macroeconomic trends; general and international economic, political, and other risks, including currency, inflation, stock market fluctuations and the uncertain economic environment; our ability to achieve and maintain adequate levels of coverage or reimbursement for our Inspire system or any future products we may seek to commercialize; competitive companies and technologies in our industry; our ability to enhance our Inspire system, expand our indications and develop and commercialize additional products; our business model and strategic plans for our products, technologies and business, including our implementation thereof; our ability to accurately forecast customer demand for our Inspire system and manage our inventory; our dependence on third-party suppliers, contract manufacturers and shipping carriers; consolidation in the healthcare industry; our ability to expand, manage and maintain our direct sales and marketing organization, and to market and sell our Inspire system in markets outside of the U.S.; risks associated with international operations; our ability to manage our growth; our ability to increase the number of active medical centers implanting Inspire therapy; our ability to hire and retain our senior management and other highly qualified personnel; risk of product liability claims; risks related to information technology and cybersecurity; risk of damage to or interruptions at our facilities; our ability to commercialize or obtain regulatory approvals for our Inspire therapy and system, or the effect of delays in commercializing or obtaining regulatory approvals; FDA or other U.S. or foreign regulatory actions affecting us or the healthcare industry generally, including healthcare reform measures in the U.S. and international markets; and the timing or likelihood of regulatory filings and approvals. Other important factors that could cause actual results, performance or achievements to differ materially from those contemplated in this press release can be found under the captions “Risk Factors” and "Management's Discussion and Analysis of Financial Condition and Results of Operations“ in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as updated in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 to be filed with the SEC, and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov and the Investors page of our website at www.inspiresleep.com. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, unless required by applicable law, we disclaim any obligation to do so, even if subsequent events cause our views to change. Thus, one should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. These forward-looking statements should not be relied upon as representing our views as of any date after the date of this press release.
Investor & Media Contact
Ezgi Yagci
Vice President, Investor Relations
ezgiyagci@inspiresleep.com
617-549-2443
Inspire Medical Systems, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)
(in thousands, except share and per share amounts)
|
| Three Months Ended |
| Year Ended | ||||||||||||
|
|
| 2023 |
|
|
| 2022 |
|
|
| 2023 |
|
|
| 2022 |
|
Revenue |
| $ | 192,508 |
|
| $ | 137,900 |
|
| $ | 624,799 |
|
| $ | 407,856 |
|
Cost of goods sold |
|
| 28,054 |
|
|
| 22,152 |
|
|
| 96,576 |
|
|
| 66,115 |
|
Gross profit |
|
| 164,454 |
|
|
| 115,748 |
|
|
| 528,223 |
|
|
| 341,741 |
|
Operating expenses: |
|
|
|
|
|
|
|
| ||||||||
Research and development |
|
| 31,052 |
|
|
| 21,248 |
|
|
| 116,536 |
|
|
| 68,645 |
|
Selling, general and administrative |
|
| 124,105 |
|
|
| 94,835 |
|
|
| 451,958 |
|
|
| 320,688 |
|
Total operating expenses |
|
| 155,157 |
|
|
| 116,083 |
|
|
| 568,494 |
|
|
| 389,333 |
|
Operating loss |
|
| 9,297 |
|
|
| (335 | ) |
|
| (40,271 | ) |
|
| (47,592 | ) |
Other (income) expense: |
|
|
|
|
|
|
|
| ||||||||
Interest and dividend income |
|
| (5,870 | ) |
|
| (3,369 | ) |
|
| (20,560 | ) |
|
| (5,050 | ) |
Interest expense |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,677 |
|
Other (income) expense, net |
|
| (73 | ) |
|
| (241 | ) |
|
| 195 |
|
|
| 49 |
|
Total other income |
|
| (5,943 | ) |
|
| (3,610 | ) |
|
| (20,365 | ) |
|
| (3,324 | ) |
Income (loss) before income taxes |
|
| 15,240 |
|
|
| 3,275 |
|
|
| (19,906 | ) |
|
| (44,268 | ) |
Income taxes |
|
| 477 |
|
|
| 125 |
|
|
| 1,247 |
|
|
| 613 |
|
Net income (loss) |
|
| 14,763 |
|
|
| 3,150 |
|
|
| (21,153 | ) |
|
| (44,881 | ) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
| ||||||||
Foreign currency translation gain |
|
| 144 |
|
|
| 195 |
|
|
| 140 |
|
|
| 89 |
|
Unrealized gain (loss) on investments |
|
| 612 |
|
|
| 82 |
|
|
| 746 |
|
|
| (120 | ) |
Total comprehensive income (loss) |
| $ | 15,519 |
|
| $ | 3,427 |
|
| $ | (20,267 | ) |
| $ | (44,912 | ) |
Basic income (loss) per share |
| $ | 0.50 |
|
| $ | 0.11 |
|
| $ | (0.72 | ) |
| $ | (1.60 | ) |
Diluted income (loss) per share |
| $ | 0.49 |
|
| $ | 0.10 |
|
| $ | (0.72 | ) |
| $ | (1.60 | ) |
Basic weighted average shares outstanding |
|
| 29,517,375 |
|
|
| 28,931,271 |
|
|
| 29,302,154 |
|
|
| 28,071,748 |
|
Diluted weighted average shares outstanding |
|
| 30,236,821 |
|
|
| 30,209,503 |
|
|
| 29,302,154 |
|
|
| 28,071,748 |
|
Inspire Medical Systems, Inc.
Consolidated Balance Sheets (unaudited)
(in thousands, except share and per share amounts)
| December 31, | ||||||
|
| 2023 |
|
|
| 2022 |
|
Assets |
|
|
| ||||
Current assets: |
|
|
| ||||
Cash and cash equivalents | $ | 185,537 |
|
| $ | 441,592 |
|
Investments, short-term |
| 274,838 |
|
|
| 9,821 |
|
Accounts receivable, net of allowance for credit losses of |
| 89,884 |
|
|
| 61,228 |
|
Inventories, net |
| 33,885 |
|
|
| 11,886 |
|
Prepaid expenses and other current assets |
| 9,595 |
|
|
| 5,505 |
|
Total current assets |
| 593,739 |
|
|
| 530,032 |
|
Investments, long-term |
| 9,143 |
|
|
| — |
|
Property and equipment, net |
| 39,984 |
|
|
| 17,249 |
|
Operating lease right-of-use assets |
| 22,667 |
|
|
| 6,880 |
|
Other non-current assets |
| 11,278 |
|
|
| 10,715 |
|
Total assets | $ | 676,811 |
|
| $ | 564,876 |
|
Liabilities and stockholders' equity |
|
|
| ||||
Current liabilities: |
|
|
| ||||
Accounts payable | $ | 38,839 |
|
| $ | 26,847 |
|
Accrued expenses |
| 39,266 |
|
|
| 34,339 |
|
Total current liabilities |
| 78,105 |
|
|
| 61,186 |
|
Operating lease liabilities, non-current portion |
| 24,846 |
|
|
| 7,536 |
|
Other non-current liabilities |
| 1,346 |
|
|
| 146 |
|
Total liabilities |
| 104,297 |
|
|
| 68,868 |
|
Stockholders' equity |
|
|
| ||||
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding |
| — |
|
|
| — |
|
Common Stock, $0.001 par value, 200,000,000 shares authorized; 29,560,464 and 29,008,368 shares issued and outstanding at December 31, 2023 and 2022, respectively |
| 30 |
|
|
| 29 |
|
Additional paid-in capital |
| 917,107 |
|
|
| 820,335 |
|
Accumulated other comprehensive income (loss) |
| 800 |
|
|
| (86 | ) |
Accumulated deficit |
| (345,423 | ) |
|
| (324,270 | ) |
Total stockholders' equity |
| 572,514 |
|
|
| 496,008 |
|
Total liabilities and stockholders' equity | $ | 676,811 |
|
| $ | 564,876 |
|
