Last Update 06 Feb 26

Fair value Decreased 11%

INSP: Reimbursement Upcodes And Coding Resolution Will Support Long Term Upside

Narrative Update: Inspire Medical Systems

Analysts have trimmed their price expectations for Inspire Medical Systems, with our fair value estimate moving from US$140.13 to US$124.40. This reflects lower assumed future P/E multiples and recent target cuts tied to coding and reimbursement uncertainty, partially balanced by prior optimism around CMS reimbursement changes.

Analyst Commentary

Recent research on Inspire Medical Systems has shifted from earlier optimism around reimbursement to a more cautious stance, with several firms revisiting both ratings and price targets as coding and reimbursement questions resurface.

Bullish analysts had previously responded positively to the "surprise" Medicare reimbursement raise and CMS OPPS upcode, while more recent updates show bearish analysts focusing on coding uncertainty and its potential impact on upside, execution and valuation multiples.

Bullish Takeaways

Bullish analysts viewed the earlier Medicare reimbursement raise and OPPS upcode as supportive for higher average selling prices and stronger economics per procedure, which they saw as supportive for revenue scaling over time.
Some viewed the higher reimbursement as a structural shift that could support pricing and reimbursement longer term, even if coding changes were required later, which they linked to confidence in future revenue visibility.
Several upgrades and price target moves into the US$110 to US$180 range were tied to the view that reimbursement headwinds had eased and that the company could better absorb operational issues such as capacity constraints or slower rollouts.
Bullish analysts also highlighted factors such as easing headwinds around patient warehousing and increased advertising spend, which they saw as potential supports for procedure volumes and growth execution in the coming years.

Bearish Takeaways

Bearish analysts more recently downgraded the stock, pointing to coding and reimbursement uncertainty that, in their view, took some upside off the table and warranted lower target prices.
Several price target cuts, including single digit and double digit reductions, reflect a reset in assumed valuation multiples as analysts reassessed how sustainable the earlier reimbursement "surprise" might be.
Some commentary pointed to execution risks such as capacity utilization bottlenecks, slower than expected rollout efforts and potential surgery delays from GLP-1 trialing or emerging competition, which they saw as constraints on growth.
Even where guidance was viewed as intact, bearish analysts expressed caution that ongoing reimbursement and coding questions could limit multiple expansion and keep the risk or reward profile more balanced in the near term.

What's in the News

The company has issued a new revenue outlook for the fourth quarter of 2025. Guidance is US$268.9 million to US$269.1 million, which the company describes as approximately a 12% increase over the same quarter of 2024 (Key Developments).
Full year 2025 revenue is guided to be in the range of US$911.8 million to US$912.0 million. The company characterizes this as approximately a 14% increase over full year 2024 (Key Developments).
Full year 2026 revenue guidance is set at US$1.003 billion to US$1.013 billion. The company states that this represents a 10% to 11% increase over full year 2025 (Key Developments).
Matt Osberg has been appointed Chief Financial Officer. He brings over 20 years of experience across global financial leadership, corporate governance and transformation roles. His start date is set for January 19, 2026 (Key Developments).

Valuation Changes

Fair Value: revised from US$140.13 to US$124.40. This represents a modest reduction in the modeled estimate.
Discount Rate: adjusted slightly from 7.71% to 7.67%. This indicates a small change in the assumed risk profile.
Revenue Growth: updated from 11.22% to 11.09%. This is a minor trim to the projected growth rate used in the model.
Profit Margin: moved slightly higher from 7.62% to 7.67%. This reflects a small uplift in anticipated profitability.
Future P/E: reduced from 51.11x to 45.15x. This signals a lower multiple assumption applied to future earnings.

Transitory operational delays are expected to resolve soon, positioning the company for accelerated growth as new system adoption and reimbursement improvements unfold.
Market expansion and clinical enhancements will boost provider capacity and adoption, supporting sustained long-term revenue growth amid rising demand for sleep health solutions.
Execution delays, increased competition, operational missteps, and evolving market dynamics threaten revenue stability, margins, and long-term growth prospects for Inspire Medical Systems.

Catalysts

About Inspire Medical Systems

A medical technology company, focuses on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea (OSA) in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The recent delay in transitioning centers to the Inspire V next-generation system-including slower onboarding, delayed SleepSync implementation, and the Medicare billing update-are transitory issues; as these barriers resolve (with Medicare billing now live and most centers expected to complete onboarding by end of Q3), procedure volumes and revenue growth are positioned to reaccelerate in 2026 as pent-up demand is realized.
Expanded coverage and proposed reimbursement increases for Inspire's procedures (notably the expected 2026 Medicare OPPS rule enhancements and near-complete payer coverage of the new CPT code) will reduce patient out-of-pocket costs and incentivize additional adoption, supporting both revenue growth and longer-term earnings visibility.
The second half of 2025 will see a ramp in marketing and new center expansion following a purposeful pause in H1 amid the Inspire V launch; this resurgence in patient education, awareness campaigns, and provider capacity building should drive higher procedure volumes and top-line acceleration into 2026 and beyond.
Inspire V's clinical enhancements-shorter procedure times (20% reduction), elimination of the pressure-sensing lead, and workflow simplification-are already increasing implant throughput at transitioned centers (20%+ higher volumes), suggesting a meaningful lift in provider capacity and future revenue as the full installed base adopts these improvements.
Increasing prevalence of obstructive sleep apnea and rising global focus on sleep health are fueling ongoing expansion of Inspire's addressable market; as obesity rates and aging populations climb, structural demand tailwinds are likely to translate into sustained long-term procedure and revenue growth for the company.

Inspire Medical Systems Earnings and Revenue Growth

Inspire Medical Systems Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Inspire Medical Systems's revenue will grow by 14.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 6.2% today to 8.0% in 3 years time.
Analysts expect earnings to reach $103.6 million (and earnings per share of $3.28) by about September 2028, up from $53.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $131.8 million in earnings, and the most bearish expecting $55 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 48.4x on those 2028 earnings, up from 45.4x today. This future PE is greater than the current PE for the US Medical Equipment industry at 29.7x.
Analysts expect the number of shares outstanding to decline by 1.31% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.42%, as per the Simply Wall St company report.

Inspire Medical Systems Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The slower-than-expected rollout of Inspire V, driven by delays in center training, contracting, onboarding, and technical hurdles with implementing SleepSync, has materially reduced near-term revenue growth rates and deferred volume expansion, increasing execution risk and potentially causing a protracted recovery in revenue and margins into 2026.
Increased dependence on a single primary product (Inspire V) and the complexities of transitioning from Inspire IV introduce risks of technological obsolescence, operational missteps, or further customer delays, which could threaten stability of long-term revenue growth and earnings visibility if competitive alternatives emerge or adoption lags.
The need for higher patient marketing and territory expansion spend in the face of revenue pressure has driven operating expenses up faster than revenue growth, compressing net margins and earnings per share; this cost trend could persist if Inspire Medical Systems must continue elevated spend to regain growth momentum and offset competitive threats.
The potential for structural changes in sleep apnea therapy-such as increased use of GLP-1 drugs for weight loss (reducing OSA prevalence or changing patient eligibility) and broader adoption of non-invasive digital health solutions-could permanently shrink Inspire's addressable market or reduce demand for surgically implanted devices, thereby impacting long-term revenue growth and profitability.
Changes in reimbursement dynamics, especially regarding Medicare and shifting CPT codes, have created temporary barriers but also hint at a long-term risk: payer and regulatory pressure could limit coverage, reduce pricing power, or discourage high-volume implanters from treating certain patient groups-putting sustained pressure on both revenue and margins over time.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $144.533 for Inspire Medical Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $230.0, and the most bearish reporting a price target of just $97.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $103.6 million, and it would be trading on a PE ratio of 48.4x, assuming you use a discount rate of 7.4%.
Given the current share price of $81.47, the analyst price target of $144.53 is 43.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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