Inspire Medical Systems Inc

Inspire Medical has been a frustrating stock all year, primarily due to mismanagement in the rollout of their next generation sleep apnea device. Issues such as insurance coverage, inventory management, and MD training have compounded investor fears over competition and reduced demand for sleep apnea treatments. Despite these challenges, revenue is still growing in the +8-10% range in 2H 2025, but the growth is negatively impacted by the burn down of old inventory. The company is trading at only 2x 2025 revenue, with 33% of its market cap in cash, and generating free cash flow, suggesting limited downside. However, the overall outlook remains clouded by operational missteps and market competition.

Inspire Medical has been a frustrating stock all year, mismanaging the rollout of their next generation sleep apnea device. Issues with insurance coverage, inventory management, and MD training have compounded investor fears over competition and reduced demand due to GLP-1 weight loss drugs. Despite these challenges, revenue is still growing in the +8-10% range in 2H 2025, but the growth is negatively impacted by the burn down of old inventory. The stock is trading at only 2x 2025 revenue, but the company faces significant headwinds that make its future uncertain.

Inspire Medical Systems, Inc. (INSP) develops implantable neurostimulators for treating obstructive sleep apnea. However, the company's shares slid in August after management downgraded full-year 2025 guidance due to delays in the U.S. commercial rollout of its next-generation Inspire V system. This raised questions about management's execution and led to concerns about how GLP-1 drugs may affect Inspire's addressable market, prompting us to trim our position.

Inspire Medical had a difficult quarter due to challenges related to GLP-1 usage increases, as well as rolling out a new product version, and delays with billing software and reimbursement codes. These issues have negatively impacted its performance, making it a notable detractor from the Fund's relative performance during the period.

Inspire Medical Systems, Inc. is a medical device company offering a treatment option called hypoglossal nerve stimulation for patients with moderate-to-severe obstructive sleep apnea. Despite a decline in shares during the second quarter due to some patients delaying surgery for the new Inspire 5 device and concerns about new competitors, we believe Inspire remains well positioned to grow at a healthy rate. The company benefits from its market leadership and the substantial size of the addressable patient population. We view the current valuation as a compelling entry point given the company’s long-term growth potential.

Inspire Medical Systems, Inc. develops minimally invasive solutions for patients with obstructive sleep apnea (OSA). The second quarter saw the launch of Inspire V, a new device that simplifies the medical installation procedure. This innovation is expected to extend the company’s lead in the OSA space and should result in higher volume across its install base in the second half of the year, despite a temporary stock sell-off as medical professionals transition from the previous model.