It has been about a month since the last earnings report for Inspire Medical Systems (INSP Quick QuoteINSP - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Inspire due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Inspire Medical Q1 Earnings & Revenues Top Estimates

Inspire Medical delivered a loss of 53 cents per share in first-quarter 2023 compared with the year-ago loss of 61 cents. The metric was narrower than the Zacks Consensus Estimate of a loss of 70 cents.

Revenues in Detail

Inspire Medical registered revenues of $127.9 million in the first quarter, up 84.3% year over year. The figure surpassed the Zacks Consensus Estimate by 6.1%.

Per management, the top-line growth was driven by higher utilization at existing centers. Activation of new centers 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 $124.5 million reflected an increase of 87% from the year-ago quarter on a reported basis. Per management, this upside can be attributed to several factors including higher utilization at existing centers, addition of new implanting centers, expanded direct-to-consumer marketing and a higher number of territory managers.

During the reported quarter, Inspire Medical activated 68 new U.S. centers, thus bringing the total to 973 U.S. medical centers providing Inspire therapy. The company also created 17 new U.S. sales territories in the quarter, bringing the total to 242 U.S. sales territories.

Revenues from outside the United States totaled $3.4 million, up 15% year over year on a reported basis.

Margin Analysis

In the quarter under review, Inspire Medical’s gross profit increased 81.9% to $108 million. However, gross margin contracted 113 basis points to 84.4%.

Selling, general and administrative expenses surged 60.4% to $101.9 million. Research and development expenses jumped 114.9% year over year to $25.5 million. Operating expenses of $127.5 million increased 69% year over year.

Operating loss totaled $19.5 million compared with the prior-year quarter’s operating loss of $16.1 million.

Financial Position

INSP exited first-quarter 2023 with cash and cash equivalents, and short-term investments of $452.1 million compared with $451.4 million at the end of 2022.

Outlook

Inspire Medical has revised its financial outlook for full-year 2023.

The company now projects revenues in the range of $580-$590 million (reflecting growth of 42-45% from 2022 levels), up from the earlier projection of $560-$570 million (reflecting growth of 37-40% from 2022 levels). The Zacks Consensus Estimate for revenues is pegged at $570.1 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 each quarter of 2023.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates revision.

The consensus estimate has shifted 5.77% due to these changes.

VGM Scores

Currently, Inspire has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Inspire has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.