Inspire Medical Systems, Inc. (INSP Quick QuoteINSP - Free Report) reported earnings per share of 32 cents for the second quarter of 2024 against the Zacks Consensus Estimate of a loss of 14 cents per share. In the year-ago period, the company had incurred a loss of 41 cents per share.

Revenues in Detail

Inspire Medical registered revenues of $195.9 million in the second quarter, up 29.8% year over year. The figure beat the Zacks Consensus Estimate by 3.7%.

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 $187.8 million reflected an increase of 30% from the year-ago quarter on a reported basis. Per management, this upside reflected increased patient awareness, increased market penetration in existing centers and expansion into new implanting centers in the United States and new U.S. sales territories.

During the reported quarter, Inspire Medical activated 81 new U.S. centers, thus bringing the total number of U.S. medical centers providing Inspire therapy to 1316. The company also created 12 new U.S. sales territories in the quarter, bringing the total to 310 U.S. sales territories.

Revenues from outside the United States totaled $8.1 million, up 27% year over year on a reported basis. This was primarily driven by a strong rebound in Europe, especially in Germany.

Margin Analysis

In the second quarter, Inspire Medical’s gross profit increased 30.9% to $166 million. The gross margin expanded 85 basis points to 84.8%.

Selling, general and administrative expenses jumped 17.3% to $132.1 million. Research and development expenses decreased 13.1% year over year to $28.9 million. Operating expenses of $160.9 million increased 12% year over year.

Operating income totaled $5.1 million against the prior-year quarter’s operating loss of $16.6 million.

Financial Position

Inspire Medical exited the second quarter of 2024 with cash and cash equivalents and short-term investments of $466 million compared with $441.4 million at the end of the first quarter of 2024.

Net cash provided by operating activities at the end of the second quarter of 2024 was $8.8 million compared with $3.7 million a year ago.

Outlook

Inspire Medical raised its guidance for 2024 earnings and revenues.

The company now projects revenues in the range of $788 million-$798 million (indicating growth of 26-28% from 2023 levels), up from the previous outlook of $783 million-$793 million. The Zacks Consensus Estimate is pegged at $798.3 million.

Inspire Medical reiterated its plans to open 52-56 new U.S. medical centers providing Inspire therapy and add 12-14 new U.S. sales territories during each quarter of 2024.

The company expects its EPS for 2024 to be between 60 and 80 cents, up from the prior guidance of 10 to 20 cents.

Our Take

Inspire Medical exited the second quarter of 2024 with better-than-expected results. The robust improvement of the top and bottom lines was impressive. Strength in year-over-year U.S. revenues and revenues from outside the United States was a positive. The gross margin expansion, despite rising product costs, was encouraging.

Management’s expectation of activating more U.S. medical centers and adding new U.S. sales territories during each quarter of 2024 also raises our optimism about the stock.

Inspire Medical announced its recent EU MDR certification in Europe that includes full-body MRI compatibility for its devices, marking a significant milestone. This certification paves the way for it to seek approval for its Bluetooth patient remote, updated physician programmer and Inspire V neurostimulation system. Additionally, it secured nationwide reimbursement in France at levels consistent with other European countries, ensuring greater accessibility to its cutting-edge technologies.

Inspire Medical’s strategic focus is now on operational readiness and building sufficient inventory to support a soft launch in May 2024, followed by a full launch in 2025. The Inspire V neurostimulation system, with its integrated respiratory sensing capabilities within the IPG, eliminates the need for an additional pressure sensitivity implant. This advancement will benefit patients with fewer components, reduce surgical times and decrease production costs and complexity for the company.

Inspire Medical Systems, Inc. Price, Consensus and EPS Surprise

Inspire Medical Systems, Inc. price-consensus-eps-surprise-chart | Inspire Medical Systems, Inc. Quote

Zacks Rank & Key Picks

Currently, Inspire Medical carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader medical space are Universal Health Service (UHS Quick QuoteUHS - Free Report) , Quest Diagnostics (DGX Quick QuoteDGX - Free Report) and ABM Industries (ABM Quick QuoteABM - Free Report) . While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Universal Health Services has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.

Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.

Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.

Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.

ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.

ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% increase.