Inspire Medical Q3 Revenue Falls 7.9% as 2026 Outlook Narrows

Inspire Medical Systems reported a year-over-year revenue decline in the third quarter of 2026 as coding and reimbursement disruption weighed on sales, although revenue increased sequentially and gross margin expanded. The medical technology company also narrowed its full-year outlook and outlined a restructuring plan intended to redirect $30 million in annualized operating expenses toward growth initiatives.

Third-quarter revenue was $206.7 million, down 7.9% from a year earlier but up 3.0% from the second quarter. Inspire attributed the annual decline primarily to coding and reimbursement disruption, while citing strength in its U.S. business as a contributor to the sequential increase.

Gross margin reached 86.0%, an improvement of 20 basis points year over year. The company generated $46.4 million in operating cash flow. GAAP diluted loss per share was $0.84, while adjusted diluted earnings were $0.14 per share.

Full-Year Outlook Narrows

Inspire now expects 2026 revenue of $850 million to $860 million, narrowing its previous range of $835 million to $875 million. The company also narrowed its expected adjusted operating margin to 4.5% to 5.5%, from 4% to 6%, and adjusted diluted earnings per share to $1.20 to $1.40, from $1.05 to $1.45.

Management anticipates low-single-digit revenue growth in 2027. That expectation reflects the company’s current outlook as of its Nov. 2, 2026, earnings call and remains subject to reimbursement developments and execution of its growth initiatives.

Reimbursement Clarity Improves

Coding and reimbursement remain central to Inspire’s operating outlook. The company said uncertainty surrounding the existing CPT 64582 code declined after the first half of 2026, with appropriate C-codes in place and the correct code adopted across all six states participating in the WISeR program. Hospital and ambulatory surgical center reimbursement rates were unchanged, while two Medicare Administrative Contractors have an impact on surgeon fees through use of the -52 modifier.

For 2027, proposed Medicare reimbursement rates call for a 12% year-over-year increase under the Hospital Outpatient Prospective Payment System and a 15% increase for ambulatory surgical centers. Those changes remained subject to the final rule at the time of the presentation.

The American Medical Association’s CPT Editorial Panel also approved a new Category I CPT code for Inspire’s single-lead hypoglossal nerve stimulation system. The code is scheduled to take effect Jan. 1, 2028, following valuation work expected in mid-2027.

Project Horizon Redirects Spending Toward Patient Flow

Under Project Horizon, Inspire is optimizing its organizational structure and supply chain to create $30 million in annualized capacity for additional growth investment. The company plans to prioritize patient access, education, engagement and support through the treatment process, with positive effects expected to begin in 2027.

The initiative is expected to result in approximately $25 million of pretax restructuring charges, about 95% of which was recognized in the third quarter. Inspire is also investing in digital scheduling, patient education and tracking, clinical capacity and its SleepSync digital health platform to address bottlenecks in the patient journey, which can take as long as six months from initial contact to implant.

The company continues to position Inspire V, its fifth-generation neurostimulation system, as a driver of improved patient and physician experience. Inspire said the device’s internal sensing technology is expected to reduce operating-room time, while its software platform supports future features and remote capabilities. The company has now treated more than 150,000 patients and works with more than 1,500 implanters.

Inspire’s outlook remains exposed to reimbursement and coding changes, adoption of its therapy, competition, regulatory requirements and its reliance on the Inspire system for revenue. The company also cautioned that Project Horizon may not produce its intended results and that its ability to manage demand, inventory, third-party relationships and continued commercial expansion could affect future performance.