Inspire Medical cuts 2026 revenue guidance to down 4-10%, cites Medicare coding disruption

Inspire Medical Systems reported Q1 2026 revenue of $204.6 million, up 1.6% year-over-year, with an 86.5% gross margin and $13 million in operating cash flow. This represents a significant deceleration from the company's historical 50% five-year revenue CAGR, suggesting potential headwinds in the business.

The company provided full-year 2026 guidance with revenue of $825-875 million (representing a decline to flat growth versus 2025's $912 million), adjusted operating margin of 2-4%, and adjusted EPS of $0.75-$1.25. The midpoint revenue guidance of $850 million would represent a 7% decline from 2025, a sharp reversal from prior growth trends.

The company reported steady progress on the full U.S. launch of its next-generation Inspire V neurostimulator system, which features improved sensing capabilities, reduced surgical time, and a flexible software platform for future feature upgrades. The Inspire V limited market release involved 101 patients at 11 U.S. centers with 100% successful implants and no serious adverse events.

Inspire disclosed that its system now has 3T MRI compatibility, expanding the types of diagnostic imaging available to patients with the implanted device. This addresses a common patient concern and removes a barrier to adoption.

An independent study from Virginia Commonwealth University compared cardiovascular and respiratory outcomes for Inspire therapy versus CPAP and no therapy, adding to the clinical evidence base. The study was published in a peer-reviewed journal and supports the company's value proposition in reducing OSA-related health risks.

Inspire Medical Systems reported Q1 2026 revenue of $204.6 million, up 1.6% year-over-year, driven by market penetration offset by reimbursement disruption and the WISeR program. GAAP diluted EPS was $(0.39) versus adjusted diluted EPS of $0.10. Operating cash flow improved to $12.8 million from $(6.7) million in the prior year period, primarily due to improved working capital.

The CPT code used for approximately 10,000 Inspire V cases in 2025 is no longer available for Medicare reimbursement, forcing physicians and centers to navigate coding alternatives. Management expects these challenges to persist through the balance of 2026 but believes they are temporary, with a return to revenue growth expected in 2027.

Inspire lowered its full-year 2026 revenue guidance to $825 million to $875 million, representing a 4% to 10% decline versus 2025, down from prior expectations. The company also revised adjusted operating margin guidance to 2% to 4%, diluted EPS to $0.07 to $0.62, and adjusted diluted EPS to $0.75 to $1.25. The downward revision reflects the ongoing coding and reimbursement uncertainty expected to persist through 2026.

Gross margin expanded 180 basis points to 86.5% in Q1 2026, driven by a higher sales mix of the Inspire V system, which carries a higher gross margin than the prior Inspire IV system. This product mix shift is a positive development despite the revenue headwinds.

The company disclosed its first quarter 2026 financial results through a press release. The 8-K body does not contain the actual financial figures; those are in the attached press release exhibit.