Inspire Medical Systems at Wells Fargo 2025 MedTech: New Frontiers in Sleep Apnea

On Friday, 13 June 2025, Inspire Medical Systems (NYSE:INSP) presented at the Wells Fargo 2025 MedTech Innovation Spotlight, unveiling its latest innovation, Inspire five. The conference highlighted the company’s strategic advancements in the Obstructive Sleep Apnea (OSA) market, emphasizing both the technological improvements and the challenges posed by competitive pressures. Inspire Medical remains optimistic about its growth potential and continuous innovation in patient care.

Key Takeaways

• Inspire five reduces implant time by 20% with new sensing technology.
• Positive feedback from surgeons on simplified procedures and reduced operating room time.
• Clinical study in Singapore shows impressive therapy usage averaging over six hours nightly.
• Inspire’s strategy includes expanding therapy adoption and advancing future innovations.
• Competitive pressures from GLP-1 drugs could increase sleep apnea awareness.

Financial Results

• 2025 guidance anticipates increased capacity through more centers and improved surgeon productivity.
• Commercial payers reimburse at 1.4 times the Medicare rate, with commercial cases making up 65-70% of Inspire’s portfolio.
• Medicare and VA/military cases represent 30-35% and approximately 5%, respectively.

Operational Updates

• Inspire five launched in May, receiving positive surgeon feedback for its reduced implant time and elimination of the pressure sensing lead.
• Most surgeons have been trained on Inspire five, focusing on new device features and interoperative testing.
• Transition to SleepSync is underway, ensuring automatic data storage from programming.
• Stable production and adequate inventory levels support the Inspire five launch.
• Patients have been waiting for Inspire five, while medical sites work to use up Inspire four inventory.

Future Outlook

• Inspire six will focus on sleep detection to enhance therapy adherence.
• Future devices may include auto-titration and auto-adjustment based on apneic events and patient position.
• SleepSync data will be utilized to improve device performance and patient outcomes.
• Growth strategy includes expanding patient treatment capacity at existing centers and opening new ones.
• Drug therapies may increase sleep apnea awareness and treatment opportunities for high-BMI patients.

Q&A Highlights

• Accelerometer technology provides stable respiration measurement, replacing sensor leads.
• The transition to Inspire five is expected to be completed by year-end.
• Physician fee changes reflect reduced procedure work, allowing more cases per day.
• GLP-1 drugs are seen as complementary, not a long-term sleep apnea treatment.

The full transcript of the conference call is available for further insights into Inspire Medical Systems’ strategic direction and innovations.

Full transcript - Wells Fargo 2025 MedTech Innovation Spotlight:

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Alright. Good afternoon for those of you on the East Coast. Good morning for those of you in the Midwest, and and the West Coast. I’m Larry Biegelsen, the medical device analyst at Wells Fargo. Welcome to the next call in our 2025 med tech innovation spotlight call series.

I’m pleased to have the management from Inspire, Tim Herbert, chairman and CEO, Rick Buchholz, CFO, and Esky Yaccha, vice president of investor relations. On today’s call, we’ll talk about the launch of Inspire’s latest innovation, Inspire five, and its future development as well as the commercial and competitive dynamics in the OSA market. As always, if anyone has a question Let me okay. Let me keep going.

Tim Herbert, Chairman and CEO, Inspire: Right. Now I got it.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Okay. Tim, Rick, and Hesby, thanks so much for joining us. You guys have been strong supporters of this call series for many years, so thank you.

Tim Herbert, Chairman and CEO, Inspire: Very good, Mary. Thanks for having us.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Of course. So before we jump into q and a, I know Tim would like to share a few slides and video. So Tim, over to you.

Tim Herbert, Chairman and CEO, Inspire: Very good. Did I do that correctly? And you can see the slides there, Larry.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Yes.

Tim Herbert, Chairman and CEO, Inspire: Fantastic. Well, thank you again. Thanks for we’ve done this in years past. We really appreciate the R and D spotlight call. I think it’s a very special series that you conduct to really be able to focus on the technology behind the products and and talk about how they’re able to really, help patients.

And we thought we wanna get started today and just kinda show you some introductory slides because we are so excited about our Inspire five launch that, you know, we we just launched. And, of course, we have our own, disclaimer, slide there. But off, really just showing a slide on what Inspire five is. Right? And it’s a 20% reduced implant time to improve the theory performance.

But we have incorporated the sensing inside the inside the neurostimulator, whereas we used to have a separate pressure sensing lead to detect respiration, and now we’ve incorporated that inside the can. And the key to it is talking about sensor performance because if we’re able to more accurately measure a patient’s respiratory cycle, we’re in a much better position to deliver stimulation synchronize synchronous with the inspiratory phase, which we all know is very critical in having the optimal outcomes with Inspire. And, of course, in the process, we have our new remote control that we released that does have Bluetooth communication. So it can communicate with the patient’s app on their cell phone and in turn communicate with SleepSync, which is our cloud based patient management system. The physician programmer is new to Inspire five two that that also directly, connects with SleepSync.

And now physicians can can just use their own laptop or their own, tablet to be able to communicate with the, device in a patient’s body, and all the performance parameters are saved to, sleep sync automatically. Whereas with Inspire four, you would have to manually upload those and connect the cable to be able to upload all the data into SleepSync. So we’re really in the process of streamlining patient management, streamlining the flow. I think it’s important. We wanted a, we had a a training video that we show physicians to really talk about the necessity to do closed loop stimulation.

And so I wanna run that, and I think it’s instead of me talking through that, it’s really a lot more effective if we can kinda just let you watch a video, and it really kinda helps explain it. And on the bad side, I’m gonna show several posters that have been presented with some at at the sleep meeting this week in Seattle to show the performance of Inspire five and the performance of the Inspire system. So let’s run this.

Unidentified speaker: With the release of Inspire five, one of the most exciting new features is the change in how Inspire’s respiration sensing technology works. With Inspire four, respiration was detected using our proprietary pressure sensor lead. INSPIRE five has incorporated all our collective knowledge and experience about how to measure a patient’s breathing pattern directly inside the generator using an accelerometer. With this innovation there is one less lead implanted in the body and the implant procedure is simplified. Sensing a patient’s breathing pattern has always been critical to ensuring effective treatment with upper airway stimulation.

You may be wondering why is respiration sensing needed at all? Why not just leave stimulation on permanently? Unfortunately, leaving stimulation on for the whole night leads to tongue muscle fatigue. Imagine trying to hold a five pound weight in your hand indefinitely. You will be putting that weight down faster than you think.

The tongue muscle is no different. It needs time to rest. This is why Inspire is designed to turn on and off with the patient’s breathing cycle. We have already established the tongue needs to rest after stimulation. Since we have to turn stimulation on and off to rest the tongue, does it then matter when stimulation is actually on?

Why can’t we just run stimulation in a pacemaker like mode without needing to detect respiration? Obstructive sleep apnea is a difficult problem to solve. A patient’s airway is dynamic and once it closes it can be very difficult to reopen it. Indeed the collapse cascade for obstructive sleep apnea begins during the late exhalation phase of breathing and continues through the inhalation phase. This is the most vulnerable time for the airway and is the time when it is most prone to collapse.

It stands to reason that we should target that period in the breathing cycle. In 1996, Doctor. Alan Schwartz and his team at Johns Hopkins proved that rhythmic stimulation targeting the inhalation phase of breathing could stabilize OSA. Their research was verified by Inspire during the STAR trial, but we also learned that turning on stimulation during the late exhalation phase was critical for success. It is important to deliver stimulation before the collapse cascade of OSA begins.

Inspire’s sensing algorithm is designed to provide stimulation during this vulnerable period of breathing and relax the tongue during the beginning of the following exhalation cycle. As such, Inspire delivers stimulation during most of inhalation and some of exhalation for most breaths. This allows some flexibility for the algorithm to adapt to different sleep states, body positions, and breathing patterns. Here is a patient example from a sleep study who was having frequent obstructive events because stimulation was not well synchronized. After some simple programming adjustments to the sensing settings, this patient’s obstructive events resolved.

Fortunately, the default sensing settings work for the majority of patients and it is very rare that we need to change these settings from their defaults. Here is another example. Look how the inspiratory flow is limited because stimulation is not capturing inhalation. You can see how much the airflow is improved after stimulation is moved to the correct portion of the breathing cycle. There have also been several peer reviewed publications that have studied what happens when you do not have well timed sensing.

In 2019, Doctor. Stefan and colleagues examined the effects of poor stimulation timing in three separate patients by inverting the sensing signal and reducing the sensitivity to breathing cycle detection. They observed worsening in ODI, AHI, and especially supine AHI. These outcomes returned to their treatment levels when the settings were corrected in future sleep studies. The authors concluded correct respiratory signaling supports controlling OSA.

In summary, constant stimulation can cause muscle fatigue. Timing of stimulation is critical to target the most vulnerable portion of the breathing cycle to prevent airway collapse. Inspire V uses an accelerometer inside the generator to monitor the patient’s breathing cycle. Inspire is committed to providing the most cutting edge technology for our providers and patients. Inspire five’s new accelerometer based sensing not only makes the implant easier, but it continues to deliver stimulation at the right time to ensure the best possible patient outcomes.

Tim Herbert, Chairman and CEO, Inspire: So I think that training video really kind of summarizes, why we do what we do, how the technology is advancing, and being able to take the knowledge from the 100,000 patients who have received Inspire therapy and be able to apply it to our generation that really sets up the platform as we start moving forward. I wanna show you just a couple other data points that we looked at and introduce a couple concepts that we talked a little bit about. The one, this was presented back in 2024, but this talks about the clinical data that we used to show the FDA the, efficiency and and the effectiveness of the inspire five neurostimulator. And what we did is we had fifty six patients who had either an Inspire two device or an Inspire four device in their body, but we can attach an Inspire five device externally and use their patients as their own control. And the key measure that we want to track is right here, the inspiratory phase overlap or what we call inspiratory overlap.

And how much of that inspiratory cycle are we able to capture with our sensing? And if we can capture that, therefore, we can now provide stimulation synchronous with the inspiration, and that’s the critical phase that we need to provide to the patient to prevent obstructive events. And you can see we’ve been shown to be quite effective with the with the device. So as as an example, when we start looking at the commercial system, this is Inspire four. But when we went to an accelerometer, we can tune that up and actually see if we can get better respiratory patterns and increase that respiratory overlap.

Right? And so, like, when we look at the commercial systems, we were running at about 78% of the inspiratory cycle we could detect and provide stimulation. But when we went to the accelerometer version, we were up to 83%. So we need to demonstrate that a noninferiority at a lower 90% confidence bound that the Inspire five system is at least as effective. But what we wanna show is potentially, that the effectiveness of the sensing is even better with the Inspire five device versus the Inspire four as shown in these pictures.

So that’s the key as we go forward. If we can improve, the detection of respiration, we can deliver the therapy most appropriately when we need it, and that in turn further increases the performance of the Inspire system. Take that to the next step. This was just presented this week. This is the results from the Singapore data.

So before we started our limited release in The United States, we actually went to Singapore, and we, did a study with 44 patients who prospectively, received Inspire therapy. And we did it at two centers. Pretty standard demographics that we experienced with the AHI of 37 at the beginning. Implant time was documented to be 20% less compared to implants of existing Inspire four systems. And remember, the sites in Singapore are experienced Inspire sites, they have a significant experience with the Inspire four system.

What’s really nice that we measure is the nightly usage at three months post implant, and you can see the total time, six hours per night on average, with 6.2 at Singapore General and at National University, 5.6. Very, very impressive. Now we have several other key features that have been incorporated into Inspire five that we learned over the years, And one of them is a a smaller step size. What that means is the patients have the ability to titrate their own therapy with the remote, and they used to be able to go up in amp in step sizes of a of a volt. But sometimes we found that that just wasn’t specific enough.

So with Inspire five, we can now go up in point zero five volt increments and very, important to get more precision stimulation for the patient. Then we have ramp duration is how long instead of the device just turning on, the device will now turn on. And so it’s more comfortable for the patient when they go to sleep to be able to have a therapy titrate at a lower level, allowing them to sleep and then be more comfortable before it gets up to the, therapeutic levels. And so really important with the new features, we’ve been able to really demonstrate those. And we’re gonna be able to show more data as we go forward because we’re gonna be collecting the AHI data at six months, with additional feature, usage.

Finally, we wanted to come back. There’s another, unique poster there because there’s been some discussion of supine AHI. And this was a study conducted by St. Luke’s Health in St. Louis on on their own accord.

And we were able to go through and and talk to them about their data. This is a large study. It’s 59 patients. And they wanted to measure what happens with supine versus nonsupine, and is there an impact with the Inspire system? And what we know is that we titrate our patients when they’re in the supine position because, of course, we all know gravity is a key part of of sleep.

And so on your back, your tongue can fall back into your airway. And their their data suggests that hypoglossal nerve stimulation is effective regardless of sleep position. And if you kinda look through the percent of patients that were responders, again, this is the share criteria where and the share criteria is defined as a reduction in AHI of 50% and a resultant AHI, in this case, less than 15. And you can see the success rate in positional, sleep apnea is over eighty percent. And in the total sample size, over seventy two percent, seventy three percent.

This is an independent study by Saint Luke’s. That’s significantly improved versus the STAR trial. Because the STAR trial was conducted back in 02/2012, there’s so much more information we know on how to select patients, how to design the technology, and then how to apply and manage patients to be able to improve our efficacy. So this was nice to walk in and see Saint Luke’s Health actually have a study independent of of Inspire to show not only the efficacy that we’ve come to expect with Inspire, but to also come back and really put to bed the whole argument of supine sleep saying that Inspire is designed for, has managed supine sleep for years since the beginning, and will continue to be effective as as we move forward. So we’re very excited to have launched the full launch of Inspire five in May, and that’s really just the slides that we wanted to cover, Larry.

So I’m gonna stop sharing and kinda hand it hand it back to you and see if you have any questions, in regards to the slides or or or anything else with Inspire.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Right. I definitely have some questions on the slides and Inspire, Tim. And I just maybe worth pointing out to people that those slides, which are a little hard to read on the screen, were included in your eight k this morning. So if people wanna, you know, see the details, they they have them.

Tim Herbert, Chairman and CEO, Inspire: Thank you. Yeah.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Yep. Let I definitely wanna follow-up on some of those things, but let me ask you one big picture question. You guys have reached an important important milestones over the past year, inspire five approval and launch, sustainable profitability. Talk about your top priorities for the remainder of this year and and key milestones for the company over the next, you know, couple years.

Tim Herbert, Chairman and CEO, Inspire: Yeah. Absolutely. I think that our priority is obviously the launch of Inspire five and how excited we are. And we did announce that, hundred thousand patients have been treated with, or have received Inspire therapy and and what a key milestone that is and to be able to, learn so much for those patients and apply that learning to the Inspire five system, for years in in the development efforts and now to be in the full launch. So that really has been our focus going forward.

We’ve made significant progress, certainly having the inventory levels to be able to support it. We had confidence in the performance of the system, but we just weren’t able to go to full launch until we had the inventory levels to really support the full launch. So we’ve been doing a limited market release since the late in twenty twenty four going forward. We’re gonna continue to focus on growing the adoption of Inspire therapy, and and, really, we we know that we’re lightly penetrated in our overall target market, and so just really probably a small single digit penetration. So, really, our focus going forward is continue to grow to focus on growth and focus on growing the adoption.

And now we have a new tool, the Inspire five, and that allows us to start the development on Inspire six and to really keep focusing on the development along our sleep sync, which is our cloud based patient management system. So very exciting times at Inspire, and we look forward to the ongoing activities.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Perfect. So let let’s, you know, move into Inspire five. As you, you know, mentioned earlier, you you announced the official launch in May. You just had the sleep meeting in Seattle this week, which I I know you you attended. Talk about the any feedback and learnings from the launch, and what did you hear?

What was the buzz like in Seattle?

Tim Herbert, Chairman and CEO, Inspire: Well, I think some of the the abstracts that you that we just showed, kinda talk a little bit more quantitatively about the performance of the system, what we’re seeing with the inspiratory overlap, what we’re seeing with the ability to improve the implant time. All the implants were successful. That’s very key. Safety performance, as you saw, were were strong. So I think when when we get to Seattle, we get to talk to physicians more so about the qualitative aspects of it.

What do you think about, the Inspire five device? What’s your reaction today with your experience? And it’s not only the limited market release sites, but now we have formally launched the product, and so we have even more of an expanded network to get feedback. Number one, I think the surgeons, ear, nose, and throat, right, ear, nose, and throat, they really appreciate the ability to implant the Inspire device without placing a pressure sensing lead in the chest wall. And that’s always been a little bit of the part of the surgery where the ENTs don’t go every day.

It’s a safe procedure. We’ve performed that in over a 100,000 procedures, but that’s the one part of the procedure that that wasn’t most comfortable for the ENT. So comment overwhelmingly is not putting in the pressure sensing need is really a a very good, very nice desired change. Number two is is the reduced OR time is very noticeable. And they as they place the electrodes and tunnel, once they place the neurostimulator, they know they just do the final intraoperative testing and close, and it they don’t have to to deal with the pressure sensing needs.

So quite an advantage going forward with reduced time, and and that really makes a difference. I think what’s they’re starting to learn too is the added features that we put in, especially the this more of a soft launch or the soft ramp of the amplitude. So it’s more comfortable for the patients during therapy, and that’s something that we’ve learned over the years. And until you get such experience with technology like that, you it’s you won’t know that to be able to apply that into your devices. So I think that’s gonna be one of the benefits that that we have going forward.

So the feedback has been very positive to date and and really look forward to doing more Inspire fives.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: It talked about the accelerometer or the video, or you, I can’t remember, talking about the accelerometer more accurately measuring respiration. Why why would the accelerometer do that better than sensor lead?

Tim Herbert, Chairman and CEO, Inspire: I well, technology has been around for for many years. Accelerometers have been standard technology and rate responsive pacemakers where if you go jogging, your pace makes better paces faster because it’s measuring your respiratory rate. So it is a proven technology that we’re able to apply into the Inspire five device to improve that. Secondly, the pressure sensing lead, while it was quite effective, you saw it was in the high 70% inspiratory overlap, provided a good respiratory signal. There is always some rotational element when you get between the intercostal muscles and some interface on how we’re measuring it and if the patient’s moving and body position.

So I think the accelerometer just provides a much stabler environment being inside the can, and the can is always flat in the chest wall when the patients, and it’s not as susceptible to patient movement. So we’ve already shown a little bit of improvement, and I think as we progress further that that we’ll continue to document, improved sensing.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: And, Tim, you still expect to complete the, transition to inspire five by the end of the year. Just remind us of the timeline for that kind of full transition, please.

Tim Herbert, Chairman and CEO, Inspire: We do. We’re making very good progress right now. We’ve trained the majority of the surgeons. Again, the surgeon’s relatively simple. They’re they do it’s a self training on a tablet where they’re able to go through the slides.

The primary focus is saying you don’t need to implant the pressure sensing lead anymore. How does that change interoperative testing? What are the new features of the device with step function and ramp? And so I think the training goes relatively quickly, and then the surgeons sign that off, and they’re qualified. Step two is the, contract phase where we have an addendum to the pricing agreements at the centers.

All the contracts are out to the sites. It’s a relatively simple change. You’re just adding a model number. And as you know, we have not changed the system level pricing, so we don’t need to go back through the value add committee. So that’s a very straightforward process.

We’re making very good progress with that. And the step is as mentioned in the slides is that we have gone to a new physician programmer that directly interfaces with SleepSync. And, therefore, the sites need to be on the SleepSync system to so the the data changes that they make when programming a patient’s device are automatically stored into SleepSync. So the majority of the top centers have already been on SleepSync. And that new programmer was approved by the FDA last year, so it’s been in play for quite some time.

But we need to work make sure all the centers adapting to Inspire five are on sleep sync. So that can take a little bit longer, up to thirty days or or longer if you if you’re a sophisticated site working with the IT departments. But we’re quite experienced, incorporating that. We don’t see that as a long term showstopper. And and so, yes, there we we fully expect to be, transitioned to Inspire five.

That said, Inspire four is still available. And so if, sites, wish to remain with Inspire four, if a physician desires to stay with Inspire four, it is, will continue to be available, but we believe the majority of surgeons, once they start implanting five, will quickly transition over to the the generation device.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: But, Tim, sticking with the clinical data, you’ve got WorldSleep in September, and then I think you have the I triple s meeting in October. So you’re gonna show additional datasets. September, I think it’s gonna be where data comparison for Inspire four versus five. Why is why is that important?

Tim Herbert, Chairman and CEO, Inspire: Well, that actually we showed a little bit of that in the slide. And the where data, comparing four to five, that’s actually the data we use of the clinical study we conducted to give the data to the FDA so they had confidence in the sensing and the algorithm of Inspire five. And with that data from the WARE study, that is what the FDA used to give us approval. The Singapore study is actually a post approval study where we’re conducting additional evidence to show. And and with that, we can collect AHI data as well.

And we’re gonna be showing some of that data when we get to World Sleep and when we get to the International Sleep Surgical Society meeting, which, by the way, is right in front of the big meeting, which is the American Academy of Olaryngology, which is the ENT society meeting. So, yes, we have, ongoing data generation and ongoing data reporting, And so it’ll be a big fall to be able to show some additional data.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: So you’re gonna show six month, p PSG or sleep study data on Inspire five at I triple s, AAO? We’re gonna try and

Tim Herbert, Chairman and CEO, Inspire: get that date yeah. We’re gonna try and get that data done. It’s gonna be, tight, to be able to get that through. So that’s the intent is to try and get most of that data available.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: You talked about improved therapy performance of the heading on one of the the lead slides. Is there anywhere besides the titration that you talked about that’s more comfortable for the patient? Anywhere you think you might be able to show a clinical benefit for Inspire five over Inspire four?

Tim Herbert, Chairman and CEO, Inspire: Well, I think the real clinical benefit is gonna be the reduction of the comorbidities. Of course, those are the ones that take longer periods of time when and larger numbers of patients to be able to monitor, but we are monitoring all those. When you look at the sleep parameters at AHI, we’re certainly gonna be looking at that. We did show you the slide from St. Louis or St.

Luke’s in Medical Center in St. Louis that showed significant improvement from the STAR trial in the share criteria with the HI responder rates pushing high seventy percent. That’s just phenomenal with the study of up to 60 patients and also showed, well, supine AHI has never been a concern of ours. We’ve been treating that since the beginning. But I think that’s one independent study that shows AHI.

We expect that we look forward to monitoring that data with Singapore as well because it’s not just INSPIRE five. It’s what we’ve learned over all these years in STAR. STAR, think about that. We conducted those implants in 02/2012. That’s we’re in in the year 2025 now.

That’s years ago. And 100,000 patients later and the amount of learning we have with patient selection, with implanting of the device, our outcomes today far surpassed what people are comparing to back in the STAR trial back then. And the St. Luke’s data is just one little piece of evidence to show our performance today is far significantly, improved versus what we had at the STAR trial. So yeah.

And we’re gonna continue to generate more, evidence ourselves as well as our, physician partners and our centers continue to generate it. What was really exciting at at the sleep meeting is when we walk to the poster sessions and all the fellows doing research, and there’s a whole row of people investigating different aspects of Inspire therapy. It’s really proud to be able to walk down the road and talk to the physician, talk to the fellows, let them understand the research that they did. Why did they choose to do research on that, and how they’re gonna continue that forward? And and we will partner with a lot of them to continue pushing that research because it’s just learning across the board.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: So, Tim, a couple other questions on Inspire five. One is you you’ve talked about the procedure time being 20% faster, but the the surgeon fee is also lower. You’ve talked about surgeons being able to do more cases to make up the difference. What what are you seeing? What are you hearing on that front?

The kind of time savings, but, you know, objectively, you know, slightly lower Mhmm. Surgeon physician fee.

Tim Herbert, Chairman and CEO, Inspire: Yeah. It all kinda works together. Let’s kinda walk through it a little bit. We know that when surgeons do more procedures, they become proficient with the procedure, and and therefore, they can do more cases because the OR time or the surgical time, skin to skin is significantly reduced. Couple of examples.

We have a surgeon in Hamburg, Germany. He’s very well versed in the Inspire procedure, but they have done 12 cases in one day. That was with Inspire four. Now in their in their situation, they can they’re very proficient. They do the procedures quickly, and they had two different rooms.

So as they’re cleaning one room, they go to a room, do another case, and go back and to the day. But they’re doing six cases in a single procedure during a day with Inspire four. In The United States, we’ve had a couple instances where physicians have done nine cases in one day with Inspire four. We know our top physicians can do the procedure in about thirty minutes. We think on average, we talked about Inspire five procedures being between forty five and sixty minutes, but we know that with practice and becoming more proficient, we can really get that down to about thirty minutes.

And when you start talking about the reimbursement rates of $600, which is a national average Medicare payment, of course, commercial payers pay higher than that, that calculates for a national average Medicare procedure at thirty minutes of $20 a minute, and that’s as strong as any other procedure that they do. With Inspire four, it’s a little less than that, but that’s still a very strong reimbursement rate on a per minute basis for for the ENT surgeons. It’s really about driving efficiencies, though, not just in the Operating Room, and that’s one example what an Inspire five does by driving that implant time down. Yes. It’s a reduced reimbursement, but there’s reduced work.

And the work that’s reduced is the work that the EMTs don’t wanna do, which is placing the pressure sensing lead. So it really works together. But, again, just we also have to build efficiencies outside the Operating Room so the ENT surgeons can spend a lot more time in the Operating Room. And one example is, we talk a lot about training APPs, advanced practice providers, which are nurse practitioners, which is physician assistants to be able to communicate with patients, give them the education tools, make sure that help them through the process so that ENTs don’t spend their time in the office with education aspects, but they could spend their time in the afternoon doing procedures where they can take advantage of the strong reimbursement that Inspire has at $20 a minute for an Inspire procedures. And if they can do more cases in a day, they can generate appropriate revenue for their practice.

So it really works hand in hand just building efficiencies outside, inside, and improving technology to maximize the reimbursement that’s there. And for those physicians, if they really wanna continue doing Inspire four, Inspire four is gonna continue to be available for them for a period of time. But I think once they get experience with Inspire five and improve their time to to do the procedure and not have to implant the pressure shunting lead, you’ll see them convert to a five, and and we won’t really talk about this reduction in in reimbursement.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Just remind us, Medicare is what percent of US implants? And do you have any idea, like, how much higher the physician fee is for commercial versus Medicare?

Tim Herbert, Chairman and CEO, Inspire: For a hospital and professional fee, we estimate commercials pay about 1.4 times that. And generally speaking, commercial cases make up sixty five, seventy percent of our cases. Medicare can make up thirty, thirty five. And then there’s a the VAs and military can can make up five. So if I did that right, it doesn’t add up to a 100.

But, generally, those are the numbers that that we’ve always talked about.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Alright. That that’s helpful. And and, Tim, on the q one call Mhmm. You talked about q two sales growth being slower because of patient warehousing in anticipation of Inspire five and and and work down of inventory of Inspire four at at at hospitals. Talk about what you’re seeing on these two fronts so far, please, and and if things been in line with your expectations.

Tim Herbert, Chairman and CEO, Inspire: I think they have. When we got to the q and earnings call, we had been on an extended limited market release, and so we spent more time with the centers understanding the dynamics there and and did see that we did have some patients who chose. They wanna wait for the Inspire five device, and that’s fine. And those are patients that really aren’t in the queue yet. Right?

Because they’re the doctors aren’t gonna put them into the queue until they have a chance to get Inspire five contracted, trained, and available at their sites, and then they’ll come back and get them in the queue and get them taken care of. We also know many sites are are working with a backlog of patients. So the patient’s already in the queue. They’re gonna be offering Inspire five as well. So we did see a little bit more of that.

So it’s kinda in line with what we were envisioning beforehand. The warehousing of of existing inventory and and working that down, that’s in process as the sites come on board. They work through their Inspire four inventory and then rebuild with Inspire five as they do their transition. So consistent from what we reported at the q one call.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Okay. So no surprises from your perspective. Things are playing out as expected.

Tim Herbert, Chairman and CEO, Inspire: Yes.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Okay. Okay. That’s helpful. Let me just scan my questions here. I mean, do you you think the bottom line is, though, Tim, on this position fee change, do you think it’s kinda overblown?

It sounds like I mean, I know there’s been a lot of investor focus on that. You think that the procedure time reduction is, you know, neutral to you know, more than offsets that?

Tim Herbert, Chairman and CEO, Inspire: Yeah. And the concerns are not unwarranted. We understand. I mean, everybody, you know, with a physician, follow the dollars. We’ve heard that before.

But the key to it is the reduction in the reimbursement is commensurate with the reduction of associated work. Now if they were doing the same procedure to procedure and the reduction goes down, that’s a concern. But in our case, it’s a reduction of work with a commencement reduction of reimbursement, but a reduction in time allowing them to do more cases in a given day. And it’s not just the professional fee with additional cases in a day. That adds a significant amount of revenue to the site of service, the hospital, or the ambulatory surgical center.

So there’s a greater benefit with the reduction of surgical time on the on the broader picture. So, no, the concerns are not unwarranted, but but I think I I don’t wanna say it’s overstated, but I think once you the physicians get comfortable with Inspire five with the reduced OR time, with the benefit it brings to hospitals, or if they’re a part of ambulatory surgical centers and the benefits that it brings the the overall ASC. I I don’t think this is gonna be an ongoing discussion.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Okay. And just one more kind of guidance question. Maybe Rick will jump in here. But, you know, the 2025 guidance, I think investors are concerned about the back half ramp. What what gives you the confidence if that’s realistic?

Remind us of what’s baked into the guidance for competitive trialing, please.

Rick Buchholz, CFO, Inspire: Yeah. We we did assume some competitive trialing in our guidance for for 2025. What’s included in in our guidance really for the half of the year is continued increase in capacity by adding more centers and more surgeons and also the improvement on productivity from a surgeon standpoint.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Okay. So as you sit here today, Tim, still confident in the in the in the half ramp?

Tim Herbert, Chairman and CEO, Inspire: Well, we’re confident with Inspire five, and what’s so exciting is to be able to show data and to show feedback from the physicians that the the excitement around five is is real. We have the inventory to support the the full launch with a stable production line. And so we’re very excited about continuing the rollout of five and and taking care of patients.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Okay. And I know, Tim, you love talking about the pipeline. Sure. We love talking about it too. So Inspire five, you’ve talked about as a platform for future upgrades.

What share, you know, some of how you’re thinking about these future upgrades.

Tim Herbert, Chairman and CEO, Inspire: Right. In the video, it did show kind of some pictures of the of the insides of the neurostimulator. It’s state of the art. And and the technology that we put in there with our integrated circuits and microprocessor based system really allows us to take this to the next level. And so one example is we’re already working on Inspire six right now.

And the the message that we had at the sleep meeting right now is we know to drive outcomes. We need to have the highest level of inspiratory overlap because then we can provide stimulation during the respiratory cycle, and that helps us prevent apnea. And that gets us the highest level of of outcomes. The part of that statement, and this applies to CPAP and everybody else, if the patients don’t use the therapy, it’s not gonna be effective. So therapy usage is so critical.

And what we showed from the Singapore data is we’re showing patients using the therapy over six hours a night. That’s really fantastic. And we wanna keep pushing that so that if we can maximize therapy usage or maximize the patient’s adherence to therapy, that’s something that’s really gonna be an advantage to patient outcomes, that’s what we’re all about. When we go to Inspire six, the the concept of Inspire six and what we’re targeting to do is detect sleep. And so we’ll know when the patient can fall asleep and when the patient wakes up, and the the vision is that we’re going to be able to turn the device on when the patient falls asleep, turn the device off when they wake up.

That way, taking therapy adherence to the highest level and along with the therapeutic stimulation because our closed loop system, we’re gonna have outcomes that are are gonna be even better than they are today. That’s what we’re really targeting. So very excited about six. When we go to future generations, we know that we can detect with our internal sensing if patients are having apneic events or if they’re having a position, what position they’re in, and and we can start to detect the performance of our system internally to our device. And then longer term, apply that learning to be able to have a device that may be able to auto titrate and auto adjust during a night to optimize outcomes throughout the night similar to what you hear see with the auto auto titrating CPAP machine.

And a auto titrating CPAP machine senses when a patient breathes and knows that it needs pressure high enough, when the patient breathes in to to prevent apneas and lower pressure when they exhale, but it optimizes that pressure to get outcomes. We’re doing the same thing except we’re have our device inside the body and stimulating the hypoglossal nerve. So a lot of excitement around that. And, really, this data is gonna be captured in our sleep sync. And now all of our centers will be using sleep sync with the Inspire five, and so we’ll be able to get a good view of outcomes across the board to be able to take those outcomes to the highest level.

And it’s also a tool to help centers efficiently manage their patient flow because we know they’re gonna be seeing a lot more patients, and we need to make sure that the sleep physicians are also equally set up to be able to manage those patients.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: So so if I go back to Rick’s comments earlier, basically, Inspire five, it it saves time, and some centers are gonna be able to do more procedures. It’s an easier procedure because you’re getting rid of the central lead, you’re gonna get more new surgeons. And that’s part of, like, that that’s the formula for accelerated growth. Is that simply Well,

Tim Herbert, Chairman and CEO, Inspire: that’s what we wanna do. Make existing centers, and so existing centers can do more cases in a day like we talked about. The centers are working on a backlog today, and and we still have strong patient demand. And so we need to go to those physicians and we need to train your partners to build some capacity at these existing centers. And then finally, we’re gonna continue to keep opening centers as we have since approval back in 02/2014.

We’ll keep adding new centers as well. So it’s really a three pronged event and really taking advantage of what you just described with the benefits of Inspire five, not only reduced OR time, comfort with the surgeons to do the procedure now that they don’t have to go into the chest wall. Some of the surgeons that are trained today, but they just don’t do a significant number of procedures, the low productive accounts. Well, now we get to go back to them saying, hey. Remember that pressure sensing lead?

That’s gone. We don’t do that anymore. Now you can come back and do it just the stimulation lead and the neurostimulator that’s kinda more in the wheelhouse of of the ENT surgeons and reengage those previously trained surgeons. So that’s a big effort that we’re putting in right now too. So about four different groups that we’re going after that that can help us treat an additional the the the new wave of patients coming through.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: I mean, Tim, it’s so early. You just had the full launch in May. Are you seeing any evidence of that where surgeons

Tim Herbert, Chairman and CEO, Inspire: some of these new groups of surgeons saying, hey. Now that the central lead is gone, I wanna do I’m I’m interested. Well, it’s it’s too early as you say. But with the surgeons that have it, we know what the positive experience, and we know a lot of the even the surgeons in the limited limited market release, they had patients waiting for Inspire five, they had patients in their mind waiting for Inspire five. So we already know with those centers that they wanna be able to do more cases as well.

So early on, but but even with the LMR sites, we’re seeing positive activity.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Alright. Alright. So fourteen minutes left, and, you know, you’ve you’ve got this exciting Inspire five launch going on, but there’s more kind of, I guess, noise in the market, if you will, with, you know, competition, drug therapy. So let’s try to tackle that. GLP ones, someone sent me an article before this call from MedPage today that talked about, you know, interest in GLP ones among sleep apnea patients at the that that was discussed at the sleep meeting.

What what are you what what are you seeing? Is this we know there’s the puts and takes. Is this kinda net neutral? Is it too early? What what what are you seeing today?

Tim Herbert, Chairman and CEO, Inspire: Well, I I yes. It’s too early. I mean, Lily had presence right next to us at the sleep meeting, and they’re still trying to figure out how the sleep physicians are gonna manage patients on GLP one. It’s not they’re not set up to do the prescriptions and do the management. While they wanna put the peep the patients on CPAP, they can also refer them either to their weight management clinic or back to the family practice doctors to have the weight management clinic and the family practice doctors prescribe the GLP ones and manage that long term.

And I think that’s what’s really happening today. But when the when the patients come to the state physicians, they they don’t wanna wait six, nine months to see if it’s gonna work. They’re putting them on CPAP right away. So we’re still trying to track how that all plays out. In the end, we know there are a lot of patients with a high BMI that we’re just unable to treat because of the lateral wall collapse, and and hypoglossal nerve stimulation does not treat complete concentric collapse, period.

We all stimulate the tongue and move the tongue forward. We don’t stiffen the lateral walls. That’s a different mechanism, a different nerve bundle that needs to be stipped, and we’re continuing on with our own research to do that as well. But I think that the GLP one the concerns aren’t as great. We’re tracking it really closely to see how patients are responding to that.

But, again, what we hear is in what we see as patients actively on GLP ones in our in our range coming in to receive therapy, and we put some of that data out a couple quarters ago showing patients actively receiving Inspire therapy while on a GLP one. So we know it’s real, and, again, little bit early days. But we do expect that that will continue to GLP ones will continue to increase awareness of sleep, which is great. We’ll be able to treat patients with a high BMI and hopefully reduce their lateral wall collapse to make them qualify for Inspire. And for those patients that don’t have tongue based obstruction, and they can take a GLP one and reduce their AHI to a mild or or normal range, that’s great.

But those are never been our patients anyways because they don’t have tongue based obstruction. So we like the GLP ones, and we continue to monitor the progress and thinks that it will be complementary to Inspire in the long run.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Hey, Tim. I’m sure you monitor kind of the top of the funnel. You you probably have, you know, hits to your website. You maybe you monitor, you know, dice tests and things like that, other data. Are you seeing any impact of GLP one positive or negative to kind of the top of the funnel?

Tim Herbert, Chairman and CEO, Inspire: Well, it’s hard for to even pinpoint that. I I think that we continue the funnel, but that’s more of a function of our DTC and how we build our awareness. And we purposely took our DTC down a little bit at the beginning of the year as we were preparing for the launch. And now that we’ve gotten into into five, you’re gonna see that increase through the year. And and so it’s kinda hard to see what’s driving that that activity.

But I think, we’ve monitored the GLP ones, and I it’s just not that evident yet. But we continue to communicate with our sleep physicians, our ENTs to see the patient demand. But we know the demand remains high, and we know most of our big big systems are working off quite a extensive backlog.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Right. So let’s talk about comp you’re gonna face the competition potentially, you know, second half of this year, assuming Nexo gets approval in the second quarter. Maybe at a high level, how do you think what what’s the basis of competition here? How do you think physicians and patients are gonna choose, you know, one device over the other?

Tim Herbert, Chairman and CEO, Inspire: Right. Well well, again, let’s go to the highest level, I think. Just like we talked about GLP ones being beneficial to the overall sleep sleep market, diagnostic tools get better and and are increasing the overall, diagnostic rate for sleep. Competition could be a good thing. Right?

Competition can build awareness and and can show credibility for the technology. The challenge is the competition has to provide the proper level of of safety and efficacy as well. So, any comp competitor coming out and if they get approval, they’re gonna make sure that in a real world setting that they continue to deliver that. And the market’s gonna decide their presence going forward. So, yeah, I I think with the success that we’ve had with our new technology, we know we’re gonna have competition.

There’s no there’s no question about that. We know there are numerous players out there, but we’ve really dug in, and we’ve worked hard to develop our technology and really build our position. Just launching Inspire five and showing evidence that comparing to our data back in 02/2012, no. No. No.

No. The market’s evolved, and and the efficacy expectations are much greater. Having all patients receive proper therapy is really important, so the safety profile is something that the market’s gonna closely monitor. I think if they get approval, I think, yeah, the academic centers, it’s their job to test new technology to see how it stacks up. Do they have a positive experience with it?

Are the are the patients gonna weigh in? And so we know those sites are gonna do trialing, and we don’t have any issue with that. And I think that’s fine. I think that we’ll continue to do our job with our new technology, continue to invest in our r and d as we as we talked about and keep pushing outcomes higher and higher and higher and keep raising the bar and making it challenging for the for the competitors to adapt technology and be innovative to be able to bring new things to market. But I’m sure we’ll continue to have competition in years to come.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Can the you know, Nixola has tried to differentiate themselves with the supine versus non supine data. Do you think that the data you showed us earlier, fifty nine or so patients retrospective, is that enough to kinda neutralize, you know, their kind of marketing message? What’s the plan to for that sender to publish that data?

Tim Herbert, Chairman and CEO, Inspire: Well, off, it’s always been a nonissue. That since I’ve started on Inspire back when I worked at at Medtronic, we knew and I think it was in the video, I think, that it talked a little bit about synchronization and also talked about without synchronization, I increase in AHI and especially in supine AHI. We all know you have to treat supine AHI primarily. And if you roll on your side, it’s a lot easier to treat those patients. So we’ve been dealing with supine AHI since the beginning of the INSPIRE project.

It’s part of our FDA approval process. We titrate our patients in a supine position, so it’s a nonfactor. But here, we have an independent site conduct their own research to kinda put that to bed, and then we’re gonna continue to show more and more data about how we treat supine HI. So we don’t think that’s really gonna be a significant factor at all.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: And how are you guys gonna address complete concentric collapse, another area that Myxoa and Levonova are trying to differentiate themselves? Well, the key is gonna

Tim Herbert, Chairman and CEO, Inspire: be they both stimulate the hypoglossal nerve, and we know the hypoglossal nerve stimulates and and, innervates the genioglossus muscle, which is the tongue muscle. And both of the therapies move the tongue forward. And I think the key to it is by moving the tongue forward, you cannot stiffen the lateral walls. And, I think that as they progress in time and we need to see the data. And to this point, you haven’t seen any data on the ability to treat complete concentric collapse.

And I think even when you do see data, the thing you need to look for is BMI. And the predictor study has already shown the patients that have a BMI less than thirty two. Very few of them really have significant lateral wall collapse and leading to complete concentric collapse. What we’re talking about with complete concentric collapse is high BMI patients that have significant lateral wall collapse, and these are patients that have apneic events, not hypopnea events, real true apneic events. And we know LivaNova screened out patients that had high apnea index, meaning they’re not treating the severe patients at the beginning, so they’re really not treating complete concentric collapse anyways.

So I think our dual channel device is one that’s gonna really go after the high BMI. Today, we’re relying on GLP ones to help those patients lose weight and relax the lateral walls. But I don’t think any of the players are really gonna have much success treating complete concentric collapse in a high BMI patient. And a low BMI patient, those patients don’t really have complete concentric collapse anyways. And that’s what we’ve shown from the predictor study.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: And, Tim, one more on on competition. So I think Myxilla expects to use the same CPT code as Inspire five. But the if you look at the description, it it it I it calls for, you know, an implantable pulse generator. It’s not clear if they truly are, you know, implanting a pulse generator. Do you have an opinion as to whether they’re gonna have success using that code and how that you know, I’m interested to know how that might impact the the ramp, you know, the adoption, which obviously impacts you.

Tim Herbert, Chairman and CEO, Inspire: Yeah. I think, Larry, this is above you and I’s pay grade. And this is all determined by certified coders. These are people that go to training. They take their test.

They’re qualified and certified to look at procedures and to determine the proper CPT code and if a proper procedure is applicable. And the certified coders looked at Inspire, and that’s why we’re using 64568 versus our previous 64582 because we don’t have the pressure sensing lead anymore. And with the implantable neurostimulator, I don’t wanna opine on that, but we’ll leave it to the certified coders to determine if a external source is the same as a implanted pulse generator. So I think the jury is is way out on that one. And until they really get approval and then get some some publications out there to show payers that covering their devices warranted, that that the next step after that will even be the coding.

So I think we’re quite some period away before you’ll hear more on that.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Just that’s is that something that’ll take, like, six to twelve months before we, you know, we and and and physicians learn? Like, how long does it take before the market understands if the if payers are going to accept that code?

Tim Herbert, Chairman and CEO, Inspire: Well, payers are gonna make sure that you gotta have peer reviewed publications to show that your your data is safe and efficacious before they’re even gonna look at it. And getting an FDA approval is not evidence that you’re safe and effective. It is. The FDA does a great job at looking at the studies, seeing if you hit your endpoints. And if they give approval, that’s an endorsement that they can proceed onto the reimbursement phase, but then it’s a whole new world.

And, Larry, you’ve been with us for a long time. You you remembered took five years for us to have sufficient evidence, large studies, five year data to be able to get proper coverage, and, it’s gonna it that just takes some time.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Alright. Two minutes left. K. Of course. I I have to give the give you give you the last word.

We we covered a lot of ground. But, yeah, I’d love to hear from you again maybe on a high level, key messages, anything we you wanted to cover that we didn’t have time to cover, and thank you for your time.

Tim Herbert, Chairman and CEO, Inspire: Oh, thank you, Larry, for, again, hosting us on these r and d spotlight calls. And it’s so fun, being an engineering background myself, to really kinda highlight the focus that we put on the r and d efforts and specifically around patient outcomes. And every employee here knows patient outcomes is everything. That’s the one slippery slope you never go down with the payers to take care of patients, and and we gain patient confidence. We gain our physician confidence that to that they know when they prescribe Inspire that the team Inspire’s gonna be behind our device.

We’re gonna do everything we can to make sure every patient has the the best possible outcome, and and and we’re committed to that. Thanks for for all the coverage that you do. You bring to light a lot of the concerns that investors have over the environmental factors such as the GLP ones. We didn’t touch on some of the other drugs in investigation, and we know the history that’s showing that that they’re set up to be able to treat more of a a mild, population, but it builds awareness to it. The technology is building the awareness around it, and and we also understand the concerns that when you do a new product launch is always a challenge on on the patient flow by going from the Inspire four technology into our Inspire five and the concerns around coding.

And and so you’re able to, Larry, with your with your work to show the concerns that the investors have. And and we at Inspire remain committed to our patients, remain committed to our customers, and, of course, remain committed to our shareholders to work as hard as we can every day to deliver what we promise and make sure that we deliver the strong patient outcomes that we believe will, in turn, continue to lead to our increased and continued growth of of Inspire. And now we can do it in a profitable manner as as we did last year and as we kinda lean into this year. So thanks everybody for attending and and and hearing the story and for your confidence in Inspire and and ongoing support of Inspire.

Larry Biegelsen, Medical Device Analyst, Wells Fargo: Oh, perfect. Well, Tim, Rick, Esky, thanks so much. Everybody on the line, thanks for listening. Hope everybody has a great weekend.

Tim Herbert, Chairman and CEO, Inspire: We’ll Thanks. We’ll end it then. Alright, Larry. Very good. Take care.

Thanks much.

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