Last Update 11 Dec 25

Fair value Increased 8.88%

INSP: Medicare Reimbursement Upside Will Offset Ongoing Execution And Competitive Risks

Analysts have raised their fair value estimate for Inspire Medical Systems by about $10 to roughly $128 per share, citing positive surprises in Medicare and commercial reimbursement that are expected to support higher pricing, stronger long term growth, and justify a higher earnings multiple.

Analyst Commentary

Recent Street research reflects a notable shift in sentiment toward Inspire Medical Systems, with several bullish analysts highlighting the impact of unexpectedly favorable reimbursement decisions and the company’s improving execution, while more cautious voices focus on operational headwinds and valuation risk.

Bullish Takeaways

Bullish analysts see the surprise Medicare and outpatient reimbursement increases as structurally lifting average selling prices and unit economics, supporting higher long term revenue growth assumptions and justifying richer revenue based valuation multiples.
Upgrades and higher price targets are being driven by greater confidence in 2026 to 2027 estimates, as better reimbursement is expected to improve provider incentives, accelerate hypoglossal nerve stimulation procedure volumes, and de risk future guidance.
Some research notes point to easing headwinds around patient flow and marketing, with stepped up advertising and patient warehousing now expected to translate into stronger volume growth in 2026, improving operating leverage over time.
Bullish analysts also argue that near term volatility has created an attractive entry point for a differentiated small and mid cap medtech name, contending that paying a premium multiple on estimated 2026 revenue is reasonable given the company’s growth profile and potential strategic interest.

Bearish Takeaways

Bearish analysts highlight lingering downside risks to near term sales growth and earnings, citing capacity utilization bottlenecks, implementation issues around new initiatives, and the need for higher operating expenses to resolve physician and workflow challenges.
Some caution that sentiment remains fragile following reduced 2025 revenue guidance, with expectations for only low double digit growth and another transition year as the company works through product ramp and execution issues.
There is concern that GLP 1 weight loss therapies and emerging competitive therapies could pressure procedure volumes and dampen the longer term growth algorithm, especially if reimbursement momentum slows.
A subset of bearish analysts has lowered price targets to reflect execution risk and uncertainty around the durability of recent reimbursement gains, warning that any disappointment versus elevated 2026 expectations could drive renewed multiple compression.

What's in the News

Grant & Eisenhofer P.A. filed a securities class action in the U.S. District Court for the District of Minnesota alleging Inspire Medical and senior executives misled investors about the Inspire V launch, market demand, launch readiness, and reimbursement timing, after the company cut 2025 earnings guidance by more than 80% and the stock fell about 32% in one day (class action filing).
Inspire Medical completed a share repurchase tranche, buying back 552,423 shares, or about 1.87% of shares, for $90.49 million under its previously announced buyback program (company disclosure).
The company raised its 2025 diluted EPS guidance to a range of $0.90 to $1.00, up from prior guidance of $0.40 to $0.50, while maintaining 2025 revenue guidance of $900 million to $910 million, which the company stated implies 12% to 13% growth over 2024 (company guidance update).
New clinical and limited market release data for Inspire V from Singapore and 10 leading U.S. centers showed shorter surgical times, strong safety, high therapy adherence, and superior outcomes to Inspire IV, supporting the company’s plans for broader commercialization (clinical and conference data release).
Nyxoah filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware alleging Inspire IV and Inspire V infringe three Nyxoah patents and seeking injunctive relief and damages (patent litigation filing).

Valuation Changes

Fair Value Estimate has risen modestly from about $118 per share to about $128 per share. This reflects higher confidence in future earnings and reimbursement durability.
Discount Rate has decreased slightly from approximately 7.72% to approximately 7.69%. This indicates a marginally lower perceived risk profile in the cash flow outlook.
Revenue Growth assumption is essentially unchanged at roughly 11.4% annually. This suggests no material shift in long term top line growth expectations.
Net Profit Margin forecast remains effectively flat at around 7.6%. This implies stable expectations for long term profitability.
Future P/E multiple has increased from about 42.5x to about 46.3x. This signals a somewhat richer valuation being applied to projected earnings.

Transitory operational delays are expected to resolve soon, positioning the company for accelerated growth as new system adoption and reimbursement improvements unfold.
Market expansion and clinical enhancements will boost provider capacity and adoption, supporting sustained long-term revenue growth amid rising demand for sleep health solutions.
Execution delays, increased competition, operational missteps, and evolving market dynamics threaten revenue stability, margins, and long-term growth prospects for Inspire Medical Systems.

Catalysts

About Inspire Medical Systems

A medical technology company, focuses on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea (OSA) in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The recent delay in transitioning centers to the Inspire V next-generation system-including slower onboarding, delayed SleepSync implementation, and the Medicare billing update-are transitory issues; as these barriers resolve (with Medicare billing now live and most centers expected to complete onboarding by end of Q3), procedure volumes and revenue growth are positioned to reaccelerate in 2026 as pent-up demand is realized.
Expanded coverage and proposed reimbursement increases for Inspire's procedures (notably the expected 2026 Medicare OPPS rule enhancements and near-complete payer coverage of the new CPT code) will reduce patient out-of-pocket costs and incentivize additional adoption, supporting both revenue growth and longer-term earnings visibility.
The second half of 2025 will see a ramp in marketing and new center expansion following a purposeful pause in H1 amid the Inspire V launch; this resurgence in patient education, awareness campaigns, and provider capacity building should drive higher procedure volumes and top-line acceleration into 2026 and beyond.
Inspire V's clinical enhancements-shorter procedure times (20% reduction), elimination of the pressure-sensing lead, and workflow simplification-are already increasing implant throughput at transitioned centers (20%+ higher volumes), suggesting a meaningful lift in provider capacity and future revenue as the full installed base adopts these improvements.
Increasing prevalence of obstructive sleep apnea and rising global focus on sleep health are fueling ongoing expansion of Inspire's addressable market; as obesity rates and aging populations climb, structural demand tailwinds are likely to translate into sustained long-term procedure and revenue growth for the company.

Inspire Medical Systems Earnings and Revenue Growth

Inspire Medical Systems Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Inspire Medical Systems's revenue will grow by 14.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 6.2% today to 8.0% in 3 years time.
Analysts expect earnings to reach $103.6 million (and earnings per share of $3.28) by about September 2028, up from $53.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $131.8 million in earnings, and the most bearish expecting $55 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 48.4x on those 2028 earnings, up from 45.4x today. This future PE is greater than the current PE for the US Medical Equipment industry at 29.7x.
Analysts expect the number of shares outstanding to decline by 1.31% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.42%, as per the Simply Wall St company report.

Inspire Medical Systems Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The slower-than-expected rollout of Inspire V, driven by delays in center training, contracting, onboarding, and technical hurdles with implementing SleepSync, has materially reduced near-term revenue growth rates and deferred volume expansion, increasing execution risk and potentially causing a protracted recovery in revenue and margins into 2026.
Increased dependence on a single primary product (Inspire V) and the complexities of transitioning from Inspire IV introduce risks of technological obsolescence, operational missteps, or further customer delays, which could threaten stability of long-term revenue growth and earnings visibility if competitive alternatives emerge or adoption lags.
The need for higher patient marketing and territory expansion spend in the face of revenue pressure has driven operating expenses up faster than revenue growth, compressing net margins and earnings per share; this cost trend could persist if Inspire Medical Systems must continue elevated spend to regain growth momentum and offset competitive threats.
The potential for structural changes in sleep apnea therapy-such as increased use of GLP-1 drugs for weight loss (reducing OSA prevalence or changing patient eligibility) and broader adoption of non-invasive digital health solutions-could permanently shrink Inspire's addressable market or reduce demand for surgically implanted devices, thereby impacting long-term revenue growth and profitability.
Changes in reimbursement dynamics, especially regarding Medicare and shifting CPT codes, have created temporary barriers but also hint at a long-term risk: payer and regulatory pressure could limit coverage, reduce pricing power, or discourage high-volume implanters from treating certain patient groups-putting sustained pressure on both revenue and margins over time.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $144.533 for Inspire Medical Systems based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $230.0, and the most bearish reporting a price target of just $97.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $103.6 million, and it would be trading on a PE ratio of 48.4x, assuming you use a discount rate of 7.4%.
Given the current share price of $81.47, the analyst price target of $144.53 is 43.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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