Inspire Medical Systems, Inc 10-Q for FY2026 Q3
Inspire Medical Systems, Inc. (INSP)
10-Q
2026-11-02
For: 2026-09-30
View Original
Added on
November 02, 2026
About this 10-Q
Inspire Medical Systems, Inc filed this 10-Q on November 2, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Inspire Medical Systems, Inc. reported nine-month revenue of $611.9 million, down 4.8%, and net loss of 35,374, with coding, reimbursement and WISeR headwinds; Project Horizon targets approximately $30 million of annualized growth investment capacity. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $206.7M
- down 7.9% from $224.5M a year earlier
- Net loss
- $24.39M
- compared with net income of $9.93M a year earlier
- Diluted EPS
- -$0.84
- compared with $0.34 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
________________________________
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| For the transition period from to | |||||
Commission File Number: 001-38468
______________________________
(Exact name of registrant as specified in its charter)
______________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
(844 ) 672-4357
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 28, 2026, the registrant had 28,966,119 shares of common stock, $0.001 par value per share, outstanding.
Table of Contents
| Page | |||||||||||
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the Quarterly Report) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical fact contained in this Quarterly Report are forward-looking statements, including, without limitation, statements regarding our future results of operations and financial position, business strategy, the impact of macroeconomic trends on our business, financial results and financial position, prospective products, international product approvals and commercializations, our expectations regarding coding and reimbursement levels for Inspire therapy procedures, our competition, research and development costs, timing and likelihood of success, other insurance providers' plans to begin approving our Inspire therapy, our sales and marketing initiatives, potential supply chain disruptions, and the plans and objectives of management for future operations.
In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties, and assumptions, including, but not limited to:
•our dependency on our Inspire system for revenues;
•fluctuations in our financial results and the market price of our common stock;
•our ability to sustain or increase our profitability;
•commercial success and market acceptance of our Inspire therapy;
•our ability to achieve and maintain adequate and clear levels of coverage or reimbursement for our Inspire system or any future products we may seek to commercialize;
•competitive companies, technologies, and pharmaceuticals in our industry;
•our ability to expand our indications and develop and commercialize additional products and enhancements to our Inspire system;
•our ability to forecast demand and manage our inventory;
•our dependence on third parties;
•risks related to consolidation in the healthcare industry;
•our ability to expand, manage, and maintain our direct sales and marketing organization, and to market and sell our Inspire system in markets outside of the United States;
•our ability to manage our growth;
•risks related to product liability claims and warranty claims;
•our ability to address quality issues that may arise with our Inspire system;
•any failure of key information technology systems, processes, or sites or damage to or inability to access our physical facilities;
•any violations of anti-bribery, anti-corruption, and anti-money laundering laws;
•future needs for additional financing;
•risks related to our tax assets and changes in tax laws;
•our ability to timely commercialize or obtain regulatory approvals or certifications for our Inspire therapy and system;
3
•U.S. Food and Drug Administration (FDA) or other United States or foreign regulatory actions affecting us or the healthcare industry generally;
•our ability to establish and maintain intellectual property protection for our Inspire therapy and system or avoid claims of infringement;
•our strategic growth plan may not achieve our intended outcome; and
•other important factors that could cause actual results, performance, or achievements to differ materially from those contemplated that are found in "Part I, Item 1A. Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and under "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
Unless the context requires otherwise, references to “Inspire,” the “Company,” “we,” “us,” and “our,” refer to Inspire Medical Systems, Inc. and its subsidiaries.
4
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Inspire Medical Systems, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
| September 30, 2026 | December 31, 2025 | |||||||||||||
| (unaudited) | ||||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Investments, short-term | ||||||||||||||
Accounts receivable, net of allowance for credit losses of $ | ||||||||||||||
| Inventories, net | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Investments, long-term | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Operating lease right-of-use assets | ||||||||||||||
| Deferred tax assets | ||||||||||||||
| Other non-current assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Operating lease liabilities, non-current portion | ||||||||||||||
| Other non-current liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and contingencies (Note 9) | ||||||||||||||
| Stockholders' equity: | ||||||||||||||
Preferred Stock, $ | ||||||||||||||
Common Stock, $ | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Accumulated other comprehensive (loss) income | ( | |||||||||||||
| Accumulated deficit | ( | ( | ||||||||||||
| Total stockholders' equity | ||||||||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||||||||
See accompanying notes to the consolidated financial statements.
5
Inspire Medical Systems, Inc.
Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||||||||
| Operating (loss) income | ( | ( | ||||||||||||||||||||||||
| Interest and dividend (income), net | ( | ( | ( | ( | ||||||||||||||||||||||
| Other expense, net | ||||||||||||||||||||||||||
| (Loss) earnings before income taxes | ( | ( | ||||||||||||||||||||||||
| Income tax (benefit) expense | ( | |||||||||||||||||||||||||
| Net (loss) earnings | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Basic (loss) earnings per share | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Diluted (loss) earnings per share | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
6
Inspire Medical Systems, Inc.
Consolidated Statements of Comprehensive (Loss) Income (unaudited)
(in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net (loss) earnings | $ | ( | $ | ( | ||||||||||||||||||||||
| Other comprehensive (loss) income: | ||||||||||||||||||||||||||
| Foreign currency translation gain (loss) | ( | ( | ||||||||||||||||||||||||
| Unrealized (loss) gain on investments, net of tax | ( | ( | ||||||||||||||||||||||||
| Total comprehensive (loss) income | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
7
Inspire Medical Systems, Inc.
Consolidated Statements of Stockholders' Equity (unaudited)
(in thousands, except share amounts)
| Nine Months Ended September 30, 2026 | |||||||||||||||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||||||||||||||
| Shares | Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock options exercised, net | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units, net | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at March 31, 2026 | ( | ( | |||||||||||||||||||||||||||||||||
| Stock options exercised, net | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units, net | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||
| Issuance of common stock for employee stock purchase plan | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Stock options exercised, net | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units, net | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
8
Inspire Medical Systems, Inc.
Consolidated Statements of Stockholders' Equity (unaudited)
(in thousands, except share amounts)
| Nine Months Ended September 30, 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||||||||||||||
| Shares | Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock options exercised, net | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units, net | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Accelerated share repurchase of common stock | ( | — | — | — | — | — | |||||||||||||||||||||||||||||
| Share repurchase of common stock | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | ( | ||||||||||||||||||||||||||||||||||
| Stock options exercised, net | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units, net | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||
| Issuance of common stock for employee stock purchase plan | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock options exercised, net | — | — | — | ||||||||||||||||||||||||||||||||
| Vesting of restricted stock units and performance stock units, net | ( | ( | |||||||||||||||||||||||||||||||||
| Issuance of common stock | — | — | — | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
| Share repurchase of common stock | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
| Net earnings | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
9
Inspire Medical Systems, Inc.
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Operating activities | ||||||||||||||
| Net (loss) earnings | $ | ( | $ | |||||||||||
| Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Accretion of investment discount | ( | ( | ||||||||||||
| Stock-based compensation expense | ||||||||||||||
| Deferred income tax expense | ||||||||||||||
| Impairment charges | ||||||||||||||
| Other non-cash expenses | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Accounts receivable | ( | |||||||||||||
| Inventories | ( | ( | ||||||||||||
| Prepaid expenses and other current assets | ( | ( | ||||||||||||
| Accounts payable | ||||||||||||||
| Accrued expenses and other liabilities | ( | ( | ||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| Investing activities | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Purchases of investments | ( | ( | ||||||||||||
| Proceeds from sales or maturities of investments | ||||||||||||||
| Net cash provided by investing activities | ||||||||||||||
| Financing activities | ||||||||||||||
| Proceeds from the exercise of stock options | ||||||||||||||
| Share repurchase of common stock | ( | |||||||||||||
| Payment of taxes on net share settlement of equity awards | ( | ( | ||||||||||||
| Proceeds from issuance of common stock from employee stock purchase plan | ||||||||||||||
| Net cash (used in) financing activities | ( | ( | ||||||||||||
| Effect of exchange rate on cash | ( | |||||||||||||
| Increase (decrease) in cash and cash equivalents | ( | |||||||||||||
| Cash and cash equivalents at beginning of period | ||||||||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||||||||
| Supplemental cash flow information | ||||||||||||||
| Capital expenditures included in accounts payable and accrued expenses | $ | $ | ||||||||||||
See accompanying notes to the consolidated financial statements.
10
Inspire Medical Systems, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(Table amounts in thousands, except share and per share amounts)
1. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of Inspire Medical Systems, Inc. (we, us, our, or the Company) have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The information included in this Form 10-Q should be read in conjunction with our most recent Form 10-K. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein. The results of operations for the three- and nine-month periods ended September 30, 2026 are not necessarily indicative of the results to be expected for the full year.
Seasonality
Historically, we have experienced seasonality in our first and fourth fiscal quarters, and we expect this trend to continue. In the U.S., we have experienced, and may in the future experience, higher sales in the fourth quarter as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs. Conversely, in the first quarter, many U.S. patients' insurance deductibles reset, requiring more out-of-pocket costs, which negatively impacts our sales during this period.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income-Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). The guidance requires the disclosure of additional information related to certain costs and expenses, including amounts of inventory purchases, employee compensation, and depreciation and amortization included in each income statement line item. ASU 2024-03 also requires disclosure of the total amount of selling expenses and our definition of selling expenses. The ASU is effective for the annual reporting period beginning after December 15, 2026 and interim reporting periods within the annual reporting period beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact that adoption of this ASU may have on our financial statements and disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Targeted Improvements to the Accounting for Internal-Use Software. This ASU modifies the criteria for when software costs may be capitalized by eliminating consideration of software project development stages and by enhancing guidance for the "probable-to-complete" threshold. The update is effective for annual reporting periods beginning after December 15, 2027 including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact that adoption of this ASU may have on our financial statements and disclosures.
We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures.
2. Financial Instruments
Investments
Investments are classified as available-for-sale and are reported at their estimated fair market values which are based on quoted, active or inactive market prices when available.
11
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
| September 30, 2026 | ||||||||||||||||||||||||||
| Amortized | Unrealized Gross | Aggregate | ||||||||||||||||||||||||
| Cost | Gains | Losses | Fair Value | |||||||||||||||||||||||
| Short-Term: | ||||||||||||||||||||||||||
| Commercial paper | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Corporate debt securities | ( | |||||||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||||||||
| U.S. Treasury debt securities | ( | |||||||||||||||||||||||||
| Short-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Long-Term: | ||||||||||||||||||||||||||
| Corporate debt securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Asset-backed securities | ( | |||||||||||||||||||||||||
| U.S. Treasury debt securities | ( | |||||||||||||||||||||||||
| Long-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Amortized | Unrealized Gross | Aggregate | ||||||||||||||||||||||||
| Cost | Gains | Losses | Fair Value | |||||||||||||||||||||||
| Short-Term: | ||||||||||||||||||||||||||
| Commercial paper | $ | $ | $ | $ | ||||||||||||||||||||||
| Corporate debt securities | ||||||||||||||||||||||||||
| U.S. Treasury debt securities | ( | |||||||||||||||||||||||||
| Short-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Long-Term: | ||||||||||||||||||||||||||
| Corporate debt securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Asset-backed securities | ||||||||||||||||||||||||||
| U.S. Treasury debt securities | ||||||||||||||||||||||||||
| Long-term investments | $ | $ | $ | ( | $ | |||||||||||||||||||||
The following table shows the fair value of our available-for-sale securities by maturity:
| September 30, 2026 | December 31, 2025 | |||||||||||||
| Due in one year or less | $ | $ | ||||||||||||
| Due after one year through five years | ||||||||||||||
The following tables show all available-for-sale investments in an unrealized loss position for which an allowance for credit losses has not been recorded and the related gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
12
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
| September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||||||||||||||||
| Commercial paper | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
| Corporate debt securities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Asset-backed securities | ( | ( | ||||||||||||||||||||||||||||||||||||
| U.S. Treasury debt securities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||||||||||||||||
| Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | |||||||||||||||||||||||||||||||||
| Corporate debt securities | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
| U.S. Treasury debt securities | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
Currently, we do not intend to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. We do not consider those investments to be other-than-temporarily impaired as of September 30, 2026. We recognized no no
Fair Value of Financial Instruments
Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets); Level 2 (inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly); and Level 3 (unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions). We do not have any Level 3 financial assets or liabilities.
The following tables set forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of September 30, 2026 and December 31, 2025.
13
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
| Fair Value Measurements as of | ||||||||||||||||||||||||||
| September 30, 2026 | ||||||||||||||||||||||||||
| Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Total cash equivalents | ||||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||
| Corporate debt securities | ||||||||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||||||||
| Asset-backed securities | ||||||||||||||||||||||||||
| U.S. Treasury debt securities | ||||||||||||||||||||||||||
| Total investments | ||||||||||||||||||||||||||
| Total cash equivalents and investments | $ | $ | $ | $ | ||||||||||||||||||||||
| Fair Value Measurements as of | ||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Estimated Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
| Total cash equivalents | ||||||||||||||||||||||||||
| Investments: | ||||||||||||||||||||||||||
| Commercial paper | ||||||||||||||||||||||||||
| Corporate debt securities | ||||||||||||||||||||||||||
| Asset-backed securities | ||||||||||||||||||||||||||
| U.S. Treasury debt securities | ||||||||||||||||||||||||||
| Total investments | ||||||||||||||||||||||||||
| Total cash equivalents and investments | $ | $ | $ | $ | ||||||||||||||||||||||
Equity Securities without Readily Determinable Fair Values
14
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
3. Inventories
Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis and consisted of the following:
| September 30, 2026 | December 31, 2025 | |||||||||||||
| Raw materials | $ | $ | ||||||||||||
| Work in process | ||||||||||||||
| Finished goods | ||||||||||||||
| Total inventories, net of reserves | $ | $ | ||||||||||||
4. Stockholders' Equity
Share Repurchases
We periodically repurchase shares of our common stock under board-authorized repurchase programs through a combination of open market transactions, accelerated share repurchase arrangements, and other privately negotiated transactions with financial institutions. As of September 30, 2026, $100.0 million remained available for future repurchases under the current share repurchase program.
Information regarding the shares we repurchased and retired was as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Number of shares purchased | ||||||||||||||||||||||||||
| Average price paid per share | $ | $ | $ | $ | ||||||||||||||||||||||
| Total value of shares repurchased | $ | $ | $ | $ | ||||||||||||||||||||||
5. Stock-Based Compensation
We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of restricted stock units (RSUs), performance stock units (PSUs), and non-statutory and incentive stock options to employees, and RSUs, PSUs, and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan (ESPP) which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. As of September 30, 2026, there were 7,663,244 shares reserved for issuance under our equity incentive plan, of which 3,565,061 shares were available for issuance.
Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is the vesting period or term to become eligible for a qualified retirement for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs, and is reduced by actual forfeitures as they occur. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock-based awards.
The table below sets forth the number of stock-based compensation awards granted during the nine months ended September 30, 2026, along with the weighted average grant date fair value. There were no stock options granted during the nine months ended September 30, 2026.
15
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
| Awards | Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||||
Restricted stock units1 | $ | |||||||||||||
Performance stock units2 | $ | |||||||||||||
1Service condition awards which generally vest over a three-year period.
2Performance condition awards which generally vest over a three-year period, shown with the grant amount equal to the target number of performance shares based on the share price at grant date. These awards allow for the right to receive a variable number of shares, between 0 % and 200 % of target, dependent on being employed at the end of the performance period and achieving defined performance goals.
Total stock-based compensation expense included in the consolidated statements of operations was $26.9 million and $29.5 million for the three months ended September 30, 2026 and 2025, respectively, and $88.8 million and $102.2 million for the nine months ended September 30, 2026 and 2025, respectively. During the nine-month period ended September 30, 2025, we recorded accelerated stock-based compensation expense of $11.2 million for employees who are retirement eligible in accordance with the implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement.
As of September 30, 2026, there was $157.4 million of unrecognized stock-based compensation expense related to outstanding stock options, RSUs, and PSUs, that is expected to be recognized over a weighted-average period of 1.9 years.
6. Income Taxes
We file income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, and other international jurisdictions.
For interim periods, income tax expense and the resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions, and other items.
The effective tax rate was 2.5 % and 26.7 % for the three months ended September 30, 2026 and 2025, respectively, and (81.4 )% and 39.3 % for the nine months ended September 30, 2026 and 2025, respectively. The decrease in the effective tax rate in the three-month period was primarily driven by the current period pre-tax loss and discrete tax charges related to restructuring. The decrease in the effective tax rate in the nine-month period was primarily driven by the current period pre-tax loss and shortfalls related to stock-based compensation. For the three and nine months ended September 30, 2025, we recorded state and foreign tax expense while maintaining a full valuation allowance against federal and state deferred tax assets, a majority of which was subsequently released at December 31, 2025.
The total liability for unrecognized tax positions was $0.1
7. Segment Reporting and Revenue Disaggregation
We operate our business as one
16
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
the Inspire system, to hospitals and ambulatory surgery centers in the U.S. and in select countries in Europe and the Asia Pacific region. We do not have any intra-entity sales or transfers.
Our CODM uses consolidated net (loss) earnings and operating (loss) income as the measures of profit or loss. Our CODM assesses performance for the segment and allocates resources using consolidated net (loss) earnings and operating (loss) income.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Less: (a) | ||||||||||||||||||||||||||
| Cost of goods sold | ||||||||||||||||||||||||||
| Research and development expense | ||||||||||||||||||||||||||
| Selling, general and administrative expense (excluding advertising expense) | ||||||||||||||||||||||||||
| Advertising expense | ||||||||||||||||||||||||||
| Operating (loss) income | ( | ( | ||||||||||||||||||||||||
| Other (income) (b) | ( | ( | ( | ( | ||||||||||||||||||||||
| Income tax (benefit) expense | ( | |||||||||||||||||||||||||
| Net (loss) earnings | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to our chief operating decision maker.
Depreciation and amortization expense was $5.1 million and $3.7 million for the three-month periods ended September 30, 2026 and 2025, respectively, and $14.8 million and $10.1 million for the nine-month periods ended September 30, 2026 and 2025, respectively, and is included within the segment expense captions of cost of goods sold, research and development (R&D) expense, and selling, general and administrative (SG&A) expense.
Stock-based compensation expense was $26.9 million and $29.5 million for the three-month periods ended September 30, 2026 and 2025, respectively, and $88.8 million and $102.2 million for the nine-month periods ended September 30, 2026 and 2025, respectively, and is included within the segment expense captions of cost of goods sold, R&D expense, and SG&A expense.
Revenue by geographic region is as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | ||||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||||||||||||
The measure of segment assets is reported on the balance sheet as total consolidated assets.
17
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
8. Earnings Per Share
Basic (loss) earnings per share is computed by dividing the net (loss) earnings by the weighted average number of shares of common stock outstanding during the period. Diluted (loss) earnings per share is computed by dividing the net (loss) earnings by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. For the periods presented with a net loss, diluted net loss per share is the same as basic net loss per share as all of the following potentially dilutive shares were antidilutive in those periods.
The following table presents a reconciliation of the share amounts used in the computation of basic and diluted (loss) earnings per share:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Net (loss) earnings | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Weighted average number of common shares outstanding — basic | ||||||||||||||||||||||||||
| Dilutive effect of stock-based compensation plan awards | ||||||||||||||||||||||||||
Weighted average number of common shares outstanding — diluted | ||||||||||||||||||||||||||
| Anti-dilutive shares excluded from the calculation of (loss) earnings per share | ||||||||||||||||||||||||||
| (Loss) earnings per share: | ||||||||||||||||||||||||||
| Basic | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Diluted | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
9. Commitments and Contingencies
We may from time to time be involved in claims, governmental inquiries or investigations, litigation and other legal proceedings arising in the ordinary course of business, some of which may seek monetary damages, including claims for punitive damages, which may not be covered by insurance. Such matters, even if not meritorious, could result in the expenditure of significant financial and managerial resources. We evaluate all matters and record liabilities for losses from legal proceedings when we determine that it is probable that the outcome will be unfavorable and the amount, or potential range, of loss can be reasonably estimated. An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations or cash flows.
On December 22, 2025, the Indiana Public Retirement System, on behalf of itself and other similarly situated investors, filed a putative securities class action in the United States District Court for the Southern District of New York against the Company and certain of its executive officers, captioned Indiana Public Retirement System v. Inspire Medical Systems, Inc., et al., Case No. 1:25‑cv‑10620 (S.D.N.Y.) (the Indiana PRS Lawsuit). The Indiana PRS Lawsuit alleged that the Company and three officers made materially false and misleading statements between August 6, 2024, and August 4, 2025, regarding the launch of the Company’s Inspire V neurostimulator. The complaint further alleged that when subsequent disclosures were made concerning issues with the Inspire V launch and the Company announced its third‑quarter fiscal 2025 results, the Company’s stock price declined, purportedly causing investor losses. The plaintiff seeks, among other relief, unquantified compensatory damages, together with attorneys’ fees and costs. On January 22, 2026, the Company and the individual defendants moved to transfer the case to the United States District Court for the District of Minnesota. On May 20, 2026, the United States District Court for the Southern District of New York granted the Company’s and the individual defendants’ motion to transfer. On May 28, 2026, the Indiana PRS Lawsuit was transferred to Minnesota and on May 29, 2026, the United States
18
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
District Court for the District of Minnesota acknowledged receipt of the transferred case and assigned the Case Number 0:26-cv-02790. On July 30, 2026, the plaintiffs filed an amended complaint (the “Amended Complaint”), which while generally based on the same underlying subject matter as the initial complaint expands its claims and the period of the putative securities class. The Amended Complaint continues to allege the same Defendants’ violation of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder relating to the launch of the Company’s Inspire V neurostimulator. It now also alleges fraud regarding the Medicare/CPT® reimbursement coding and expands the period of the putative securities class to November 4, 2024 through May 4, 2026. The Company and the individual defendants intend to vigorously defend against the action. On September 25, 2026, the defendants moved to dismiss the Amended Complaint. A hearing on that motion is presently scheduled for February 2027. No accrual for loss has been recorded in the Company’s financial statements as of, or for the period ended, September 30, 2026 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.
On January 27, 2026, a stockholder derivative lawsuit was filed in the United States District Court for the Southern District of New York, purportedly on behalf of Inspire against certain of our present and former executive officers and against all current members of the Board of Directors and Inspire (as a nominal defendant), captioned Korte v. Herbert, et al., Case No. 1:26‑cv‑680 (S.D.N.Y.) (the Korte Derivative Lawsuit). The Korte Derivative Lawsuit arises out of the same subject matter as the Indiana PRS Lawsuit described above and alleges the following claims: (1) Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder; (2) Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; (3) Section 20(a) of the Exchange Act; (4) a common-law claim for breach of fiduciary duty; (5) common-law aiding and abetting; (6) unjust enrichment; and (7) waste of corporate assets. The Korte Derivative Lawsuit seeks unspecified damages. The Company and the individual defendants intend to vigorously defend against the action.
On March 20, 2026, a stockholder derivative lawsuit was filed in the United States District Court for the Southern District of New York, purportedly on behalf of Inspire against certain of our present and former officers and against all current members of the Board of Directors and Inspire (as a nominal defendant), captioned Davis v. Herbert et al., Case No. 1:26-cv-02315 (S.D.N.Y.) (the Davis Derivative Lawsuit). The Davis Derivative Lawsuit arises out of the same subject matter as the Indiana PRS Lawsuit described above and alleges substantially the same claims as the Korte Derivative Lawsuit, plus a claim for contribution under Section 21D of the Exchange Act. The Davis Derivative Lawsuit seeks unspecified damages. On April 21, 2026, counsel for Plaintiffs in the Korte and Davis Derivative Lawsuits submitted, along with all Defendants in those lawsuits, a proposed stipulation to consolidate them into one lawsuit and to stay them, among other terms. On April 29, 2026, the Court adopted the parties’ proposed stipulation, and the case remains stayed.
On May 12, 2026, a stockholder derivative lawsuit was filed in the United States District Court for Minnesota, purportedly on behalf of Inspire against certain of our present and former officers and against all current members of the Board of Directors and Inspire (as a nominal defendant), captioned Ahlberg v. Herbert et al., Case No. 0:26-cv-02587 (D. Minn.) (the Ahlberg Derivative Lawsuit). The Ahlberg Derivative Lawsuit arises out of the same subject matter as the Indiana PRS Lawsuit described above and alleges substantially the same claims as the Korte and Davis Derivative Lawsuits. On June 4, 2026, counsel for Plaintiffs in the Ahlberg Derivative Lawsuit submitted a proposed stipulation to stay the Action pending resolution of the Indiana PRS Lawsuit, and on June 5, 2026, the Court entered an order granting the parties’ proposed stipulation and staying the case. The Company and the individual defendants intend to vigorously defend against the Korte, the Davis and the Ahlberg Derivative Lawsuits.
On January 17, 2025, we received a civil investigative demand (CID) from the Department of Justice U.S. Attorney’s Office for the District of Minnesota pursuant to the False Claims Act in the course of the government’s investigation concerning allegations of false claims, including false claims arising from violations of the Anti-Kickback Statute, submitted to government payors in connection with our implant. The CID requests information relating to the marketing, promotion, and reimbursement practices associated with our products. We are cooperating with the investigation. No assurance can be given as to the timing or outcome of the government’s investigation. No amount of loss has been recorded in the Company’s financial statements as of, or for the period ended, September 30, 2026 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.
19
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
On November 19, 2024, a former Inspire employee, Patrick Collins (the Relator), filed a civil False Claims Act qui tam lawsuit under seal in the United States District Court for the Central District of California against the Company, captioned United States ex rel. Collins v. Inspire Medical Systems, Inc., No. 2:24-cv-10001-JFW-AS (C.D. Cal.) The complaint alleges that Inspire violated the False Claims Act by improperly certifying that physicians were eligible to seek reimbursement from the Medicare program for Inspire devices, and the procedures to implant them. Relator’s complaint seeks unspecified treble damages, civil penalties, and costs and expense of the action, among other relief. On January 28, 2026, the United States, acting through the United States Attorney’s Office for the Central District of California, declined to intervene in the action, and, on January 29, 2026, the Court ordered that the case be unsealed. Notwithstanding the government's decision not to intervene, the Relator has decided to proceed with the litigation. On June 5, 2026, the Company moved to dismiss Relator’s complaint. Relator filed an amended complaint on June 26, 2026, and the Company moved to dismiss Relator’s amended complaint in its entirety on July 10, 2026. On August 28, 2026, the district court granted the Company’s motion to dismiss in its entirety. On September 28, 2026, Relator filed a Notice of Appeal appealing the district court’s decision granting the Company’s motion to dismiss. The Company intends to defend the claims in this lawsuit vigorously.
On May 30, 2025, Inspire filed a lawsuit against Nyxoah SA and its subsidiary Nyxoah, Inc. (collectively Nyxoah) in the United States District Court for the District of Delaware, alleging that Nyxoah's Genio product infringes on certain of Inspire's U.S. patents related to neurostimulation therapy for obstructive sleep apnea. Inspire seeks a judgment of patent infringement and relief for such infringement, including monetary damages such as lost profits. Nyxoah has denied infringement and has asserted counterclaims seeking declaratory judgments of invalidity and non‑infringement. On December 18, 2025, Nyxoah filed three (3 ) petitions with the United States Patent Trial and Appeal Board (PTAB) seeking inter partes review (IPR) of the three patents asserted by Inspire in the lawsuit. On April 14, 2026, the PTAB denied institution of all three IPRs. The district court matter is ongoing. Given the current status of these matters and the inherent uncertainties of litigation, we cannot predict the outcome or estimate the range of potential loss.
On September 15, 2025, Nyxoah filed a lawsuit against us in the United States District Court for the District of Delaware alleging that the Inspire IV and Inspire V devices infringe certain of Nyxoah’s patents. The lawsuit is ongoing. The Company intends to defend the claims in this lawsuit vigorously and believes it has good and substantial defenses to them, but there is no guarantee that the Company will be successful in these efforts. No amount of loss has been recorded in the Company’s financial statements as of and for the period ended September 30, 2026 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.
On December 5, 2025, Nyxoah brought suit against Inspire and its wholly-owned subsidiary, Inspire Medical Systems Europe GmbH in the Unified Patent Court, Munich Division, alleging that the Inspire IV implantable neurostimulator infringes a patent owned by Nyxoah. The lawsuit is ongoing. The Company intends to defend the claims in this lawsuit vigorously and believes it has good and substantial defenses to them, but there is no guarantee that the Company will be successful in these efforts. No amount of loss has been recorded in the Company’s financial statements as of and for the period ended September 30, 2026 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.
On January 30, 2026, a putative class action captioned Zeller v. Inspire Medical Systems, Inc. was filed against the Company in the U.S. District Court for the District of Minnesota. The complaint alleged that third-party tracking technologies on our website captured and transmitted users' information to third parties without their knowledge or consent. It asserted claims under the Electronic Communications Privacy Act and the Minnesota wiretap statute, as well as common law claims. On July 28, 2026, a putative class action making similar allegations on behalf of California residents, captioned Brookshier et al. v. Inspire Medical Systems, Inc., was filed against us in the Superior Court of California, County of San Mateo. That complaint asserted claims under the California Invasion of Privacy Act, for breach of contract, and under California's Unfair Competition Law. In September 2026, both actions were voluntarily dismissed without prejudice to facilitate the parties’ participation in mediation. On October 5, 2026, following mediation, we entered into a binding term sheet with the named plaintiffs in both actions. The term sheet contemplates filing a new putative class action asserting the same or similar claims, which would be settled on behalf of a nationwide settlement class. Under the term sheet, we will pay $7.0 million into a settlement fund, which
20
INSPIRE MEDICAL SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
(Table amounts in thousands, except share and per share amounts)
will also cover notice and administration costs and any court-approved attorneys' fees, costs and service awards. The settlement is subject to execution of a definitive settlement agreement and approval by the court in the new action. We deny the allegations and any liability, and we agreed to the proposed settlement solely to avoid the expense, burden and uncertainty of further litigation. We incurred $7.0 million of legal settlement expense in the third quarter of 2026 related to this matter.
10. Restructuring
On August 3, 2026, we announced a strategic growth plan, named Project Horizon, intended to create additional investment capacity to accelerate revenue growth through:
•aligning resources to revenue growth initiatives;
•streamlining the organization; and
•optimizing our supply chain by consolidating production to support quality, scale, and efficiency.
The majority of actions related to the restructuring were completed in the third quarter and we expect that all actions will be substantially complete by the end of 2026. We expect to incur approximately $25 million of pre-tax restructuring charges in connection with Project Horizon leading to annualized cost savings of approximately $30 million. Restructuring charges are expected to include:
•approximately $4 million of employee severance and termination benefits; and
•approximately $21 million of asset impairment charges, which are non-cash in nature.
In the third quarter of 2026, we incurred $24.1 million of pre-tax restructuring charges, of which $1.3 million was included within R&D expense and $22.8 million was included within SG&A expense:
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, 2026 | September 30, 2026 | |||||||||||||
| Employee severance and termination benefits | $ | $ | ||||||||||||
| Asset impairment charges | ||||||||||||||
| Total restructuring charges | $ | $ | ||||||||||||
As a result of the decision to cease certain manufacturing activities, we determined that the carrying amounts of certain production equipment were no longer recoverable and therefore reduced the carrying amounts of the assets to their estimated fair value, resulting in non-cash asset impairment charges of $21.1 million, which were recognized within SG&A expense. The estimated fair value of certain production equipment that we do not expect to utilize or sell was estimated to be zero because the equipment had no alternative use or expected disposal proceeds.
The restructuring accrual balance included in accrued expenses on the consolidated balance sheets was $1.5 million at September 30, 2026 and relates to employee severance and termination benefits. The majority of the accrued balance is expected to be paid during the fourth quarter of 2026 and early 2027. The restructuring accrual excludes non-cash charges and other costs that were recognized directly in earnings as incurred.
11. Subsequent Event
On October 5, 2026, we entered into a binding term sheet to settle a class action related to allegations concerning our use of pixel-tracking technology on our website and the disclosure of certain information to third parties (Zeller v. Inspire Medical Systems, Inc.). See Note 9, “Commitments and Contingencies,” for additional information.
21
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report, as well as the audited financial statements and the related notes thereto, the discussion under "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part I, Item 1. Business” sections included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report"). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, such as information with respect to our plans and strategy for our business and the impact of macroeconomic factors on our business, financial results and financial condition includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the "Part I, Item 1A. Risk Factors" section of our Annual Report and in the "Part II, Item 1A. Risk Factors" section of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.
Overview
We are a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea (OSA). Our proprietary Inspire system is the first FDA, European Union (EU) Medical Devices Regulation (MDR), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA. We have developed a novel, closed-loop solution that continuously monitors a patient’s breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level.
Seasonality
Historically, we have experienced seasonality in our first and fourth fiscal quarters, and we expect this trend to continue. In the U.S., we have experienced, and may in the future experience, higher sales in the fourth quarter as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs. Conversely, in the first quarter, many U.S. patients' insurance deductibles reset, requiring more out-of-pocket costs, which negatively impacts our sales during this period.
Recent Developments
Strategic Growth Plan
On August 3, 2026, we announced a strategic growth plan, named Project Horizon, intended to create additional investment capacity to accelerate revenue growth through:
•aligning resources to revenue growth initiatives;
•streamlining the organization; and
•optimizing our supply chain by consolidating production to support quality, scale, and efficiency.
We expect to incur a total of approximately $25 million of pre-tax restructuring charges in connection with Project Horizon. These actions are expected to generate approximately $30 million of annualized growth investment capacity which is expected to be invested in revenue growth initiatives. The majority of actions related to the restructuring were completed in the third quarter of 2026 and we expect that all actions will be substantially complete by the end of 2026.
Coding and Reimbursement
Third-party payors require physicians and hospitals to identify the service for which they are seeking reimbursement by using Current Procedural Terminology (CPT®) codes, which are created and maintained by the American Medical Association (AMA). Our various generations of Inspire therapy have been billed under different codes and
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reimbursement approaches throughout our history. In November 2025, the final 2026 Medicare reimbursement payments were announced. Since this announcement, there has been, and still is currently, significant uncertainty and changes directly and indirectly relating to the appropriate coding and reimbursement for our Inspire V therapy from the Centers for Medicare & Medicaid Services (CMS) and Medicare Administrative Contractors (MACs), as well as other payors and stakeholders in the overall coding and reimbursement process.
In March 2026, the American Hospital Association (AHA) recommended use of CPT code 64999 for Inspire V commercial cases. CPT code 64999 is an unlisted procedure code for the nervous system and is to be used when no specific CPT code exists to accurately describe a service. Because CPT code 64999 is non-specific, reimbursement determinations typically required additional supporting documentation, which may result in increased claims review and processing time (in which case we provide additional education and support to customers). The AHA's quarterly newsletter that included this recommendation indicates that its guidance does not dictate coverage and reimbursement policy as determined by local Medicare contractors or any other payer; nor is it a substitution for the judgment of a qualified practitioner in the application of HCPCS codes. Currently, many commercial policies still publish CPT code 64568 as the code to be used for the Inspire V procedure. As a result, Inspire continues to recommend that providers consider using the code listed in the applicable payer policy (recognizing that the payer policies may not reflect current coding guidance) and consult their provider's own compliance, coding advisors, and payers as needed.
In terms of Inspire V Medicare cases, in February 2026, CMS announced that it would implement a series of HCPCS Level II C‑codes which were published on April 1, 2026. These C‑codes apply only to facility billing and do not address professional (or physician) fee reimbursement. We currently believe all Medicare Administrative Contractor (MAC) local coverage determinations identify CPT code 64582 as the appropriate code. We are currently aware of two MACs that require the use of the -52 modifier when billing CPT code 64582 for the implantation of a hypoglossal nerve stimulator without the insertion of a distal respiratory sensor. Based on available data and information provided to us, application of the modifier has resulted in physician reimbursement ranging from no reduction to approximately 30% below the existing national average payment, although most procedures billed year-to-date have been submitted and paid without use of the modifier. Additional MACs may in the future require the use of a modifier which could affect professional fee reimbursement.
These and other recent coding and reimbursement decisions (particularly the uncertainty of the decisions and volatility of the announcements from multiple stakeholders) have adversely impacted our revenue in the first nine months of 2026 and we anticipate that this will continue to adversely impact revenue during the remainder of 2026. Inspire is actively engaging with relevant stakeholders regarding the reimbursement uncertainty affecting Inspire V and is providing support as appropriate - with a goal of limiting and moving past the uncertainty as soon as possible. In the short term, we are working to minimize potential delays and continue to support patient access to therapy. This includes providing proactive education and assistance to our field team, our customers, and physicians. In July 2026, the preliminary 2027 Medicare reimbursement payments related to our therapy were announced, which generally increased proposed reimbursement rates over 2026 levels. We expect the 2027 final rates will be announced in November 2026.
In September 2026, the AMA approved the establishment of a new set of Category I CPT codes which are scheduled to take effect on January 1, 2028. With the new codes created, the CMS will conduct its standard process to determine the value for each new CPT code, which determines the payments for that service under Medicare. We expect that CMS will issue their proposed valuation in July 2027 with final valuations issued in November 2027 and effective January 1, 2028. The use of any -52 modifier for professional billing will no longer be needed at this time due to the new code.
In addition, the Wasteful and Inappropriate Service Reduction Model (WISeR) program, which is a government initiative requiring prior authorization of Medicare cases in six pilot states, began in mid-January 2026. During the first nine months of 2026, we experienced delays due to the new WISeR requirements for traditional Medicare procedures in the six WISeR states which adversely impacted our revenue during that period. We anticipate that this will continue to adversely impact revenue for the remainder of 2026, although to a lesser extent than in the first nine months of the year.
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Commercial Organization
We continue to make significant investments in our sales and marketing organization. In 2025, we began optimizing our sales model through targeted territory consolidation and increased field clinical representatives (FCRs). This enables territory managers to focus on therapy awareness, surgeon recruiting and training, and driving the adoption of Inspire therapy, while FCRs provide technical and clinical expertise as well as educational and field support. As of September 30, 2026, we had 279 U.S. sales territories and 306 field clinical representatives, as compared with 295 U.S. sales territories and 275 field clinical representatives as of December 31, 2025.
GLP-1s
Since 2023, glucagon-like peptide 1 (GLP-1s), a class of drug initially indicated for diabetes and obesity, has continued to gain popularity as a weight-loss drug. In 2024, tirzepatide (marketed as Zepbound), a GLP-1 injection was FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA. If GLP-1s are used to treat OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be delayed or reduced. In late 2025, we conducted a survey of over 200 sleep physicians to better understand their treatment paradigm for OSA since the introduction of GLP-1s. The survey findings suggest that some physicians will prescribe a GLP-1 to patients prior to considering Inspire therapy. The survey findings also suggest that, with the availability of GLP-1s to treat OSA, the number of patients seeking diagnosis and treatment for OSA is increasing. We believe that some of these patients will see a reduction in their BMI into our indication, and that some of those patients will not have their OSA fully resolved and will require further treatment. This reinforces our belief that the overall number of patients eligible for Inspire therapy will increase in the long-term due to the availability of GLP-1s, although there can be no assurance of such benefit at this time. However, in the short term we currently believe our revenue is being adversely impacted by the increasing prevalence and adoption of GLP-1s.
Macroeconomic Environment
As a global company, our business is subject to local and international macroeconomic trends as well as geopolitical factors. Continued uncertainty around inflationary pressures, interest rates, regulatory changes (including changes to government funding of entitlement programs and changes to contain health care costs), foreign currency fluctuations, global trade policies and changes in tax laws, as well as actions by governments in response thereto, could create economic challenges which could negatively impact our business and results of operations. Further, geopolitical developments and uncertainties, including related to various ongoing global conflicts and tensions, may also create economic, supply chain, transportation, energy, and other financial or operational challenges, including disruptions to our suppliers or our customers' operations, which could negatively impact our business and results of operations.
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Results of Operations
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||
| September 30, | % of Revenue | |||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 206,695 | $ | 224,501 | $ | (17,806) | (7.9) | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Cost of goods sold | 28,837 | 31,773 | (2,936) | (9.2) | % | 14.0 | % | 14.2 | % | |||||||||||||||||||||||||||||
| Gross profit | 177,858 | 192,728 | (14,870) | (7.7) | % | 86.0 | % | 85.8 | % | |||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Research and development | 22,176 | 24,211 | (2,035) | (8.4) | % | 10.7 | % | 10.8 | % | |||||||||||||||||||||||||||||
| Selling, general and administrative | 184,398 | 158,873 | 25,525 | 16.1 | % | 89.2 | % | 70.8 | % | |||||||||||||||||||||||||||||
| Total operating expenses | 206,574 | 183,084 | 23,490 | 12.8 | % | 99.9 | % | 81.6 | % | |||||||||||||||||||||||||||||
| Operating (loss) income | (28,716) | 9,644 | (38,360) | (397.8) | % | (13.9) | % | 4.3 | % | |||||||||||||||||||||||||||||
| Other (income), net | (3,706) | (3,907) | 201 | (5.1) | % | (1.8) | % | (1.7) | % | |||||||||||||||||||||||||||||
| (Loss) earnings before income taxes | (25,010) | 13,551 | (38,561) | (284.6) | % | (12.1) | % | 6.0 | % | |||||||||||||||||||||||||||||
| Income tax (benefit) expense | (616) | 3,619 | (4,235) | (117.0) | % | (0.3) | % | 1.6 | % | |||||||||||||||||||||||||||||
| Net (loss) earnings | $ | (24,394) | $ | 9,932 | $ | (34,326) | (345.6) | % | (11.8) | % | 4.4 | % | ||||||||||||||||||||||||||
| Effective tax rate | 2.5% | 26.7% | ||||||||||||||||||||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||||||||||||||||||||
| September 30, | % of Revenue | |||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | 2026 | 2025 | $ Change | % Change | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 611,859 | $ | 642,904 | $ | (31,045) | (4.8) | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||||
| Cost of goods sold | 85,630 | 97,154 | (11,524) | (11.9) | % | 14.0 | % | 15.1 | % | |||||||||||||||||||||||||||||
| Gross profit | 526,229 | 545,750 | (19,521) | (3.6) | % | 86.0 | % | 84.9 | % | |||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Research and development | 72,700 | 78,223 | (5,523) | (7.1) | % | 11.9 | % | 12.2 | % | |||||||||||||||||||||||||||||
| Selling, general and administrative | 483,877 | 462,684 | 21,193 | 4.6 | % | 79.1 | % | 72.0 | % | |||||||||||||||||||||||||||||
| Total operating expenses | 556,577 | 540,907 | 15,670 | 2.9 | % | 91.0 | % | 84.1 | % | |||||||||||||||||||||||||||||
| Operating (loss) income | (30,348) | 4,843 | (35,191) | (726.6) | % | (5.0) | % | 0.8 | % | |||||||||||||||||||||||||||||
| Other (income), net | (10,850) | (10,535) | (315) | 3.0 | % | (1.8) | % | (1.6) | % | |||||||||||||||||||||||||||||
| (Loss) earnings before income taxes | (19,498) | 15,378 | (34,876) | (226.8) | % | (3.2) | % | 2.4 | % | |||||||||||||||||||||||||||||
| Income tax expense | 15,876 | 6,046 | 9,830 | 162.6 | % | 2.6 | % | 0.9 | % | |||||||||||||||||||||||||||||
| Net (loss) earnings | $ | (35,374) | $ | 9,332 | $ | (44,706) | (479.1) | % | (5.8) | % | 1.5 | % | ||||||||||||||||||||||||||
| Effective tax rate | (81.4)% | 39.3% | ||||||||||||||||||||||||||||||||||||
Revenue information by region is summarized as follows:
| Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | Amount | % of Revenue | Amount | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
| United States | $ | 197,486 | 95.5 | % | $ | 214,394 | 95.5 | % | $ | (16,908) | (7.9) | % | ||||||||||||||||||||||||||
| International | 9,209 | 4.5 | % | 10,107 | 4.5 | % | (898) | (8.9) | % | |||||||||||||||||||||||||||||
| Total revenue | $ | 206,695 | 100.0 | % | $ | 224,501 | 100.0 | % | $ | (17,806) | (7.9) | % | ||||||||||||||||||||||||||
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| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | Amount | % of Revenue | Amount | % of Revenue | $ | % | ||||||||||||||||||||||||||||||||
| United States | $ | 580,393 | 94.9 | % | $ | 615,150 | 95.7 | % | $ | (34,757) | (5.7) | % | ||||||||||||||||||||||||||
| International | 31,466 | 5.1 | % | 27,754 | 4.3 | % | 3,712 | 13.4 | % | |||||||||||||||||||||||||||||
| Total revenue | $ | 611,859 | 100.0 | % | $ | 642,904 | 100.0 | % | $ | (31,045) | (4.8) | % | ||||||||||||||||||||||||||
Comparison of the Three Months Ended September 30, 2026 and 2025
•Revenue decreased $17.8 million, or 7.9%, to $206.7 million, driven primarily by a decline in U.S. revenue. The U.S. revenue decline was primarily driven by the adverse impacts of coding and reimbursement challenges.
•Gross margin increased to 86.0% compared to 85.8%, primarily due to increased sales mix of the Inspire V system, which has a higher gross margin than the Inspire IV system.
•Research and development expenses decreased $2.0 million, or 8.4%, to $22.2 million, primarily due to lower stock-based compensation expense primarily driven by forfeitures related to actions of Project Horizon and increased internal cost allocations into SG&A and cost of goods sold, partially offset by an increase in development costs, mainly for our next generation neurostimulator, and $1.3 million of restructuring charges.
•SG&A expenses increased $25.5 million, or 16.1%, to $184.4 million, primarily driven by $22.8 million of restructuring charges, a legal settlement expense of $7.0 million, and higher legal fees, partially offset by lower marketing expenses.
•The effective tax rate was 2.5% compared to 26.7%. The decrease in the effective tax rate was primarily driven by the current period pre-tax loss and discrete tax charges related to restructuring. Additionally, for the three months ended September 30, 2025, we maintained a full valuation allowance against federal and state deferred tax assets, a majority of which was subsequently released at December 31, 2025.
Comparison of the Nine Months Ended September 30, 2026 and 2025
•Revenue decreased $31.0 million, or 4.8%, to $611.9 million primarily due to a decline in U.S. revenue, partially offset by growth in International. The U.S. decline was driven primarily by the adverse impacts of coding and reimbursement challenges and the WISeR program.
•Gross margin increased to 86.0% compared to 84.9%, primarily due to increased sales mix of the Inspire V system, which has a higher gross margin than the Inspire IV system.
•Research and development expenses decreased $5.5 million, or 7.1%, to $72.7 million, primarily due to increased internal cost allocations into SG&A and cost of goods sold, and lower stock-based compensation expense, partially offset by an increase in development costs, mainly for our next generation neurostimulator, and $1.3 million of restructuring charges.
•SG&A expenses increased $21.2 million, or 4.6%, to $483.9 million, primarily due to $22.8 million of restructuring charges, a legal settlement expense of $7.0 million, higher legal fees, and higher internal cost allocations from R&D, partially offset by lower marketing expenses and lower stock-based compensation expense primarily due to forfeitures related to actions of Project Horizon and accelerated stock-based compensation expense recognized in the prior year period for retirement eligible employees in accordance with the implementation of changes to the treatment of equity awards.
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•Other income, net increased by $0.3 million, or 3.0%, to $10.9 million, primarily due to a $4.0 million impairment charge recognized during the prior year period, partially offset by a decrease in interest and dividend income due to lower average interest rates and lower average cash, cash equivalents, and investment balances in the current period.
•The effective tax rate was (81.4)% compared to 39.3%. The decrease in the effective tax rate was primarily driven by the current period pre-tax loss and shortfalls related to stock-based compensation. Additionally, for the nine months ended September 30, 2025, we maintained a full valuation allowance against federal and state deferred tax assets, a majority of which was subsequently released at December 31, 2025.
Liquidity and Capital Resources
We primarily rely on cash provided by operations for our material cash requirements, including working capital needs, investments in research and development, capital expenditures, other operating costs, and share repurchases. Our anticipated future uses of capital have not changed in any material respects from that described in our Annual Report. Our sources of capital have generally included sales of our Inspire system and registered offerings of our common stock.
We believe that our existing cash and cash equivalents and investments, together with cash flows from operations, will provide liquidity sufficient to meet our short-term and currently anticipated long-term cash needs and fund our operations and planned capital expenditures for at least the next twelve months. There can be no assurance, however, that our business will continue to generate cash flows at the same levels achieved in prior periods.
Beyond the next twelve months, our cash requirements will depend extensively on the extent of market acceptance of our Inspire system and the demand for our therapy. Our long-term cash requirements also will be significantly impacted by the level of our investment in commercialization, entry and expansion into new markets, whether we make strategic acquisitions, whether we repurchase more shares of our common stock, competition, and our ability to obtain financing. An extended period of global supply chain and economic disruption could materially affect our business, results of operations, access to sources of liquidity, and financial condition. If the business need were to arise, we may seek additional sources of liquidity and capital resources through equity or debt financings, such as additional securities offerings or through borrowings under a new credit facility. There can be no assurance that such transactions will be available to us on favorable terms, if at all.
Operating Activities
Net cash provided by operating activities was $82.5 million for the nine months ended September 30, 2026 compared to $64.5 million in the prior year period. The change was primarily driven by improved working capital, mainly in receivables and inventories.
Investing Activities
Net cash provided by investing activities was $9.3 million for the nine months ended September 30, 2026, compared to $33.4 million in the prior year period. The change was primarily driven by lower proceeds from the sale or maturity of investments.
Financing Activities
Net cash used in financing activities was $6.0 million for the nine months ended September 30, 2026, compared to $135.1 million in the prior year period. The change was primarily driven by higher share repurchases in the prior year period.
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Off-Balance Sheet Arrangements
As of September 30, 2026, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Contractual Obligations and Commitments
There have been no material changes to our short-term and long-term anticipated cash requirements under contractual obligations from those described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from those described in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in market risk from those described in our Annual Report under the heading Part II, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer (the Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of September 30, 2026. Based on that evaluation, the Certifying Officers concluded the Company's disclosure controls and procedures were effective as of September 30, 2026 at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting.
There was no change to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2026 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in claims and proceedings arising in the ordinary course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain.
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The information contained in “Note 9 — Commitments and Contingencies” in the Notes to the Consolidated Financial Statements is incorporated by reference into this Part II, Item 1 of this Quarterly Report.
Item 1A. Risk Factors.
Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of these risks and uncertainties, see the information in "Part I, Item 1A. Risk Factors” in our Annual Report and "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. As of September 30, 2026, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Share Repurchases
The following table presents information with respect to the repurchase of our common stock during the three months ended September 30, 2026:
| Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program(1) | Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Program (in thousands) | ||||||||||||||||||||||
| July 1, 2026 - July 31, 2026 | — | $ | — | — | $ | 100,000 | ||||||||||||||||||||
| August 1, 2026 - August 31, 2026 | — | $ | — | — | $ | 100,000 | ||||||||||||||||||||
| September 1, 2026 - September 30, 2026 | — | $ | — | — | $ | 100,000 | ||||||||||||||||||||
| Total | — | — | ||||||||||||||||||||||||
(1) On August 11, 2025, we announced that our Board of Directors authorized the repurchase of up to $200.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means. We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. The share repurchase program is set to expire on August 7, 2027, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.
Item 5. Other Information.
Adoption or Termination of Trading Arrangements by Directors and Executive Officers
There were no "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements," as each term is defined in Item 408(a) of Regulation S-K, adopted terminated
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Item 6. Exhibits.
| Exhibit Number | Description | Form | File No. | Exhibit | Filing Date | Filed/ Furnished Herewith | ||||||||||||||||||||||||||||||||
| 3.1 | 8-K | 001-38468 | 3.1 | 5/7/2018 | ||||||||||||||||||||||||||||||||||
| 3.2 | 10-Q | 001-38468 | 3.2 | 5/4/2026 | ||||||||||||||||||||||||||||||||||
| 3.3 | 8-K | 001-38468 | 3.1 | 2/11/2026 | ||||||||||||||||||||||||||||||||||
| 31.1 | * | |||||||||||||||||||||||||||||||||||||
| 31.2 | * | |||||||||||||||||||||||||||||||||||||
| 32.1 | ** | |||||||||||||||||||||||||||||||||||||
| 32.2 | ** | |||||||||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document | * | ||||||||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | * | ||||||||||||||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * | ||||||||||||||||||||||||||||||||||||
_______________________________________________________________________________
* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Inspire Medical Systems, Inc. | |||||||||||
| Date: | November 2, 2026 | By: | /s/ TIMOTHY P. HERBERT | ||||||||
| Timothy P. Herbert | |||||||||||
| President, Chief Executive Officer, and Chairperson | |||||||||||
| (principal executive officer) | |||||||||||
| Date: | November 2, 2026 | By: | /s/ MATTHEW J. OSBERG | ||||||||
| Matthew J. Osberg | |||||||||||
| Chief Financial Officer | |||||||||||
| (principal financial officer and principal accounting officer) | |||||||||||
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Exhibit 31.1
CERTIFICATION
I, Timothy P. Herbert, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Inspire Medical Systems, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | November 2, 2026 | By: | /s/ TIMOTHY P. HERBERT | |||||||||||
Timothy P. Herbert President, Chief Executive Officer, and Chairperson (principal executive officer) | ||||||||||||||
Exhibit 31.2
CERTIFICATION
I, Matthew J. Osberg, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Inspire Medical Systems, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | November 2, 2026 | By: | /s/ MATTHEW J. OSBERG | |||||||||||
Matthew J. Osberg Chief Financial Officer (principal financial officer) | ||||||||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Inspire Medical Systems, Inc. (the "Company") for the quarterly period ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | November 2, 2026 | By: | /s/ TIMOTHY P. HERBERT | |||||||||||
Timothy P. Herbert President, Chief Executive Officer, and Chairperson (principal executive officer) | ||||||||||||||
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Inspire Medical Systems, Inc. (the "Company") for the quarterly period ended September 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: | November 2, 2026 | By: | /s/ MATTHEW J. OSBERG | |||||||||||
Matthew J. Osberg Chief Financial Officer (principal financial officer) | ||||||||||||||
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.