Inspire Medical Reports Steady 2025 Results with Adjusted Profitability Beats, Aligning with Reset Guidance Amid Persistent GLP-1 Risks

What happened

Following a mid-2025 guidance reset due to GLP-1 competition and Inspire V transition challenges, Inspire Medical entered Q4 with lowered expectations for revenue growth and earnings. The company reported Q4 revenue growth of 12% and full-year growth of 14%, matching the reset guidance range of 12-13% for 2025 and indicating stabilization after earlier volatility. However, net income per diluted share showed a significant disparity, with full-year adjusted EPS at $2.42 surpassing the earlier EPS guidance of $0.90-$1.00, likely driven by one-time items or aggressive adjustments that mask underlying operational trends. Operating cash flow remained robust at $52.5 million in Q4 and $117 million for the year, reinforcing the high-margin model and balance sheet strength noted in the DeepValue report. These results confirm that Inspire has navigated the reset period without further deterioration, but the core investment thesis remains hinged on navigating GLP-1 headwinds and capitalizing on the 2026 Medicare reimbursement uplift.

Implication

The in-line revenue growth of 12-14% for 2025 solidifies the new, slower growth trajectory anticipated in the base case scenario, reducing near-term downside risk from further guidance cuts. Adjusted EPS exceeding guidance suggests potential cost efficiencies or one-time benefits, but investors must critically assess the quality of these earnings given the large GAAP-to-adjusted gap and possible non-recurring items. Strong operating cash flow generation supports the company's ability to execute share buybacks and maintain a net cash position, offering a margin of safety against operational shocks as highlighted in the DeepValue report. However, persistent GLP-1 competition, single-product dependency, and regulatory scrutiny continue to cap upside potential, requiring close monitoring of procedure volumes and payer behavior in 2026. For now, the stock's premium valuation at ~55x EPS may find limited support unless revenue re-accelerates to mid-teens levels with gross margins above 86%, as outlined in the DeepValue call for increased conviction.

Thesis delta

The new financial results do not shift the core investment thesis from the DeepValue report, as revenue growth aligns with the reset expectations and confirms the decelerated but stable baseline. However, the higher adjusted EPS figures could signal improved profitability or one-off gains, necessitating a critical review of earnings sustainability beyond adjustments. Overall, the thesis remains a 'POTENTIAL BUY' with conviction dependent on future execution against GLP-1 headwinds and the realization of 2026 reimbursement benefits, with no material change in the probability-weighted scenarios.