Inspire Medical Systems Files Q3 2024 10-Q

TL;DR

**Inspire Medical Systems Q3 10-Q filed. Key financials and operations detailed.**

AI Summary

Inspire Medical Systems, Inc. filed its 10-Q for the period ending September 30, 2024. The filing covers the third quarter and the first nine months of the fiscal year. Key financial data and operational details for this period are presented.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational updates for Inspire Medical Systems, crucial for understanding the company's trajectory in the medical device sector.

Risk Assessment

Risk Level: medium — As a medical device company, Inspire Medical Systems faces risks related to regulatory approvals, market adoption, competition, and reimbursement, which are typical for this industry.

Key Players & Entities

• Inspire Medical Systems, Inc. (company) — Filer of the 10-Q
• 2024-09-30 (date) — End of the reporting period
• 2024-11-04 (date) — Filing date
• 5500 Wayzata Blvd, Suite 1600, Golden Valley, MN 55416 (location) — Company's business and mailing address

FAQ

Key Financial Figures

• $0.001 — ange on which registered Common Stock, $0.001 par value per share INSP New York Stock

Filing Documents

• insp-20240930.htm (10-Q) — 1142KB
• a2024-q3ex31x1.htm (EX-31.1) — 10KB
• a2024-q3ex31x2.htm (EX-31.2) — 10KB
• a2024-q3ex32x1.htm (EX-32.1) — 6KB
• a2024-q3ex32x2.htm (EX-32.2) — 6KB
• insp-20240930_g1.jpg (GRAPHIC) — 14KB
• 0001609550-24-000053.txt ( ) — 6282KB
• insp-20240930.xsd (EX-101.SCH) — 32KB
• insp-20240930_cal.xml (EX-101.CAL) — 54KB
• insp-20240930_def.xml (EX-101.DEF) — 167KB
• insp-20240930_lab.xml (EX-101.LAB) — 574KB
• insp-20240930_pre.xml (EX-101.PRE) — 397KB
• insp-20240930_htm.xml (XML) — 890KB

Forward-Looking Statements

Forward-Looking Statements 3 PART I. FINANCIAL INFORMATION 5 Item 1. Consolidated Financial Statements 5 Balance Sheets 5 6 7 9

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 37 Item 4.

Controls and Procedures

Controls and Procedures 38 PART II. OTHER INFORMATION 38 Item 1.

Legal Proceedings

Legal Proceedings 38 Item 1A.

Risk Factors

Risk Factors 38 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41 Item 3. Defaults Upon Senior Securities 42 Item 4. Mine Safety Disclosures 42 Item 5. Other Information 42 Item 6. Exhibits 43

Signatures

Signatures 44 2 Table of Contents

FORWARD-LOOKING STATEMENTS

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 the final reimbursement levels for Inspire therapy procedures, 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 forwar

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements. Inspire Medical Systems, Inc. Consolidated Balance Sheets (in thousands, except share and per share amounts) September 30, 2024 December 31, 2023 (unaudited) Assets Current assets: Cash and cash equivalents $ 147,512 $ 185,537 Investments, short-term 263,475 274,838 Accounts receivable, net of allowance for credit losses of $ 515 and $ 1,648 , respectively 89,743 89,884 Inventories, net 67,432 33,885 Prepaid expenses and other current assets 14,358 9,595 Total current assets 582,520 593,739 Investments, long-term 113,425 9,143 Property and equipment, net 67,447 39,984 Operating lease right-of-use assets 21,811 22,667 Other non-current assets 10,991 11,278 Total assets $ 796,194 $ 676,811 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 34,926 $ 38,839 Accrued expenses 39,338 39,266 Total current liabilities 74,264 78,105 Operating lease liabilities, non-current portion 25,218 24,846 Other non-current liabilities 150 1,346 Total liabilities 99,632 104,297 Stockholders' equity: Preferred Stock, $ 0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding — — Common Stock, $ 0.001 par value per share; 200,000,000 shares authorized; 29,963,260 and 29,560,464 issued and outstanding at September 30, 2024 and December 31, 2023, respectively 30 30 Additional paid-in capital 1,021,970 917,107 Accumulated other comprehensive income 1,700 800 Accumulated deficit ( 327,138 ) ( 345,423 ) Total stockholders' equity 696,562 572,514 Total liabilities and stockholders' equity $ 796,194 $ 676,811 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents Inspire Medical Systems, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) (in thousands, except share and per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 202

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) (Table amounts in thousands, except share and per share amounts) 1. Organization Description of Business Inspire Medical Systems, Inc. is 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 and only United States ("U.S.") Food and Drug Administration ("FDA"), European Union ("EU"), Medical Devices Regulation ("MDR"), and Japan Pharmaceuticals and Medical Devices Agency ("PDMA")-approved neurostimulation technology of its kind that provides a safe and effective treatment for moderate to severe OSA. Inspire therapy received premarket approval ("PMA") from the FDA in 2014 and has been commercially available in certain European markets since 2011 and certain Asia Pacific markets since 2021. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial reporting and as required by the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, the results of operations for the interim periods are not necessarily indicative of the opera

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) (Table amounts in thousands, except share and per share amounts) in our accumulated other comprehensive income balance as of September 30, 2024 and December 31, 2023, respectively. Investments Our investments are classified as available-for-sale and consisted of the following: September 30, 2024 Amortized Unrealized Gross Aggregate Cost Gains Losses Fair Value Short-Term: Commercial paper $ 19,299 $ 59 $ — $ 19,358 Corporate debt securities 46,988 168 ( 4 ) 47,152 Certificates of deposit 11,272 24 — 11,296 U.S. treasury debt securities 185,082 587 — 185,669 Short-term investments $ 262,641 $ 838 $ ( 4 ) $ 263,475 Long-Term: Corporate debt securities $ 31,988 $ 211 $ ( 2 ) $ 32,197 Asset-backed securities 422 1 — 423 U.S. treasury debt securities 80,465 350 ( 10 ) 80,805 Long-term investments $ 112,875 $ 562 $ ( 12 ) $ 113,425 December 31, 2023 Amortized Unrealized Gross Aggregate Cost Gains Losses Fair Value Short-Term: Commercial paper $ 2,950 $ 1 $ — $ 2,951 Corporate debt securities 30,154 61 — 30,215 Certificates of deposit 2,953 15 — 2,968 U.S. treasury debt securities 238,237 467 — 238,704 Short-term investments $ 274,294 $ 544 $ — $ 274,838 Long-Term: Corporate debt securities $ 3,109 $ 13 $ — $ 3,122 Asset-backed securities 1,170 1 — 1,171 U.S. treasury debt securities 4,838 12 — 4,850 Long-term investments $ 9,117 $ 26 $ — $ 9,143 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. Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive income (loss) within stockholders' equity. We had $ 1.4 million and $ 0.6 million of unrecognized gain in our accumulated other comprehensive income balance at September 30, 2024 and December 31, 20

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) (Table amounts in thousands, except share and per share amounts) As of September 30, 2024 and December 31, 2023, we had no investments with a contractual maturity of greater than two years. 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 maturity. We do not consider those investments to be other-than-temporarily impaired as of September 30, 2024. Each reporting period, we evaluate whether declines in fair value below carrying value are due to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs. Expected credit losses, not to exceed the amount of the unrealized loss, are recorded as an allowance through other expense in the consolidated statements of operations and comprehensive income (loss). The total allowance for credit losses was $ 0 at both September 30, 2024 and December 31, 2023. Fair Value of Financial Instruments We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: 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 si

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) (Table amounts in thousands, except share and per share amounts) Fair Value Measurements as of September 30, 2024 Estimated Fair Value Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 69,000 $ 69,000 $ — $ — Total cash equivalents 69,000 69,000 — — Investments: Commercial paper 19,358 — 19,35

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