Q4 2025 Inspire Medical Systems Inc Earnings Call

February 11, 2026

Expired. Medical Systems, fourth quarter and full year 2025 conference call.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session.

I'll now hand the call over to your first Speaker. The vice president of investor relations at inspire, you may begin the conference.

Speaker #1: We expect to have stable product inventory for Inspire 5 through all 2026, and we anticipate transitioning the existing Inspire 4 IPG line to Inspire 5 later in 2026.

Heading in today's call joining me are Tim Herbert chairman and chief executive officer and Matt osberg Chief Financial Officer.

Speaker #1: Switching to our quarterly results, we are very pleased with the strong revenue performance and cost discipline we delivered in the fourth quarter, which enabled us to deliver positive operating incomes and earnings.

Earlier today, we released Financial results for the 3 and 12 months end of December 31st 2025.

A copy of the press release is available on our website.

Operator: Good afternoon. My name is Delam, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Inspire Medical Systems Q4 and full year 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. I'll now hand the call over to your first speaker, Ezgi Yagci, Vice President of Investor Relations at Inspire. You may begin the conference.

Speaker #1: We ended the year with 295 U.S. territories and 275 U.S. field clinical representatives. As we enter 2026, we are being more strategic in our approach to territory management and optimizing our model through targeted territory consolidation and increased field clinical reps.

On this call management will make forward-looking statements within the meaning of the federal Securities laws, All 4 looking statements, including without limitation, those relating to our operations, Financial results and financial condition investments in our business full year 2026, financial and operational Outlook and changes in Market, access and different aspects of coding or reimbursement. Are based upon our current estimates, and various assumptions,

Speaker #1: We hired seven field clinical reps in the quarter, consistent with our strategy to get the ratio closer to one-to-one territory manager-to-field clinical marketing. We had a very strong finish to 2025 regarding patient demand for Inspire therapy, including a significant increase in the fourth quarter in social media activity.

Ezgi Yagci: Thank you, Delam, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer, and Matt Osberg, Chief Financial Officer. Earlier today, we released financial results for the 3 and 12 months ended December 31, 2025. A copy of the press release is available on our website. On this call, management will make forward-looking statements within the meaning of the federal securities laws. All forward-looking statements, including, without limitation, those relating to our operations, financial results, and financial condition, investments in our business, full year 2026 financial and operational outlook, and changes in market access and different aspects of coding or reimbursement, are based upon our current estimates and various assumptions. Forward-looking statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements.

Forward-looking statements involve material risks and uncertainties that could cause actual results or events to materially differ.

Accordingly, you should not Place undue Reliance on these statements.

Speaker #1: We believe that this increase is related to the incremental growth investments we made in the back half of 2025. The WISER program, which is a government initiative requiring prior authorization of Medicare cases in six pilot states kicked off in mid-January of 2026.

for a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission, including our periodic reports on form, 10K and 10q, as well as the form 10K, which we expect to file later this week with the SEC for the fiscal year, ended December 31st 2025

inspired disclaims any intention or obligation except as required by law to update, or revise any Financial projections or forward-looking statements, whether because of new information, future events or otherwise

Speaker #1: To date, many Medicare cases have been submitted and approved, however, there have also been denials for multiple reasons including medical criteria inconsistencies in the AI software as well as coding.

This conference call contains time-sensitive information and speaks only. As of the live broadcast today, February 11th, 2026.

With that. It is my pleasure to turn the call over to Tim Herbert Tim

Ezgi Yagci: For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission, including our periodic reports on Form 10-K and 10-Q, as well as the Form 10-K, which we expect to file later this week with the SEC for the fiscal year ended December 31, 2025. Inspire disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and speaks only as of the live broadcast today, February 11, 2026. With that, it is my pleasure to turn the call over to Tim Herbert. Tim?

Thank you, Esky and thanks everyone for joining. Our business update call for the fourth quarter and full year 2025.

Speaker #1: We continue to provide prior authorization support to our centers as they work through the WISER update. We will update you as we have more implementation and information.

On this call, I will start by providing an update on reimbursement of our inspired by System, followed by some key, takeaways of our fourth quarter and full year results.

Speaker #1: But the WISER program has affected Medicare patient procedures in these six states in the first quarter. With respect to our R&D initiatives, we recently began testing a prior authorization feature in SleepSync, which will provide a simplified uploading of patient data to support preparation of prior authorization submissions.

Then Matt will provide a financial review of our fourth quarter and full year 2025 results and our full year 2026 Outlook. We were then open the call for questions.

The key challenge for our business since late last year is, of course, the coding of the inspired 5 procedure.

A few weeks ago at an investor conference, we shared that we were actively engaging.

Speaker #1: We believe this is an important initiative to enhance patient access to Inspire therapy and we continue to look for additional ways to increase the utility of sleep sync.

with key government agencies and Physicians societies regarding the use of CPT code, 64568 verse

Excuse me. Sorry. We had a bug.

Tim Herbert: Thank you, Ezgi, and thanks everyone for joining our business update call for the Q4 and full year 2025. On this call, I will start by providing an update on reimbursement of our Inspire five system, followed by some key takeaways of our Q4 and full year results. Then Matt will provide a financial review of our Q4 and full year 2025 results and our full year 2026 outlook. We will then open the call for questions. The key challenge for our business since late last year is, of course, the coding of the Inspire five procedure. A few weeks ago, at an investor conference, we shared that we were actively engaging with key government agencies and physician societies regarding the use of CPT code 64568. Excuse me. Sorry, I had a bug.

Speaker #1: We are also excited to announce that we recently received FDA approval for three Tesla MRI compatibility. In addition, in 2026, one of our programs, we'll be Inspire primary product development 6, which will include sleep detection and auto-activation, meaning the device will turn itself on when the patient falls asleep and turn itself off when the patient awakens.

Um, versus CPD code 64582 with a -52 modifier for the Inspire 5 procedures.

In the last week, we received clarification regarding the coding, that should be used for the inspired 5 procedure.

Currently Health Care Centers and Physicians should build the most recent Health Care policies. Be it a Mac or a commercial repair.

Speaker #1: Maximizing therapy adherence. In summary, we remain focused on the patient to continue the growth and the adoption of Inspire therapy. We will execute our growth strategy of driving high-quality patient flow and increasing the capacity of our provider partners to effectively treat and manage more patients.

based on the clarification, we believe the code will transition to CPT, code 64582 for the inspired by procedure including

The use of a dash 52 modifier.

We estimate that the reduction to the professional fee associated with applying the -52 modifier could range from approximately 10% to 50% of the base rate.

Tim Herbert: Versus CPT code 64582 with a -52 modifier for the Inspire five procedure. In the last week, we received clarification regarding the coding that should be used for the Inspire five procedure. Currently, healthcare centers and physicians should bill the most recent healthcare policies, be it a MAC or a commercial payer. Based on the clarification, we believe the code will transition to CPT code 64582 for the Inspire five procedure, including the use of a -52 modifier. We estimate that the reduction to the professional fee associated with applying the -52 modifier could range from approximately 10% to 50% of the base rate. The actual reduction may vary by MAC, and we will not know the precise impact until sufficient claims data have been submitted and processed across payers.

Speaker #1: Our key strategies include training advanced practice providers certifying additional surgeons qualified to implant Inspire therapy and driving the adoption of sleep sync. And our digital tools.

The actual reduction may vary by Mac and we will not know the precise impact until sufficient claims data have been submitted and processed across payers.

Speaker #1: All of which are embedded strategy in our commercial teams' objective in enhancing patient access to Inspire therapy. Looking ahead, we are excited about our future and we believe that we have the appropriate strategies in place to drive long-term stakeholder value and we are focused on addressing reimbursement as I described above.

In any case, we believe that a significant decrease in the professional fee, resulting from use of the -52 modifier will likely influence positions, willingness to perform the Inspire 5 procedures and may limit the number of cases, they choose to undertake

We intend to address these challenges by focusing on short and long-term initiatives.

Speaker #1: Looking beyond 2026, we continue to take actions to position the company for profitable growth. As we close 2025, I would like to thank Rick Buchholz for his many years at Inspire.

Over the short term.

Speaker #1: With the close of 2025, Rick will move on to his new opportunity, and we wish him well. He joined Inspire in 2014 and was a key contributor to bringing Inspire to where it is today.

Applied to the professional fee as well as to drive consistency across the country.

Tim Herbert: In any case, we believe that a significant decrease in the professional fee resulting from use of the -52 modifier will likely influence physicians' willingness to perform the Inspire five procedure and may limit the number of cases they choose to undertake. We intend to address these challenges by focusing on short and long-term initiatives. Over the short term, as we work through 2026, we plan to work with the appropriate stakeholders on initiatives intended to minimize the actual reduction applied to the professional fee, as well as to drive consistency across the country. As an initial observation, we believe there is strong justification for applying a smaller reduction, given the markedly higher surgical skill and complexity associated with implanting the stimulation lead compared to the sensing lead.

Speaker #1: With that, it is also my pleasure to introduce you to Matt Osberg, for his initial earnings call at Inspire Medical Systems.

As an initial observation, we believe there is strong justification for applying a smaller reduction. Given the market Lear surgical skill and complexity associated.

With implanting the stimulation lead compared to the sensing leak.

Speaker #1: Inspire. Thank you, Tim.

Speaker #2: And good afternoon, everyone. I'm excited to be part of the Inspire team and I look forward to getting to know each of you in the coming months.

furthermore, because of the excellent progress made with the, the larger inspired 5 to close out 2025,

Speaker #2: Now let's review our 2025 fourth quarter and full year financial results. Fourth quarter revenue increased 12% to $269 million, and full year revenue increased 14% to $912 million.

Significant coding experience now exists for the inspired 5 procedure.

Speaker #2: With both increases primarily driven by growth at existing centers and new center additions. Fourth quarter and full year operating margin improved primarily due to sales leverage and a higher sales mix of Inspire 5 systems.

CPT code. 64568 was used for approximately 10,000 Inspire 5 procedures in 2025, which provides the basis for professional reimbursement.

The professional fee.

For a CPT code, 64568.

Is approximately 10% less.

Speaker #2: As expected, fourth quarter and full year income tax was a significant benefit, primarily driven by the previously disclosed release of the company's income tax valuation allowance of our net deferred tax assets in the fourth quarter of 2025.

Than the reimbursement for CPT. Code 64582, used for inspire 4 procedures, and reflects the reduced work, Associated within planning, the pressure, sensing lead.

Tim Herbert: Furthermore, because of the excellent progress made with the launch of Inspire five to close out 2025, significant coding experience now exists for the Inspire five procedure. CPT code 64568 was used for approximately 10,000 Inspire five procedures in 2025, which provides the basis for professional reimbursement. The professional fee for a CPT code 64568 is approximately 10% less than the reimbursement for CPT code 64582, used for Inspire four procedures and reflects the reduced work associated with implanting the pressure sensing lead. As a note, we are nearing the completion of manufacturing of the Inspire four systems. However, we believe that we have sufficient inventory available for centers who may choose to remain with the Inspire four system for the foreseeable future.

Speaker #2: Fourth quarter net income per diluted share increased $3.51 to $4.66, full year net income per diluted share increased $3.09 to $4.89. Fourth quarter adjusted net income per diluted share increased $0.51 to $1.65, full year adjusted net income per diluted share increased $0.80 to $2.42.

As a note, we are nearing the completion of manufacturing of the inspired Forest systems. However, we believe that we have sufficient inventory. Available for centers who may choose to remain with the inspired Force system for the foreseeable future.

Given this Dynamic reimbursement landscape. We have revised and widened. Our full year Revenue guidance for 2026 to reflect the broad range of possible impacts.

That we may experience throughout the year.

Speaker #2: Fourth quarter operating cash flow was $52 million, bringing the full-year total operating cash flow to $117 million. We completed $50 million of share repurchases in the fourth quarter, bringing the full-year total to $175 million, and we ended the quarter with $405 million in cash and investments.

Over the long term, we will be focused on developing a new CPT code.

With Clarity, on the coding of inspiring 5 procedures as well as hospital and ASC sight of service reimbursement.

Speaker #2: Our strong cash position allows us to remain focused on making investments to drive profitable growth. Turning to our 2026 outlook, we are revising our full-year revenue outlook to be in the range of $950 million to $1 billion.

And an action plan to clarify. The professional fee payment, we can return to Patient Care. And I will start by reiterating our commitment to put the patient first and deliver strong patient outcomes.

Tim Herbert: Given this dynamic reimbursement landscape, we have revised and widened our full-year revenue guidance for 2026 to reflect the broad range of possible impacts that we may experience throughout the year. Over the long term, we will be focused on developing a new CPT code. With clarity on the coding of Inspire five procedures, as well as hospital and ASC site of service reimbursement, and an action plan to clarify the professional fee payment, we can return to patient care, and I will start by reiterating our commitment to put the patient first and deliver strong patient outcomes. Over the past few months, we had the privilege to show data from the Singapore study and the US Limited Market Release, and we are excited and energized by the strong performance of the Inspire five system.

Over the past few months, we had the privilege to show data from the Singapore study and the US limited market release.

Speaker #2: Representing 4% to 10% growth. This range reflects the expected impact on our first quarter from coding uncertainty, as well as the range of outcomes that exist by adopting CPT code 64582 with the -52 modifier and the related position reimbursement rates for the full year.

And we are excited and energized by the strong performance of The Inspired 5 system.

Being more specific, the Inspire 5 system has demonstrated superiority over Inspire 4. As the data has shown a reduction in surgical time with the Inspire 5 system,

Speaker #2: The low end of our outlook contemplates a 50% discount to the physician fee while the high end of our outlook contemplates a 10% discount.

inspiratory overlap, which is the essential factor for closed loop therapy has shown to be significantly improved with the Inspire 5 system and

Speaker #2: As we progress through the first half of the year, we expect to gain further insights on the professional fee associated with the use of this modifier.

Speaker #2: Additionally, we expect adjusted operating margin in the range of 6 to 8 percent, net income per diluted share in the range of $1.23 to $1.81, and adjusted net of $1.85 to income per diluted share in the range $2.35.

the aji in the Singapore study has demonstrated a 79.5%, responder rate using the share or criteria, Which is far superior to the 66% responder rate, demonstrated in the star phase 3, pivotal trial in 2012,

Inspired system. Reliability. Continues to improve year-over-year.

Tim Herbert: Being more specific, the Inspire five system has demonstrated superiority over Inspire four, as the data has shown a reduction in surgical time with the Inspire five system. Inspiratory overlap, which is the essential factor for closed loop therapy, has shown to be significantly improved with the Inspire five system. And the AHI in the Singapore study has demonstrated a 79.5% responder rate using the SHER criteria, which is far superior to the 66% responder rate demonstrated in the STAR phase 3 pivotal trial in 2012. Inspire system reliability continues to improve year-over-year, and the 2025 data to date has shown a 0.5% occurrence of device explants and a 1.5% occurrence of revisions.

And the 2025 data today has shown a 0.5% occurrence.

Speaker #2: Our outlook assumes an effective tax rate of 44% to 49% and an adjusted effective tax rate of 26% to 28%. As we are in a situation where our pre-tax income is a relatively small base, certain discrete tax charges can have a material impact on our tax rate.

A device expanse and a 1.5%. Occurrence of revisions.

Speaker #2: Due to the fact that we have a significant amount of stock-based compensation outstanding, and due to the volatility of our stock price, the tax impact of stock-based compensation on our effective tax rate can be material and could have significant variability from year to year including moving from a tax expense to a tax benefit between years.

With respect to the Inspire 5 us launch. The team has made significant progress in the fourth quarter and we are excited to report that position. Training is complete Contracting is over, 95% complete for our centers and sleep tank. On boarding is complete for over 90%, bringing the total to over 90% of our centers in planning, Inspire 5 today,

We expect to have stable product inventory for inspire 5 through all 2026 and we anticipate transitioning. The existing Inspire 4 IP, GL line to inspire 5 later in 2026.

Speaker #2: Therefore, we have excluded the tax impact of stock-based compensation in our adjusted income tax expense and our adjusted effective tax rate. The ultimate amount of tax impact will primarily be determined by the difference in the value of the stock at the grant date as compared to the vesting date for RSUs and PSUs, or the grant date versus the exercise date for options.

Switching to our quarterly results. We are very pleased with the strong Revenue, performance and cost discipline. We delivered in the fourth quarter, which enabled us to deliver positive, operating incomes and earnings

Tim Herbert: With respect to the Inspire five US launch, the team has made significant progress in the fourth quarter, and we are excited to report that physician training is complete, contracting is over 95% complete for our centers, and sleep tech onboarding is complete for over 90%, bringing the total to over 90% of our centers implanting Inspire five today. We expect to have stable product inventory for Inspire five throughout 2026, and we anticipate transitioning the existing Inspire four IPG line to Inspire five later in 2026. Switching to our quarterly results, we are very pleased with the strong revenue performance and cost discipline we delivered in the fourth quarter, which enabled us to deliver positive operating income and earnings. We ended the year with 295 US territories and 275 US field clinical representatives.

We ended the year with 295 US territories and 275 us field clinical Representatives.

Speaker #2: We expect the tax impact from stock-based compensation will be concentrated in the first quarter of the year as that is when the majority of the vesting of our RSUs and PSUs occur.

As we enter 2026, we are being more strategic.

To targeted territory consolidation, and increased field clinical reps.

Speaker #2: Our outlook assumes estimated weighted average diluted shares outstanding of approximately 29.4 million and capital expenditures between $45 million and $50 million. Looking at the cadence of the year, due to the expected impact on our first quarter for coding uncertainty, we expect revenue in the first quarter of 2026 to be approximately flat to prior year.

We hired 7 field clinical reps in the quarter can uh consistent with our strategy to get the racial closer to 1 1 territory manager to feel clinical rep.

Our patient marketing.

We had a very strong finish to 2025, regarding patient, demand for inspire therapy, including a significant increase in the fourth quarter, in social media activity.

Speaker #2: Additionally, we expect a net loss in the first quarter due to our revenue expectation and forecasted year-over-year higher operating expenses. We expect sequential improvement in both our revenue and net income throughout the year with the fourth quarter having the highest levels of revenue and profit in the year.

We believe that this increase is related to the incremental growth Investments. We made in the back half of 2025.

Tim Herbert: As we enter 2026, we are being more strategic in our approach to territory management and optimizing our model through targeted territory consolidation and increased field clinical reps. We hired seven field clinical reps in the quarter, consistent with our strategy to get the ratio closer to 1-to-1 territory manager to field clinical rep. On patient marketing, we had a very strong finish to 2025 regarding patient demand for Inspire therapy, including a significant increase in Q4 in social media activity. We believe that this increase is related to the incremental growth investments we made in the back half of 2025. The WISeR program, which is a government initiative requiring prior authorization of Medicare cases in six pilot states, kicked off in mid-January 2026. To date, many Medicare cases have been submitted and approved.

The wiser program, which is a government initiative. Requiring prior, authorization of Medicare, cases in 6 pilot States.

Speaker #2: Finally, in addition to revenue, we plan to focus more of our communications on measures such as operating income, operating margin, and net income per diluted share as well as adjusted operating income adjusted operating margin and adjusted net income per diluted share.

Kicked off in mid January of 2026.

To date. Many Medicare cases have been submitted and approved. However, there have also been denials for multiple reasons, including medical criteria, inconsistencies in the AI software, as well as coding.

Speaker #2: These changes more closely align our reporting with our medical device peer group and give our shareholders a better understanding of our recurring operations. As we have not previously reported on adjusted operating income and adjusted operating margin, we have included a reconciliation of these measures for each quarter and the full year 2025 in our press release and investor presentation.

we continue to provide prior authorization support to our centers as they work through the wiser implementation and when will update you, as we have more information,

But the wiser program has affected Medicare patient procedures.

In these 6 states in the first quarter.

With respect to our R&D initiatives.

Speaker #2: In closing, despite the dynamic reimbursement landscape, our team remained focused on the fundamentals to drive strong performance in the fourth quarter of 2025. As we look ahead to 2026, we will continue to emphasize execution and remain focused on what we can control.

We recently began testing a prior authorization feature in sleeping which will provide a simplified uploading of patient data to support preparation of prior authorization. Submissions.

Tim Herbert: However, there have also been denials for multiple reasons, including medical criteria, inconsistencies in the AI software, as well as coding. We continue to provide prior authorization support to our centers as they work through the WISeR implementation, and we'll update you as we have more information. But the WISeR program has affected Medicare patient procedures in these 6 states in Q1. With respect to our R&D initiatives, we recently began testing a prior authorization feature in SleepSync, which will provide a simplified uploading of patient data to support preparation of prior authorization submissions. We believe this is an important initiative to enhance patient access to Inspire therapy, and we continue to look for additional ways to increase the utility of SleepSync. We are also excited to announce that we recently received FDA approval for 3 Tesla MRI compatibility.

Speaker #2: I'm excited to be part of the Inspire team and excited about the opportunities we have to drive continued profitable growth and long-term shareholder value.

We believe this is an important initiative to enhance patient access to inspire therapy and we continue to look for additional ways to increase the utility else. Sleeping

Speaker #2: With that, our prepared remarks are concluded. Dilem, you may now open the line for questions.

We are also excited to announce that we recently received FDA approval.

For a 3 Tesla, MRI compatibility.

Speaker #1: Thank you, sir. As a reminder, to ask a question, you would need to press star 11 on your telephone. To withdraw your question, please press star 11 again.

in addition, in 2026, 1 of our primary product development programs,

Will be inspired 6.

Speaker #1: We ask that you please limit your questions to no more than one question and one follow-up. Please stand by while we compile the Q&A roster.

Speaker #1: And I show our first question comes from the line of Adam Mater from Piper Sandler. Please go

Which will include sleep detection and auto activation meaning, the device will turn itself on when the patient falls asleep and turn itself off. When the patient awakens maximizing therapy, adherence,

Speaker #1: ahead.

Speaker #3: Hi, Tim. Thank you for taking the questions and apologies for Matt, how's it going?

Speaker #3: Apologies for the background noise. I wanted to start on reimbursement, and I guess the first question is just around the physician fee with Gen 5, using the 8.2 code and the -52 modifier. The 10 to 15 percent reduction is obviously a wide range.

In summary, we remain focused on the patient to continue the growth in the adoption of inspired therapy, we will execute our growth strategy of driving high quality patients, low and increasing the capacity of our provider Partners to effectively treat and manage more patients.

Speaker #3: So the question is, when do you expect to have more clarity on exactly where that shakes out from the various payers? I think you said you have a strong case to come out close to the 10% haircut.

Our key strategies include training advanced practice providers, certifying additional surgeons qualified to inspire implant Inspire therapy.

And driving the adoption of sleep sack, and our digital tools.

Tim Herbert: In addition, in 2026, one of our primary product development programs will be Inspire six, which will include sleep detection and auto activation, meaning the device will turn itself on when the patient falls asleep and turn itself off when the patient awakens, maximizing therapy adherence. In summary, we remain focused on the patient to continue the growth and the adoption of Inspire therapy. We will execute our growth strategy of driving high-quality patient flow and increasing the capacity of our provider partners to effectively treat and manage more patients. Our key strategies include training advanced practice providers, certifying additional surgeons qualified to implant Inspire therapy, and driving the adoption of SleepSync and our digital tools. All of which are embedded strategy in our commercial team's objective in enhancing patient access to Inspire therapy.

Speaker #3: So maybe just elaborate on that. And what can the company and the medical societies do from an involvement standpoint in those discussions?

All of which are embedded strategy in. Our commercial teams objective and enhancing patient access,

To inspire therapy.

Speaker #3: Thanks.

Speaker #4: Hi, Adam. Thanks very much. I

Speaker #4: Think from the first off, there's existing policies in place. So the step number one is for facilities and professionals to build to the current policy.

Looking ahead. We are excited about our future and we believe that we have the appropriate strategies in place to drive, long-term stakeholder value, and we are focused on addressing reimbursement as I described above

Speaker #4: So this evolution to -52 is going to be a little bit of a process as it kind of works forward. Number two, we want to be proactive working initially with the max but then eventually also working with commercial payers too.

There can be on 2026. We continue to take actions to position the company for profitable growth.

Speaker #4: But initially with the max we can describe the differences between Inspire 4 and Inspire 5, the history using Inspire 5 with CPT code 64568 in 2025 and document the reduction in the work performed in 64582 to be able to get a line with the max and more importantly to drive consistency.

As we close 2025, I would like to thank Rick buh holds for as many years that Inspire with the close of 2025. Rick will move on to his new opportunity and we wish him. Well he joined Inspire in 2014 and was a key contributor to Bringing Inspire to where it is today.

With that. It is also my pleasure to introduce you to Matt osberg for his initial earnings. Call that inspire

Tim Herbert: Looking ahead, we are excited about our future, and we believe that we have the appropriate strategies in place to drive long-term stakeholder value, and we are focused on addressing reimbursement, as I described above. Looking beyond 2026, we continue to take actions to position the company for profitable growth. As we close 2025, I would like to thank Rick Buchholz for his many years at Inspire. With the close of 2025, Rick will move on to his new opportunity, and we wish him well. He joined Inspire in 2014 and was a key contributor to bringing Inspire to where it is today. With that, it is also my pleasure to introduce you to Matt Osberg for his initial earnings call at Inspire.

Speaker #4: So yeah, we expect that and we believe that we're going to work with these societies and with the physician groups to make sure that we can drive that consistency so they have predictability to be able to move forward with

Thank you, Tim and good afternoon everyone. I'm excited to be part of the Inspire team and I look forward to getting to know each of you in the coming months.

Now, let's review our 2025 fourth quarter and full year Financial results.

Fourth quarter Revenue, increase 12% to 269 million.

Speaker #4: implants. Okay.

Speaker #3: That's helpful. And for the follow-up, I guess maybe just talk about kind of the pathway forward here in terms of Gen 5. And I think you mentioned you're pursuing a dedicated code.

in full year Revenue, increased 14% to 912 million, with both increases, primarily driven by growth at existing centers and new center Editions,

Fourth quarter and full year. Operating margin improved. Primarily due to sales leverage and a higher sales, mix of inspire 5 systems

Speaker #3: Just key steps and timelines in that process and I guess one question that I have, sorry, to take it on is why not push the Gen 4 system a little bit more aggressively?

Speaker #3: Just given it, buttoned up with 64,582 until we really have Gen 5 kind of fully situated. Thank you for taking—

Matt Osberg: Thank you, Tim, and good afternoon, everyone. I'm excited to be part of the Inspire team, and I look forward to getting to know each of you in the coming months. Now, let's review our 2025 Q4 and full year financial results. Q4 revenue increased 12% to $269 million, and full year revenue increased 14% to $912 million, with both increases primarily driven by growth at existing centers and new center additions. Q4 and full year operating margin improved primarily due to sales leverage and a higher sales mix of Inspire five systems. As expected, Q4 and full year income tax was a significant benefit, primarily driven by the previously disclosed release of the company's income tax valuation allowance of our net deferred tax assets in the Q4 of 2025.

Income tax was a significant benefit primarily driven by the previously disclosed release of the company's income tax valuation allowance of our net deferred tax Assets in the fourth quarter of 2025.

Fourth quarter, net income per diluted. Share increased 3.51 to $4.66.

Speaker #3: the question. I understand that.

Speaker #4: I think a couple of things in that you talk about in that discussion. Number one, we do want to pursue a new CPT code for the simple reason there has been public discussion that using a -52 modifier is not a long-term solution.

Full year, net income for diluted. Share increased 3.9 to $4.89.

fourth quarter adjusted, net income per diluted, share increased 51, cents to $1.65,

Speaker #4: That is really used for— that's important for us to be able to address special cases. And so, that. Number two, if you look at the payers, we believe that they are going to minimize that reduction because if they're going to pay for an Inspire procedure with a 50% reduction, that could be $350-some dollars.

Full year adjusted, net income per diluted, share increased 80 cents to $2.42.

Fourth quarter, operating cash flow was 52 million, bringing the full year. Total operating cash flow to 117 million.

Speaker #4: Compared to $700 for an Inspire 4. So, we think CommerHeads will prevail. We will. We believe that we can work with the payers and the societies to get alignment, to be able to continue to offer Inspire 5 because that is a product that has shown effectiveness even as compared to Inspire 4.

Matt Osberg: Fourth quarter net income per diluted share increased $3.51 to $4.66. Full year net income per diluted share increased $3.09 to $4.89. Fourth quarter adjusted net income per diluted share increased $0.51 to $1.65. Full year adjusted net income per diluted share increased $0.80 to $2.42. Fourth quarter operating cash flow was $52 million, bringing the full year total operating cash flow to $117 million. We completed $50 million of share repurchases in the fourth quarter, bringing the full year total to $175 million, and we ended the quarter with $405 million in cash and investments.

We completed 50 million of share repurchases in the fourth quarter, bringing the full year, total to 175 million and we ended the quarter with 405 million in cash and Investments.

Our strong cash position allows us to remain focused on making Investments, to drive profitable growth.

Speaker #4: That being said, to the last part of your discussion, we do have inventory of Inspire 4 available to those physicians and those centers that wish to continue with that by submitting a CPT code now.

Turning to our 2026 Outlook. We are revising our full year. Revenue Outlook to be in the range of 950 million, to 1 billion representing 4% to 10% growth,

Speaker #4: The timing of that is such that that would come online with a RUC process near January 1st, 2028. So that is a two-year period.

this range reflects the expected impact on our first quarter from coding uncertainty as well as the range of outcomes that exists by adopting CPT code 64582 with the -52 modifier and the related physician reimbursement rates for the full year,

Speaker #4: So it's important that we work through to minimize the reduction with the -52 modifier, but also have Inspire 4.

The low end of our Outlook contemplates, a 50% discount to The Physician fee, while the high end of our Outlook, contemplates, a 10% discount.

Matt Osberg: Our strong cash position allows us to remain focused on making investments to drive profitable growth. Turning to our 2026 outlook, we are revising our full-year revenue outlook to be in the range of $950 million to $1 billion, representing 4% to 10% growth. This range reflects the expected impact on our Q1 from coding uncertainty, as well as the range of outcomes that exist by adopting CPT code 64582 with the -52 modifier and the related physician reimbursement rates for the full year. The low end of our outlook contemplates a 50% discount to the physician fee, while the high end of our outlook contemplates a 10% discount.

Speaker #4: available. Thank

as we progress through the first half of the year, we expect to gain further, insights on the professional fee, associated with the use of this modifier,

Speaker #3: you.

Speaker #1: Thanks, Adam. And I see our next question comes from the line of John Block from Stifel. Please go ahead.

Additionally, we expect adjusted operating margin in the range of 6 to 8%.

Speaker #5: Great, thanks, guys. Good afternoon. Tim, I guess I'm just curious about the revision to the 2026 revenue guidance. What, specifically, is due to the new reimbursement landscape?

Net income per diluted share and the range of $1.23 to $1.81.

Speaker #5: The 8.2 code with the modifier, versus what you're seeing with the Wiser program? Because you did call out just some early findings there, some headwinds.

And adjusted net income per diluted share in the range of $1.85 to $2.35.

Speaker #5: So, is there a way to delineate one versus the other? How do we think that through?

Our Outlook assumes an effective tax rate of 44% to 49% and an adjusted effective tax rate of 26% to 28%.

Speaker #4: Hi, John. I think the Wiser program is the government program to require prior authorizations. In six pilot states—now, those six states are significant contributors of procedures.

As we are in a situation, where our pre-tax income is a relatively small base.

Certain discrete tax charges can have a material impact on our tax rate.

Matt Osberg: As we progress through the first half of the year, we expect to gain further insights on the professional fee associated with the use of this modifier. Additionally, we expect adjusted operating margin in the range of 6% to 8%, net income per diluted share in the range of $1.23 to $1.81, and adjusted net income per diluted share in the range of $1.85 to $2.35. Our outlook assumes an effective tax rate of 44% to 49% and an adjusted effective tax rate of 26% to 28%. As we are in a situation where our pre-tax income is a relatively small base, certain discrete tax charges can have a material impact on our tax rate.

Speaker #4: And so, that's why we're working very diligently to solve the technical challenges with the portal that Wiser has implemented, and the Wiser program didn't allow any implants until January 15th, because I think there was awareness that there would be challenges as they fired up the program.

due to the fact that we have a significant amount of stock-based, compensation outstanding and due to the volatility of our stock price,

the tax impact of stock-based compensation on our effective tax rate, can be material and could have significant variability from year to year, including moving from a tax expense to a tax benefit between years

Speaker #4: So we do see that Wiser will be able to get our arms around that and work with our centers to be able to get the prior authorizations once the portal is streamlined and we're able to work through the bug.

Therefore we have excluded the tax impact of stock-based compensation in our adjusted income tax expense and our adjusted effective tax rate.

Speaker #4: So a little bit more of just a Q1 phenomenon with the Wiser. What was the first question?

Speaker #3: So the primary reason for our revenue reduction, though, is the coding uncertainty and the potential shift to the 52 modifier for the remainder of the year.

The ultimate amount of tax impacts will primarily be determined by the difference in the value of the stock at the grant date as compared to the vesting date for rsus and psus or the grant date versus the exercise date for options.

Matt Osberg: Due to the fact that we have a significant amount of stock-based compensation outstanding, and due to the volatility of our stock price, the tax impact of stock-based compensation on our effective tax rate can be material and could have significant variability from year to year, including moving from a tax expense to a tax benefit between years. Therefore, we have excluded the tax impact of stock-based compensation in our adjusted income tax expense and our adjusted effective tax rate. The ultimate amount of tax impact will primarily be determined by the difference in the value of the stock at the grant date as compared to the vesting date for RSUs and PSUs, or the grant date versus the exercise date for options.

Speaker #3: Wiser is causing a little bit of disruption in those six states. But the bigger issue is the updated reimbursement guidance.

We expect the tax impact from stock-based, compensation will be concentrated in the first quarter of the year as that is, when the majority of the vesting of our rsus and psus occur.

Speaker #5: Okay, that's helpful context. I just wanted to, on that last point, make sure that was all embedded in the revision. And then maybe just a quicker follow-up is, Tim, can you remind us, in terms of the physicians, what percent are salary-based?

Our Outlook assumes estimated weighted, average diluted shares outstanding of approximately 29.4 million in capital expenditures between 45 million and 50 million.

looking at the Cadence of the year,

Speaker #5: What percent are RVUs? And I'm just curious, anecdotally, any feedback you're getting, right? For those that have billed and have billed and seen the modifier, what you're hearing from the field, from the physicians, or from the reps?

due to the expected impact on our first quarter for coding uncertainty, we expect Revenue in the first quarter of 2026 to be approximately flat to Prior year.

Speaker #5: Thanks,

Speaker #5: guys. Sure.

Additionally, we expect a net loss in the first quarter due to our Revenue expectation.

Speaker #4: I think that a majority of our physicians are private practice. Any physician who's associated with a large medical practice or a large hospital system would be salary-based.

And forecasted year-over-year, higher operating expenses.

Matt Osberg: We expect the tax impact from stock-based compensation will be concentrated in Q1 of the year, as that is when the majority of the vesting of our RSUs and PSUs occur. Our outlook assumes estimated weighted average diluted shares outstanding of approximately 29.4 million, and capital expenditures between $45 million and $50 million. Looking at the cadence of the year, due to the expected impact on our Q1 for coding uncertainty, we expect revenue in Q1 2026 to be approximately flat to prior year. Additionally, we expect a net loss in Q1 due to our revenue expectation and forecasted year-over-year higher operating expenses. We expect sequential improvement in both our revenue and net income throughout the year, with Q4 having the highest levels of revenue and profit in the year.

Speaker #4: Physicians who are part of an academic center tend to be salary-based. So it doesn't have the same level of impact with them, but they're also a lot of them are the key opinion leaders that help drive this process.

We expect sequential Improvement in both our revenue and net income throughout the year with the fourth quarter, having the highest levels of revenue and profit in the year.

Finally, in addition to revenue, we plan to focus more of our Communications on measures such as operating income operating margin and net income per diluted share.

Speaker #4: So they will be working with us in detail to try and minimize this reduction of the reimbursement going forward.

Adjusted operating margin and adjusted net income per diluted share.

Speaker #3: What we've said, John, in the past is that on average, 30% of our centers are academic centers. I think you can take that as a proxy for implanting.

These changes more closely align our reporting with our medical device peer group and give our shareholders a better understanding of our recurring operations.

Speaker #3: surgeons. Okay.

Speaker #5: Thank you,

Speaker #5: guys. Thank

Speaker #1: you. And I show our next question comes from the line of Robbie Marcus from JPMorgan. Please go

As we have not previously reported on adjusted operating income and adjusted operating margin, we have included a Reconciliation of these measures for each quarter and the full year 2025 in our press release and investor presentation.

Speaker #1: ahead. Oh, great.

Speaker #6: Thanks for taking the questions. I'll just one for me. Tim, I imagine the first quarter got a flat is based on what you're seeing so far.

Matt Osberg: Finally, in addition to revenue, we plan to focus more of our communications on measures such as operating income, operating margin, and net income per diluted share, as well as adjusted operating income, adjusted operating margin, and adjusted net income per diluted share. These changes more closely align our reporting with our medical device peer group and give our shareholders a better understanding of our recurring operations. As we have not previously reported on adjusted operating income and adjusted operating margin, we have included a reconciliation of these measures for each quarter and the full year 2025 in our press release and investor presentation. In closing, despite the dynamic reimbursement landscape, our team remained focused on the fundamentals to drive strong performance in the fourth quarter of 2025.

In closing, despite the dynamic reimbursement, landscape our team remained focused on the fundamentals to drive strong performance in the fourth quarter of 2025. As we look ahead to 2026, we will continue to emphasize execution and remain focused on what we can control.

Speaker #6: the quarter, I guess, how do you In get comfort with the 4 to 10, especially if the low end is a 50% cut with the 5.2 modifier?

I'm excited to be part of the Inspire team and excited about the opportunities. We have to drive continued profitable growth, and long-term shareholder value.

Speaker #6: That would probably assume high single to close to double-digit for the rest of the year. How do you get comfortable with that? And why couldn't it be even

With that our prepared remarks are concluded dilemma. You may now open the line for questions.

Thank you, sir.

Speaker #6: lower? Oh,

Speaker #4: gotcha. We ran our models and we based what Ezgi just kind of commented on, the percent of our surgeons that are at academic or large facilities versus private practice.

As a reminder to ask a question, you will need to press star. 1 1, 1 on your telephone to rejoin your question. Please press star, 1, 1 1 again.

We ask that you please limit your questions to know more than 1 question and 1 follow-up.

Please stand by while we compile the Q&A roster.

Speaker #4: Also looking at the timing of any implementation from both Medicare as well as commercial payers with the -52 modifier. And so when we ran through our models, we believe that we're comfortable with the range.

And I show our first question comes from the line of Adam Mater from Piper Sandler. Please go ahead.

Matt Osberg: As we look ahead to 2026, we will continue to emphasize execution and remain focused on what we can control. I'm excited to be part of the Inspire team and excited about the opportunities we have to drive continued profitable growth and long-term shareholder value. With that, our prepared remarks are concluded. Dilem, you may now open the line for questions.

Hi, Tim Matt, asked you. Thank you for taking the questions and apologies for the the background noise. Um, I wanted to start on reimbursement. Um and and I guess the, the first question is just

Speaker #4: And it's our desire to and we believe that if we can work with the max to minimize any reduction on that -52 modifier that we can be on the higher end of that range.

Around the, uh, The Physician fee with Jen 5, using the 82 code, in the dash 52 modifier. And you know, the 10- 15% reduction is, is obviously uh,

Speaker #6: All right. I said one, but I got to follow up. And I also apologize, Matt. Welcome. And congratulations. Look forward to working with you.

Operator: Thank you, sir. As a reminder, to ask a question, you will need to press star one one on your telephone. To withdraw your question, please press star one one again. We ask that you please limit your questions to no more than one question and one follow-up. Please stand by while we compile the Q&A roster. I show our first question comes from the line of Adam Maeder from Piper Sandler. Please go ahead.

Speaker #4: Thank you, Robbie.

Speaker #6: Tim, just a quick follow-up to that. Does that guide 4 to 10 assume that something improves from here on out? Or if everything stays the same, do you feel comfortable you could still hit that?

A wide range, you know? So the question is, when do you expect to have more clarity on exactly where that shapes out from the various payers? You know, I think you said you have a strong case to come out close to the 10% haircut. So maybe just elaborate on that and and what can the company and the medical societies, you know do from an investment standpoint and in those discussions that's

Um hi Adam. Thanks very much. I think from the first off the there's

Speaker #6: And I'll leave it there.

Speaker #4: Thank you. Well, I think really the -52 really hasn't modified right now, hasn't really kicked in right now. And so I think that's where the range is kind of based on what we believe the impact would be, given that there are variable situations in there with the reimbursement from 10% to 50%.

Adam Maeder: Hi, Tim, Matt, SD. Thank you for taking the questions, and apologies for the background noise. I wanted to start on reimbursement, and I guess the first question is just around the physician fee with Gen Five using the 82 code and the -52 modifier. And, you know, the 10% to 15% reduction is obviously a wide range. You know, so the question is, when do you expect to have more clarity on exactly where that shakes out from the various payers? You know, I think you said you have a strong case to come out closer to the 10% haircut, so maybe just elaborate on that. And what can the company and the medical societies, you know, do from an involvement standpoint in those discussions? Thanks.

for facilities and professionals to build to the current policy. So this um Evolution to -52 is going to be a little bit of a process as it kind of works forward. Number 2, we want to be proactive working initially with the max.

Speaker #4: Obviously, the Wiser is having a short-term impact in Q1 as we work through the logistics. But I think once we get more clarity, we'll get more comfort around this.

Pretty Danny Betsy also working with commercial pairs, too. But initially with the max,

Speaker #6: Yeah. And Robbie, I'd just add to that. I think you heard in my prepared remarks, the bottom end of that range is more of the the 50% reduction.

We can describe the differences between Inspire 4 and Inspire 5, the history using as per 5 with CPT code, 64568 in 2025.

Speaker #6: And the top end as you get closer to that 10% reduction. So it kind of depends on how things play out within that range as we see things in the next few months.

Matt Osberg: Hi, Adam. Thanks very much. I think from the first off, there's existing policies in place. So the step number 1 is for facilities and professionals to build to the current policy. So this evolution to -52 is gonna be a little bit of a process as it kind of works forward. Number 2, we want to be proactive, working initially with the MACs, but then eventually also working with commercial payers too. But initially with the MACs, we can describe the differences between Inspire Four and Inspire Five, the history using Inspire Five with CPT code 64568 in 2025, and document the reduction in the work performed in 64582, to be able to get alignment with the MAC, and more importantly, to drive consistency.

And document the reduction in the work performed. Um in 64582 to be able to get a lion alignment with the Max and more importantly to drive consistency.

Speaker #6: Thanks a

Speaker #6: lot. Thank you.

Speaker #1: And I'll show our next question comes from the line of Travis Steed from Bank of America.

Speaker #1: And I show our next question comes from the line of Travis Steed from Bank of America Securities. Please go ahead.

Speaker #7: everybody. Just wanted to ask Hi, about the pathway to getting a new code. Is there the temporary code miscellaneous code that you'd go to while transitioning?

So yeah, we expect that um and we believe that we're going to work with these societies and with the physician groups to make sure that we can drive that consistency. So they have predictability to be able to move forward with implants.

Okay, that's helpful. Um, and for the follow-up.

Speaker #7: And kind of what happens if the doc payment changes during that process? And how do you get comfort that the reimbursement of payments couldn't go lower with a new code?

Speaker #4: Oh, sure. Good question. I think the new code application process is well-documented. And I think the application will go in in the near future.

Speaker #4: And that starts with the initial review with the AMA CPT panel. And if we get that approved, then it moves on to the RUC process to be able to do the valuation of it.

Matt Osberg: So yeah, we expect that, and we believe that we're gonna work with these societies and with the physician groups to make sure that we can drive that consistency. So they have-

Speaker #4: And as you say, that's a valuation process to weigh the time it takes to do the procedure, and they try to get an accurate measure.

You know, I I guess maybe just talk about kind of the, the pathway forward here in terms of Gen 5 and I think you mentioned your pursuing a, a dedicated code, you know, just key steps and and timelines in that process. And, you know, well I guess 1 question that, that I have sorry to, to take it on is, you know, um, you know, why not push the Gen 4 system a little bit more, uh, you know, aggressively, uh, just give them that the reimbursement is. I'll call it buttoned up with 64582, you know, until we really have. Um, uh, you know, Jen Fox kind of fully situated. Thank you for taking the question. I understand that. I think

Speaker #4: But in the meantime, we will run with 64582. So we won't be using any kind of miscellaneous code, any kind of temporary code, or any kind of Category 3 code.

Tim Herbert: ... predictability to be able to move forward with implants.

Adam Maeder: Okay, that's helpful. And for the follow-up, you know, I guess maybe just talk about the pathway forward here in terms of Gen five. And I think you mentioned you're pursuing a dedicated code, you know, just key steps and timelines in that process. And, you know, I guess one question that I have, sorry to take it on, is, you know, why not push the Gen four system a little bit more, you know, aggressively? Just given that the reimbursement is, I'll call it, buttoned up with 64582, you know, until we really have Gen five kind of fully situated. Thank you for taking my question.

Speaker #4: Right now, our intention is to go to a new Category 1 code through the full process, which includes a RUC. And with that, yes, there's always risk that the RUC would identify a lower payment from where 64582 is.

A couple things in that you talked about in that discussion. Number 1, we do want to pursue a new CPT code for the simple reason there has been public discussions. That using a -52 modifier is not a long-term solution that is really used for special cases.

And so that's important for us to be able to address that um number 2. If you look at um the payers um

Speaker #4: today. Oh,

Speaker #7: helpful. And on kind of the ability to still kind of grow earnings and expand margins here with lower revenue growth, I assume it's probably a little harder to get leverage and so just kind of thinking about the puts and takes and how your ability to continue to grow earnings in a slower revenue environment.

We think uh, calmer heads will prevail. We will, We believe that we can work.

Tim Herbert: Sure. Understand that. I think, a couple things in that you talk about in that discussion. Number one, we do want to pursue a new CPT code for the simple reason there has been public discussions that using a dash 52 modifier is not a long-term solution. That is really used for special cases, and so that's important for us to be able to address that. Number two, if you look at the payers, we believe that they are gonna minimize that reduction, because if they're gonna pay for an Inspire five procedure of a 50% reduction, that could be $350 some dollars, compared to $700 for an Inspire four. So we think, calmer heads will prevail.

Speaker #4: Thanks. I think we've had good cost discipline over the last several quarters. We'll continue to do that. Again, we're going to be working the reimbursement as a priority.

With the payers in the societies to get alignment, to be able to continue to offer Inspire 5 because that is a product that has shown, uh, Effectiveness. And even as compared to inspire 4,

Speaker #4: To minimize that payment. And if we minimize that payment, we get to the higher end of a range, obviously, we're able to get leverage from those numbers.

that being said to the last part of your discussion,

Speaker #4: But we're going to be diligent with our spending. And as we learn more about the reduction being able to be—

Speaker #7: Good. flexible. you.

Speaker #4: Thanks,

Speaker #4: Travis. Thank

Speaker #1: you. And I show our next question comes from the line of David Rescott from Baird. Please go ahead.

Speaker #8: Great, thanks. I heard the comments around the initiatives to minimize this actual reduction applied to the professional fee, and was wondering if there's any appetite from your end to minimize the impact that hospitals will see.

Tim Herbert: We believe that we can work with the payers and the societies to get alignment, to be able to continue to offer Inspire five, because that is a product that has shown effectiveness, even as compared to Inspire four. That being said, to the last part of your discussion, we do have inventory of Inspire four available to those physicians and those centers that wish to continue with that, by submitting a CPT code now. The timing of that is such that that would come online with a RUC process near January 1, 2028. So that is a two-year period. So it's important that we work through to minimize the reduction with the dash fifty-two modifier, but also have Inspire four available.

We do have inventory of inspired, 4 available to those positions and those centers that wish to continue with that, um, by submitting a CPT code now, um, the timing of that is such that that would come online with a Ruck process near January 1st 2028. So that is a 2-year period. So, it's important that we work through to minimize the, uh, reduction with the dash 52 modifier, um, but also have inspired 4 available.

Thank you.

And I share our next question comes from the line of John block from stifel. Please go ahead.

Great, thanks guys. Good afternoon. Um Tim I guess I'm just curious that the revision to the

Speaker #8: I think pricing potentially could be a lever there, so wondering if at all that is something you're thinking about, and generally how we should be thinking about device pricing in—

2026 Revenue guidance.

What specific to the new reimbursement, Landscaping of the 82 code with the modifier?

Speaker #8: '26. Great.

Speaker #4: Thank you, David. I think for pricing, I think with going back with 64582, it aligns pretty well with where our current pricing model is.

Versus what you're seeing with the wiser program because you did call out just some early findings there, some headwinds. So is there a way to delineate 1 versus the other? Or how do we think that through?

Speaker #4: So, as it stands today, we believe we're going to just have consistent product pricing going forward. But that's certainly always something that is something we can—

Um hi John. I think the uh wiser program is uh the uh government program to require prior authorization.

Speaker #4: review. Okay.

Speaker #8: And I think maybe midway through last year, when you lowered the 25 guide, there was a comment about maybe some newer centers that were meant to be coming online or getting trained on the system.

Adam Maeder: Thank you.

Tim Herbert: Thanks, Adam.

Operator: Thank you. And our next question comes from the line of John Block from Stifel. Please go ahead.

Jon Block: Great. Thanks, guys. Good afternoon. Tim, I guess I'm just curious, on the revision to the 2026 revenue guidance, what's specific to the new reimbursement landscape into the 82 code with the modifier versus what you're seeing with the WISeR program? Because you did call out just some early findings there, some headwinds. So is there a way to delineate one versus the other, or how do we think that through?

John Block: Great. Thanks, guys. Good afternoon. Tim, I guess I'm just curious, on the revision to the 2026 revenue guidance, what's specific to the new reimbursement landscape into the 82 code with the modifier versus what you're seeing with the WISeR program? Because you did call out just some early findings there, some headwinds. So is there a way to delineate one versus the other, or how do we think that through?

Speaker #8: We're getting delayed. So wondering just how you're thinking about your installed base, we'll call it, of trained accounts on the Inspire system and how those progressed throughout 2025.

Speaker #8: And then how that impacts the ramp that you will see from a utilization perspective, as some of the delays, we'll say, of newer centers coming online progress throughout 2025.

Tim Herbert: Hi, John. I think the WISeR program is the government program to require prior authorizations in six pilot states. Now, those six states are significant contributors of procedures, and so that's why we're working very diligently to solve the technical challenges with the portal that WISeR has implemented. WISeR program didn't allow any implants until 15 January 2026, because I think there was awareness that there would be challenges as they fired up the program. So we do see the WISeR will be able to get around, get our arms around that and work with our centers to be able to get the prior authorizations once the portal is streamlined and we're able to work through the bugs. So a little bit more of just a Q1 phenomena with the WISeR. What was the first question?

Um, and 6 Pilots States. Now those 6 states are significant contributors of procedures and uh and so that's why we're working very diligently to to solve the technical challenges with the portal that wiser has implemented. And why is there program didn't allow any implants until January 15th? Because I think there was awareness that there would be challenges as they fired up the program. So we do see. Um, the wiser will be able to get around, get our arms around that and uh and work with our centers to be able to get the prior authorizations, once the port of the streamlined and we're able to work through the bugs. So a little bit more of just a q1 uh Phenomenon with the wiser. What was the first question?

Speaker #8: Thank you.

Speaker #4: Great. As you recall, David, back last year we held back on opening centers in the first half of the year and wrapped that up more diligently in the second half of the year.

The primary reason for our Revenue reduction though is the coding uncertainty and the potential shift to the 52 modifier for the remainder of the year. Um, wiser is causing a little bit of disruption in those 6 States.

Uh, but the bigger issue is the updated reimbursement, guidance.

Speaker #4: And I think we're going to want to keep that rate moving forward. impact based on the reduction of Obviously, it will have the physician fee.

Speaker #4: to maintain that, but we want to be able to rate, if you will. So, the centers that came on late in the year are brought on with the expectation to have strong utilization and be able to move

Speaker #4: forward. Thank

Speaker #1: You. And I show our next question comes from the line of Larry Biggleson from Wells Fargo. Please go ahead.

Jon Block: Okay.

John Block: Okay.

Ezgi Yagci: The primary reason for our revenue reduction, though, is the coding uncertainty and the potential shift to the 52 modifier for the remainder of the year. WISeR is causing a little bit of disruption in those 6 states, but the bigger issue is the updated reimbursement guidance.

Speaker #7: Good afternoon. Thanks for taking the question. Welcome, Matt. There are two for me. Tim, could you talk about the clarification you got this week or within the last week?

Speaker #7: Who was it from? What did it say that led you to the conclusions you provided today? And I had one

Jon Block: Okay. That's helpful context. I just wanted to, to that last point, make sure, you know, that was all embedded in, in the revision. And then maybe just a quicker follow-up is, Tim, can you remind us in terms of, you know, the physicians, like what percent are salary based, what percent are RVUs? And I'm just curious anecdotally, any feedback you're getting, right? For those that are billed and have billed and seen the modifier, like what you're hearing from the field, from the physicians or from the reps. Thanks, guys.

John Block: Okay. That's helpful context. I just wanted to, to that last point, make sure, you know, that was all embedded in, in the revision. And then maybe just a quicker follow-up is, Tim, can you remind us in terms of, you know, the physicians, like what percent are salary based, what percent are RVUs? And I'm just curious anecdotally, any feedback you're getting, right? For those that are billed and have billed and seen the modifier, like what you're hearing from the field, from the physicians or from the reps. Thanks, guys.

Speaker #7: follow-up. Really, we just had, as we said

Okay, the topical context, I just wanted to to that last Point, make sure, you know, that was all embedded in in the revision and then maybe just a quicker. Follow-up is Tim. Can you remind us in terms of, you know, the Physicians, like what percent or salary based what percent are rvus? And I'm just curious anecdotally, any feedback you're getting right for those that are build and, and build, and seen the modifier, like, what you're hearing from the field from the Physicians, or from the Reps? Thanks guys. Sure. Um, I think that, uh, majority of our, uh, Physicians are, uh, Private Practice. Any physician who's associated with a large, uh, medical practice or a large hospital system would be salary based, uh, Physicians who are part of an academic center, tend to be salary based. So doesn't have the same level of impact with them, but they're also a lot of them are the key opinion, leaders leaders that help drive this process. So they will, um, be working with us in detail to try and minimize.

Speaker #4: Before, we've been working with all the societies, all the agencies, to be able to identify and gain clarity on the coding. We still contend that 64568 is a descriptor that most closely matches the Inspire 5 procedure.

This reduction of the of the reimbursement, going forward?

Uh, what we've said, John in the past is that on average 30% of our centers are academic centers. I think you can, uh, take that as a proxy for for implanting surgeons,

Speaker #4: There's an economic discussion in there now that showed that that's not being supportive, especially with the number of procedures that we perform. So, without getting too specific into the details of who went and how, we have got to the point that we know that 64582 will be the code going forward, including with DASH 52 modifier.

Tim Herbert: Sure. I think that majority of our physicians are private practice. Any physician who's associated with a large medical practice or a large hospital system would be salary based. Physicians who are part of an academic center tend to be salary based, so doesn't have the same level of impact with them. But there are also a lot of them are the key opinion leaders, leaders that help drive this process. So they will be working with us in detail to try and minimize this reduction of the reimbursement going forward.

Okay, thank you guys.

Thank you.

And I share our next question comes from the line of Robbie Marcos from JP Morgan. Please go ahead.

Oh great. Uh, thanks for taking the question.

Um,

I'll I'll just 1 for me. Um,

Tim, I imagine the first quarter guy to flat

Speaker #7: Thanks. Tim, can you talk about competition? We all saw the Nixella Q4 results. There was probably some stocking there, but we do see a lot of posts on LinkedIn.

Is, um, you know, based on what you're seeing so far in the quarter, I guess. How do you get comfort with the 4 to 10?

Speaker #7: So, what are you assuming in the guidance from the impact of competition? And just secondly, do you know if they're going to have to use the 52 modifier or if there will be any difference in their reimbursement?

Especially if the low end is a 50% cut with the 52 modifier.

Ezgi Yagci: What we've said, John, in the past is that on average, 30% of our centers are academic centers. I think you can take that as a proxy for implanting surgeons.

And why couldn't it be even lower?

Speaker #7: Thank

Speaker #7: you. Thanks,

Speaker #4: Larry. I will not comment on their coding strategy that you'll have the opportunity, I'm sure, to ask both of those companies on their respective strategies.

Gotcha. We ran our models and we uh, based what as you just kind of commented on the percent of our

Jon Block: Okay. Thank you, guys.

John Block: Okay. Thank you, guys.

Operator: Thank you. Our next question comes from the line of Robbie Marcus from JP Morgan. Please go ahead.

Speaker #4: But as far as what we see out in the field, we have great confidence in our technology, especially the Inspire 5 and the data that we have seen both from Singapore and the limited market release and the early experience and the safety profile has been strong.

Adam Maeder: Oh, great. Thanks for taking the questions. Just one for me. Tim, I imagine the Q1 guide of flat-

Robbie Marcus: Oh, great. Thanks for taking the questions. Just one for me. Tim, I imagine the Q1 guide of flat-... is, you know, based on what you're seeing so far in the quarter, I guess, how do you get comfort with the 4 to 10, especially if the low end is a 50% cut with the 52 modifier? You know, that would probably assume high single- to close to double-digit for the rest of the year. How do you get comfortable with that, and why couldn't it be even lower?

Surgeons that are um at academic or large, uh, facilities versus Private Practice. Also looking at the timing of any implementation from both Medicare, as well as

Robbie Marcus: ... is, you know, based on what you're seeing so far in the quarter, I guess, how do you get comfort with the 4 to 10, especially if the low end is a 50% cut with the 52 modifier? You know, that would probably assume high single- to close to double-digit for the rest of the year. How do you get comfortable with that, and why couldn't it be even lower?

Speaker #4: So yes, you're saying one-off opening of a center here and there. But we did build a little impact into our guide for competition. But we still believe that we're in a very strong position from an overall perspective.

Commercial payers with the -52 modifier. And so when we ran through our models, we believe that, uh, we're comfortable with with the range and, uh, it's it's our desire to, and we believe that if we can work with the max to, uh, minimize any reduction on that, uh, -52 modifier that that, that we can be on the higher end of that range.

Speaker #4: market. Thank Thanks,

Speaker #7: you.

Speaker #4: Larry. Thank you.

Speaker #1: And I show our next question comes from the line of Chris Pascale from Nephron Research. Please go ahead.

Tim Herbert: Oh, gotcha. We ran our models, and we based what as you just kind of commented on, the percent of our surgeons that are at academic or large facilities versus private practice. Also, looking at the timing of any implementation from both Medicare as well as commercial payers with the -52 modifier. And so when we ran through our models, we believe that we're comfortable with the range, and it's our desire to, and we believe that if we can work with the MACs to minimize any reduction on that -52 modifier, that we can be on the higher end of that range.

Speaker #1: ahead. Thanks.

Speaker #9: Tim, could you talk about your expectations for commercial payers? You talked about providers billing with whatever the most recent guidance was. We obviously know the MACs have gone away from 68.

Speaker #9: But I would imagine that it varies. On the commercial side, do you expect some of the large payers to continue to allow cases to be submitted under 68?

Speaker #9: Or do you expect them also to go to 82 with the modifier?

Speaker #4: No, I think currently, they do allow 64568. That is their policy. And we, of course, have to build to their policy. Now, the difference, Chris, with commercial payers, including Medicare Advantage, remember, these are all prior authorized.

All right, I said, 1, but I I got to follow up and I I also apologize, Matt. Welcome and uh, congratulations. Look forward to working with you. Thank you. Tim just a a quick follow-up to that, you know, does does that guide 4 to 10 assets that something improves from here on out or if everything stays the same? Do you feel comfortable? You could still hit that and I'll leave it there. Thanks a lot. Thank you. Well, I think um, really the dash 52 really hasn't modified right now. Hasn't really kicked in right now. And so, I think that that's where the range is kind of based on what we believe the impact would be given that variable, um, situations in there with the reindex, the reimbursement from 10 to 15,

Robbie Marcus: All right. I said one, but I got a follow-up, and I also apologize. Matt, welcome, and congratulations. Look forward to working with you.

Speaker #4: And so, when they're prior authorized, we do have the specific CPT code in the prior authorization, including per their policy, so it's a little bit of a lesser impact on commercial payers initially.

Tim Herbert: Thanks, Robbie.

Robbie Marcus: Tim, just a quick follow-up to that. You know, does that guide 4 to 10 assume that something improves from here on out? Or if everything stays the same, do you feel comfortable you could still hit that? I'll leave it there. Thanks a lot.

%. Obviously, the wiser is having a short-term impact in q1, as we work through the logistics. But I think once we get more clearity, we'll, we'll get more Comfort around this. Yeah. And, and Robbie, I, I just add to that, you know, I think you heard in my prepared remarks, you know, the the bottom end of that range is that, you know, more than 50% reduction and and the top end as you get closer to that 10% reduction. So it kind of depends on how things play out within that range over the as we see things in the next few months.

Speaker #4: But in time, we do believe that they will transition over to 64582, and likely to include the DASH 52 modifier. And at that point, we do have to work with them on their global contracts to make sure that they have the proper physician reimbursement.

Thanks a lot.

Tim Herbert: Thank you. Well, I think really the -52 modifier really hasn't kicked in right now, and so I think that's where the range is kind of based on what we believe the impact would be, given that variable situations in there with the reimbursement from 10% to 50%. Obviously, the WISeR having a short-term impact in Q1 as we work through the logistics, but I think once we get more clarity, we'll get more comfort around this.

Thank you.

And I share our next question comes from the line of Travis Steve from Bank of America security. Please go ahead.

Speaker #1: Okay. And then your territory count is down by 40, I believe, from a year ago. How much of that was sort of intentional, or rethinking of the U.S. sales organization?

Hi everybody. Just wanted to ask about uh the the pathway to getting a new code. And it it is there's a temporary code uh, miscellaneous code that you'd go to while transitioning and kind of what happened to the doc payment, uh, during that process and and how you get comfort that, uh, you know, the reimbursement of payments couldn't go lower, uh, with a new code.

Matt Osberg: Yeah, and Robbie, I just add to that. You know, I think you heard in my prepared remarks, you know, the bottom end of that range is at, you know, more than 50% reduction, and the top end, as you get closer to that 10% reduction. So it kinda depends on how things play out within that range over then, as we see things in the next few months.

Speaker #1: And can you give us an update on the number of centers those reps are serving? Your rep-to-center ratio over time had stayed relatively stable.

Oh sure. Uh, good question. I think the um new code application process is well, documented. And I think the uh,

Speaker #1: Did you expand your installed base in '25? Any numbers there would be great.

Speaker #4: Gotcha. It is intentional. We know that, as we're ramping up territories, we're more strategic with the numbers that you quoted to more closely align with strategic territories, to allow improved utilization and improved use of the team.

Robbie Marcus: Thanks a lot.

Operator: Thank you. And I show our next question comes from the line of Travis Steed from Bank of America Securities. Please go ahead.

Um, application will go in in the near future and that uh, starts with the initial review, with the AMA CPT panel. And uh, if we get that approved, then it moves on to The Ruck process to be able to do the valuation of it. And as you say, that's a valuation process to weigh the time, it takes to do the procedure.

Travis Steed: Hi, everybody. Just wanted to ask about the pathway to getting a new code. And is there the temporary code, or miscellaneous code that you'd go to while transitioning, and kinda what happens with the doc payment during that process, and how you get comfort that you know the reimbursement and payments couldn't go lower with a new code?

Speaker #4: But with each of those decisions, we also were adding field clinical reps, so we can have the field clinical reps work one-on-one with the centers on case management and training.

Speaker #4: And we can have the territory managers working out front with referrals, adding centers, adding capacity and keeping the commitment of the surgeons and the practices.

And uh, and they try to get a an accurate measure. But in the meantime, we will run with 6 or 582, so we won't be using any kind of miscellaneous code. Any kind of temporary code, or any kind of Category 3 code right now, Our intention is to go to a new uh category 1 code, through the full process, which includes a rock. And with that, yes, there's always risk.

Tim Herbert: Oh, sure. Good question. I think the new code application process is well documented, and I think the application will go in in the near future, and that starts with the initial review with the AMA CPT panel. And if we get that approved, then it moves on to the RUC process to be able to do the valuation of it. And as you say, that's a valuation process to weigh the time it takes to do the procedure, and they try to get an accurate measure. But in the meantime, we will run with 64582, so we won't be using any kind of miscellaneous code, any kind of temporary code, or any kind of category three code.

Speaker #4: So really kind of a focus on the role of the territory managers and an expanded role for the field clinical reps. So that is intentional move that we made.

That the, The Rock would identify uh um a lower payment from where 64582 is today.

Speaker #4: And

Speaker #4: then. And the second question. Generally, it's maybe five centers per

Speaker #4: territory. Thanks,

All right, helpful. Um, and on the kind of the ability to still kind of grow earnings and and expand margins here with with lower Revenue growth, you know, I assume it's probably a little harder to get leverage. Uh, and so just kind of thinking about like the puts and takes and, and how your ability to, to continue to, to grow earnings, um, in a slower Revenue environment.

Speaker #1: Okay. Thank

Speaker #1: you.

Speaker #4: Chris.

Speaker #7: Thank you. And our next question comes from the line of Anthony Petroni from Mizuho Americas. Please go ahead.

Uh, thanks. I think we've had good cost discipline over the last. Uh, several quarters, we'll continue to do that. Um, again, we're going to be working the reimbursement. Um,

Tim Herbert: Right now, our intention is to go to a new category one code through the full process, which includes a RUC. And with that, yes, there's always risk that the RUC would identify a lower payment from where 64582 is today.

Speaker #10: Thanks, and good evening, everyone. I'll stay on topic here. Maybe, Tim, you mentioned there in your prepared remarks you're going to need a certain level of claims data to make the determination on whether you're at the lower or upper end of the 10% to 50% pro-fee cut.

As a priority to minimize that payment and if we minimize that payment, we get to the higher end of our range. Obviously, we're able to get leverage from uh, those numbers but we're going to be diligent with our spending and as we learn more about that reduction, being able to be uh, flexible

Good. Thank you.

Thanks Charles.

Speaker #10: So I'm wondering, how much claims data do you need? Will you have that in hand by the end of one Q? Or does that bleed into two Q?

Thank you.

Travis Steed: Helpful. And on the kind of ability to still kind of grow earnings and expand margins here with lower revenue growth, you know, I'd assume it's probably a little harder to get leverage, and so just kind of thinking about, like, the puts and takes and how your ability to continue to grow earnings in a slower revenue environment.

And I share our next question comes from the line of David reskit from bear. Please go ahead.

Speaker #10: Because then it kind of sets up a moving target in terms of guidance. And then I'll have one quick follow-up.

Great. Um, thank you. I I heard the comments around, um, you know, the, the, the initiative to minimize this.

Speaker #4: I think that it'd be nice to have some data by the time we get to the Q1 call. But it also is in regards to the policies getting updated with the max.

Tim Herbert: Thanks. I think we've had good cost discipline over the last several quarters. We'll continue to do that. Again, we're gonna be working the reimbursement as a priority to minimize that payment, and if we minimize that payment, we get to the higher end of our range. Obviously, we're able to get leverage from those numbers. But we're gonna be diligent with our spending, and as we learn more about that reduction, being able to be flexible.

Speaker #4: And again, our leading statement is we need to build to the most current policy. So we'll be working with the max, and some of those may not have the modifier in place yet.

Speaker #4: So we're going to watch that to see how we can pick up that data and minimize the reduction in that surgeon fee. But we may not have full exposure to that by the time we get to the Q1.

And from your end, the, uh, the impact at hospitals, um, you know, we'll see, I think pricing potentially could be, you know, a lever there so wondering if at all that is, um, something you're thinking about and, and generally, how we should be thinking about device pricing, um, in in 26.

Travis Steed: Good. Thank you.

Speaker #4: call. Yes.

Tim Herbert: Thanks, Travis.

Speaker #10: How many max already have the mapping to the 52 modifier? I think it's three of seven. And I guess you're waiting on the other four to actually have that 52 modifier in

Operator: Thank you. And I show our next question comes from the line of David Rescott from Baird. Please go ahead.

um great uh thank you David I think for for pricing I think with going back with 64582 Airlines pretty well with where our current pricing model is

David Rescott: Great. Thanks. I heard the comments around, you know, the initiatives to minimize this actual reduction applied to the professional fee. And wondering if, you know, there's any appetite to minimize, you know, and from your end, the impact at hospitals, you know, we'll see. I think pricing potentially could be, you know, a lever there. So wondering if at all that is something you're thinking about and generally, how we should be thinking about device pricing in 2026.

Speaker #10: place? Yeah.

Speaker #4: Anthony currently in the policy is none of the max have a mapping to a DASH 52. There is some commentary with one of the max.

so as it stands today, that we believe we're going to just have consistent product pricing uh going forward, but that's certainly always something that is uh, something that we can review.

Speaker #4: But currently, we're building 64,582 with those max, and we're going to be working closely with them to communicate when or if they're going to implement the DASH 52.

Speaker #1: And then, real quick, just to follow up, you have some evidence here—initial observation—that there could be a smaller reduction based on the surgical skill.

Speaker #1: You had that in prepared comments. It almost reads like there's a dual path here—that you'll pursue a new coding structure on one path.

Tim Herbert: Great. Thank you, David. I think for, for pricing, I think with going back with 64582, it aligns pretty well with where our current pricing model is. So as it stands today, that we believe we're gonna just have consistent product pricing, going forward, but that's certainly always something that is, something that we can review.

Speaker #1: But then sort of show evidence here that the reduction should be lower. Is that the right way to think about it? Or is this just a one-track path that you're

Speaker #1: pursuing a new code? Thanks. No,

Speaker #4: You are absolutely correct. We are—it's a dual path. There's a short-term, address the current situation with 64582, and when the -52 modifier gets implemented. And then, long-term, it is to go to a whole new Category I CPT code.

Okay. And and I think um, you know, maybe Midway through. Um, last year, um, you, when you're lowered the, the 25 guide there was a comment about, um, you know, maybe some some newer centers that were, uh, meant to be coming online or getting trained on on the system. Um, you know, we're getting delayed. Um, so wondering, you know, just how you're thinking about um, your installed base will call out of of trained accounts on the Inspire system, um and how those progressed throughout 2025 and then how that impacts the, you know, ramp that you uh will see from utilization perspective as some of the the the delays will say of of newer centers coming online. Uh, progress throughout 2025, thank you.

As you recall. Uh, David back last year, we held back.

David Rescott: ... Okay, and, and I think, you know, maybe midway through, last year, you, when you lowered the, the 25 guide, there was a comment about, you know, maybe some, some newer centers that were, meant to be coming online or getting trained on, on the system, you know, were, were getting delayed. So wondering, you know, just how you're thinking about, your, installed base, we'll call it, of, of trained accounts on the Inspire system, and how those progressed throughout 2025, and then how that impacts the, you know, ramp that you, will see from a utilization perspective as some of the, the, the delays, we'll say, of, of newer centers coming online, progress throughout 2025. Thank you.

Speaker #4: But that code would be in place January 1, 2028.

Speaker #1: Thanks. Thank

Speaker #7: you. And I show our next question comes from the line of Richard Newwitter from Truist. Please go ahead.

Speaker #4: Hi. Thanks for taking the questions. Maybe just the first. I guess it was asked earlier as to whether or not there was a CPT-3 code and maybe a dual track while you pursue your CPT-1.

On opening centers in the first half of the year and wrapped that up more diligently in the second half of the year. And I think we're going to want to keep that rate moving forward. Um, obviously it will have impact based on the reduction of the position fee but we want to be able to uh, maintain that rate if you will. But so the centers that came on late in the year um, are are brought on uh, with the expectation that

To, uh, um, have have strong utilization and be able to move forward.

Speaker #4: And I'm curious as to why you're not pursuing that. The reason being I would have thought that at least would have allowed you to pivot away from any modifier requirements and you get to go back to a stable appropriate payment system at least during 2027.

Thank you.

And I share our next question comes from the line of Larry. Beagle, since from Wells Fargo, please go ahead.

Tim Herbert: Great. As you recall, David, back last year, we held back on opening centers in the first half of the year and ramped that up more diligently in the second half of the year, and I think we're gonna wanna keep that rate moving forward. Obviously, it will have impact based on the reduction of the physician fee, but we wanna be able to maintain that rate, if you will. But so the centers that came on late in the year are brought on with the expectation to have strong utilization and be able to move forward.

Speaker #4: So just help me understand why that isn't a viable or worthwhile path while you're pursuing the CPT-1 as well. That doesn't go into effect until—

Speaker #4: 2028, and then I have a follow-up.

Speaker #10: I understand, Richard. Thanks for that. A category three code, if applied for and awarded, could take effect on January 1, 2027. And the word I would remove from your description is the word stable.

Uh good afternoon. Thanks for taking the question. Uh Welcome Matt um there are 2 for me. Tim could you talk about the clarification you got this week or within the last week who was it from? You know what did it say that led you uh to the conclusions you provided today and I had 1 follow up. Um, really? We just uh have been as we said before we've been working with all the societies, all the agencies

Speaker #10: And what we would enter into at that point is an environment where we would not have defined reimbursement, and that would be variable across the board, introducing a new Category III code, similar to if we were to use a miscellaneous code.

Operator: Thank you. And I show our next question comes from the line of Larry Biegelsen from Wells Fargo. Please go ahead.

Larry Biegelsen: Good afternoon. Thanks for taking the question. Welcome, Matt. There are two for me. Tim, could you talk about the clarification you got this week or within the last week? Who was it from? You know, what did it say that led you to the conclusions you provided today? And I had one follow-up.

Speaker #10: So, we made the choice to stay the course with a Category I code long-term. We know that we have clarity on facility reimbursement, and that if we went to a Category III code, we would not have that clarity.

To be able to, um, identify and gain Clarity on the coding. Um, we still contend that 64568 is a descriptor that most closely matches the Aspire 5 procedure. Um, there's an economic discussion in there. Now, that, that, uh, showed that it that's not being supportive, especially with the number of procedures that we perform. So, without getting too specific into the details of who went and how, uh, we have, uh, uh, got to the point that we know that 64582, uh, will be the closed going forward including with that -52 modifier.

Tim Herbert: Really, we just have been. As we said before, we've been working with all the societies, all the agencies, to be able to identify and gain clarity on the coding. We still contend that 64568 is a descriptor that most closely matches the Inspire five procedure. There's an economic discussion in there now that that showed that it that's not being supportive, especially with the number of procedures that we perform. So without getting too specific into the details of who, when, and how, we have got to the point that we know that 64582 will be the code going forward, including with that dash 52 modifier.

Speaker #10: That's the most important part, because that's how we get paid, and the facilities get the reimbursement from those centers. And we're looking at a range of reimbursement for the professional fee.

Speaker #10: And again, we're targeting to minimize that risk in the short term. That will carry us through '27.

Thanks Tim. Can you talk about, you know, competition? We we all saw the uh, you know the nixo Q4 results there. There was probably some stocking there but you know, we do see a lot of posts on LinkedIn. So what are you assuming in the guidance, you know, from the impact of competition and and just secondly do you know if they're going to have to use the 52 modifier or there'll be any difference uh in in their reimbursement? Thank you.

Speaker #7: Okay. Thanks. For that. And then just did you guys provide a US OUS breakout? I may have just missed it. I couldn't find it in the press release.

Speaker #7: Okay. Thanks. For that. And then just did you guys provide a US OUS breakout? I may have just missed it. I couldn't find it in the press

Speaker #11: It should be in the 'For the Numbers' press release, but I'll have to check. It'll be in the K when we file later this week if it's not in the press release.

Thanks Larry. Um, I I will not comment on their coding strategy that uh you'll have the opportunity. I'm sure to ask both of those uh companies on their respective uh strategies. But as far as what we see out in the field, uh we have great confidence in our technology especially at the Inspire 5 and the data that we have seen both from Singapore and The Limited

Larry Biegelsen: Thanks. Tim, can you talk about, you know, competition? We all saw the, you know, the Nyxoah Q4 results. There was probably some stocking there, but, you know, we do see a lot of posts on LinkedIn. So what are you assuming in the guidance, you know, from the impact of competition? And just secondly, do you know if they're gonna have to use the 52 modifier or there'll be any difference, in their reimbursement? Thank you.

Speaker #11: Next question.

Speaker #7: Thank you. And I show our next question. Comes from the line of Shagun Sink from RBC. Please go

Speaker #7: Go ahead. Thank you so much for taking the question.

Speaker #12: Just one for me. Do you think we could see a broader negative impact from this WISER program? It does focus on wasteful and inappropriate service reduction.

Market relief, and the early experience in the safety, profile has been strong. So, yes, you're saying, uh, 1 off, um, opening of a center here and there, but, uh, we did build, um, a little impact into our guide for competition, but we still believe that we are in a very strong position, uh, from an overall Market.

Thank you.

Thanks Larry.

Thank you.

Speaker #12: That HNS is now a part of. Thank you.

Tim Herbert: Thanks, Larry. I will not comment on their coding strategy. That you'll have the opportunity, I'm sure, to ask both of those companies on their respective strategies. But as far as what we see out in the field, we have great confidence in our technology, especially the Inspire five, and the data that we have seen, both in Singapore and the limited market release and the early experience, and the safety profile has been strong. So yes, you're seeing a one-off opening of a center here and there, but we did build a little impact into our guide for competition, but we still believe that we're in a very strong position from an overall market.

Speaker #4: Yeah, I think that we have a long history working with Medicare, and there's a parallel program with RAC audits. I think you maybe heard that term.

And I share our next question comes from the line of Chris. Pasquali from nefron research, please, go ahead.

Speaker #4: There are third parties that will come in to facilities, and they will audit their Medicare cases to make sure that they have the proper documentation and that those patients who have received treatment are on label.

The most recent guidance was we obviously know the max um have gone away from 68 but I would imagine that it varies on the commercial side. Do you expect some of the large payers to continue to allow um cases to be submitted under 68? Or do you expect them also to go to 82 with the modifier?

Speaker #4: So, over the years, we've been very diligent at training all centers to make sure that they're prepared for RAC audits. And so, while the Wiser program has a little bit of a challenge getting started, we believe we will be in good shape because we've already had facilities that are very diligent in making sure they have proper documentation and proper patient selection to make sure that they are on-label candidates for—

No, I think currently they do allow 60568. That is

Their policy. And we of course have to build to their policy. Now, the difference Chris with, uh, um, commercial payers including

Larry Biegelsen: Thank you.

Tim Herbert: Thanks, Larry.

Operator: Thank you. And I show our next question comes from the line of Chris Pasquale from Nephron Research. Please go ahead.

David Rescott: Thanks. Tim, could you talk about your expectation for commercial payers? You talked about providers billing with whatever the most recent guidance was. We obviously know the MACs have gone away from 64568, but I would imagine that it varies on the commercial side. Do you expect some of the large payers to continue to allow cases to be submitted under 64568, or do you expect them also to go to 64582 with the modifier?

Chris Pasquale: Thanks. Tim, could you talk about your expectation for commercial payers? You talked about providers billing with whatever the most recent guidance was. We obviously know the MACs have gone away from 64568, but I would imagine that it varies on the commercial side. Do you expect some of the large payers to continue to allow cases to be submitted under 64568, or do you expect them also to go to 64582 with the modifier?

Speaker #4: Inspire. Thank

Speaker #7: you. One moment while we compile the Q&As. And I show our next question comes from the line of Danielle Antalfi from UBS. Please go ahead.

Medicare Advantage. Remember, these are all prior authorized and so when their prior authorized, we do have the specific CPT code in the prior authorization, including, um, per their policy. So it's, it's a little bit of a lesser, uh, impact on Commercial payers, uh, initially. But in time, we do believe that they will transition over to 64582 and likely to include the -52 modifier. And at that point, we do have to work with them uh, on their uh, Global contracts to make sure that they have the proper, uh, position reimbursement.

Tim Herbert: No, I think currently they do allow 64568. That is their policy, and we, of course, have to build to their policy. Now, the difference, Chris, with commercial payers, including Medicare Advantage, remember, these are all prior authorized. And so when they're prior authorized, we do have the specific CPT code in the prior authorization, including per their policy. So it's a little bit of a lesser impact on commercial payers initially, but in time, we do believe that they will transition over to 64582 and likely to include the -52 modifier. And at that point, we do have to work with them on their global contracts to make sure that they have the proper physician reimbursement.

Speaker #4: Danielle, are you there? I think she fell off the line now. So all right. We'll see if she comes back on. So let's just go to the next

Speaker #4: question. Thank

Speaker #7: you. And I show our next question. Comes from the line of Michael Cerconi from Jefferies. Please go

Speaker #7: ahead. Hey.

Okay, and then your your territory count is down by 40, I believe, from a year ago. Um, how much of that was um, sort of intentional or rethinking of the Us sales organization, and can you give us an update on on the number of centers? Those reps are serving your, your rep to Center ratio over time. Head stayed. Relatively stable, did you expand your install base in 25? Any numbers there would be great. Gotcha. Um, it is intentional. We know that um, as we were ramping up territories, we were more strategic with the numbers that you quoted.

Speaker #13: Good afternoon, and thanks for taking the questions. Really, just one for me. Maybe you can give us the latest and greatest on what you're seeing in terms of GLP-1s and what, if any, headwinds you have baked into the guide.

David Rescott: Okay. And then your territory count is down by 40, I believe, from a year ago. How much of that was sort of intentional or rethinking of the US sales organization? And can you give us an update on the number of centers those reps are serving? Your rep-to-center ratio over time had stayed relatively stable. Did you expand your install base in 2025? Any numbers there would be great.

Chris Pasquale: Okay. And then your territory count is down by 40, I believe, from a year ago. How much of that was sort of intentional or rethinking of the US sales organization? And can you give us an update on the number of centers those reps are serving? Your rep-to-center ratio over time had stayed relatively stable. Did you expand your install base in 2025? Any numbers there would be great.

Speaker #4: Absolutely. We do put a little basis into the guide if we track as we talked before we had our survey from last year. And we look to continue to expand that knowledge.

Speaker #4: But we do know patients are trying GLP-1s for multiple reasons. The high BMI patients—we think that's a really important step, because they can lose weight and qualify for Inspire.

Speaker #4: And the data is coming in a little bit to see what percentage actually resolves their sleep apnea. So we still believe that GLP-1s will be a tailwind for us.

Tim Herbert: Gotcha. It is intentional. We know that, as we're ramping up territories, we are more strategic with the numbers that you quoted... to more closely align with strategic territories to allow improved utilization and, and improved use of the team. But with each of those decisions, we also are adding field clinical reps, so we can have the field clinical work reps work one-on-one with the centers on case management and training, and we can have the territory managers working out front with referrals, adding centers, adding capacity, and keeping the commitment of the surgeons and the practices. So really kind of a focus on the role of the territory managers and an expanded role for the field clinical reps. So that is an intentional move that we made. And then the second question-

To more closely, align with, um, strategic territories to allow, uh, improved utilization and and, and uh, improved, uh, use of the team. But with each of those decisions, we also were adding field clinical reps, so we can have the field clinical reps, work 1-on-1 with the centers, on case management and training and we can have the territory managers working out front with referrals adding centers adding capacity and keeping the commitment of the surgeons and the practices. So, really kind of a focus on the role of the territory managers, and then expanded role for the field clinical rep. So that is the intentional, um, move that we made.

And then the second.

Speaker #4: And we work with our centers to make sure that they are taking care of their patients, keeping in contact with the patients, and, if appropriate, putting them on a GLP-1 to lose weight, with a secondary benefit which is a reduction in sleep apnea.

Generally generally it's it's maybe 5 centers per territory.

Okay, thank you. Thanks Chris

Thank you.

Speaker #13: Thanks, Tim.

Speaker #4: You bet. Thank

And I share our next question comes from the line of Anthony. Petroni from mizuho Americas, please go ahead.

Speaker #4: you. Thank

Speaker #7: You. And I'll show our next question. It comes from the line of Danielle Antalfi from UBS. Please go ahead.

Uh, thanks and good evening, everyone. I'll stay on on, on topic here. Maybe, Tim. You you mentioned there and you prepared remarks.

Speaker #7: ahead.

Speaker #12: Hi.

Speaker #12: working now? Yes.

Speaker #4: It is,

Speaker #4: Danielle. Okay.

Speaker #12: Sorry. I don't know what's going on today. But technology is not my friend. So I am sorry about that. Thank you guys so much for taking the question.

Speaker #12: I appreciate a lot of this call. It's been about reimbursement and the impact there, but I'm actually curious because this seems like an unfortunate situation to me where you've got what seems like a growing funnel of patients that want to get this procedure.

Ezgi Yagci: The second question?

Tim Herbert: Generally-

You know, it's getting you're going to need a certain level of claims data to make the determination on whether you're at the lower upper end of the 10 to 50%, you know, Pro fee cut. So I'm wondering like, how much claims dated do you need. Will you have that in Hand by the end of 1 Q or, or does that bleed into the 2q? Because then it kind of sets up a moving Target in terms of guidance and then I'll have 1, uh, quick follow-up.

Ezgi Yagci: Yeah.

Tim Herbert: Generally, it's maybe five centers per territory.

Speaker #12: And now if you don't have doctors that are as willing to do it, I'm just curious how you guys are working with, whether it's your centers or the patients, to manage these patients who are coming into the system but maybe are finding this bottleneck of physicians that actually want to treat the patients.

Ezgi Yagci: Okay. Thank you.

Chris Pasquale: Okay. Thank you.

Tim Herbert: Thanks, Chris.

Operator: Thank you. I show our next question comes from the line of Anthony Petrone from Mizuho Americas. Please go ahead.

Anthony Petrone (Mizuho Securi: Thanks, and good evening, everyone. I'll stay on topic here. Maybe, Tim, you mentioned there in your prepared remarks, you know, it's gonna-- you're going to need a certain level of claims data to make the determination on whether you're at the lower or upper end of the 10 to 50%, you know, pro fee cuts. So I'm wondering, like, how much claims data do you need? Will you have that in hand by the end of Q1, or does that bleed into Q2? Because then it kind of sets up a moving target in terms of guidance. And then I'll have one quick follow-up.

Speaker #12: Because it feels like the front of the funnel is not necessarily slowing. So, I'm just—sorry, that's kind of a convoluted question, but I'm just curious if you can comment on...

Speaker #12: that. Got it.

Uh, I think that uh, it'd be nice to have some data, by the time we get to the q1 call, but it also is in regards to the policies, getting updated with the Max. And again, our leading statement is, we need to build to the most current policy. So we'll be working with the Max and uh, uh, some of those may not have the modifier in place yet. So we're going to watch that to see, um, how we can pick up that data and, and to minimize the reduction in that, uh, surgeon fee. But we may not

Speaker #4: Okay. So what drives us at Inspire is, Inspire 5 is a rock-solid product. And we show the clinical evidence to it. And we know the benefits that patients can have because we have clinical data both from Singapore as well as from our new product launch in the US.

Have full exposure to that. By the time we get to the q1 call.

I guess how how many Max already have? The mapping to the 52 modifier is it? I think it's 3 of 7, and I guess you're waiting on the other 4 to

Speaker #4: And so that's what drives the employees here, in that we know that we have an ability to help patients with their disease. Secondly, we do know there's variability in the professional fee.

Tim Herbert: I think that, it'd be nice to have some data by the time we get to the Q1 call, but it also is in regards to the policies getting updated with the MACs. And again, our leading statement is, we need to build to the most current policy, so we'll be working with the MACs, and some of those may not have the modifier in place yet. So we're going to watch that to see how we can pick up that data and to minimize the reduction in that surgeon fee, but we may not have full exposure to that by the time we get to the Q1 call.

Speaker #4: Reduction with any dash 52 modifier. So, as that transitions into the program with the strength of the Inspire 5 data, and with the experience of having 10,000 procedures performed with Inspire 5 in the year 2025, we have very good experience to work with the payers to minimize that reduction.

To actually have that 52 modifier in place. Yeah Anthony currently in the policy is uh none of the max have a mapping to a dash 52. There is some commentary with 1 of the max but currently we're building 64582 with those Max and we're going to be working closely with them to communicate um when or if they're going to implement the dash 52.

and then real quick just to follow up would be, you know, you have some evidence here, initial observation that there should there could be a smaller reduction

Prepared comments. It almost reads. Like there's a dual path here that

Speaker #4: But we need to put that in place. And even though we do have Inspire 4 units available for those centers, we will continue to push 5.

You'll pursue a new coding structure on 1 path.

Anthony Petrone (Mizuho Securi: I guess, how many MACs already have the mapping to the 52 modifier? Is it? I think it's 3 of 7, and I guess you're waiting on the other 4 to actually have that 52 modifier in place.

Speaker #4: That being said, going back a little bit to a previous question, we do know centers that are able to continue to move forward, and so we will focus and lean in on those centers.

Tim Herbert: Currently, Anthony, currently in the policies, none of the MACs have a mapping to a dash fifty-two.

Speaker #4: And while we work with payers at some of the private practices to minimize the impact from the professional fee reductions. So yeah. So, Danielle, we keep up the fight.

Anthony Petrone (Mizuho Securi: Okay.

Tim Herbert: There is some commentary with one of the MACs, but currently we're billing 64582 with those MACs, and we're going to be working closely with them to communicate when or if they're going to implement the -52.

But then you know sort of show evidence here that the reduction should be lower is that the right way to think about it or is this just a 1 track path that you're pursuing a new code? Thanks. Oh you are absolutely correct. We are it's a dual path, there's a short term uh address the current situation with 6 or 582 and when the dash 52 modifier gets implemented and that long term it is go to a whole new category, 1 CPT code but that, um, code would be in place, January, 1 2028.

Speaker #4: And what works is we have strength on the front end of the funnel, and we’ve got a really good product to be able to work with.

Thanks.

Thank you.

Anthony Petrone (Mizuho Securi: And then real quick, just a follow-up would be, you know, you have some evidence here, initial observation, that there could be a smaller reduction, you know, based on the surgical skill. You had that in the prepared comments. It almost reads like there's a dual path here, that you'll pursue a new coding structure on one path, but then, you know, sort of show evidence here that the reduction should be lower. Is that the right way to think about it, or is this just a one-track path that you're pursuing a new code? Thanks.

Speaker #12: Yeah. Okay. I mean, is there a scenario where you have centers that are willing to take more patients? I mean, I guess I'm just trying to understand what happens to the patient that gets referred to a physician and they're like, "Oh, we're not doing that anymore because we don't get paid enough." I mean, I know that wouldn't be the conversation actually.

And I share our next question comes from the line of Richard. New, Witter from truist, please go ahead.

Speaker #12: But where does the patient go?

Speaker #4: That's a valid statement. Because what's clear here, with the clarity— we got clarity of coding and we got clarity in the facility reimbursement. And the reimbursement for the facility actually increased $1,000 from last year.

Tim Herbert: Oh, you are absolutely correct. We are. It's a dual path. There's a short-term address the current situation with 64582 and when the -52 modifier gets implemented, and then long-term, it is go to a whole new category one CPT code, but that code would be in place 1 January 2028.

Speaker #4: So the reimbursement is strong at facilities. So in those centers where we may be a salary-based surgery, we believe that we can bring more patients to those facilities if some of the private practice physicians are more challenged based on the economics.

Hi, thanks for taking the questions. Um, maybe just the first I I guess it was asked earlier as to whether or not there was a CPT 3 code, maybe a dual track while you pursue your cpt1 and I'm curious as to why you're not pursuing. That the reason being I would have thought that at least would have allowed you to Pivot away from any modifier requirements and you get to go, you know, go back to a, a stable appropriate payment system at least during 2027. So just help me understand why that isn't

A viable or or worthwhile path while you're pursuing the cpt1 as well. That doesn't go into effect into 2028 and then have a follow-up.

Anthony Petrone (Mizuho Securi: Thanks.

Operator: Thank you. And I show our next question comes from the line of Richard Newitter from Truist. Please go ahead.

I understand Richard, thanks for that the uh um a category 3 code if applied for an awarded.

Speaker #4: But we're going to be—we're going to work all avenues.

Richard Newitter: Hi, thanks for taking the questions. Maybe just the first. I guess it was asked earlier as to whether or not there was a CPT three code, maybe a dual track, while you pursue your CPT one, and I'm curious as to why you're not pursuing that. The reason being, I would have thought that at least would have allowed you to pivot away from any modifier requirements, and you get to go, you know, go back to a stable, appropriate payment system at least during 2027. So just help me understand why that isn't a viable or worthwhile path while you're pursuing the CPT one as well, that doesn't go into effect until 2028. And then I have a follow-up.

Speaker #4: very diligently. Okay.

Uh, could take effect on January 1st 2027.

Speaker #12: Thank you so

Speaker #12: much. Thank

And the word I would remove from your description is the word stable.

Speaker #7: Thank you. And I'll show our next question. It comes from the line of Daniel Markovitz from Evercore ISI. Please go ahead.

Speaker #4: I don't know. Daniel, did we lose?

Speaker #4: You? If you have your phone on, okay.

Speaker #7: Mute. Please unmute yourself. Sorry. Can you all hear me?

Speaker #7: right? Yep.

Speaker #7: Sorry about that. Thanks for taking my questions. I had two. The first is on the math. I'm curious to exercise your running on the physician fee and how that could impact the business.

Speaker #7: Is it mostly survey work? Or how do you do this? I guess I'm just curious. With the revenue guidance, there's a 6% delta between the low versus high end, compared to on the physician fee—10 to 50 percent, or a potential 40% delta.

Tim Herbert: Yeah, I understand, Richard. Thanks for that. A category three code, if applied for and awarded, could take effect on 1 January 2027, and the word I would remove from your description is the word stable. What we would enter into at that point is an environment where we would not have defined reimbursement, and that would be variable across the board, introducing a new category three code, similar to if we were to use a miscellaneous code. So we made the choice to stay the course with a category one code long term. We know that we have clarity on facility reimbursement, that if we went to a category three code, we would not have that clarity.

Speaker #7: So, I guess, how do you run the exercise of figuring out what physician fee cut leads to what type of impact on your business?

Speaker #4: Sure. A little bit of continuation and expansion on the last question. And Daniel, we look at this saying, 'We know there are centers that will remain consistent.'

And what we would enter into at that point is, uh, is an environment where we would not have defined reimbursement, and that would be variable across the board, introducing a new Category 3 code similar to if we were to use a miscellaneous code. So we made the choice to stay the course with a category 1 code, long term. Um, we know that we have Clarity on facility reimbursement that if we went to a category 3 code, we would not have that Clarity. That's the most important part because that's how we get paid, um, and the facilities, um, um, get the reimbursement from those centers. And we're looking at a range of reimbursement for the professional fee and and again, we're targeting, um, to minimize that risk in the short term that will carry us through 227.

Okay, thanks for that. And then just did you guys provide a US?

Speaker #4: And we may be able to drive more patients to those centers because, as an example, the surgeon may be salary-based, if you will. Academic centers aren't affected so much by the professional fee because they're salary-based.

Owe us breakout. I I may have just missed it. I couldn't find it in the press release.

It should be in the press release but I I'll have to check.

Speaker #4: So we can continue working in those areas. In some of the ASCs, if a surgeon is a partial owner, they are less dependent on the professional fee than they are the set of service fee.

It'll be in the K when we file later this week, if it's not in the press release.

Next question.

Thank you.

Tim Herbert: That's the most important part because that's how we get paid, and the facilities get the reimbursement from those centers. And we're looking at a range of reimbursement for the professional fee, and again, we're targeting to minimize that risk in the short term that will carry us through 27.

And I saw our next question.

Speaker #4: So there are avenues in there that we can continue to pursue. In the area where the surgeons face the greatest challenge are those private practice physicians who get their operating rights or privileges and get OR time from a large hospital, but they get paid on their own professional fee.

Comes from the line of struggle and sink from RBC. Please. Go ahead.

Uh, thank you so much. Taking the question, just 1 for me. Do you think we could see a broader negative impact from this visor program, it does focus on wasteful and inappropriate service reduction. Um, that hns is now a part of

Richard Newitter: Okay, thanks for that. And then, just did you guys provide a US, OUS breakout? I may have just missed it. I couldn't find it in the press release.

Speaker #4: Those are the surgeons that are at the most risk because we're asking them to do a procedure that doesn't pay them for their time spent on it.

Thank you. Yeah. Um,

Speaker #4: Now, that's why we have a good argument and rationale to justify a lower reduction from the professional fee, to be able to support those physicians.

Tim Herbert: By the numbers?

Ezgi Yagci: It should be in the press release, but I'll have to check. It'll be in the K when we file later this week, if it's not in the press release. Next question?

Speaker #4: So it's not just a straight math equation—a reduction of the professional fee does not have the same impact across.

Speaker #4: all centers. The other thing I'd add to

Operator: Thank you. Our next question comes from the line of Shagun Singh from RBC. Please go ahead.

Speaker #7: That, Daniel, is we called out that there is an impact on Q1 just for some of the coding uncertainty that we've seen that's compounding the range as well and making that a little bit wider.

I think that we have a long history uh working with Medicare and there's a there's a a parallel uh program with rack audits. I think you. Maybe heard that term where there is third parties that will come in to facilities and they will audit their Medicare cases to make sure that they have the proper documentation and those patients that have received treatment are on label. So, over the years, we've been very diligent and training all centers to make sure that they're prepared for, uh, rack out us

Shagun Singh: Thank you so much for taking the question. Just one for me. Do you think we could see a broader negative impact from this WISeR program? It does focus on wasteful and inappropriate service reduction that HMS is now a part of. Thank you.

Speaker #7: Got it. That's helpful. And then my follow-up—as I look at the high end of the revenue guidance, can you help me understand what the cadence would look like in that scenario?

Speaker #7: Is it fair to assume we’d be exiting the year at something like mid-teens percent growth? And would that contemplate some sort of catch-up, as you said that some of the patients might be redirected to other centers?

Tim Herbert: Yeah. I think that we have a long history working with Medicare, and there's a parallel program with RAC audits. I think you maybe heard that term, where there is third parties that will come in to facilities, and they will audit their Medicare cases to make sure that they have the proper documentation, and those patients that have received treatment are on label. So over the years, we've been very diligent at training all centers to make sure that they're prepared for RAC audits.And so while the WISeR program has a little bit of a challenge getting started, we believe we will be in good shape because we've already have facilities that are very diligent in making sure they have proper documentation and proper patient selection to make sure that they are on label candidates for Inspire.

And so, while the wiser program has a little bit of a challenge getting started. Uh, we believe we will be in a good shape because we've already, uh, have facilities that are very diligent and making sure they have proper documentation and proper patient selection to make sure that they are, um, on label candidates for inspire.

Speaker #7: Or can you just help us understand how we get to the high end of the guidance?

Thank you.

Speaker #4: Yeah, I think you described it pretty well. Maybe we describe it more as comfort. And I think as we get additional clarity and it minimizes the risk of reimbursement—of what they're going to be paid—once we have data, then we can get back into leaning in harder.

1 moment while we compile the Q&A.

Speaker #4: So, we would expect acceleration in the second half of the year. And we believe that if we can get the data, we'll be able to show improved reimbursement.

And I saw our next question comes from the line of Danielle and Tali from UBS. Please go ahead.

Tim Herbert: And so while the WISeR program has a little bit of a challenge getting started, we believe we will be in good shape because we've already have facilities that are very diligent in making sure they have proper documentation and proper patient selection to make sure that they are on label candidates for Inspire.

Speaker #4: And then we'll have the surgeons be more comfortable making the determination to commit more of their time and more of their operating room time for Inspire.

And how are you there?

I think she, uh,

I think she fell off the line now. So all right, we'll see if she comes back on.

Speaker #7: Helpful. Thank you. Thank

Let's go to the next question.

Speaker #4: Thanks, Daniel.

Thank you.

Speaker #7: You. And I’ll show our next question. It comes from the line of Patrick Wood from Morgan Stanley. Please go ahead. Beautiful, thanks. Just two quick ones for me.

And I share our next question.

Comes from the line of Michael Cercone from Jeffrey. Please go ahead.

Operator: Thank you. One moment while we compile the Q&A. Our next question comes from the line of Danielle Antalffy from UBS. Please go ahead.

Speaker #7: First, I know you guys don't guide to it, but just for a sense for OUS—I understand why we've all been focused, obviously, on the US at the moment.

Speaker #7: But the relative guide going forward, in the sense of the contribution in '26 that you guys expect from OUS to be—

Hey, good afternoon, and thanks for taking the question. Uh, really just 1 for me. Um, maybe you can give us the, the latest and greatest of what you're seeing in terms of glp-1s. And and what if any headwinds you have baked into to guide?

Speaker #7: helpful? Thank you.

Speaker #4: I know that go ahead.

Speaker #4: Do you want to jump in? So, actually, I have the—

Speaker #12: Numbers for Rich's earlier question: To answer your question, Patrick, 4% to 5% OUS contribution roughly for the full year 2026. Q4 US revenue was $256.9 million, 95% of revenue. OUS was $12.1 million.

Tim Herbert: Danielle, are you there? I think she, I think she fell off the line now, so. All right, we'll see if she comes back on. Let's go to the next question.

Speaker #12: And full year was $872.1 million U.S., $39.9 million OUS.

Operator: Thank you. I show our next question comes from the line of Michael Sarcone from Jefferies. Please go ahead.

Speaker #7: Amazing. Thank you. And then, just really quickly, I know we sort of touched on the commitment to moving to Inspire 5. But if you wanted to switch back a little more durably to Inspire 4—let's say for a little longer period of time—do you have things like the contracts set up, like the manufacturing supply chain bits, enabling you to do that if you chose to go down that pathway?

Um, absolutely. We do put a little basis into the guide if we uh, track as as we talked before, we had our survey from last year and we uh, looked to continue to expand that knowledge. But we do know patients are trying uh GOP wants for multiple reasons. Um, the high BMI patients. We think that's really important step, because they can lose weight and uh, qualify for inspire. And the data is coming in a little bit to see what percentage actually, uh, resolves, their sleep, bad news. So we still believe that GOP wants will

Michael Sarcone: Hey, good afternoon, and thanks for taking the question. Really just one for me. Maybe you can give us the latest and greatest on what you're seeing in terms of GLP-1s and what, if any, headwinds you have baked into the guide.

Speaker #7: Or is there something preventing you from doing that?

Will be, uh, Tailwind for us. And, uh, uh, we work with our centers to make sure that they are, uh, taken care of their patients, keeping in contact with the patients, and if appropriate, uh, putting them on a GOP, Wanda to lose weight with a secondary benefit, which is a reduction in sleep apnea,

Speaker #4: Well, I think that as you looked at our inventory numbers on the tables that you see, we do carry a significant inventory. The majority of that is Inspire 4.

Tim Herbert: Absolutely. We do put a little basis into the guide. If we track, as we talked before, we had our survey from last year, and we look to continue to expand that knowledge. But we do know patients are trying GLP-1s for multiple reasons. The high BMI patients, we think that's a really important step because they can lose weight and qualify for Inspire. And the data is coming in a little bit to see what percentage actually resolves their sleep apnea.So we still believe that GLP-1s will be a tailwind for us, and we work with our centers to make sure that they are taking care of their patients, keeping in contact with the patients, and if appropriate, putting them on a GLP-1 to lose weight with a secondary benefit, which is a reduction in sleep apnea.

Thanks, Tim that. Thank you.

Thank you.

Speaker #4: So we have the ability to carry forward with 4. And in the time it'll take us to get to the new CPT code, we don't believe centers in the US will really go back to Inspire 4.

And I share our next question comes from the line of Daniel and paly from UBS. Please go ahead.

Hi, is this working now? Yes.

It is okay.

Speaker #4: I think once physicians and centers experience Inspire 5, they are comfortable with the procedure—not putting in the pressure-sensing lead, the reduced work to do the Inspire 5 procedure.

Tim Herbert: So we still believe that GLP-1s will be a tailwind for us, and we work with our centers to make sure that they are taking care of their patients, keeping in contact with the patients, and if appropriate, putting them on a GLP-1 to lose weight with a secondary benefit, which is a reduction in sleep apnea.

Speaker #4: And then the outcomes associated with Inspire 5, I think people are going to be careful about going back to Inspire 4. But that being said, there were centers that are high volume that were doing Inspire, lately Inspire 4, late in the year.

Speaker #4: To answer your other question, our ability to go back and fire up the line and restart making piece parts associated with Inspire 4, it does get a little bit limited on parts obsolescence as we transition to 5.

Michael Sarcone: Thanks, Jim.

Tim Herbert: You bet. Thank you.

Operator: Thank you. And I show our next question comes from the line of Danielle Antalffy from UBS. Please go ahead.

Danielle Antalffy: Hi, is this working now?

Tim Herbert: Yes, it is, Danielle.

Danielle Antalffy: Okay. Sorry, I don't know what's going on today, but technology is not my friend, so I am sorry about that. Thank you guys so much for taking the question. Appreciate a lot of this call has been about reimbursement and impact there, but I'm actually curious about, because this seems like an unfortunate situation to me, where you've got what seems like a growing funnel of patients that want to get this procedure, and now if you don't have doctors that are as willing to do it, I'm just curious how you guys are working with, whether it's your centers, the patients, to manage these patients who are coming into the system but maybe are finding this bottleneck of physicians that actually want to treat the patients. Because it feels like the front of the funnel is not necessarily slowing.

Speaker #4: So, we do have inventory to carry us forward. But yeah, we want to transition over to full production on Inspire.

Sorry, I don't know what's going on today, but technology is not my friend. So I am sorry about that. Thank you guys so much for, for taking the question. Um, appreciate a lot of this call has been about reimbursement and impact there. But I'm actually curious about, um, because it seems like an unfortunate situation to me where you've got, what seems like a growing funnel of patients that want to get this procedure. And now, if you don't have doctors that are as willing to do it, I'm just curious how you guys are working with whether it's your centers, the patients, um, to manage these patients, who are coming into the system, but maybe are finding this bottleneck of Physicians that actually want to to treat the patients because it feels like the front of the funnel is not necessarily slowing. So I'm just sorry. That's like a, a kind of convoluted question but I'm just curious if you can comment on that. Oh, got it. Okay. So what

Drives us that Inspire is Inspire 5 is a rock solid product.

Speaker #4: 5. Totally got it.

Speaker #7: Thanks, guys. Thank

Speaker #4: Thank you.

Speaker #7: you. And I show our next question. Comes from the line of Brett Fishbane from KeyBank Capital Markets. Please go ahead. All right, guys. Thanks for taking the questions.

Speaker #7: And welcome, Matt. Just maybe switching gears a little bit here, just on the fourth quarter earnings number—I think maybe a little bit got lost.

And we show the clinical evidence to it. We know the benefits that patients can have because we have clinical data both from Singapore as well as from our, um, uh, new product launch in the US. And so, that's what drives the employees here in that. We know that we have an ability to help patients with their disease.

Speaker #7: You guys grew EPS over 40%, and it was really well above expectations and the implied guidance coming out of last quarter. So, curious where you saw incremental expense leverage relative to what you were planning on with the full-year guidance coming out of Q3?

Speaker #4: Yeah, I'll start. And as you might add in here, I think what you saw in the fourth quarter was a beat in expectations kind of throughout the P&L. Revenue was better than we expected.

Danielle Antalffy: So I'm just sorry, that's like a kind of convoluted question, but I'm just curious if you can comment on that.

Tim Herbert: Got it. Okay, so what drives us at Inspire is Inspire five is a rock solid product, and we show the clinical evidence to it. We know the benefits that patients can have because we have clinical data both from Singapore as well as from our new product launch in the US. And so that's what drives the employees here, and that we know that we have an ability to help patients with their disease. Secondly, that we do know there's variability in the professional fee reduction with any dash 52 modifier.

Speaker #4: Gross profit margin was better than we expected, as we had a higher percentage of Inspire 5. And then, as Tim said in his prepared remarks, we did have good cost discipline.

Speaker #4: We were thoughtful about our spending and spent less than we anticipated. So compile all that. Obviously, we've got the significant tax benefit. But even you just that out, all of those contributed to the beat in

Secondly, that we do know, there's very ability in the uh, professional fee reduction with any Dash 52 modifier. So as that transitions into the program, with the strength of the inspired 5 data, and with the experience of having 10,000, uh, procedures performed with Inspire 5 in the year 2025, we have very good experience to work with the players to minimize that reduction, but we need to put that in place. And, uh, even though we do have inspired foul 4 units, available for those Setters. Uh, we will continue to push by that being said, going back a little bit to a previous question, we do know centers that are able to continue to move forward and so we will focus and lean in on those centers and uh while we work with payers at some of the Private Practice,

Speaker #7: All right, cool. And then just one follow-up on expenses for 2026. Just curious how you're thinking about overall direct-to-consumer marketing this year relative to 2025.

To minimize the impact from the professional fee, uh, reduction.

Tim Herbert: So as that transitions into the program, with the strength of the Inspire five data and with the experience of having 10,000 procedures performed with Inspire five in the year 2025, we have very good experience to work with the payers to minimize that reduction, but we need to put that in place. Even though we do have Inspire four units available for those centers, we will continue to push five. That being said, going back a little bit to a previous question, we do know centers that are able to continue to move forward, and so we will focus and lean in on those centers... and while we work with payers at some of the private practice to minimize the impact from the professional fee reductions.

Speaker #7: I'm sure, as the year progresses, there may be some change based on the reimbursement status. But just in terms of a base case, how you're thinking about that at this point?

So, yeah, so Danielle, we, uh, keep up the fight and what works is? We have strength on the front end of the funnel and we got a really good product to be able to work with.

Speaker #7: And then, where are you targeting the advertising in 2026 compared to '25? Thank you.

Speaker #7: you. Brett, thanks for the

Speaker #12: Our current thinking is that it'll still be flat to slightly up, but we're going to take a look at that as we go forward here.

Yeah. Okay. I mean is there a scenario where you have centers that are willing to take more patients? I mean I guess I'm just trying to understand what happens to the patient that gets referred to a physician and they're like oh we're not doing that anymore because we don't get paid enough. I mean I know that wouldn't be the conversation actually but um you know where does the patient go

Speaker #12: Advertising mix will be mostly similar to what you've seen in the past. But I think greater focus on social media and more of those types of platforms.

What's clear here with the clarity? We got Clarity of coding and we got Clarity in the facility reimbursement and the reimbursement for the facility. Actually increased 000 from last year.

Speaker #12: We'll still continue to run our TV advertising, but with more focus on social media and

Speaker #12: digital.

Speaker #7: And I think Tim said it earlier, we know we've got a wide

Tim Herbert: So, yeah, so Danielle, we keep up the fight, and what works is we have strength on the front end of the funnel, and we got a really good product to be able to work with.

Speaker #7: Range of outcomes on the top line. We're going to be thoughtful and flexible about our spending and just make sure that we're tracking that based on where we see revenue coming in.

Patrick Wood: Yeah, okay. I mean, is there a scenario where you have centers that are willing to take more patients? I mean, I guess I'm just trying to understand what happens to the patient that gets referred to a physician, and they're like: Oh, we're not doing that anymore because we don't get paid enough. I mean, I know that wouldn't be the conversation, actually, but you know, where does the patient go?

Danielle Antalffy: Yeah, okay. I mean, is there a scenario where you have centers that are willing to take more patients? I mean, I guess I'm just trying to understand what happens to the patient that gets referred to a physician, and they're like: Oh, we're not doing that anymore because we don't get paid enough. I mean, I know that wouldn't be the conversation, actually, but you know, where does the patient go?

Speaker #7: All right. Awesome. Thank you so much.

We're going to work. Um, all avenues. Very uh diligently.

Speaker #2: Thank you. From the line of Mike Kratky from Leerink Partners, please go ahead.

Okay, thank you so much.

Thank you.

Speaker #7: Hi, everyone. Thanks for fitting me in. So, for instances where the MACs announced the removal of the 64568 code for OSA back in December, and then implants subsequently happened in January, can you quantify what portion of the claims you've seen so far have been rejected versus not?

And I share our next question comes from the line of Daniel Markowitz from evercore isi. Please go ahead.

Tim Herbert: That's a valid statement, because what's clear here with the clarity, we got clarity of coding, and we got clarity in the facility reimbursement. And the reimbursement for the facility actually increased $1,000 from last year. So the reimbursement is strong at facilities. So in those centers where we may be a salary-based surgery, we believe that we can bring more patients to those facilities, if some of the private practice physicians are more challenged based on the economics. But we're gonna work all avenues very diligently.

Speaker #4: Yes, a little unknown. We have had procedures paid on 64568. We've had procedures paid on 64582. We've had some procedures actually get denied and require clarification.

Speaker #4: We've had notifications of centers receiving notification of payment at 64,568, only to be followed up with an adjustment to the payment level of 64,582.

No, no, Daniel. Do we lose you if you have your phone on mute? Sorry. Can you hear me? All right, yep. Yep. Sorry about that. Sorry about that. Thanks for taking my questions. Um, I had 2, the first is is is on the map. I'm curious to exercise your running on the physician fee and how that can impact the business is it mostly survey work or how do you do this? I guess I'm just curious with the revenue guidance. There's a 6% Delta between the low versus high end compared to on the physician fee 10 to 50% of potential 40% Delta. So I guess how do you run the exercise of figuring out what position fee, cut leads to what type of impact on your business?

Patrick Wood: Okay. Thank you so much.

Danielle Antalffy: Okay. Thank you so much.

Speaker #4: So bottom line, it's all over the place. And I guess this is the good news as we close the call here: we have the clarity of the code.

Operator: Thank you. And our next question comes from the line of Daniel Markowitz from Evercore ISI. Please go ahead.

Speaker #4: And so facilities and ASCs know what the reimbursement's going to be. And it's no longer the unknown if the new reimbursement's going to be the improved 64582 with the $1,000 increase.

Tim Herbert: I don't know, Daniel, did we lose you?

Daniel Markowitz: I don't know, Daniel, did we lose you?

Operator: You have your phone on mute.

Daniel Markowitz: Hey, sorry. Can you hear me all right?

Tim Herbert: Yep, yep.

Daniel Markowitz: Sorry about that. Sorry about that. Thanks for taking my questions. I had two. The first is, is on the math. I'm curious, the exercise you're running on the physician fee and how that could impact the business. Is it mostly survey work, or how do you do this? I guess I'm just curious, with the revenue guidance, there's a 6% delta between the low versus high end, compared to on the physician fee, 10% to 50%, a potential 40% delta. So I guess, how do you run the exercise of figuring out what physician fee cut leads to what type of impact on your business?

Speaker #4: So again, I think having clarity of the code, having consistency with reimbursement at the centers, is really the solid thing. And then our next step is to really lock down on minimizing the professional fee, and we think that we're going to have a good audience specifically with the MACs to discuss that with us.

Sure. Little bit continuation, um, and expansion of the last question. And uh, Daniel. So we look at this saying, um, we know, there are centers, that will remain consistent, and we may be able to drive more patients to those centers. Because as an example, the uh, surgeon may be salary based uh if you will academic centers are in affected so much by the professional fee because their salary based. So we can continue um working in those areas in some of the asc's, if a surgeon is a

Tim Herbert: Sure. Little bit continuation, and expansion of the last question. And, Daniel, so we look at this saying, we know there are centers that will remain consistent, and we may be able to drive more patients to those centers because, as an example, the surgeon may be salary-based, if you will. Academic centers aren't affected so much by the professional fee because they're salary-based, so we can continue working in those areas. In some of the ASCs, if a surgeon is a partial owner, they are less dependent on the professional fee than they are the site of service fee. So there's avenues in there that we can continue to pursue.

Speaker #7: Understood. Thanks, Tim.

Speaker #4: Very good. Thanks very much. Hey, as always, I'm grateful to the growing team. I've dedicated Inspire employees for their enthusiasm, hard work, and continued motivation to achieve successful and consistent patient outcomes.

Partial owner, they are less dependent on the professional fee than they are the set of service fee. So there's Avenues in there that we can continue to pursue and the area that, um, the surgeons that are at the greatest challenge are those, uh, Private Practice positions who get their operating rights or privileges and get, oh, time from a large hospital, but they get paid on their own professional fee. Those are the, the surgeons that are at the most risk because we're asking them to do a procedure, that doesn't pay them for their time, spent on it now, that's why we have good argument and rationale.

Speaker #4: The team's commitment to the patient remains unmatched and is the most important element of our success. I wish to thank all of our employees, as well as the healthcare teams, for their continued efforts as we remain focused on further expanding our business in the US, Europe, and Asia.

Speaker #4: For all of you on the call, we really appreciate your continued interest and support of Inspire, and look forward to providing you with further updates in the months ahead.

Tim Herbert: The area that the surgeons that are at the greatest challenge are those private practice physicians who get their operating rights or privileges and get OR time from a large hospital, but they get paid on their own professional fee. Those are the surgeons that are at the most risk because we're asking them to do a procedure that doesn't pay them for their time spent on it. Now, that's why we have good argument and rationale to justify a lower reduction from the professional fee to be able to support those physicians. It's not just a straight math equation across a reduction. The professional fee does not have the same impact across all centers.

To justify a lower reduction from the professional fee, to be able to support those positions. So it's not just a straight math equation across uh a reduction of the professional fee. Does not have the same impact impact across all centers. The other thing I'd add to that Daniel is, you know, we called out that there is an impact on q1. Just for some of the coding uncertainty that we've seen. That's compounding the the the range as well and making that a little bit wider.

Speaker #4: So, thanks very much. And Dylan, back to you.

As I look at the high end of the revenue guidance, can you help me understand what the Cadence would look like in that scenario is, is it fair to assume we'd be exiting the year at something like mid teens percent growth? Uh, and that would that contemplate some sort of catch-up. As, as you said that some of the, the patients might be, uh, redirected to other centers. Or can you just help us understand how we get to the high end of the guidance?

Matt Osberg: The other thing I'd add to that, Daniel, is, you know, we called out that there is an impact on Q1 just for some of the coding uncertainty that we've seen. That's compounding the range as well and making that a little bit wider.

Daniel Markowitz: Got it. That's helpful. And then my follow-up: As I look at the high end of the revenue guidance, can you help me understand what the cadence would look like in that scenario? Is it fair to assume we'd be exiting the year at something like mid-teens % growth? And that would contemplate some sort of catch-up, as you said, that some of the patients might be redirected to other centers? Or can you just help us understand how we get to the high end of the guidance?

Yeah, I think um you described it pretty good, maybe we describe it more as comfort and I think as we get additional Clarity and a minimizes the risk of reimbursement of what they're going to be paid once we have data um then we can get back into leaning in um harder. So we would expect uh acceleration in the second half of the year and and we believe that if we can get the data of that we'll be able to show improved reimbursement and then we'll have the surgeons. Will be more comfortable uh, making the the determination to commit more of their time and more of their operating room time for inspire.

Helpful. Thank you.

Daniel.

Thank you.

Tim Herbert: I think you described it pretty good. Maybe we describe it more with comfort. And I think as we get additional clarity and it minimizes the risk of reimbursement of what they're going to be paid, once we have data, then we can get back into leaning in harder. So we would expect acceleration in the second half of the year. And, and we believe that if we can get the data, that we'll be able to show improved reimbursement, and then we'll have the surgeons will be more comfortable making the determination to commit more of their time and more of their operating room time for Inspire.

And I share our next question comes from the line of Patrick Wood from Morgan Stanley. Please go ahead, beautiful. Thanks uh just 2 quick ones for me. Um first 1 uh I know you guys don't guide to it but just since the OS I understand why we've all been focused, obviously on the us at the moment. But the relative guide going forward in the sense of the contribution in 26. That you guys expect from us to be helpful.

Daniel Markowitz: Helpful. Thank you.

Tim Herbert: Thanks, Daniel.

Thank you. I know that, uh, um, go ahead. You want to jump? So, I actually have the numbers for Rich's earlier. Question to answer your question, uh, Patrick 4 to 5%. Oh, us contribution roughly for the full year. 2026 Q4, uh, us Revenue was 256.995% of Revenue, owe us, 12.1 million. And uh, full year was 872.1 Million us 39.90 us

Operator: Thank you. And our next question comes from the line of Patrick Wood from Morgan Stanley. Please go ahead.

Patrick Wood: Beautiful. Thanks. Just two quick ones from me. First one, I know you guys don't guide to it, but just a sense to OUS. I understand why we've all been focused, obviously, on the US at the moment, but the relative guide going forward and the sense of the contribution 26 that you guys expect from OUS, be helpful.

amazing. Thank you. Um, and then just really quickly, uh, I know we sort of touched on the commitment to moving to inspire 5, but if you wanted to switch back a little more durably to inspire 4, let's say, for a little longer period of time. Do you have things like the contracts set up? Like the manufacturing, uh, supply chain bits enabling you to do that. If you chose to go down that pathway, or is there something preventing you from doing that?

Tim Herbert: Thank you. I know that. Go ahead, you want to jump in?

Ezgi Yagci: I actually have the numbers for Rich's earlier question. To answer your question, Patrick, 4 to 5% OUS contribution, roughly for the full year, 2026. Q4, US revenue was $256.9 million, 95% of revenue, OUS $12.1 million, and full year was $872.1 million US, $39.9 million OUS.

Tim Herbert: Sure.

Patrick Wood: Amazing. Thank you. And then just really quickly, I know we sort of touched on the commitment to moving to Inspire five, but-

Patrick Wood: Amazing. Thank you. And then just really quickly, I know we sort of touched on the commitment to moving to Inspire five, but-... If you wanted to switch back a little more durably to Inspire four, let's say, for a little longer per-period of time, do you have things like the contracts set up, like the manufacturing, supply chain bits, enabling you to do that if you chose to, to go down that pathway? Or is there something preventing you from doing that?

Brett Fishbin: ... If you wanted to switch back a little more durably to Inspire four, let's say, for a little longer per-period of time, do you have things like the contracts set up, like the manufacturing, supply chain bits, enabling you to do that if you chose to, to go down that pathway? Or is there something preventing you from doing that?

We've looked at our inventory numbers, um, on on, on the tables that you see, we do carry a significant inventory and the majority of that is inspired for. So we have the ability to carry forward with for and, uh, in the time it will take us to get to the, um, new CPT code, but we don't believe, um, senators in the US will really. Um, go back to inspire for. I think, once Physicians and centers experience inspired 5, they are comfortable with the procedure, not putting in the pressure, sensing lead the reduced work to do the Inspire 5.

Tim Herbert: Well, I think that, as you've looked at our inventory numbers on the tables that you see, we do carry a significant inventory. The majority of that is Inspire four. So we have the ability to carry forward with four, and in the time it'll take us to get to the new CPT code. But we don't believe centers in the US will really go back to Inspire four. I think once physicians and centers experience Inspire five, they are comfortable with the procedure, not putting in the pressure sensing lead, the reduced work to do the Inspire five procedure, and then the outcomes associated with Inspire five.

Procedure and then the outcomes associated with Inspire 5, I think people are going to be careful about going back to inspire 4, but that being said there were centers that are high volume, that we're doing inspired lately inspired for late in the year to answer your other question. Our ability to go back and, and, and fire up the line and restart making. Uh, piece Parts associated with Inspire 4. It does get a little little bit limited on parts opso.

Um as we transition to 5 so we do have inventory to carry us forward but yeah we want to transition over to full production on inspired 5.

Totally got it. Thanks guys.

Thank you.

And I share our next question comes from the line of Brett. Fish been from keybanc Capital markets, please go ahead.

All right guys, thanks for taking the call.

Tim Herbert: I think people are gonna be careful about going back to Inspire Four, but that being said, there were centers that are high volume that we're doing Inspire late in the, Inspire Four, late in the year. To answer your other question, our ability to go back and fire up the line and restart making piece parts associated with Inspire Four, it does get a little bit limited on parts obsolescence as we transition to Five. So we do have inventory to carry us forward, but yeah, we wanna transition over to full production on Inspire Five.

Questions and uh, Welcome Matt just, um, maybe switching computers a little bit here, just on um, the fourth quarter. Earnings number, I think, you know, maybe a little bit lost so you guys grew EPS over 40%, and it was really well above expectations and the implied guidance coming out of last quarter. So curious where you saw incremental expense leverage relative to what you were planning on um with the player guidance, coming out of 3Q,

Brett Fishbin: Got it. Thanks, guys.

Patrick Wood: Got it. Thanks, guys.

Tim Herbert: Thank you.

Operator: Thank you. I show our next question comes from the line of Brett Fishbin from KeyBanc Capital Markets. Please go ahead.

Mike Kratky: All right, guys, thanks for taking the questions, and welcome, Matt. Just maybe switching gears a little bit here, just on the Q4 earnings number. I think, you know, maybe a little bit lost, you guys grew EPS over 40% and was really well above expectations and the implied guidance coming out of last quarter. So curious where you saw incremental expense leverage relative to what you were planning on with the full-year guidance coming out of Q3.

Brett Fishbin: All right, guys, thanks for taking the questions, and welcome, Matt. Just maybe switching gears a little bit here, just on the Q4 earnings number. I think, you know, maybe a little bit lost, you guys grew EPS over 40% and was really well above expectations and the implied guidance coming out of last quarter. So curious where you saw incremental expense leverage relative to what you were planning on with the full-year guidance coming out of Q3.

Yeah, I'll start and and as you might add in here so I you know, I think what you saw in the fourth quarter was was a beating expectations kind of throughout the p&l revenue was better than we expected gross. Profit margin was better than we expected, as we had a higher percentage of inspire 5 and then you know, as, as Tim said, in his prepared remarks, we we did have good cost discipline. We were thoughtful about our spending and, and spent less than than we anticipated. So, compile all that, um, you know, obviously we've got the, the significant tax benefit, but even you just that out, um, you know, that all of those contributed to the beat and Q4,

Matt Osberg: Yeah, I'll start, and Ezgi, you might add in here. So, you know, I think what you saw in the fourth quarter was a beat in expectations, kind of throughout the P&L. Revenue was better than we expected. Gross profit margin was better than we expected, as we had a higher percentage of Inspire Five. And then, you know, as Tim said in his prepared remarks, we did have good cost discipline. We were thoughtful about our spending and spent less than we had anticipated. So compile all that, you know, obviously, we've got the significant tax benefit, but even you adjust that out, you know, that all of those contributed to the beat in Q4.

2026. Just curious like how you're thinking about overall direct to consumer marketing. Um, this year relative to 2025, I'm sure as like the year progressed is there, maybe some change based on you know, the reimbursement status but just in terms of like a base case, how you're thinking about that at this point and then like where you're targeting um the advertising in 2026 compared to 25. Thank you.

Mike Kratky: All right, cool. And then just, one follow-up, on expenses for 2026. Just curious, like, how you're thinking about overall direct-to-consumer marketing, this year relative to 2025. I'm sure as, like, the year progresses, there may be some change based on, you know, the reimbursement status, but just in terms of, like, a base case, how you're thinking about that at this point, and then, like, where you're targeting, the advertising in 2026 compared to 2025. Thank you.

Brett Fishbin: All right, cool. And then just, one follow-up, on expenses for 2026. Just curious, like, how you're thinking about overall direct-to-consumer marketing, this year relative to 2025. I'm sure as, like, the year progresses, there may be some change based on, you know, the reimbursement status, but just in terms of, like, a base case, how you're thinking about that at this point, and then, like, where you're targeting, the advertising in 2026 compared to 2025. Thank you.

All right, thanks for the question. Um, our current thinking is that it'll still be flat to slightly up, but we're we're going to take a look at that as we go forward here. Um, advertising mix will be mostly similar to what you've seen in the past, but I think greater focus on on social media and um, you know, more of those types of platforms. We'll still continue to run our TV advertising but but more focused on on social media and digital. And I think, you know, Tim said it earlier, you know, we we we know we've got a wide range of outcomes on the top line. We're going to be thoughtful and flexible about our spending and and just make sure that we're tracking that based on where we see Revenue coming in.

That's awesome. Thank you so much.

Thank you.

And I share our last question in the queue comes from the line of Mike kratki from leerink Partners. Please go ahead.

Ezgi Yagci: Brett, thanks for the question. Our current thinking is that it'll still be flat to slightly up, but we're gonna take a look at that as we go forward here. Advertising mix will be mostly similar to what you've seen in the past, but I think greater focus on social media and, you know, more of those types of platforms. We'll still continue to run our TV advertising, but more focus on social media and digital.

Hi everyone. Thanks for fitting me in. So, for instances, where the max announced the removal of the 645 68 code for Osa, back in December. And then implants subsequently happened in January. Can you quantify what portion of the claims you've seen so far? Come in have been rejected, uh, versus not.

Um, uh, yes.

Matt Osberg: I think, you know, Tim said it earlier, you know, we know we've got a wide range of outcomes on the top line. We're gonna be thoughtful and flexible about our spending and just make sure that we're tracking that based on where we see revenue coming in.

Mike Kratky: All right. Awesome. Thank you so much.

Brett Fishbin: All right. Awesome. Thank you so much.

Operator: Thank you. I show our last question in the queue comes from the line of Mike Kratky from Leerink Partners. Please go ahead.

Brett Fishbin: Hi, everyone. Thanks for fitting me in. So for instances where the MAC announced the removal of the 64568 code for OSA back in December, and then implants subsequently happened in January, can you quantify what portion of the claims you've seen so far come in have been rejected, versus not?

Mike Kratky: Hi, everyone. Thanks for fitting me in. So for instances where the MAC announced the removal of the 64568 code for OSA back in December, and then implants subsequently happened in January, can you quantify what portion of the claims you've seen so far come in have been rejected, versus not?

Tim Herbert: Yes. Little known, we have had procedures paid on 64568. We've had procedures paid on 64582. We've had some procedures actually get denied and require clarification. We've had notifications of centers receiving notification of payment at 64568, only to be followed up with an adjustment to the payment level of 64582.

Little unknown. Uh, we have had procedures paid on 64568. We've had procedures paid on 64582. Um, we've had some procedures actually, get denied and require clarification. We've had notifications of of centers, receiving notification of payment at 64568. Only to be followed up with an adjustment to the payment level of 64582. So, bottom line, it's all over the place and I think now this is the good, this is the good news as we close the, the call here is we have the clarity of the code. And so the facilities and asc's know what the reimbursement is going to be and it's no longer the unknown. If, if it's going to be the, the new reimbursement is going to be to the, uh, the improved, uh, 64582 with 1,000, uh, increase. So again. So I think having Clarity of the code having consistency with reimbursement.

At the centers is really the solid thing and then our next step is to really, um, lock down on minimizing, the professional fee. And uh, we think that we're going to have um a good audience with specifically with the max um to uh uh discuss that with us.

Tim Herbert: So bottom line, it's all over the place, and I think now this is the good news as we close the call here, is we have the clarity of the code, and so facilities and ASCs know what the reimbursement is going to be, and it's no longer the unknown if it's gonna be the new reimbursement is gonna be to the improved 64582 with a $1,000 increase. So again, I think having clarity of the code, having consistency with reimbursement at the centers is really the solid thing. And then our next step is to really lock down on minimizing the professional fee, and we think that we're gonna have a good audience with, specifically with the MAC, to discuss that with us.

Understood. Thanks Tim.

Very good.

Thanks very much. Hey, as always, I'm grateful to the growing team.

Of dedicated inspiring employees for their enthusiasm, hard, work and continued motivation to achieve successful and consistent patient outcomes. The team's commitment

To uh the patient remains unmatched and is the most important element of our success. I wish to thank all of our employees as well as the health care teams for their continued efforts. As we remain focused on further, expanding our business in the US, Europe and Asia for all. You on the call, we really appreciate your continued interest and support of inspire and look forward to providing you with further updates in the months ahead. So thanks very much and DM back to you.

Thank you, sir. This concludes today's conference call.

Brett Fishbin: Understood. Thanks, Tim.

Mike Kratky: Understood. Thanks, Tim.

you may now disconnect

Tim Herbert: Very good. Thanks very much. Hey, as always, I'm grateful to the growing team of dedicated Inspire employees for their enthusiasm, hard work, and continued motivation to achieve successful and consistent patient outcomes. The team's commitment to the patient remains unmatched and is the most important element of our success. I wish to thank all of our employees, as well as the healthcare teams, for their continued efforts as we remain focused on further expanding our business in the US, Europe, and Asia. For all you on the call, we really appreciate your continued interest and support of Inspire and look forward to providing you with further updates in the months ahead. So thanks very much, and Delan, back to you.

Operator: Thank you, sir. This concludes today's conference call. You may now disconnect.

Q4 2025 Inspire Medical Systems Inc Earnings Call

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