INSP - NYSE

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

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 three and twelve months ended 12/31/2025. 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, 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. For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission, including our periodic reports on Forms 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 12/31/2025. Inspire Medical Systems, Inc. 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, 02/11/2026. With that, it is my pleasure to turn the call over to Tim Herbert. Tim? Thank you, Ezgi, and thanks, everyone,

for joining our business update call for the fourth quarter and full year 2025. On this call, I will start by providing an update on reimbursement of our Inspire 5 system, followed by some key takeaways of our fourth quarter and full year results. Then Matt will provide a financial review of our quarter 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 5 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 versus—excuse me. Sorry. Caught a bug. First, the CPT code 64582 with a -52 modifier for the Inspire 5 procedure. In the last week, we received clarification regarding the coding that should be used for the Inspire 5 procedure. Currently, health care centers and physicians should bill the most recent health care 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 5 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. 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 5 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. Furthermore, because of the excellent progress made with the launch of Inspire 5 to close out 2025, significant coding experience now exists for the Inspire 5 procedure. CPT code 64568 was used for approximately 10,000 Inspire 5 procedures in 2025, which provides a basis for professional reimbursement. The professional fee for CPT code 64568 is approximately 10% less than the reimbursement for CPT code 64582 used for Inspire 4 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 4 systems, however, we believe that we have sufficient inventory available for centers who may choose to remain with the Inspire 4 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. Over the long term, we will be focused on developing a new CPT code. With clarity on the coding of Inspire 5 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 U.S. limited market release, and we are excited and energized by the strong performance of the Inspire 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, inspiratory overlap, which is the essential factor for closed-loop therapy, has shown to be significantly improved with the Inspire 5 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 III 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. With respect to the Inspire 5 U.S. 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 centers, and SleepSync onboarding is complete for over 90%, bringing the total to over 90% of our centers implanting Inspire 5 today. We expect to have stable product inventory for Inspire 5 throughout 2026, and we anticipate transitioning the existing Inspire 4 IPG line to Inspire 5 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 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. We hired seven field clinical reps in the quarter, consistent with our strategy to get the ratio closer to 1:1 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 the fourth quarter in social media activity. We believe that this increase is related to the incremental growth investments we made in 2025. The WISER program, which is a government initiative requiring prior authorization of Medicare cases in six pilot states, kicked off in 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. We continue to provide prior authorization support to our centers as they work through the WISER implementation and we will update you as we have more information. 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 submission. 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.

In addition,

in 2026, one of our primary product development programs will be Inspire 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, 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 in our commercial team's 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. 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 Medical Systems, Inc. With the close of 2025, Rick will move on to his new opportunity, and we wish him well. He joined Inspire Medical Systems, Inc. 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 Medical Systems, Inc. Thank you, Tim. Good afternoon, everyone. I am 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 us 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, 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. 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 2025. 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. 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 $1,000 million, 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 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. 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 pretax income is a relatively small base, certain discrete tax charges can have a material impact on our tax rate. 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. 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. Our outlook assumes estimated weighted-average diluted shares outstanding of approximately 29,400,000 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 from coding uncertainty, we expect revenue in the first quarter of 2026 to be approximately flat to prior year. 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. 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 2025. As we look ahead to 2026, we will continue to emphasize execution and remain focused on what we can control. I am 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. Delam, you may now open the line for questions.

Thank you, sir. As a reminder, to ask a question, you would need to press 11 on your telephone. To withdraw your question, please press 11 again. We ask that you please limit your questions to no more than one and one follow-up. Please standby while we compile the Q&A roster. And I show our first question comes from the line of Adam Maeder from Piper Sandler. Please go ahead. Hi, Tim, Matt, Husky. 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 5 using the 82 code and the -52 modifier and, you know, the 10% to 50% reduction is obviously a wide range. So the question is, when do you expect to have more clarity exactly where that shakes out from the various payers? 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 do from an involvement standpoint in those discussions?

Hi. Thanks very much. I think from the first off, there are existing policies in place. So step number one is for facilities and professionals to bill to the current policy. So this evolution to -52 is going to be a little bit of a process as it works forward. Number two, 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 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 alignment with the MACs, and more importantly, to drive consistency. So, yes, we expect that and we believe that we are 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 is 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 are 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 4 system a little bit more, you know, aggressively, just given that reimbursement is, I will call it, buttoned up with 64582, you know, until we really have, you know, Gen 5 kind of fully situated. Thank you for taking the questions. 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 -52 modifier is not a long-term solution. That is really used for special cases. And so that is important for us to be able to address that. Number two, if you look at the payers, we believe that they are going to minimize that reduction because if they are going to pay for an Inspire 5 procedure of a 50% reduction, that could be $350 some compared to $700 for an Inspire 4. So we think calmer heads will prevail. 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. 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, the timing of that is such that that would come online with the RUC process near 01/01/2028. So that is a two-year period. So it is important that we work through to minimize reduction with the -52 modifier, but also have Inspire 4 available. Thank you. Thanks, Adam. Thank you. And I show our next

comes from the line of Jonathan David Block from Stifel. Please go ahead. Tim, I guess I am just curious on the revision to the 2026 revenue guidance. What is specific to the new reimbursement landscape into the 82 code with the modifier versus what you are 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?

Hi, Jon. 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 is why we are working very diligently to solve the technical challenges with the portal that WISER has implemented. And WISER program did not allow any implants until January 15, because I think there was awareness that there would be challenges as they fired up the program. So we do see that WISER, we 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 are able to work through the bugs. So a little bit more of just a Q1 phenomena with WISER. What is the first question?

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 six states. But the bigger issue is the updated reimbursement guidance.

That is helpful context. I just wanted to that last point, make sure that was all embedded in the revision. 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 am just curious, anecdotally, any feedback you are getting for those that have billed and seen the modifier, like, what you are hearing from the field, from the physicians, or from the reps. Thanks, guys.

Sure. I think that the majority of our physicians are private practice. Any physician who is 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 it does not have the same level of impact with them, but they are also, a lot of them are the key opinion 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.

What we have said, Jon, 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.

Okay. Thank you, guys.

Thank you. And I show our next question comes from the line of Robert Justin Marcus from JPMorgan.

Great. Thanks for taking the questions. Just one for me. Tim, I imagine the first quarter guide of flat

is based on what you are 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 could it not be even lower?

Oh, 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 at 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 are comfortable with the range. And it is 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.

Alright. I said one, but I got to follow-up. And I also apologize, Matt. Welcome, and congratulations. Look forward to working with you.

Thanks, Robbie.

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? And I will leave it there. Thanks a lot. Thank you. Well, I think, really, the -52 really has not modified right now. It has not really

kicked in right now. And so I think that that is 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 is having a short-term impact in Q1 as we work through the logistics. But I think once we get more clarity, we will get more comfort around this. Yes. And, Robbie, I would just add to that. You know, I think you heard in my

prepared remarks, you know, the bottom end of that range is

more of a 50% reduction, and the top end does get closer to that 10% reduction. So it kind of depends on how things play out within that range over then as we see things in the next few months.

Thanks a lot.

Thank you. And I show our next question comes from the line of Travis Lee Steed from Bank of America Securities. Just wanted to ask about the pathway to getting a new code. And is there a temporary code, miscellaneous code, that you would go to while transitioning, and kind of what happens with the doc payment during that process, and how you get comfort that

you know, the reimbursement of payments could not go lower with a new code?

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 is 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 will not be using any kind of miscellaneous code, any kind of temporary code, any kind of Category III code. Right now, our intention is to go to a new Category I code through the full process, which includes a RUC. And with that, yes, there is always risk that the RUC would identify a lower payment from where 64582 is today.

Alright. Helpful. And

on the kind of the ability to still kind of grow earnings and expand margins here with lower revenue growth, you know, I would assume it is probably a little harder to get leverage, and so just kind of thinking about, like, the puts and takes and your ability to continue to grow earnings in a slower revenue environment?

Thanks. I think we have had good cost discipline over the last several quarters. We will continue to do that. Again, we are going to 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 are able to get leverage from those numbers. But we are going to be diligent with our spending. And as we learn more about that reduction, being able to be flexible.

Good. Thank you.

Travis.

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

Great. Thanks. I heard comments around, you know, the initiatives to minimize this actual reduction applied to the professional

fee, and

wondering if there is any appetite to minimize

from your end the impact that hospitals

will see. I think pricing potentially could be a lever there. So wondering if at all that is

something you are thinking about and generally how we should be thinking about device pricing

in 2026?

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

Okay. And I think, you know, maybe midway through

last year, when you lowered the 2025 guide, there was a comment about, you know, maybe some newer centers that were meant to be coming online or getting trained on the system, you know, were getting delayed.

So wondering, you know, just how you are thinking about your installed base, we will call it, of trained accounts on the Inspire system, and how those progressed throughout 2025, and then how that impacts the ramp that you will see from a utilization perspective as some of the delays, we will say, of newer centers coming online, progressed throughout 2025? Thank you.

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 are going to want to keep that rate moving forward. Obviously, it will have impact based on the reduction of the physician fee, but we want to be able to maintain that rate, if you will. But 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.

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

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. Really, just have been, as we said before, we have 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.

There is an economic discussion in there now that shows that it is 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 a -52 modifier. Thanks. Tim, can you talk about

competition? We all saw 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

from the impact of competition,

and just secondly, do you know if they are going to have to use the -52 modifier,

or there will be any difference in their reimbursement?

Thank you.

Thanks, Larry. I will not comment on their coding strategy. You will have the opportunity, I am 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 5. 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 are 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 are in a very strong position from an overall market. Thank you.

And I show our next question comes from the line of Christopher Thomas Pasquale from Nephron Research. Please go ahead.

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 68, 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,

or do you expect them also to go to 82 with the modifier?

I think currently, they do allow 64568. That is their policy, and we, of course, have to bill to their policy. Now the difference, Chris, with commercial payers, Medicare Advantage—remember, these are all prior authorized. And so when they are prior authorized, we do have the specific CPT code in the prior authorization, including per their policy. So it is 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. 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? And can you give us an update on the number of centers those reps are serving? Rep-to-center ratio over time had stayed relatively stable. Did you expand your installed base in 2025? Any numbers there would be great. Gotcha. It is intentional. We know that as we are 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 improved 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 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 the intentional move that we made. And then

generally, it is maybe five centers per territory.

Okay. Thank you.

Thanks, Chris. Thank you.

And I show our next question comes from the line of Anthony Charles Petrone from Mizuho Americas. Please go ahead.

Thanks, and good evening, everyone. I will stay on top here. Maybe, Tim, you mentioned there in your prepared remarks, you know, you are going to need a certain level of claims data to make the determination on whether you are at the lower or upper end of the 10% to 50%, you know, pro fee cut. So I am wondering, like, how much claims data do you need? Will you have that in hand by the end of 1Q, or does that bleed into 2Q? Because then it kind of sets up a moving target in terms of guidance. And then I will have one quick follow-up.

I think that it would 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 MAC. And, again, our leading statement is we need to bill to the most current policy, so we will be working with the MACs. And some of those may not have the modifier in place yet. So we are 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 call.

I guess, how many MACs already have the mapping to the -52 modifier? Is it—I think it is three of seven. And I guess you are waiting on the other four to

actually have that

-52 modifier in place. Yes.

Anthony, currently in the policy, none of the MACs have them mapped into a -52. There is some commentary with one of the MACs, but currently, we are billing 64582 with those MACs, and we are going to be working closely with them to communicate when or if they are going to implement the -52.

And then real quick, just a follow-up would be, you know, you have some evidence here, initial, 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 is a dual path here, that you will 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 are pursuing a new code?

Thanks. Oh, you are absolutely correct. It is a dual path. There is a short term to 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 I CPT code. But that code would be in place 01/01/2028.

Thanks.

Thank you. And I show our next question comes from the line of Richard Samuel Newitter from Truist. Please go ahead. 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 III code,

maybe a dual track while you pursue your CPT I.

And I am curious as to why you are 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 is not a viable or worthwhile path while you are pursuing the CPT I as well that does not go into effect into 2028? And then I have a follow-up.

Yes. I understand, Rich, and thanks for that. A Category III code, if applied for and awarded, could take effect on 01/01/2027. And the word I would remove from your description is the word stable. 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. So we made the choice to stay the course with that Category I code long term. We know that we have clarity on facility reimbursement. If we went to a Category III code, we would not have that clarity. That is the most important part because that is how we get paid, and the facilities get the reimbursement from those centers. And we are looking at a range of reimbursement for the professional fee. And again, we are targeting to minimize that risk in the short term. That will carry us through 2027. Okay. Thanks for that. And then just did you guys provide a U.S./O.U.S. breakout? I may have just missed it. I could not find it in the press release.

Are the numbers?

It should be in the press release, but I will have to check.

It will be in the 10-K when we file later this week if it is not in the press release.

Next question. Thank you.

And I show our next question comes from the line of Shagun Singh from RBC.

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 HNS is now a part of.

Thank you.

Yes. I think that we have a long history working with Medicare. And there is a parallel program with RAC audits—I think you maybe heard that term—where 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 those patients that have received treatment are on label. So over the years, we have been very diligent at training all centers to make sure that they are 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 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.

Thank you.

One moment while we compile the Q&A. And I show our next question comes from the line of Danielle Joy Antalffy from UBS. Please go ahead.

Danielle, are you there? I think she fell off the line now. So alright, we will see if she comes back on. Let us go to the next question.

Thank you. And I show our next question comes from the line of Michael Anthony Sarcone from Jefferies.

Hey, 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 are seeing in terms of GLP-1s and what, if any, headwinds you have baked into the guide? 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, I think that is really an 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 the GLP-1 to lose weight with a secondary benefit which is a reduction in sleep apnea.

Thanks, Tim.

You bet. Thank you.

Thank you.

I show our next question comes from the line of Danielle Joy Antalffy from UBS. Please go ahead.

Hi. Is this working now?

Yes. It is. Yes. Okay. Sorry. I do not know what is going on today, but technology is not my

friend. So I am sorry about that. Thank you guys so much for taking the question. I appreciate a lot of this call has been about reimbursement and the impact there, but I am actually curious about—because this seems like an unfortunate situation to me where you have got what seems like a growing funnel of patients that want to get this procedure, and now if you do not have doctors that are as willing to do it, I am just curious how you guys are working with whether it is 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 patient. Because it feels like the front of the funnel is not necessarily slowing. So I am just—sorry. That is like a kind of convoluted question. I am just curious if you can comment on that.

Got it. Okay. So what drives us at Inspire is Inspire 5 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 U.S. And so that is 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 is variability in the professional fee reduction with any -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. But we need to put that in play. And even though we do have Inspire 4 units available for those centers, we will continue to push 5. 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 while we work with payers at some of the private practice to minimize the impact from the professional fee reductions. So, yes, so, Danielle, we keep up the fight. And what works is we have strength on the front end of the funnel, and we have a really good product to be able to work with.

Yes. Okay. I mean, is there a scenario where you have centers that are willing to take more patients? I mean, I guess I am just trying to understand what happens to the

patient

that gets referred to a physician, and they are like, oh, we are not doing that anymore because we do not get paid enough. I mean, I know that would not be the conversation, actually. But, you know, where does the patient go?

That is a valid statement because what is 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 have 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 are going to work all avenues very diligently.

Okay. Thank you so much.

Thank you.

And I show our next question comes from the line of Daniel Markowitz from Evercore ISI.

I know, Daniel. Did we lose you?

If you have your phone on mute, please unmute you. Sorry. Can you hear me on that?

Yep. Yep. Sorry about that. Sorry about that. Thanks for taking my questions. I had two.

The first is on the math. I am curious, the exercise you are 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 am just

curious. With the revenue guidance, there is 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 physician fee cut leads to what type of impact on your business?

Sure. There will be a 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 are not affected so much by the professional fee because they are 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 are avenues in there that we can continue to pursue. And the area where the surgeons 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 are asking them to do a procedure that does not pay them for their time spent on it. Now, that is why we have good argument and rationale to justify a lower reduction from the professional fee to be able to support those physicians. So it is not just a straight math equation across—a reduction of the professional fee does not have the same impact across all centers.

The other thing I would 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 have seen. That is compounding the range as well and making that a little bit wider.

Got it. That is helpful. And then my follow-up:

as I look at the high end of the revenue guidance,

help me understand what the cadence would look like in that scenario? Is it fair to assume we would be exiting the year at something like mid-teens percent growth? And would that contemplate some sort of catch-up? As you said,

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?

I think you described it pretty good. 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 are going to be paid once we have data, then we could get back into leaning in harder. So we would expect acceleration in the second half of the year. And we believe that if we can get the data that we will be able to show improved reimbursement. And then the surgeons will be more comfortable making the determination to commit more of their time

and more of their operating room time for Inspire.

Helpful. Thank you.

Thanks, Daniel.

And I show our next question comes from the line of Patrick Wood from Morgan Stanley. Please go ahead.

Beautiful. Just two quick ones for me.

First one, I know you guys do not guide to it, but just a sense to OUS. I understand why we have all been focused obviously on the U.S. at the moment, but the relative guide going forward in the sense of the contribution in 2026 that you guys expect from OUS would be helpful.

Thank you. I know that—go ahead. You want to jump in? So 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 U.S. revenue was $256.9 million, 95% of revenue. OUS $12.1 million. And full year was $807.2 million U.S., $39.9 million OUS. 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 us say for a 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, or is there something preventing you from doing

that? 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. So we have the ability to carry forward with 4, and in the time it will take us to get to the new CPT code. But we do not believe centers in the U.S. will really go back to Inspire 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. 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 4 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 4 does get a little bit limited on parts obsolescence as we transition to 5. So we do have inventory to carry us forward. But, yes, we want to transition over to full production on Inspire 5.

Totally got it. Thanks, guys. Thank you. Thank you.

And I show our next question comes from the line of Brett Adam Fishbin from KeyBanc Capital Markets. Please go ahead.

Alright, guys. Thanks for taking the questions, and welcome, Matt.

Just maybe switching gears a little bit here just on the fourth quarter earnings number.

I think maybe a little bit lost. You guys grew EPS over 40% and 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 3Q?

Yes. I will 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 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 Tim said in his prepared remarks, we did have good cost discipline. We were thoughtful about our spending and spent less than we anticipated. So compile all that. You know, obviously, we have got the significant tax benefit, but even if you adjust that out,

all of those contributed to the beat in Q4.

Alright. Cool. And then just one follow-up.

On expenses for 2026. Just curious, like, how you are thinking about overall direct-to-consumer marketing this year relative to 2025. I am sure as the year progresses, there may be some

change based on the reimbursement status. But just in terms of, like, a base case, how you are thinking about that at this point, and then, like, where you are targeting the advertising in 2026 compared to 2025. Thank you.

Thanks for the question. Our current thinking is that it will still be flat to slightly up, but we are going to take a look at that as we go forward here. Advertising mix will be mostly similar to what you have seen in the past, but I think greater focus on social media and, you know, more of those types of platforms. We will still continue to run our TV advertising, but more focused on social media and digital.

And I think, you know, Tim said it earlier, you know, we know we have got a wide range of outcomes on

top line. We are going to be thoughtful and flexible about our spending and just make sure that we are tracking that based on where we see revenue coming in.

Alright. Awesome. Thank you so much.

Thank you. And I show our last question in the queue comes

from the line of Michael Kratky from Leerink Partners. Please go ahead.

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 have seen so far come in have been rejected versus not? Yes. Little unknown. We have had procedures paid on 64568. We have had procedures paid on 64582. We have had some procedures actually get denied and require clarification. We have had notifications 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 is all over the place. And I think now this is the good news as we close the call here. We have the clarity of the code. And so facilities and ASCs know what the reimbursement is going to be. And it is no longer the unknown if it is going to be the new reimbursement. It is going to 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 are going to have a good audience specifically with the MACs to discuss that with us. Understood. Thanks, Tim. Very good. Thanks very much. Hey, as always, I am 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 health care teams for their continued efforts as we remain focused on further expanding our business in the U.S., Europe, and Asia. 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. So thanks very much, and, Delam, back to you.