Inspire Medical Systems's (NYSE:INSP) Q1: Strong Sales, Stock Soars
Medical technology company Inspire Medical Systems (NYSE:INSP) announced better-than-expected revenue in Q1 CY2025, with sales up 22.7% year on year to $201.3 million. The company expects the full year's revenue to be around $947.5 million, close to analysts' estimates. Its GAAP profit of $0.10 per share was significantly above analysts' consensus estimates.
Is now the time to buy Inspire Medical Systems? Find out in our full research report.
Revenue: $201.3 million vs analyst estimates of $195.2 million (22.7% year-on-year growth, 3.1% beat)
EPS (GAAP): $0.10 vs analyst estimates of -$0.24 (beat)
Adjusted EBITDA: $33.19 million vs analyst estimates of $16.51 million (16.5% margin, significant beat)
The company reconfirmed its revenue guidance for the full year of $947.5 million at the midpoint
EPS (GAAP) guidance for the full year is $2.25 at the midpoint, beating analyst estimates by 4.1%
Operating Margin: -0.7%, up from -9.3% in the same quarter last year
Market Capitalization: $4.76 billion
'We are very proud of our performance in the first quarter which included strong revenue growth and continued progress on profitability. We achieved a tremendous milestone with over 100,000 patients receiving Inspire therapy and we are still just getting started in growing awareness and adoption,' said Tim Herbert, Chairman and CEO of Inspire Medical Systems.
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE:INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Reviewing a company's long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Inspire Medical Systems grew its sales at an incredible 57.3% compounded annual growth rate. Its growth surpassed the average healthcare company and shows its offerings resonate with customers, a great starting point for our analysis.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Inspire Medical Systems's annualized revenue growth of 34.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.
This quarter, Inspire Medical Systems reported robust year-on-year revenue growth of 22.7%, and its $201.3 million of revenue topped Wall Street estimates by 3.1%.
Looking ahead, sell-side analysts expect revenue to grow 18.2% over the next 12 months, a deceleration versus the last two years. Still, this projection is admirable and implies the market is forecasting success for its products and services.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
Although Inspire Medical Systems broke even this quarter from an operational perspective, it's generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 5.6% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out.
On the plus side, Inspire Medical Systems's operating margin rose by 47.2 percentage points over the last five years, as its sales growth gave it operating leverage. Zooming in on its more recent performance, we can see the company's trajectory is intact as its margin has also increased by 16.9 percentage points on a two-year basis. These data points are very encouraging and shows momentum is on its side.
In Q1, Inspire Medical Systems generated a negative 0.7% operating margin.
Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Inspire Medical Systems's full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it's at an inflection point.
In Q1, Inspire Medical Systems reported EPS at $0.10, up from negative $0.34 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Inspire Medical Systems's full-year EPS of $2.17 to grow 26.7%.
We liked that Inspire Medical Systems beat across the board, exceeding analysts' revenue, adjusted EBITDA, and EPS expectations this quarter. Its full-year EPS guidance outperformed Wall Street's estimates, as the company maintained its outlook from the previously-provided one. Zooming out, we think this quarter featured some important positives. The stock traded up 6.8% to $170 immediately after reporting.
Indeed, Inspire Medical Systems had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free.
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Prior to the cord-cutting phenomenon, linear advertising and cable affiliate fees had consistently boosted revenues. But as ad buyers now flee traditional TV channels in favor of digital options like streaming, companies are beginning to realize they may never realize those economics again. These pressures have resulted in waves of layoffs across the industry as companies double down on streaming through newly launched ad-supported tiers, bundled offerings, and price hikes. That has triggered a broader recalibration of portfolio strategy and, according to Hirsch, is setting the stage for a sweeping wave of divestitures across the industry. Read more here. Elon Musk is targeting the GOP spending bill, calling it a "disgusting abomination." "I'm sorry, but I just can't stand it anymore," Musk wrote Tuesday in a blistering post on X. "This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it: you know you did wrong. You know it." He added: "It will massively increase the already gigantic budget deficit to $2.5 trillion (!!!) and burden American citizens with crushingly unsustainable debt." Musk officially left the White House last week after completing his work as the head of the Department of Government Efficiency (DOGE). Musk's brief 130-day tenure was defined by sweeping cost reductions, mounting legal hurdles, and intense political scrutiny. It's unclear The administration is asking Congress to sign off on a $9.4 billion package to confirm DOGE's past budget cuts and cement its cost-cutting efforts. Read more here. Yahoo Finance's Ben Werschkul reports: Read more here. Stocks steadily rose on Tuesday as positive JOLTS data pointed to a stable labor market ahead of Friday's crucial jobs report. In sector action, Energy (XLE) led the gains, followed by Tech (XLK) and Consumer Discretionary (XLY). Real Estate (XLRE) and Consumer Staples (XLP) traded in the red, off around 0.5%, while Financials (XLF) were little changed. Dollar General (DG) led the S&P 500 on Tuesday after posting record first quarter sales. Cost-conscious consumers have flocked to discount retailers amid an uncertain economic backdrop. Ford (F) stock rose more than 2% on Tuesday afternoon after reporting that sales jumped 16.3% in May to just under 221,000 units. It marked the automaker's best May since 2019 and the third straight month of sales gains, Yahoo Finance's Pras Subramanian reported. Ford's sales were likely boosted by a price-cut promotion that the automaker implemented to counteract the potential for slower demand under President Trump's tariffs. As a result, Ford likely took market share from rivals GM (GM) and Stellantis (STLA), which didn't offer similar discount plans. It remains to be seen how long Ford can sustain this level of discounting as pre-tariff hike inventories dwindle. Meanwhile, Pras reports that Toyota (TM) also reported a sales increase of 6.8% in May to 240,176 units, led by gains in its car and truck segments. And Korean automaker Hyundai (HYMTF) reported sales rose 8% to 84,521 units, while Kia ( sales jumped 5% to 79,007 units. Read more here. The bond market is caught in a tug-of-war between pro-growth stimulus and inflationary pressures, leaving investors with few clear signals and rising long-term yields. "We have policies that on the one hand will boost growth like expansive fiscal stimulus," Kathy Jones, chief fixed income strategist at Charles Schwab, told Yahoo Finance. "Then we have some that will slow growth, like tariffs. ... So the bond market is just caught in the middle." Long-term Treasury yields have climbed in recent weeks, driven by concerns over the US fiscal trajectory as President Trump's sweeping tax legislation, estimated to add $4 trillion to the national debt over the next decade, heads to the Senate after clearing the House. Trump has vowed to sign the bill into law by July 4. "We haven't seen this for decades," Jones said, pointing to the recent bond market moves as a reflection of "a lot of worries and uncertainty." "I've been doing this a long time," she added. "And we haven't worried about the 30-year for a very long time." Read more here. Job openings unexpectedly rose in April after hovering near a four-year low the month prior. New data from the Bureau of Labor Statistics showed 7.39 million jobs open at the end of April, an increase from 7.2 million in March. The data comes as investors closely watch for any signs that economic growth may be slowing further. The March figure was revised higher from the 7.19 million open jobs initially reported. Economists surveyed by Bloomberg had expected Tuesday's report to show 7.1 million openings in March. The April survey included data from the first month that the most severe versions of President Trump's tariffs were in effect. The Job Openings and Labor Turnover Survey (JOLTS) also showed that 5.57 million hires were made during the month, up slightly from the 5.4 million made during March. The hiring rate ticked up to 3.5% from 3.4% prior. In one sign that workers may become more cautious about labor market conditions, the quits rate, a sign of confidence among workers, moved down slightly to 2% from 2.1% in March. US stocks wavered on Tuesday as investors await more updates on President Trump's tariffs. The S&P 500 (^GSPC) traded near the flat line while the Dow Jones Industrial Average (^DJI) fell about 0.1%. The tech-heavy Nasdaq Composite (^IXIC) was little changed on the heels of an upbeat start to the week for the major gauges. Here are some top stocks trending on Yahoo Finance this morning: Applied Digital (APLD) stock added 8% in premarket trading to a whopping 48% gain on Monday after announcing it signed two long-term lease agreements with Nvidia-backed CoreWeave (CRWV) for AI data centers. CoreWeave also rose 4% premarket. Constellation Energy (CEG) jumped 11% after the energy company secured a 20-year nuclear power purchase agreement from Meta (META). The deal also boosted other nuclear stocks, including Vistra (VST) (up 5%) and Oklo (OKLO) (up 6%). Scroll down to read more about Constellation's deal. Dollar General (DG) stock surged 11% on better-than-expected earnings and a raised annual forecast. The discount retailer is expected to be resilient in a weaker economic environment. Pinterest (PINS) shares gained nearly 4% after JPMorgan upgraded its rating on the stock to Outperform from Neutral. The JPMorgan analysts also raised their price target on the stock to $40 (from $35 previously), citing improving user numbers and ad technology. Check out more trending tickers here. Constellation Energy (CEG) stock surged more than 12% in premarket trading following news that it struck a 20-year power purchase agreement (PPA) with Meta (META). Meta stock was roughly unchanged. Starting in June 2027, Meta will buy 1,121 megawatts of energy from Constellation's Clinton nuclear facility in Illinois, powering its AI ambitions while supporting its clean energy goals, a release stated. The Clinton Clean Energy Center was nearly retired in 2017 after financial losses, but a state clean energy program kept the facility operational until mid-2027. Meta's PPA now ensures that the plant will continue to run once that program ends, essentially replacing that financial support. Though Constellation and Meta did not announce a price tag for the deal, they noted it "backs billions in plant investments," marking one of the largest nuclear energy agreements so far. Meta has signed a number of power purchase agreements in recent months — along with the other hyperscalers like Google (GOOG), Amazon (AMZN), Microsoft (MSFT) — as Big Tech races to ensure it can power the artificial intelligence boom. Reuters reports: Read more here. Shares in Dollar General (DG) rose 10% in premarket trading on Tuesday, after the retailer raised its annual sales forecast and beating quarterly sales estimates on robust demand for everyday essentials. Reuters reports: Earnings: Asana (ASAN), CrowdStrike (CRWD), Dollar General (DG), Hewlett Packard Enterprise (HPE), Nio (NIO), Ollie's (OLLI), Signet Jewelers (SIG) Economic data: JOLTS Job Openings (April); Factory and Durable goods orders (April); Capital goods orders (April final); Capital goods shipments (April final) Here are some of the biggest stories you may have missed overnight and early this morning: Boeing is the US government's favorite trade talk tool Why the 'Magnificent 7' are outperforming other stocks again Trump tariffs: A Supreme Court test may make or break their fate OECD warns of tariff hit to growth as US pushes for deals Google stock could fall 25% on 'black swan event': Barclays Nvidia's $1 trillion rally has traders primed to ramp back up Wall Street games out how to profit from Trump tariff flip-flops Yahoo Finance's Josh Schafer reports: Read more here. President Trump's trade war has dragged the global economy into a downturn, with the US among those hardest hit, the OECD has warned. Trade barriers and uncertainty are stifling investment and undermining confidence, the organization said on Tuesday as it slashed its forecasts for leading economies for the second time this year. Trump's policy shift is also adding to inflationary pressures, it said. The Financial Times reported: Read more here Oil prices rose Monday evening as major producers Iran and Canada were struck with issues. Iran has an ongoing deal with the US in jeopardy over a potential pivot to nuclear while Canada is facing wildfires. Reuters reports: Read more here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
