Inspire Medical Systems, Inc. (NYSE:INSP) stock is plunging after the company released its second-quarter earnings and cut its annual guidance.

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The company, which focuses on minimally invasive solutions for obstructive sleep apnea, reported sales of $217.09 million, up 11% year-over-year, beating the consensus of $214.48 million.

Inspire Medical swung into a loss of 12 cents per share, a shift from an income of 32 cents a year ago.

Adjusted earnings per share were 45 cents compared to the consensus estimate of 21 cents.

The company initiated the full launch of the Inspire V neurostimulation system in the U.S. In August 2024, the FDA approved the Inspire V therapy system, which includes the next-generation neurostimulator and the associated Bluetooth patient remote and physician programmer.

“However, the U.S. commercial launch is progressing slower than expected, and the timeline to complete the full transition to Inspire V has been pushed forward, which will impact financial results for the year,” said Tim Herbert, chairman and CEO of Inspire.

“Importantly, we believe the operational headwinds are temporary, and actions are underway to address them,” continued Herbert.

Gross margin was 84% for the second quarter of 2025 compared to 84.8% in the second quarter of 2024. The decrease is primarily due to a $2.1 million charge associated with excess components inventory related to Inspire IV.

Operating loss was $3.3 million compared to operating income of $5.1 million a year ago.

Investors should note that in December 2024, the FDA approved Eli Lilly and Co.’s (NYSE:LLY) Zepbound (tirzepatide) as the first and only prescription medicine for adults with moderate-to-severe obstructive sleep apnea (OSA) and obesity. 

Guidance: Inspire Medical Systems lowered its fiscal 2025 earnings per share from $2.20-$2.30 to 40 cents-50 cents compared to the consensus of $2.27.

The company also cut its 2025 sales guidance from $940 million-$955 million to $900 million-$910 million, versus the consensus of $949.36 million.

The company maintains its full-year 2025 gross margin guidance of 84% to 86%.

Analysts Reactions:

Keybanc downgraded the stock from Overweight to Sector Weight.

JPMorgan downgraded the stock from Overweight to Neutral and lowered the price forecast from $195 to $110.

Stifel maintained the stock with a Hold and lowered the price forecast from $175 to $140.

Piper Sandler maintained the stock with an Overweight and lowered the price forecast from $233 to $150.

RBC Capital maintained the stock with an Outperform and lowered the price target from $215 to $180.

UBS maintained the stock with a Buy and lowered the price forecast from $270 to $230.

Lake Street maintained the stock a Buy rating and lowered the price forecast from $270 to $150.

Wells Fargo maintained the stock with an Equal-Weight and lowered the price forecast from $174 to $101.

Truist Securities downgraded the stock from Buy to Hold and lowered the price forecast from $190 to $125.

INSP Price Action: Inspire Medical Systems stock is down 41.90% at $76.50 at publication on Tuesday.

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