Inspire-INSP Stock Declines Despite Q4 Earnings Beat, Gross Margin Contracts

Core Insights - Inspire Medical Systems, Inc. (INSP) reported a significant increase in earnings per share (EPS) for the fourth quarter of 2024, reaching $1.15, which is a 134.7% increase from the previous year's EPS of 49 cents, and exceeded the Zacks Consensus Estimate by 55.4% [1] - The full-year 2024 EPS was$ 1.75, compared to a loss of 72 cents per share in 2023, surpassing the Zacks Consensus Estimate by 31.6% [2] Revenue Performance - Inspire Medical's revenues for the fourth quarter were $239.7 million, reflecting a year-over-year increase of 24.5%, and slightly beating the Zacks Consensus Estimate by 0.04% [3] - For the full year 2024, revenues totaled$ 802.8 million, marking a 28.5% increase from 2023 [3] Geographic Revenue Breakdown - U.S. revenues for the fourth quarter amounted to $231.6 million, up 22% year-over-year [4] - International revenues reached$ 8.1 million, showing a remarkable year-over-year increase of 163% [5] Margin and Expense Analysis - Gross profit for the fourth quarter increased by 23.9% to $203.7 million, although the gross margin contracted by 44 basis points to 84.9% [6] - Selling, general, and administrative expenses rose by 14% year-over-year to$ 141.5 million, while research and development expenses decreased by 2.3% to $30.3 million [6] Operating Performance - Operating profit for the quarter was$ 31.9 million, a substantial increase of 242.9% from the prior year, with the operating margin expanding by 847 basis points to 13.3% [7] Financial Position - At the end of 2024, Inspire Medical had cash and cash equivalents and short-term investments totaling $445.5 million, down from$ 460.4 million at the end of 2023 [8] - Cumulative net cash provided by operating activities increased to $130.2 million from$ 24.7 million a year ago [8] Future Outlook - Inspire Medical has reiterated its revenue outlook for 2025, projecting revenues between $940 million and$ 955 million, which represents a growth of 17-19% from 2023 levels [10] - The company expects EPS for 2025 to be in the range of $2.10 to$ 2.20, compared to the Zacks Consensus Estimate of $2.03 [10] Strategic Developments - During the reported quarter, Inspire Medical activated 72 new U.S. centers, increasing the total to 1,435 centers providing Inspire therapy, and created 12 new U.S. sales territories, bringing the total to 335 [5] - The management highlighted positive early feedback from the Inspire V device and the full launch of the new Inspire SleepSync programming system in the U.S., which aims to enhance patient programming efficiency and data access [12]