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What changed in Inspire Medical Systems, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Inspire Medical Systems, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+526 added−487 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-10)

Top changes in Inspire Medical Systems, Inc.'s 2025 10-K

526 paragraphs added · 487 removed · 392 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

125 edited+43 added−26 removed187 unchanged
Biggest changeThe Health Insurance Portability and Accountability Act of 1996 ("HIPAA") also created additional federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Biggest changeThe Civil Monetary Penalty Law imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier. 27 Table of Contents The Health Insurance Portability and Accountability Act of 1996 ("HIPAA") also created additional federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Our foundational commitment to driving innovation and improving patient lives fuels our desire for continuous product 9 Table of Contents development. We intend to invest in existing and next generation technologies to further improve our products and clinical outcomes, optimize patient acceptance and comfort, and broaden the patient population that can benefit from our Inspire therapy.
Our foundational commitment to driving innovation and improving patient lives fuels our desire for continuous product development. We intend to invest in existing and next generation technologies to further improve our 9 Table of Contents products and clinical outcomes, optimize patient acceptance and comfort, and broaden the patient population that can benefit from our Inspire therapy.
Third-Party Reimbursement Our market access team is responsible for all of our reimbursement processes and initiatives. Our team of professionals are focused on all key aspects of reimbursement, which include coding, payment, coverage, and prior authorization. Coding and Payment In the U.S., we sell our products to hospitals and ASCs.
Third-Party Reimbursement Our market access team is responsible for all of our reimbursement processes and initiatives. Our team of professionals are focused on all key aspects of reimbursement, which include prior authorization, coding, coverage, and payment. Coding and Payment In the U.S., we sell our products to hospitals and ASCs.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which currently require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced, provide adequate directions for use, and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of a supplement for certain modifications to PMA devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the laws and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID); • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and 22 Table of Contents • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; 22 Table of Contents • QMSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced, provide adequate directions for use, and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of a supplement for certain modifications to PMA devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with the laws and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database (GUDID); • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect public health or to provide additional safety and effectiveness data for the device.
The Inspire system’s implantable components are placed during an approximately 90-minute outpatient procedure. The procedure is minimally invasive and performed with two small incisions. Patients typically recover quickly and are able to resume normal activities within a few days. • Long-lasting solution. Our Inspire system uses a battery designed to last approximately 11 years without charging or maintenance.
The Inspire system’s implantable components are placed during an approximately 30 to 90-minute outpatient procedure. The procedure is minimally invasive and performed with two small incisions. Patients typically recover quickly and are able to resume normal activities within a few days. • Long-lasting solution. Our Inspire system uses a battery designed to last approximately 11 years without charging or maintenance.
We have developed the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for patients with moderate to severe OSA who have been confirmed to fail or cannot tolerate PAP treatments, such as CPAP. We received a PMA from the FDA in 2014 for our Inspire therapy.
We have developed the first FDA-approved neurostimulation technology that provides a safe and effective treatment for patients with moderate to severe OSA who have been confirmed to fail or cannot tolerate PAP treatments, such as CPAP. We received a PMA from the FDA in 2014 for our Inspire therapy.
All of our full-time employees are eligible to receive stock awards, which may include stock options, restricted stock units, or performance stock units. All U.S. employees are also eligible to elect to participate in our employee stock purchase program. Our standard employee benefits package is available to all full-time employees (except for variations required by state or country-specific laws).
Many of our full-time employees are eligible to receive stock awards, which may include stock options, restricted stock units, or performance stock units. All U.S. employees are also eligible to elect to participate in our employee stock purchase program. Our standard employee benefits package is available to all full-time employees (except for variations required by state or country-specific laws).
Our proprietary Inspire system is the first and only FDA, European Union ("EU") Regulation No. 2017/745 ("MDR" or "EU Medical Devices Regulation"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA.
Our proprietary Inspire system is the first FDA, European Union ("EU") Regulation No. 2017/745 ("MDR" or "EU Medical Devices Regulation"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA.
We sell our Inspire system through a direct sales force that primarily targets ENT physicians and sleep centers in the U.S., Europe, and Japan, and through distributors in Singapore and Hong Kong. The implant procedure for our Inspire therapy is typically performed by an ENT physician or in some cases by a neurosurgeon.
We sell our Inspire system through a direct sales force that primarily targets ENT physicians and sleep centers in the U.S., Europe, and Japan, and through distributors in Singapore, Hong Kong, and Thailand. The implant procedure for our Inspire therapy is typically performed by an ENT physician or in some cases by a neurosurgeon.
Fee-for-service Medicare beneficiaries have historically accounted for approximately 25% to 30% of all Inspire system implantations in the U.S. In addition, we have a contract with the U.S. government that covers implantations of our Inspire system performed in Veterans Affairs and military hospitals, which account for approximately 5% of all Inspire system implantations historically in the U.S.
Fee-for-service Medicare beneficiaries have historically accounted for approximately 25% to 30% of all Inspire system implantations in the U.S. In addition, we have a contract with the U.S. government that covers implantations of our Inspire system performed in Veterans Affairs and military hospitals, which account for approximately 5% to 10% of all Inspire system implantations historically in the U.S.
Two recent findings published in 2022 from Medicare and the French national healthcare insurance databases have demonstrated, in large national cohorts, risks of CPAP intolerance. Specifically, Medicare patients with CPAP intolerance had higher risks of new cardiovascular events than those who were adherent.
Two findings published in 2022 from Medicare and the French national healthcare insurance databases have demonstrated, in large national cohorts, risks of CPAP intolerance. Specifically, Medicare patients with CPAP intolerance had higher risks of new cardiovascular events than those who were adherent.
We plan to continue to establish and strengthen our presence internationally. Our goal is to further increase sales of our Inspire therapy in existing international markets in Europe, including Germany, France, and the Netherlands, and in the Asia Pacific region, including Japan, Singapore, and Hong Kong.
We plan to continue to establish and strengthen our presence internationally. Our goal is to further increase sales of our Inspire therapy in existing international markets in Europe, including Germany, France, and the Netherlands, and in the Asia Pacific region, including Japan, Singapore, Hong Kong, and Thailand.
We also plan to expand our reach to markets in new regions, such as Thailand and South Korea. We plan to strategically invest in new markets based on our assessment of market size and opportunity and prospects for compelling reimbursement coding and coverage.
We also plan to expand our reach to markets in new regions, such as South Korea. We plan to strategically invest in new markets based on our assessment of market size and opportunity and prospects for compelling reimbursement coding and coverage.
Our Solution for OSA Overview of Inspire Therapy Our proprietary Inspire system is the first and only FDA-approved closed-loop neurostimulation technology that provides a safe and effective treatment for patients with moderate to severe OSA.
Our Solution for OSA Overview of Inspire Therapy Our proprietary Inspire system is the first FDA-approved closed-loop neurostimulation technology that provides a safe and effective treatment for patients with moderate to severe OSA.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: • warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; • recalls, withdrawals, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) marketing clearance or PMAs of new products or modified products; • withdrawing 510(k) clearances or PMAs that have already been granted; • refusal to grant export or import approvals for our products; or • criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: • warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; • recalls, withdrawals, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; 23 Table of Contents • refusing or delaying requests for 510(k) marketing clearance or PMAs of new products or modified products; • withdrawing 510(k) clearances or PMAs that have already been granted; • refusal to grant export or import approvals for our products; or • criminal prosecution.
Violation of any of the federal and state healthcare laws described above or any other governmental regulations that apply to device manufacturers may result in significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if the entity becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of operations.
Violation of any of the federal and state healthcare laws described above or any other governmental regulations that apply to device manufacturers may result in significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, 28 Table of Contents reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if the entity becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of operations.
The Committee engages an independent consulting firm to assess the market competitiveness of our compensation programs and offerings. Inspire most recently completed a pay equity analysis in 2024. We expect to continue to review pay equity on a regular basis. We believe strongly in providing employees with the opportunity to participate as owners of the company.
The Committee engages an independent consulting firm to assess the market competitiveness of our compensation programs and offerings. Inspire most recently completed a pay equity analysis in 2025. We expect to continue to review pay equity on a regular basis. We believe strongly in providing employees with the opportunity to participate as owners of the company.
The benefits of treatment with Inspire therapy have been consistent across seven sponsored and more than 100 independent clinical studies that evaluated several thousand patients and have been highlighted in more than 350 peer-reviewed publications. Data reported in these clinical studies also demonstrated a high level of overall patient satisfaction.
The benefits of treatment with Inspire therapy have been consistent across seven sponsored and more than 100 independent clinical studies that evaluated several thousand patients and have been highlighted in more than 385 peer-reviewed publications. Data reported in these clinical studies also demonstrated a high level of overall patient satisfaction.
England, Wales and Scotland) medical device market according to the requirements provided in the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) that sought to give effect to EU Medical Devices Directive and AIMDD whereas Northern Ireland continues to be governed by EU rules according to the Northern Ireland Protocol.
England, Wales and Scotland) medical device market according to the requirements provided in the Medical Devices Regulations 2002 (SI 2002 No 618, as amended)("UK Medical Devices Regulations") that sought to give effect to EU Medical Devices Directive and AIMDD whereas Northern Ireland broadly continues to be governed by EU rules according to the Northern Ireland Protocol.
The results of the STAR trial, our phase III pivotal clinical trial that served as the basis for the FDA approval of our PMA application, were published in the New England Journal of Medicine , and the results of additional clinical studies have been published in more than 350 peer-reviewed publications.
The results of the STAR trial, our phase III pivotal clinical trial that served as the basis for the FDA approval of our PMA application, were published in the New England Journal of Medicine , and the results of additional clinical studies have been published in more than 385 peer-reviewed publications.
Our manufacturing processes are required to comply with the applicable portions of the QSR, which currently cover the methods and the facilities, controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.
Our manufacturing processes are required to comply with the applicable portions of the QMSR, which currently cover the methods and the facilities, controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.
A significant body of clinical data, which includes a publication in the New England Journal of Medicine , multiple publications in leading respiratory, ear, nose and throat ("ENT") and sleep medicine journals, and more than 350 peer-reviewed publications, supports the safety and efficacy of Inspire therapy.
A significant body of clinical data, which includes a publication in the New England Journal of Medicine , multiple publications in leading respiratory, ear, nose and throat ("ENT") and sleep medicine journals, and more than 385 peer-reviewed publications, supports the safety and efficacy of Inspire therapy.
Medicare provides reimbursement to our hospital and ASC customers under the outpatient prospective payment system and ASC prospective payment system, respectively, which provide bundled amounts generally intended to reimburse the hospital or ASC for all facility costs related to procedures performed in the outpatient setting.
Medicare provides reimbursement to our hospital and ASC customers under the outpatient prospective payment system and ASC prospective payment system, respectively, which provide bundled amounts generally intended to reimburse the hospital or ASC for device and facility costs related to procedures performed in the outpatient setting.
Information on our website, including our Corporate Governance Guidelines, Code of Business Conduct and Ethics, ESG Report, and committee charters, is not part of this or any other report we file with, or furnish to, the SEC.
Information on our website, including our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Sustainability Report, and committee charters, is not part of this or any other report we file with, or furnish to, the SEC.
In the EU, there has also been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU 27 Table of Contents member states have adopted national "Sunshine Acts" which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the United States, on medical device manufacturers.
In the EU, there has also been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU member states have adopted national "Sunshine Acts" which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the United States, on medical device manufacturers.
Left untreated, OSA increases the risk of high blood pressure, hypertension, heart failure, stroke, coronary artery disease, and other life-threatening diseases. CPAP is the leading therapy for patients with moderate to severe OSA. CPAP is delivered through a face or nasal mask that connects through a hose to a bedside air pump.
Left untreated, OSA increases the risk of high blood pressure, hypertension, heart failure, stroke, coronary artery disease, and other life-threatening diseases. Continuous positive airway pressure ("CPAP") is the leading therapy for patients with moderate to severe OSA. CPAP is delivered through a face or nasal mask that connects through a hose to a bedside air pump.
We have also begun to experience some seasonality during summer months in the U.S. and Europe, which we believe is attributable to the postponement of elective surgeries due to summer vacation plans of physicians and patients. 28 Table of Contents Human Capital We take pride in our innovative and collaborative work environment, which we believe has been key to our success.
We have also begun to experience some seasonality during summer months in the U.S. and Europe, which we believe is attributable to the postponement of elective surgeries due to summer vacation plans of physicians and patients. Human Capital We take pride in our innovative and collaborative work environment, which we believe has been key to our success.
Additionally in 2023, we received approval from the FDA on an expanded indication which includes an increase on the upper limit of the AHI to 100 events per hour from 65 and raises the BMI warning in the labeling to 40 from 32. • Further penetrate and expand into existing and new international markets.
Additionally in 2023, we received approval from the FDA on an expanded indication which includes an increase on the upper limit of the AHI to 100 events per hour from 65 and raises the body mass index ("BMI") warning in the labeling to 40 from 32. • Further penetrate and expand into existing and new international markets.
Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, ESG Report, and the charters for the committees of our Board of Directors are also available free of charge at https://investors.inspiresleep.com.
Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Sustainability Report, and the charters for the committees of our Board of Directors are also available free of charge at https://investors.inspiresleep.com.
We believe we have a significant first mover advantage and momentum over future competitors, as physicians have treated more than 90,000 patients with Inspire therapy. • Significant body of strong clinical data. We have developed a significant body of clinical data that demonstrates the safety and effectiveness, therapy adherence, and long-term sustained benefits of our Inspire therapy.
We believe we have a significant first mover advantage and momentum over current and future competitors, as physicians have treated more than 125,000 patients with Inspire therapy. • Significant body of strong clinical data. We have developed a significant body of clinical data that demonstrates the safety and effectiveness, therapy adherence, and long-term sustained benefits of our Inspire therapy.
We have 25 sales territories in Europe and Japan, and we sell our products through distributors in Singapore and Hong Kong. We provide consistent training in geographies outside of the U.S. as is conducted in the U.S. and have established a support team in Europe and Japan for patient outreach and education, implant support, and device programming.
We have 21 sales territories in Europe and Japan, and we sell our products through distributors in Singapore, Hong Kong, and Thailand. We provide consistent training in geographies outside of the U.S. as is conducted in the U.S. and have established a support team in Europe and Japan for patient outreach and education, implant support, and device programming.
Our failure to maintain compliance with the QSR or other applicable regulatory requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products.
Our failure to maintain compliance with the QMSR or other applicable regulatory requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products.
The goals of the training are to encourage broad and diverse viewpoints to achieve the best outcomes for our patients, customers, and employees, and to build awareness of how our own behaviors impact our colleagues. 30 Table of Contents Charitable Giving As a medical technology company, we are committed to enhancing the lives of patients through innovation.
The goals of the training are to encourage broad and diverse viewpoints to achieve the best outcomes for our patients, customers, and employees, and to build awareness of how our own behaviors impact our colleagues. Charitable Giving As a medical technology company, we are committed to enhancing the lives of patients through innovation.
In addition, the FDA will generally conduct a preapproval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR.
In addition, the FDA will generally conduct a preapproval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QMSR.
Our contributions seek to provide crucial assistance to charitable organizations striving to treat critical illnesses, combat poverty and homelessness, ease hardship for people affected by disasters, eliminate barriers to equal opportunity, and support underserved communities to address inequities in health outcomes.
Our contributions seek to provide crucial assistance to charitable organizations striving to treat critical illnesses, combat poverty and homelessness, ease hardship for people affected by disasters, eliminate barriers to equal opportunity, promote healthy sleep, and support underserved communities to address inequities in health outcomes.
We also compete with other medical technology companies to recruit and retain qualified personnel. Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws, and confidentiality and invention assignment agreements to protect our intellectual property rights.
We also compete with other medical technology companies to recruit and retain qualified personnel. 18 Table of Contents Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws, and confidentiality and invention assignment agreements to protect our intellectual property rights.
We intend to maintain sufficient levels of inventory to enable us to continue our operations while we obtain another supplier in the event that one or more of our single-source suppliers were to encounter a delay in supply or end supply.
We intend to maintain sufficient levels of inventory to enable us to continue our operations while we obtain another 19 Table of Contents supplier in the event that one or more of our single-source suppliers were to encounter a delay in supply or end supply.
Our U.S. customers are generally reimbursed for the cost of patient treatment by various third-party payors, such as commercial insurance providers and Medicare. We have secured positive coverage policies with many U.S. commercial payors, including all large national commercial insurers, encompassing approximately 260 million covered lives in the U.S.
Our U.S. customers are generally reimbursed for the cost of patient treatment by various third-party payors, such as commercial insurance providers and Medicare. We have secured positive coverage policies with many U.S. commercial payors, including all large national commercial insurers, encompassing over 300 million covered lives in the U.S.
Reimbursement rates from commercial payors vary depending on the procedure performed, the commercial payor, contract terms, and other factors. Commercial Payor and Government Program Coverage A core pillar of our reimbursement strategy involves broadening our third-party payor coverage when possible.
Reimbursement rates from commercial payors vary depending on the procedure performed, the commercial payor, contract terms, and other factors. 15 Table of Contents Commercial Payor and Government Program Coverage A core pillar of our reimbursement strategy involves broadening our third-party payor coverage when possible.
As of December 31, 2024, we had 165 pending and registered trademark filings worldwide, some of which may apply to multiple countries. We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position.
As of December 31, 2025, we had 178 pending and registered trademark filings worldwide, some of which may apply to multiple countries. We also rely, in part, upon unpatented trade secrets, know-how and continuing technological innovation, and may in the future rely upon licensing opportunities, to develop and maintain our competitive position.
Our employees are passionate about improving the lives of others, so we provide channels for our team members to identify opportunities to engage with charitable organizations and events in our communities. In 2024, we contributed nearly $140,000 to local and national charitable organizations including health care charities and charitable organizations addressing other related causes.
Our employees are passionate about improving the lives of others, so we provide channels for our team members to identify opportunities to engage with charitable organizations and events in our communities. In 2025, we contributed nearly $175,000 to local and national charitable organizations including health care charities and charitable organizations addressing other related causes.
A second incision in the upper right chest below the clavicle is used to implant the neurostimulator, which houses all the electronics and battery power for the device, and a pressure sensing lead to monitor the breathing cycle.
A second incision in the upper right chest below the clavicle is used to implant the neurostimulator, which houses all the electronics and battery power for the device, and, for the Inspire IV system, a pressure sensing lead to monitor the breathing cycle.
The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or 26 Table of Contents knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
Alternatively, if a UK notified body conducts such assessment, a “UKNI” mark is applied, and the device may only be placed on the market in Northern Ireland and not the EU.
Alternatively, if a UK notified body conducts such assessment, a “UKNI” mark and a CE mark are applied, and the device may only be placed on the market in Northern Ireland and not the EU.
We have experienced and continue to experience supply disruptions that began during the COVID-19 pandemic, but to date we have managed to avoid major delays in implant procedures due to those issues.
We have experienced supply disruptions that began during the COVID-19 pandemic, but to date we have managed to avoid major delays in implant procedures due to those issues.
We also plan to continue building patient awareness through our direct-to-consumer marketing initiatives, which include paid online search, radio, social media, television, and online videos. • Expand our sales and marketing organization to facilitate adoption of our Inspire therapy.
We also plan to continue building patient awareness through our direct-to-consumer marketing initiatives, which include paid online search, radio, social media, television, and online videos. • Utilize our dedicated sales and marketing organization to facilitate further adoption of our Inspire therapy.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. As a manufacturer, our facilities, records, and manufacturing processes are subject to periodic scheduled or unscheduled inspections by the FDA.
The QMSR also requires, among other things, maintenance of a medical device master file and complaint files. As a manufacturer, our facilities, records, and manufacturing processes are subject to periodic scheduled or unscheduled inspections by the FDA.
Additionally, after a study begins, the sponsor, the FDA or the IRB 21 Table of Contents could suspend or terminate a clinical study at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
Additionally, after a study begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical study at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.
If the FDA accepts a submitted PMA application for substantive review, it has 180 days under the FDCA to complete its review, although in practice, the FDA’s review 20 Table of Contents often takes significantly longer.
If the FDA accepts a submitted PMA application for substantive review, it has 180 days under the FDCA to complete its review, although in practice, the FDA’s review often takes significantly longer.
Unlike the EU Medical Devices Directive, the EU Medical Devices Regulation is directly applicable in EU member states without the need for member states to implement into national law. In the EU, there is currently no premarket government review of medical devices.
Unlike the EU Medical Devices Directive and Active Implantable Medical Device Directive, the EU Medical Devices Regulation is directly applicable in EU member states without the need for member states to implement into national law. In the EU, there is currently no premarket government review of medical devices.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the FCA's Quality System Regulation ("QSR"), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I 20 Table of Contents includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the FDA's Quality Management System Regulation ("QMSR"), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Initial activation of the system occurs 30 days after the implantation. After the initial activation, the patient is instructed to use the therapy each night by turning on their Inspire system before going to sleep using their remote control. Patients turn their Inspire system on when they plan to go to sleep and turn it off when they awaken.
After the initial activation, the patient is instructed to use the therapy each night by turning on their Inspire system before going to sleep using their remote control. Patients turn their Inspire system on when they plan to go to sleep and turn it off when they awaken.
Our products and our operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the European Economic Area ("EEA"), Japan, and in Thailand and Australia (where our products are approved for sale but where we have not yet commercialized 19 Table of Contents them).
Our products and our operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the European Economic Area ("EEA"), Japan, and in Thailand, South Korea and Australia (where our products are approved for sale but where we have not yet commercialized them).
The initial activation is performed by the clinician using a programming tablet that is able to turn the system on as well as change various parameters such as the strength, timing, and duration of the stimulation pulse, the stimulating electrode configuration, and the sensitivity of respiration detection.
The initial activation is performed by the clinician using the SleepSync™ programmer that is able to turn the system on as well as change various parameters such as the strength, timing, and duration of the stimulation pulse, the stimulating electrode configuration, and the sensitivity of respiration detection.
Recent examples of our product innovation include the next generation of the Inspire system and our SleepSync™ programmer as discussed above. We have launched a cloud-based patient management system called the SleepSync™ platform (formerly referred to as Inspire Cloud), which allows physicians to monitor patient compliance and more efficiently coordinate patient care, and the Inspire Sleep app for patients' smartphones.
Recent examples of our product innovation include the next generation of the Inspire system and our SleepSync™ programmer. We have a cloud-based patient management system called the SleepSync™ platform which allows physicians to monitor patient compliance and more efficiently coordinate patient care, and the Inspire Sleep app for patients' smartphones.
A recent example of our efforts to expand our label indications for the Inspire system include obtaining FDA approval in 2023 to offer Inspire therapy to certain pediatric patients with Down syndrome.
Examples of our efforts to expand our label indications for the Inspire system include obtaining FDA approval in 2023 to offer Inspire therapy to certain pediatric patients with Down syndrome.
Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level. Physicians have treated more than 90,000 patients with Inspire therapy at over 1,575 medical centers across the United States ("U.S."), Europe, and Asia.
Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level. Physicians have treated more than 125,000 patients with Inspire therapy across the United States ("U.S."), Europe, and Asia.
We intend to make significant investments building our sales and marketing organization by increasing the number of U.S. sales representatives and continuing our direct-to-consumer marketing efforts in existing and new markets throughout the U.S. and Europe. 11 Table of Contents In Singapore and Hong Kong, our commercialization approach is through exclusive distribution partners, who are responsible for local sales and promotional activities focused on ENT physicians, sleep centers, and community awareness.
We intend to continue to make significant investments in our direct-to-consumer marketing efforts in existing and new markets throughout the U.S. and Europe. 11 Table of Contents In Singapore, Hong Kong, and Thailand, our commercialization approach is through exclusive distribution partners, who are responsible for local sales and promotional activities focused on ENT physicians, sleep centers, and community awareness.
We strive to maintain this environment by fostering an inclusive workforce, offering competitive compensation and benefits, promoting open communication, prioritizing employee health, wellbeing and engagement, and providing robust training and development programs. Employees As of December 31, 2024, we had 1,246 employees, of which 1,172 are in the U.S., 67 are in Europe and 7 are in Japan.
We strive to maintain this environment by fostering an inclusive workforce, offering competitive compensation and benefits, promoting open communication, prioritizing employee health, wellbeing and engagement, and providing robust training and development programs. Employees As of December 31, 2025, we had 1,333 employees, of which 1,243 are in the U.S., 83 are in Europe and 7 are in Japan.
We estimate that the majority of patients who meet the FDA-approved indication for Inspire therapy are covered by commercial insurance companies and we have secured coverage policies with all major national commercial payors. 15 Table of Contents All seven MACs provide coverage of Inspire therapy when certain coverage criteria are met.
We estimate that the majority of patients who meet the FDA-approved indication for Inspire therapy are covered by commercial insurance companies and we have secured coverage policies with all major national commercial payors. In terms of government program coverage, all seven MACs provide coverage of Inspire therapy when certain coverage criteria are met.
Similarly, we are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: • design, development, manufacturing, and testing; • product standards; • product safety; • product safety reporting; • marketing, sales, and distribution; • packaging and storage requirements; • labeling requirements; 25 Table of Contents • content and language of instructions for use; • clinical studies; • record keeping procedures; • advertising and promotion; • recalls and field corrective actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • import and export restrictions; • tariff regulations, duties, and tax requirements; • registration for reimbursement; and • necessity of testing performed in country by distributors for licensees.
Similarly, we are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of: • design, development, manufacturing, and testing; • product standards; • product safety; • product safety reporting; • marketing, sales, and distribution; • packaging and storage requirements; • labeling requirements; • content and language of instructions for use; • clinical studies; • record keeping procedures; • advertising and promotion; • recalls and field corrective actions; • post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; • import and export restrictions; • tariff regulations, duties, and tax requirements; • registration for reimbursement; and • necessity of testing performed in country by distributors for licensees. 26 Table of Contents The time required to obtain clearance or certification required by foreign countries may be longer or shorter than that required for FDA clearance, and requirements for licensing a product in a foreign country may differ significantly from FDA requirements.
Our SEC filings are available to the public over the Internet at the SEC's website at http://www.sec.gov . We also make these filings available, free of charge, under the Investor Relations section of our website at www.inspiresleep.com as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
We also make these filings available, free of charge, under the Investor Relations section of our website at www.inspiresleep.com as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.
Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness.
Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. 21 Table of Contents Clinical Studies Clinical studies are almost always required to support a PMA submission and may be required to support certain PMA supplements.
See Part I, "Item 1A. Risk Factors — Risks Related to Intellectual Property Matters” for additional information regarding these and other risks related to our intellectual property portfolio and their potential effect on us.
Risk Factors — Risks Related to Intellectual Property Matters” for additional information regarding these and other risks related to our intellectual property portfolio and their potential effect on us.
Our FTO policy allows employees to take time off for any reason, including vacation, personal time, volunteering, school commitments, and religious holidays not observed by our paid holiday calendar. 29 Table of Contents Talent Acquisition With our aggressive growth objectives, it is imperative that we continue to hire exceptional talent and invest in the growth and development of our existing employees.
Our FTO policy allows employees to take time off for any reason, including vacation, personal time, volunteering, school commitments, and religious holidays not observed by our paid holiday calendar. Talent Acquisition To facilitate our continued evolution and growth, it is imperative that we hire exceptional talent and invest in the growth and development of our existing employees.
Until Eudamed is fully functional, the corresponding provisions of the EU Medical Devices Directive and the AIMDD continue to apply for the purpose of meeting the obligations laid down in the provisions regarding exchange of information, including, and in particular, information regarding registration of devices and economic operators.
Until the effective date, respectively until Eudamed is fully functional with regard to other modules, the corresponding provisions of the EU Medical Devices Directive and the AIMDD, respectively national provisions, continue to apply for the purpose of meeting the obligations laid down in the provisions regarding exchange of information, including, and in particular, information regarding registration of devices and economic operators.
Outside of the U.S., in addition to the Inspire therapy, other second-line therapy alternatives that compete with CPAP and PAP include therapies marketed by Nyxoah and LivaNova. Nyxoah markets an open-loop bilateral hypoglossal nerve stimulation device in certain countries and is seeking FDA approval in the U.S.
Outside of the U.S., in addition to the Inspire therapy, other second-line therapy alternatives that compete with CPAP and PAP include therapies marketed by Nyxoah and LivaNova. Nyxoah markets their open-loop bilateral hypoglossal nerve stimulation device, described above in certain countries, and LivaNova also markets an open-loop neurostimulation device outside the U.S.
We have a comprehensive patent portfolio to protect our intellectual property and technology, with rights as of December 31, 2024 to 98 issued U.S. patents, 72 issued foreign patents, 67 pending U.S. patent applications, and 69 pending foreign patent applications that cover aspects of our Inspire system and future product concepts.
We have a comprehensive patent portfolio to protect our intellectual property and technology, with rights as of December 31, 2025 to 119 issued U.S. patents, 83 issued foreign patents, 73 pending U.S. patent applications, and 73 pending foreign patent applications that cover aspects of our Inspire system and future product concepts.
Manufacturers are required to take FSCAs defined as any corrective action for technical or medical reasons to prevent or reduce a risk of a serious incident associated with the use of a medical device that is made available on the market.
Manufacturers are required to take FSCAs defined as any corrective action for technical or medical reasons to prevent or reduce a risk of a serious incident associated with the use of a medical device that is made available on the market. An FSCA may include the recall, modification, exchange, destruction or retrofitting of the device.
The effectiveness of Inspire therapy to relieve OSA is objectively measured during a sleep study or polysomnogram. A sleep study records a patient’s breathing, airflow, and blood oxygen levels before and after 10 Table of Contents activating the device.
The therapy is designed to provide stimulation for each breath to prevent obstructive events. 10 Table of Contents The effectiveness of Inspire therapy to relieve OSA is objectively measured during a sleep study or polysomnogram. A sleep study records a patient’s breathing, airflow, and blood oxygen levels before and after activating the device.
In addition to the STAR trial, we have established a global real-world patient registry ("ADHERE") to collect data on safety, effectiveness, weekly usage, overall compliance, and satisfaction from patients who have been implanted with an Inspire system for one year after implant. The target enrollment of 5,000 patients was achieved in 2024 and patient follow-up is ongoing.
In addition to the STAR trial, we have established a global real-world patient registry ("ADHERE") to collect data on safety, effectiveness, weekly usage, overall compliance, and satisfaction from patients who have been implanted with an Inspire system for one year after implant.
As of December 31, 2024, we had rights to 98 issued U.S. patents, which will expire between 2029 and 2041 assuming all required fees are paid, 67 pending U.S. patent applications, 72 issued foreign patents, and 69 pending foreign patent applications. Our patents cover aspects of our current Inspire system and future product concepts.
As of December 31, 2025, we had rights to 119 issued U.S. patents, which will expire between 2029 and 2043 assuming all required fees are paid, 73 pending U.S. patent applications, 83 issued foreign patents, and 73 pending foreign patent applications. Our patents cover aspects of our current Inspire system and future product concepts.
Standard U.S. employee benefits available to all full-time employees include medical, dental, and vision insurance, identity protection, disability insurance, life and AD&D insurance, and paid holidays. Beginning in 2022, we also incorporated a 401(k)-employer match for all U.S.-based employees.
Standard U.S. employee benefits available to all full-time employees include medical, dental, and vision insurance, identity protection, disability insurance, life and AD&D insurance, 401(k) employer match, and paid holidays.
The MHRA only registers devices where the manufacturer or their UK responsible person has a registered place of business in the UK. Beginning January 1, 2022, manufacturers based outside the UK need to appoint a UK responsible person that has a registered place of business in the UK to register devices with the MHRA.
Since January 1, 2022, manufacturers based outside the UK need to appoint a UK responsible person that has a registered place of business in the UK to register devices with the MHRA.
It then monitors the patient’s breathing and delivers mild stimulation to the hypoglossal nerve at the start of the inspiratory phase, causing a slight forward movement at the back of the tongue to maintain an open airway during the inspiratory phase of respiration. The therapy is designed to provide stimulation for each breath to prevent obstructive events.
It then monitors the patient’s breathing and delivers mild stimulation to the hypoglossal nerve at the start of the inspiratory phase, causing a slight forward movement at the back of the tongue to maintain an open airway during the inspiratory phase of respiration.
Manufacturers must submit reports by the 90th day of each calendar year. Also, many U.S. states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.
Also, many U.S. states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.
We develop and set an annual hiring plan to understand and plan for the organization’s talent recruitment and pipeline needs. Inspire’s growth has required several strategies to attract talent and meet our growth plans, including a strong internal referral network.
We develop and set an annual hiring plan to understand and plan for the organization’s talent recruitment and pipeline needs. Inspire’s growth has required several strategies to attract talent and meet our growth plans, including a strong internal referral network. In addition to sourcing candidates, we also work with search partners as needed.
Our commitment to driving innovation has allowed us to achieve continuous, significant improvements of our Inspire therapy. For example, in 2024, we received approval from the FDA for our next generation 8 Table of Contents Inspire system, which we expect to fully launch in the U.S. in 2025.
Our commitment to driving innovation has allowed us to achieve continuous, significant improvements of our Inspire therapy. For example, in 2024, we received approval from the FDA for our Inspire V 8 Table of Contents neurostimulator, which we began to market for sale in the U.S. in 2025.
We plan to continue to expand our sales and marketing organization and seek to recruit and train exceptionally talented sales representatives in existing and new markets to help facilitate further adoption and broaden awareness of our Inspire therapy.
We plan to continue to utilize our talented sales representatives in existing and new markets to help facilitate further adoption and broaden awareness of our Inspire therapy.
The validity of our certificates, initially granted under the AIMDD, has been extended by virtue of the amendment to the EU Medical Devices Regulation, specifically Regulation (EU) 2023/607 as regards the transitional provisions for certain medical devices.
The validity of our certificates, initially granted under the AIMDD, has been extended by virtue of the amendment to the EU Medical Devices Regulation, specifically Regulation (EU) 2023/607 as regards the transitional provisions for certain medical devices. Surveillance of the initial AIMDD certificate has been transferred from our original notified body BSI, to our current notified body DEKRA.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther factors that may cause fluctuations in our quarterly and annual results include, but are not limited to: • changes in coverage policies by third-party payors that affect the reimbursement of procedures using our products; • challenges experienced by patients in obtaining positive coverage and reimbursement decisions from payers, including necessary prior authorization approvals in advance of treatment; • timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; • patients opting to delay implants of our devices in advance of the commercial launch of new products or product generations; • unanticipated pricing pressure; • the hiring, retention, and continued productivity of our sales representatives; • our ability to expand the geographic reach of our sales and marketing efforts; • our ability to obtain regulatory clearance, approval, or certification for any products in development or for our current products for additional indications or in additional countries outside the U.S.; • results of clinical research and studies on our existing products and products in development; • delays in receipt of anticipated purchase orders; and • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry. 37 Table of Contents Because our quarterly and annual results may fluctuate, period-to-period comparisons may not be the best indication of the underlying results of our business and should only be relied upon as one factor in determining how our business is performing.
Biggest changeOther factors that may cause the market price of our common stock to be highly volatile and fluctuations in our quarterly and annual results include, but are not limited to: • changes in coverage policies by third-party payors that affect the reimbursement of procedures using our products (as well as confusion about potential changes to reimbursement even where no formal change occurs and including any indirect impacts from any changes to provider and patient behavior); • challenges experienced by patients in obtaining positive coverage and reimbursement decisions from payers, including necessary prior authorization approvals in advance of treatment; • timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors; • disputes or other developments with respect to our or others' intellectual property rights; • patients opting to delay implants of our devices in advance of the commercial launch of new products or product generations; • unanticipated pricing pressure; • the hiring, retention, and continued productivity of our sales representatives; • our ability to expand the geographic reach of our sales and marketing efforts; • our ability to obtain regulatory clearance, approval, or certification for any products in development or for our current products for additional indications or in additional countries outside the U.S.; • results of clinical research and studies on our existing products and products in development; • product liability claims or other litigation; • changes in earnings estimates or recommendations by securities analysts; • changes in government regulations; • delays in receipt of anticipated purchase orders; • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
Attorney’s Office for the District of Minnesota pursuant to the False Claims Act in the course of the government’s investigation concerning allegations of false claims, including false claims arising from violations of the Anti-Kickback Statute, submitted to government payors in connection with our implant. The CID requests information relating to the marketing, promotion and reimbursement practices associated with our products.
Attorney’s Office for the District of Minnesota pursuant to the False Claims Act in the course of the government’s investigation concerning allegations of false claims, including false claims arising from violations of the Anti-Kickback Statute, submitted to government payors in connection with our implant. The CID requests information relating to the marketing, promotion and reimbursement practices associated with our products.
These provisions provide, among other things, that: • our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or 68 Table of Contents removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by the chair of our board of directors, our chief executive officer or a majority of our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • our board of directors may alter certain provisions of our bylaws without obtaining stockholder approval; • the approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our Company; and • our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror.
These provisions provide, among other things, that: • our board of directors has the exclusive right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by the chair of our board of directors, our chief executive officer or a majority of our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • our board of directors may alter certain provisions of our bylaws without obtaining stockholder approval; • the approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; 71 Table of Contents • stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our Company; and • our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror.
Any future funding requirements will depend on many factors, including: • patient, physician and market acceptance of our Inspire therapy; • the scope, rate of progress and cost of our current or future clinical studies; • the cost of our research and development activities; • the cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights; • the cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights; 45 Table of Contents • the cost and timing of additional regulatory clearances, approvals or certifications; • the cost and timing of establishing additional sales and marketing capabilities; • costs associated with any product recall that may occur; • the effect of competing technological and market developments; and • the extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions.
Any future funding requirements will depend on many factors, including: • patient, physician and market acceptance of our Inspire therapy; 47 Table of Contents • the scope, rate of progress and cost of our current or future clinical studies; • the cost of our research and development activities; • the cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights; • the cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights; • the cost and timing of additional regulatory clearances, approvals or certifications; • the cost and timing of establishing additional sales and marketing capabilities; • costs associated with any product recall that may occur; • the effect of competing technological and market developments; and • the extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions.
To date, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our credit facility, the initial public offering of our common stock that closed in May 2018 ("IPO"), and the three follow-on offerings of our common stock that closed in December 2018, April 2020, and August 2022.
To date, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our credit facility, the initial public offering of our common stock that closed in May 2018, and the three follow-on offerings of our common stock that closed in December 2018, April 2020, and August 2022.
Any side effects, manufacturing defects, misuse or abuse associated with our Inspire system could result in patient injury or death. The medical device industry has historically been subject to extensive litigation over product liability claims, and we cannot offer any assurance that we will not face product liability suits.
Any side effects, design defects, manufacturing defects, misuse or abuse associated with our Inspire system could result in patient injury or death. The medical device industry has historically been subject to extensive litigation over product liability claims, and we cannot offer any assurance that we will not face product liability suits.
While the number of physicians prescribing our Inspire therapy has increased, there is a significant group of physicians who have not yet adopted our Inspire therapy, and additional physicians may choose not to adopt our Inspire therapy for a number of reasons, including, for example: • lack of availability of adequate third-party payor coverage or reimbursement; • lack of experience with our products and with upper airway neurostimulation as a treatment alternative; • our inability to convince key opinion leaders to provide recommendations regarding our Inspire therapy, or to convince physicians, patients, and healthcare payors that our Inspire therapy is an attractive alternative to other treatment options; 32 Table of Contents • perceived inadequacy of evidence supporting clinical benefits or cost-effectiveness of our Inspire therapy over existing alternatives; • challenges in obtaining prior authorization; • a perception among some physicians of patients’ inability to tolerate the surgical procedure required to implant our Inspire system; • liability risks generally associated with the use of new products and procedures; and • the training required to use new products.
While the number of physicians prescribing our Inspire therapy has increased, there is a significant group of physicians who have not yet adopted our Inspire therapy, and additional physicians may choose not to adopt our Inspire therapy for a number of reasons, including, for example: • lack of availability of adequate or clear third-party payor coverage or reimbursement; • lack of experience with our products and with upper airway neurostimulation as a treatment alternative; • our inability to convince key opinion leaders to provide recommendations regarding our Inspire therapy, or to convince physicians, patients, and healthcare payors that our Inspire therapy is an attractive alternative to other treatment options; • perceived inadequacy of evidence supporting clinical benefits or cost-effectiveness of our Inspire therapy over existing alternatives; 34 Table of Contents • challenges in obtaining prior authorization; • a perception among some physicians of patients’ inability to tolerate the surgical procedure required to implant our Inspire system; • liability risks generally associated with the use of new products and procedures; and • the training required to use new products.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our Inspire system; • any of our pending patent applications will issue as patents; 63 Table of Contents • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: • any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our Inspire system; • any of our pending patent applications will issue as patents; • we will be able to successfully commercialize our products on a substantial scale, if approved, before our relevant patents we may have expire; • we were the first to make the inventions covered by each of our patents and pending patent applications; • we were the first to file patent applications for these inventions; • others will not develop similar or alternative technologies that do not infringe our patents; any of our patents will be found to ultimately be valid and enforceable; • any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; • we will develop additional proprietary technologies or products that are separately patentable; or • our commercial activities or products will not infringe upon the patents of others.
If patients or physicians are not willing to change current practices to adopt our Inspire therapy to treat moderate to severe OSA, our Inspire therapy may fail to gain increased market acceptance, and our business will be adversely affected.
If patients or physicians are not willing to change practices to adopt our Inspire therapy to treat moderate to severe OSA, our Inspire therapy may fail to gain increased market acceptance, and our business will be adversely affected.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; 51 Table of Contents • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future PMAs or foreign regulatory approvals or certifications of new products, new intended uses, or modifications to existing products; • withdrawals or suspensions of our current PMA or foreign regulatory approvals or certifications, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: • untitled letters or warning letters; • fines, injunctions, consent decrees and civil penalties; • recalls, termination of distribution, administrative detention, or seizure of our products; • customer notifications or repair, replacement or refunds; • operating restrictions or partial suspension or total shutdown of production; • delays in or refusal to grant our requests for future PMAs or foreign regulatory approvals or certifications of new products, new intended uses, or modifications to existing products; • withdrawals or suspensions of our current PMA or foreign regulatory approvals or certifications, resulting in prohibitions on sales of our products; • FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and • criminal prosecution.
Any actual or perceived failure by us, our employees or contractors, our partners, our service providers, or the third parties with whom we work, to comply with privacy or security laws, policies, legal obligations or industry standards, or any security incident that results in the unauthorized release or transfer of personal information, may 58 Table of Contents result in governmental enforcement actions and investigations including by EU regulators and U.S. federal and state regulatory authorities as well as fines and penalties, litigation, including by consumer advocacy groups, and/or adverse publicity and could cause our customers, their patients and other healthcare professionals to lose trust in us, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
Any actual or perceived failure by us, our employees or contractors, our partners, our service providers, or the third parties with whom we work, to comply with privacy or security laws, policies, legal obligations or industry standards, or any security incident that results in the unauthorized release or transfer of personal information, may result in governmental enforcement actions and investigations including by EU regulators and U.S. federal and state regulatory authorities as well as fines and penalties, litigation, including by consumer advocacy groups, and/or adverse publicity and could cause our customers, their patients and other healthcare professionals to lose trust in us, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
The FDA and other regulatory authorities or notified bodies outside the U.S. can delay, limit or deny approval or certification of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory entity or notified body that our products are safe or effective for their intended uses; • the disagreement of the FDA or the applicable foreign regulatory authority or notified body with the design or implementation of our clinical studies or the interpretation of data from pre-clinical studies or clinical studies; • serious and unexpected adverse device effects experienced by participants in our clinical studies; • the data from our pre-clinical studies and clinical studies may be insufficient to support approval or certification, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; 49 Table of Contents • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for policies or regulations of the FDA or applicable foreign regulatory authorities to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance, approval or certification.
The FDA and other regulatory authorities or notified bodies outside the U.S. can delay, limit or deny approval or certification of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory entity or notified body that our products are safe or effective for their intended uses; • the disagreement of the FDA or the applicable foreign regulatory authority or notified body with the design or implementation of our clinical studies or the interpretation of data from pre-clinical studies or clinical studies; • serious and unexpected adverse device effects experienced by participants in our clinical studies; • the data from our pre-clinical studies and clinical studies may be insufficient to support approval or certification, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for policies or regulations of the FDA or applicable foreign regulatory authorities to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance, approval or certification.
Any potential intellectual property litigation also could force us to do one or more of the following: • stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; • pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; • pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; • redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive and infeasible; and • attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have.
Any potential intellectual property litigation also could force us to do one or more of the following: • stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property rights against others; incur significant legal expenses; • pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; • pay the attorney’s fees and costs of litigation to the party whose intellectual property rights we may be found to be infringing; 68 Table of Contents • redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive or infeasible; and • attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at all, or from third parties who may attempt to license rights that they do not have.
Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property or personal information, including trade secrets or other proprietary information, of a former employer or other third party.
Although we seek to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property or personal information, including trade secrets or other proprietary information, of a former employer or other third party.
We may experience increased costs in order to execute upon our ESG goals, initiatives, and commitments and measure achievement of those goals, initiatives, and commitments which could have an adverse impact on our business and financial condition. Moreover, the increasing attention to corporate ESG initiatives could also result in reduced demand for products, reduced profits, and increased investigations and litigation.
We may experience increased costs in order to execute upon our ESG goals, initiatives, and commitments and measure achievement of those goals, initiatives, and commitments which could have an adverse impact on our business and financial condition. Moreover, the evolving attention to corporate ESG initiatives could also result in reduced demand for products, reduced profits, and increased investigations and litigation.
In addition to contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information.
In addition to contractual measures, we seek to protect the confidential nature of our proprietary information using commonly accepted physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information.
If we are unable to comply with QMSR, once effective, or with any other changes in the laws or regulations enforced by FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations.
If we are unable to comply with QMSR or with any other changes in the laws or regulations enforced by FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations.
We may experience a number of events during that could adversely affect the costs, timing or successful completion of our clinical studies, including: • we may be required to submit an IDE application or similar application to the FDA or a foreign regulatory authority, which must become effective prior to commencing human clinical studies, and the FDA or foreign regulatory authority may reject our IDE or similar application and notify us that we may not begin investigational studies; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical studies; • regulators and/or IRBs, or other reviewing bodies may not authorize us or our investigators to commence a clinical study, or to conduct or continue a clinical study at a prospective or specific study site; • we may not reach agreement on acceptable terms with prospective contract research organizations ("CROs") and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites; • clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical studies or abandon product development programs; • the number of subjects or patients required for clinical studies may be larger than we anticipate, enrollment in these clinical studies may be insufficient or slower than we anticipate, and the number of clinical studies being conducted at any given time may be high and result in fewer available patients for any given clinical study, or patients may drop out of these clinical studies at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical studies on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend or terminate clinical studies for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; 60 Table of Contents • we may have to amend clinical study protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB or other review bodies and/or regulatory authorities for re-examination; • regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical studies may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical study; • we may be unable to recruit a sufficient number of clinical study sites; • regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical studies may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • policies or regulations of FDA or applicable foreign regulatory agencies may change in a manner rendering our clinical data insufficient for approval or certification; and • our current or future products may have undesirable side effects or other unexpected characteristics.
We may experience a number of events during that could adversely affect the costs, timing or successful completion of our clinical studies, including: • we may be required to submit an IDE application or similar application to the FDA or a foreign regulatory authority, which must become effective prior to commencing human clinical studies, and the FDA or foreign regulatory authority may reject our IDE or similar application and notify us that we may not begin investigational studies; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical studies; • regulators and/or IRBs, or other reviewing bodies may not authorize us or our investigators to commence a clinical study, or to conduct or continue a clinical study at a prospective or specific study site; 63 Table of Contents • we may not reach agreement on acceptable terms with prospective contract research organizations ("CROs") and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites; • clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical studies or abandon product development programs; • the number of subjects or patients required for clinical studies may be larger than we anticipate, enrollment in these clinical studies may be insufficient or slower than we anticipate, and the number of clinical studies being conducted at any given time may be high and result in fewer available patients for any given clinical study, or patients may drop out of these clinical studies at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical studies on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend or terminate clinical studies for various reasons, including a finding that the subjects are being exposed to unacceptable health risks; • patients may be harmed in the course of the clinical study negatively impacting Inspire’s brand, reputation, and business; • we may have to amend clinical study protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB or other review bodies and/or regulatory authorities for re-examination; • regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical studies may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical study; • we may be unable to recruit a sufficient number of clinical study sites; • regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical studies may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • policies or regulations of FDA or applicable foreign regulatory agencies may change in a manner rendering our clinical data insufficient for approval or certification; and • our current or future products may have undesirable side effects or other unexpected characteristics.
In addition, if we experience a significant increase in demand, additional supplies of raw materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, or suppliers or our third-party manufacturers may not be able to allocate sufficient capacity in order to meet our increased requirements, which could have an adverse effect on our ability to meet customer demand for our Inspire system and our results of operations.
In addition, if we experience a significant increase in demand, additional supplies of raw materials or additional manufacturing capacity may not be available when required on terms that are acceptable to us, or at all, or suppliers or our third-party manufacturers may not be able 39 Table of Contents to allocate sufficient capacity in order to meet our increased requirements, which could have an adverse effect on our ability to meet customer demand for our Inspire system and our results of operations.
As a result of these transactions, we pay interchange and other fees, which may increase over time and could require us to either increase the prices we charge for our Inspire system or experience an 43 Table of Contents increase in our costs and expenses.
As a result of these transactions, we pay interchange and other fees, which may increase 45 Table of Contents over time and could require us to either increase the prices we charge for our Inspire system or experience an increase in our costs and expenses.
Securities litigation brought against us following volatility in our stock price, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management's attention and resources from our business.
Securities litigation brought against us following volatility in our stock price (including pending litigation, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management's attention and resources from our business.
For example, HIPAA, 56 Table of Contents as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder (collectively "HIPAA"), imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.
For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations implemented thereunder (collectively "HIPAA"), imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors.
Modifications to our products may require us to obtain new PMAs or approvals of a PMA supplement or certification, and if we market modified products without obtaining necessary approvals or certifications, we may be required to cease marketing or recall the modified products until required approvals are obtained.
Modifications to our products or manufacturing processes may require us to obtain new PMAs or approvals of a PMA supplement or certification, and if we market modified products without obtaining necessary approvals or certifications, we may be required to cease marketing or recall the modified products until required approvals are obtained.
Factors such as geopolitical events (including the ongoing wars in Ukraine and Israel), inflationary pressures, public health crises, and U.S. election cycles have caused extreme volatility and disruptions in the capital and credit markets in recent years.
Factors such as geopolitical events (including global events like the ongoing wars in Ukraine and Israel), inflationary pressures, public health crises, and U.S. election cycles have caused extreme volatility and disruptions in the capital and credit markets in recent years.
As we grow our international presence and global operations, we will have increasing obligations to comply with trade and economic sanctions and other restrictions imposed by the U.S., the EU, and other governments and organizations. During the year ended December 31, 2024, approximately 4.0% of our total sales were made in EU member states and certain Asia Pacific regions.
As we grow our international presence and global operations, we will have increasing obligations to comply with trade and economic sanctions and other restrictions imposed by the U.S., the EU, and other governments and organizations. During the year ended December 31, 2025, approximately 4.4% of our total sales were made in EU member states and certain Asia Pacific regions.
During 2024, we finalized a detailed analysis to determine whether an ownership change has occurred through December 31, 2023, and if a limitation exists. It was determined that December 11, 2018 was the only date that we experienced an ownership change.
During 2025, we finalized a detailed analysis to determine whether an ownership change has occurred through December 31, 2024, and if a limitation exists. It was determined that December 11, 2018 was the only date that we experienced an ownership change.
Our customers have experienced similar disruptions as result of the recent wildfires in California. These disruptions have caused some customers to limit or postpone surgical procedures or elective procedures at their facilities, including DISE procedures and implantations of our Inspire system.
These disruptions caused some customers to limit or postpone surgical procedures or elective procedures performed at their facilities, including DISE procedures and implantations of our Inspire system. Our customers have experienced similar disruptions as result of the wildfires in California.
As such, any enforcement action with respect to our SleepSync™ software platform, or any requirements for us to obtain clearances or approvals for our software applications would also affect the speed at which we could update and modify these systems, and in any case, would entail significant cost and could harm our reputation, business, financial condition, and results of operations.
As such, any enforcement action with respect to our SleepSync™ software platform, or any requirements for us to obtain clearances or approvals for our software applications would also affect the speed at which we could update and modify these systems, and in 57 Table of Contents any case, would entail significant cost and could harm our reputation, business, financial condition, and results of operations.
The availability of the PTAB as a lower-cost, faster and potentially more potent tribunal for challenging patents could increase the likelihood that our own patents will be challenged, thereby increasing the uncertainties and costs of maintaining and enforcing them. In addition, implementation of the European Patent Package, or EU Patent Package, occurred on June 1, 2023.
The availability of the PTAB as a lower-cost, faster and potentially more potent 70 Table of Contents tribunal for challenging patents could increase the likelihood that our own patents will be challenged, thereby increasing the uncertainties and costs of maintaining and enforcing them. In addition, implementation of the European Patent Package, or EU Patent Package, occurred on June 1, 2023.
Any adverse determination against us in these proceedings, or even the allegations contained in the claims, regardless of whether they are ultimately found to be 35 Table of Contents without merit, may also result in settlements, injunctions or damages that could have a material adverse effect on our business, financial condition and results of operations.
Any adverse determination against us in these proceedings, or even the allegations contained in the claims, regardless of whether they are ultimately found to be without merit, may also result in settlements, injunctions or damages that could have a material adverse effect on our business, financial condition and results of operations.
If we are required to change contract manufacturers due to any change in or termination of our relationships with these third parties, or if our manufacturers are unable to obtain the materials they need to produce our products at consistent prices or at all, 38 Table of Contents we may lose sales, experience manufacturing or other delays, incur increased costs or otherwise experience impairment to our customer relationships.
If we are required to change contract manufacturers due to any change in or termination of our relationships with these third parties, or if our manufacturers are unable to obtain the materials they need to produce our products at consistent prices or at all, we may lose sales, experience manufacturing or other delays, incur increased costs or otherwise experience impairment to our customer relationships.
Our competitors in both the U.S. and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our products.
Our competitors in both the U.S. and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may 67 Table of Contents in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use and sell our products.
In addition, some countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.
In addition, some countries limit the enforceability of patents against third parties, including government agencies or government 69 Table of Contents contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes.
Even though we have obtained approval for the Inspire system, we are subject to ongoing and pervasive regulatory requirements governing, among other things, the manufacture, marketing, advertising, medical device reporting, sale, promotion, registration, and listing of devices. For example, we must submit periodic reports to the FDA as a condition of PMA.
Even though we have obtained approval for the Inspire system, we are subject to ongoing and pervasive regulatory requirements governing, among other things, the manufacture, marketing, advertising, medical device reporting, sale, promotion, registration, and listing of devices. For example, we must submit periodic reports to the 53 Table of Contents FDA as a condition of PMA.
The success of any new product offering or product enhancements to our Inspire system will depend on several factors, including our ability to: • properly identify and anticipate physician and patient needs; • develop and introduce new products and product enhancements in a timely manner; • avoid infringing upon the intellectual property rights of third parties; • demonstrate, if required, the safety and efficacy of new or modified products with data from preclinical studies and clinical studies; • obtain the necessary regulatory clearances, approvals or certifications for expanded indications, new products or product modifications; 36 Table of Contents • be fully FDA-compliant with marketing of new or modified devices and be fully compliant with foreign requirements to market our new or modified devices; • provide adequate training to potential users of our products; • receive adequate coverage and reimbursement for procedures performed with our products; and • develop an effective and dedicated sales and marketing team.
The success of any new product offering or product enhancements to our Inspire system will depend on several factors, including our ability to: • properly identify and anticipate physician and patient needs; • develop and introduce new products and product enhancements in a timely manner; • avoid infringing upon the intellectual property rights of third parties; • demonstrate, if required, the safety and efficacy of new or modified products with data from preclinical studies and clinical studies; • obtain the necessary regulatory clearances, approvals or certifications for expanded indications, new products or product modifications; • be fully FDA-compliant with marketing of new or modified devices and be fully compliant with foreign requirements to market our new or modified devices; • provide adequate training to potential users of our products; • receive adequate and clear coverage and reimbursement for procedures performed with our products; and • develop and maintain effective and dedicated sales and marketing team.
In the event that we 57 Table of Contents are subject to or affected by new and/or existing privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. We are also or may become subject to rapidly evolving data protection laws, rules and regulations in foreign jurisdictions.
In the event that we are subject to or affected by new and/or existing privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition. We are also or may become subject to rapidly evolving data protection laws, rules and regulations in foreign jurisdictions.
Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk 41 Table of Contents when considering the use of our products, either of which could have a material adverse effect on our business, financial condition and results of operations.
Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have a material adverse effect on our business, financial condition and results of operations.
The healthcare laws and regulations that may affect our ability to operate include, but are not limited to: the federal Anti-Kickback Statute, the federal civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, the federal Civil Monetary Penalties Law, federal criminal fraud and abuse laws under HIPAA, analogous state and foreign law equivalents of each of the foregoing.
The healthcare laws and regulations that may affect our ability to operate include, but are not limited to: the federal Anti-Kickback Statute, the federal civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, the federal Civil 58 Table of Contents Monetary Penalties Law, federal criminal fraud and abuse laws under HIPAA, analogous state and foreign law equivalents of each of the foregoing.
Additionally, we compete with various other second-line therapies to treat OSA, including invasive surgical treatment options such as UPPP, MMA, robotic tongue reduction surgery, and, to a lesser extent, oral appliances, which are primarily used in the treatment of mild to moderate OSA. Pharmaceutical therapies to treat OSA are also emerging.
Additionally, we compete with various other second-line therapies to treat OSA, including invasive surgical treatment options such as UPPP, MMA, robotic tongue reduction surgery, and, to a lesser extent, oral appliances, which are primarily used in the treatment of mild to moderate OSA.
Furthermore, the use of our Inspire system for indications other than those approved by the FDA, approved by any foreign regulatory 52 Table of Contents authority or certified by a notified body, may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients.
Furthermore, the use of our Inspire system for indications other than those approved by the FDA, approved by any foreign regulatory authority or certified by a notified body, may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards 59 Table of Contents have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
Any changes of, or uncertainty with respect to, future coverage or reimbursement rates could affect demand for our Inspire system, which in turn could impact our ability to successfully commercialize our Inspire system and could have a material adverse effect on our business, financial condition and results of operations.
Any changes of, or uncertainty with respect to, future coverage or reimbursement rates could affect demand for our Inspire system, which in turn could impact our ability to successfully 62 Table of Contents commercialize our Inspire system and could have a material adverse effect on our business, financial condition and results of operations.
Our locations, and those of our customers and suppliers, can be disrupted by droughts, extreme temperatures, fires, flooding and other climate change-related risks, as well as earthquakes, actions by utility providers, and other catastrophic events such as an actual or threatened public health emergency.
Our locations, and those of our customers and suppliers, can be disrupted by droughts, extreme 50 Table of Contents temperatures, fires, flooding and other climate change-related risks, as well as earthquakes, actions by utility providers, and other catastrophic events such as an actual or threatened public health emergency.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation 69 Table of Contents to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.
The U.S. Departments of Justice, Commerce, State and Treasury 44 Table of Contents and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the U.S.
The U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the U.S.
Seeking such approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our 53 Table of Contents devices, we may face additional regulatory enforcement action, including FDA or foreign regulatory authority warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.
Seeking such approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA or foreign regulatory authority warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.
The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S., and we may encounter significant problems in protecting our proprietary rights in these countries. Our ability to enforce our patent rights depends on our ability to detect infringement.
The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the U.S., and we may encounter significant problems in protecting our proprietary rights in these countries. 66 Table of Contents Our ability to enforce our patent rights depends on our ability to detect infringement.
For example, in Europe, we are subject to the requirements of the General Data Protection Regulation ("GDPR") (and national laws implementing the GDPR) because we are “established” in certain EU countries and we are processing personal data of individuals located in the EU and EEA in the context of these establishments, as well as offering of goods to, and/or monitoring the behavior of, individuals in the EU and EEA in connection with our clinical investigations.
For example, in Europe, we are subject to the requirements of the General Data Protection Regulation ("GDPR") (and national laws implementing the GDPR) because we are “established” in certain EU countries and we are processing personal data of individuals located in the EU and EEA in the context of these establishments, as well as offering of goods to, and/or monitoring the behavior of, individuals in the EU and EEA in connection with our clinical investigations and commercial technical support activities.
The primary customers for our products are hospitals and ASCs. Our customers typically bill various third-party payors to cover all or a portion of the costs and fees associated with the procedures in which our products are used and bill patients for any deductibles or co-payments.
Our customers typically bill various third-party payors to cover all or a portion of the costs and fees associated with the procedures in which our products are used and bill patients for any deductibles or co-payments.
Sales in markets outside of the U.S. accounted for approximately 4.0%, 3.0%, and 3.2% of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively. Our strategy is to increase our international presence in Europe, including Germany and the Netherlands, as well as other international markets, such as Japan, Singapore, and Hong Kong.
Sales in markets outside of the U.S. accounted for approximately 4.4%, 4.0%, and 3.0% of our revenue for the years ended December 31, 2025, 2024, and 2023, respectively. Our strategy is to increase our international presence in Europe, including Germany and the Netherlands, as well as other international markets, such as Japan, Singapore, Hong Kong, and Thailand.
Such proceedings could include supplemental examination or contested post-grant proceedings such as review, reexamination, inter partes review, interference or derivation proceedings before the USPTO and 64 Table of Contents challenges in U.S. District Court. Patents may be subjected to opposition, post-grant review or comparable proceedings lodged in various foreign, both national and regional, patent offices.
Such proceedings could include supplemental examination or contested post-grant proceedings such as review, reexamination, inter partes review, interference or derivation proceedings before the USPTO and challenges in U.S. District Court. Patents may be subjected to opposition, post-grant review or comparable proceedings lodged in various foreign, both national and regional, patent offices.
Such factors may include, for example, seasonal variations in our sales or required postponements of elective surgical procedures effected during a health crisis, as was the case with COVID-19.
Such factors may include, for example, seasonal variations in our sales or required postponements of elective surgical procedures effected during a health crisis, as was the 32 Table of Contents case with COVID-19.
For its part, the FDA may regulate medical or health-related software, including machine learning functionality and predictive algorithms, if such software falls within the definition of a “medical device” under the FDCA.
For its part, the FDA may regulate medical or health-related software, including clinical decision support software, machine learning functionality and predictive algorithms, if such software falls within the definition of a “medical device” under the FDCA.
Similarly, the EU landscape concerning medical devices recently evolved, and continues to undergo legislative changes. On May 25, 2017, the EU Medical Devices Regulation entered into force, which repeals and replaces 55 Table of Contents the EU Medical Devices Directive and the AIMDD. See Part I, Item I, “Business – Government Regulation” for additional information on these reforms.
Similarly, the EU landscape concerning medical devices recently evolved, and continues to undergo legislative changes. On May 25, 2017, the EU Medical Devices Regulation entered into force, which repeals and replaces the EU Medical Devices Directive and the AIMDD. See Part I, Item I, “Business – Government Regulation” for additional information on these reforms.
Certain modifications to a PMA-approved device may require approval of a new PMA or a PMA supplement, or alternatively a notification or other submission to the FDA. The FDA may not agree with our decisions regarding whether a new PMA or PMA supplement is necessary.
Certain modifications to a PMA-approved device, or its manufacturing process, may require approval of a new PMA or a PMA supplement, or alternatively a notification or other submission to the FDA. The FDA may not agree with our decisions regarding whether a new PMA or PMA supplement is necessary.
The FDA’s and foreign regulatory bodies' authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found.
The FDA’s and foreign regulatory bodies' authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious adverse health consequences or death. We may also choose to voluntarily recall a product if any material deficiency is found.
Complying with foreign regulatory requirements, including obtaining registrations, approvals or certifications, can be expensive and time-consuming, and we may not receive regulatory approvals or certifications in each country in which we plan to market our products or we may be unable to do so on a timely basis.
Complying with foreign regulatory requirements, including obtaining registrations, approvals or certifications, can be expensive and time-consuming, and we may not receive regulatory approvals or certifications in each country 56 Table of Contents in which we plan to market our products or we may be unable to do so on a timely basis.
A weak or declining economy has strained in the past and may in the future strain our manufacturers or suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. Further, the Trump administration has proposed or enacted tariffs and substantial changes to trade policies, which could adversely affect our business.
A weak or declining economy has strained in the past and may in the future strain our manufacturers or suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. Further, the current U.S. presidential administration has proposed or enacted tariffs and substantial changes to trade policies, which could adversely affect our business.
Our quarterly and annual results of operations have in the past and may in the future vary significantly and future period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance.
The market price of our common stock and our quarterly and annual results of operations have in the past and may in the future vary significantly and future period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance.
Our business involves the use of hazardous materials and our third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how we do business. Our third-party manufacturers’ activities may involve the controlled storage, use and disposal of hazardous materials.
Our business involves the use of hazardous materials and our third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how we do business. Our third-party manufacturers’ activities may involve the controlled storage, use and disposal of hazardous materials, including for example batteries.
Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.
Any litigation or claim against us may cause us to incur substantial costs, and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.
In addition, patients participating in our clinical studies may drop out before completion of the study or experience adverse medical events unrelated to our products.
In addition, 64 Table of Contents patients participating in our clinical studies may drop out before completion of the study or experience adverse medical events unrelated to our products.
Furthermore, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors.
Furthermore, we are required to verify that our suppliers maintain facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSMR through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of 54 Table of Contents subcontractors.
We perform substantially all of our research and development and back-office activity at two locations in Golden Valley, Minnesota. The majority of our finished goods inventory is maintained at a third-party location in Tennessee. Our facility, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace.
We perform substantially all of our research and development and back-office activity at two locations in Golden Valley, Minnesota. The majority of our finished goods inventory is maintained at third-party locations in California and North Carolina. Our facility, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace.
Provisions in our governing documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Risks Related to Our Common Stock Provisions in our governing documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
These potential claims may include but are not limited to personal injury and class action lawsuits, intellectual property claims and regulatory investigations relating to the advertising and promotional claims about our products and services and employee claims against us based on, among other things, discrimination, harassment or wrongful termination.
These potential claims may include but are not limited to personal injury and class action lawsuits, data privacy, intellectual property claims and regulatory investigations relating to the advertising and promotional claims about our products and services and employee claims against us based on, among other things, discrimination, harassment or wrongful 37 Table of Contents termination.
If we are unable to expand, manage and maintain our direct sales and marketing organization we may not be able to generate revenue growth.
If we are unable to effectively size, manage and maintain our direct sales and marketing organization we may not be able to generate revenue growth.
There can be no assurance that we will be able to eliminate or mitigate occurrences of quality issues and associated liabilities.
There can be no 43 Table of Contents assurance that we will be able to eliminate or mitigate occurrences of quality issues and associated liabilities.
We cannot ensure that our Inspire therapy will achieve or maintain broad market acceptance among physicians and patients. Any failure of the Inspire system to satisfy physician or patient demand or to achieve meaningful market acceptance will harm our business and future prospects.
We cannot ensure that our Inspire therapy will achieve or maintain broad market acceptance among physicians and patients. As a single-product company, any failure of the Inspire system to satisfy physician or patient demand or to achieve meaningful market acceptance will harm our business and future prospects.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted, such as the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, and the Medicare Access and CHIP Reauthorization Act of 2015, among others. See Part I, Item 1.
In addition, other legislative changes have been proposed and adopted since the ACA was enacted, such as the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, and the Medicare Access and CHIP Reauthorization Act of 2015, among others.
Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control and, as a result, may not fully reflect the underlying performance of our business.
The market price of our common stock and our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control and, as a result, may not fully reflect the underlying performance of our business.
Our clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in 61 Table of Contents addition to those we have planned.
Our clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.
Because of its recent commercial introduction, in particular in Hong Kong, our Inspire system has limited product and brand recognition, particularly in new markets. In addition, demand for our Inspire system may decline or may not increase as quickly as we expect.
Because of its recent commercial introduction, in particular in Thailand and other new markets, our Inspire system has limited product and brand recognition. In addition, demand for our Inspire system may decline or may not increase as quickly as we expect.
Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages or global health concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.
Disruptions at the FDA, other government agencies or notified bodies caused by funding shortages, staffing limitations, or policy changes could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.
We primarily rely on our own direct sales force, which as of December 31, 2024, covered 335 territories in the U.S. and 25 outside of the U.S., to market and sell our Inspire system. Some of our competitors rely predominantly on independent sales agents and third-party distributors.
We primarily rely on our own direct sales force, which as of December 31, 2025, covered 295 territories in the U.S. and 21 outside of the U.S., to market and sell our Inspire system. Some of our competitors rely predominantly on independent sales agents and third-party distributors.
Any one of these claims, even those without merit, may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations.
Any one of these claims may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations.
Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures. There can be no assurance that third-party payor policies will provide coverage for procedures in which our products are used.
Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for 35 Table of Contents new or existing products and procedures. There can be no assurance that third-party payor policies will provide full or meaningful coverage for procedures in which our products are used.
If we are not successful in expanding our indications and developing and commercializing new products and product enhancements, our ability to increase our revenue may be impaired, which could have a material adverse effect on our business, financial condition, and results of operations. Our financial results may fluctuate significantly and may not fully reflect the underlying performance of our business.
If we are not successful in expanding our indications and developing and commercializing new products and product enhancements, our ability to increase our revenue may be impaired, which could have a material adverse effect on our business, financial condition, and results of operations.
Among other ways in which it may affect our business, the ACA: • established a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; • implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and • expanded the eligibility criteria for Medicaid programs.
Among the provisions of the ACA of importance to our business are the following: • a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; • payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and • expanded the eligibility criteria for Medicaid programs.
If we are found to infringe the intellectual property rights of third parties, we could be required to pay substantial damages (which may be increased up to three times of awarded damages) and/or substantial royalties and could be prevented from selling our products unless we obtain a license or are able to redesign our products to avoid infringement.
If we are found to infringe the intellectual property rights of third parties, we could be required to pay substantial damages (which a court may, in its discretion, enhance awarded damages up to three times in cases of willful infringement) and/or substantial royalties and could be prevented from selling our products unless we obtain a license or are able to redesign our products to avoid infringement.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, management updates the Audit Committee, where it deems appropriate, regarding any cybersecurity incidents it considers to be significant or potentially significant. 71 Table of Contents Our information security program is principally managed by our information security team, which is led by our Senior Director, Information Services and Security.
Biggest changeOur information security program is principally managed by our information security team, which is led by our Senior Director, Information Services and Security.
Our information security team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through a variety of means, including briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
Our information security team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through a variety of means, including briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. 74 Table of Contents
Key elements of our information security program include but are not limited to the following: (i) risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; (ii) an information security team principally responsible for managing our (1) information security risk assessment processes, (2) security controls, and (3) response to cybersecurity incidents; (iii) risk assessments and security tests, conducted internally and by external security and risk audit providers, as appropriate; (iv) cybersecurity awareness training of our employees; (v) a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and (vi) third-party risk assessment procedures to review material third-party vendors and applications for information security.
Key elements of our information security program include but are not limited to the following: (i) risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; (ii) an information security team principally responsible for managing our (1) information security risk assessment processes, (2) security controls, and (3) response to cybersecurity incidents; (iii) risk assessments and security tests, conducted internally and by external security and risk audit providers with subject matter expertise, as appropriate; (iv) cybersecurity awareness training of our employees; (v) a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and (vi) third-party risk assessment procedures to review key third-party vendors based on our assessment of their criticality to our operations and respective risk profile and applications for information security.
Our information security program is designed based on the National Institute of Standards and Technology (“NIST”) 800-53 framework. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST framework as a guide in designing and implementing our information security program.
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST framework as a guide in designing and implementing our information security program.
As such, we have implemented an information security program, which includes cybersecurity risk management measures intended to prevent, detect, and respond to malicious cyber activities and other security incidents that could adversely affect the confidentiality, integrity, or availability of our, or our customers’ information or information systems.
As such, we have implemented an information security program, which includes cybersecurity risk management measures intended to protect, detect, and respond to malicious cyber activities and other security incidents that could adversely affect the confidentiality, integrity, or availability of our, or our customers’ information or information systems. 73 Table of Contents Our information security program is designed based on the National Institute of Standards and Technology (“NIST”) Cybersecurity v2.0 framework.
The Audit Committee receives quarterly reports from our Chief Technology Officer on our information security program, including any material cybersecurity risks.
The Audit Committee receives quarterly reports from our Chief Technology Officer on our information security program, including any material cybersecurity risks. Additionally, management updates the Audit Committee, where it deems appropriate, regarding any cybersecurity incidents it considers to be significant or potentially significant.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended (the "Securities Act"), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 73 Table of Contents December 31, Stock or Index Ticker 2019 2020 2021 2022 2023 2024 Inspire INSP $ 100.00 $ 253.46 $ 310.01 $ 339.42 $ 274.13 $ 249.80 NYSE Composite NYA 100.00 104.40 123.37 109.14 121.13 137.26 S&P Healthcare Equipment Select SPSIHE 100.00 132.83 137.24 104.93 98.68 103.67 Item 6. [Reserved] 74 Table of Contents
Biggest changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended (the "Securities Act"), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The graph assumes an investment of $100 in our common stock at market close on December 31, 2019 and the reinvestment of dividends, if any. The comparisons in the table are not intended to forecast or be indicative of possible future performance of our common stock.
The graph assumes an investment of $100 in our common stock at market close on December 31, 2020 and the reinvestment of dividends, if any. The comparisons in the table are not intended to forecast or be indicative of possible future performance of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the NYSE under the symbol “INSP." Holders As of February 3, 2025, there were approximately 12 holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the NYSE under the symbol “INSP." Holders As of February 5, 2026, there were approximately 12 holders of record of our common stock.
This number does not include stockholders who are beneficial owners, but whose shares are held in street name by brokers and 72 Table of Contents other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
This number does not include stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return on our common stock with the total return for (i) the S&P Healthcare Equipment Select Industry Index and (ii) the NYSE Composite from December 31, 2019 through December 31, 2024.
Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return on our common stock with the total return for (i) the S&P Healthcare Equipment Select Industry Index and (ii) the NYSE Composite from December 31, 2020 through December 31, 2025.
Issuer Purchases of Equity Securities Below is a summary of stock repurchases for the three months ended December 31, 2024. See Note 6 of our Notes to Consolidated Financial Statements for information regarding our stock repurchase program.
Issuer Purchases of Equity Securities Below is a summary of stock repurchases for the three months ended December 31, 2025. See Note 5 to our Consolidated Financial Statements included elsewhere in this Form 10-K for information regarding our stock repurchase program.
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be repurchased under the plans or programs (1) October 1, 2024 - October 31, 2024 — $ — — $ 150,000,000 November 1, 2024 - November 30, 2024 (2) (2) (2) $ 75,000,000 December 1, 2024 - December 31, 2024 — $ — — $ 75,000,000 (1) On August 6, 2024, our Board of Directors authorized the repurchase of up to $150.0 million in our common stock through August 5, 2026 in open market transactions, privately negotiated transactions, tender offers, or other means (the "Repurchase Program").
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet be Repurchased Under the Program (in thousands) October 1, 2025 - October 31, 2025 — $ — — $ 150,000 November 1, 2025 - November 30, 2025 176,428 $ 87.70 176,428 $ 134,526 December 1, 2025 - December 31, 2025 347,374 $ 99.39 347,374 $ 100,000 75 Table of Contents (1) On August 11, 2025, we announced that our Board of Directors authorized the repurchase of up to $200.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means.
We are not obligated to repurchase any specific number of shares and the Repurchase Program may be modified, suspended, or discontinued at any time.
We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. The share repurchase program is set to expire on August 7, 2027, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.
Removed
(2) In November 2024, we entered into an accelerated share repurchase agreement (the “ASR”) with a large financial institution as part of the Repurchase Program, whereupon we paid the counterparties to the ASR $75.0 million for the repurchase of shares of our common stock.
Added
December 31, Stock or Index Ticker 2020 2021 2022 2023 2024 2025 Inspire INSP $ 100.00 $ 122.31 $ 133.91 $ 108.16 $ 98.56 $ 49.04 NYSE Composite NYA 100.00 118.17 104.54 116.03 131.48 151.49 S&P Healthcare Equipment Select SPSIHE 100.00 103.32 79.00 74.29 78.05 77.53 Item 6. [Reserved] 76 Table of Contents
Removed
In November 2024, we received an initial delivery of 305,157 shares of common stock representing a portion of the prepayment, which shares had an average price paid per share of $196.62. Upon final settlement of this ASR in January 2025, we received an incremental delivery of 103,886 shares of our common stock.
Removed
Under this ASR, we repurchased a total of 409,043 shares at an average price paid per share of $190.29.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther Income, Net Other income, net consists primarily of interest and dividend income, interest expense under our former credit facility, the impacts of foreign currency transactions and remeasurements, and gains and losses on investments. 79 Table of Contents Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Revenue $ 802,804 $ 624,799 $ 178,005 28.5 % Cost of goods sold 122,986 96,576 26,410 27.3 % Gross profit 679,818 528,223 151,595 28.7 % Gross margin 84.7 % 84.5 % Operating expenses: Research and development 114,128 116,536 (2,408) (2.1) % Selling, general and administrative 529,607 451,958 77,649 17.2 % Total operating expenses 643,735 568,494 75,241 13.2 % Operating income (loss) 36,083 (40,271) 76,354 (189.6) % Other income, net (22,370) (20,365) (2,005) 9.8 % Income (loss) before income taxes 58,453 (19,906) 78,359 (393.6) % Income taxes 4,944 1,247 3,697 296.5 % Net income (loss) $ 53,509 $ (21,153) $ 74,662 (353.0) % Revenue Revenue increased $178.0 million, or 28.5%, to $802.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Biggest changeResults of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Year Ended December 31, Change 2025 2024 $ % (in thousands, except percentages) Revenue $ 911,981 $ 802,804 $ 109,177 13.6 % Cost of goods sold 133,225 122,986 10,239 8.3 % Gross profit 778,756 679,818 98,938 14.6 % Gross margin 85.4 % 84.7 % Operating expenses: Research and development 103,165 114,128 (10,963) (9.6) % Selling, general and administrative 624,637 529,607 95,030 17.9 % Total operating expenses 727,802 643,735 84,067 13.1 % Operating income 50,954 36,083 14,871 41.2 % Other income, net (14,743) (22,370) 7,627 (34.1) % Income before income taxes 65,697 58,453 7,244 12.4 % Income taxes (79,725) 4,944 (84,669) (1712.6) % Net income $ 145,422 $ 53,509 $ 91,913 171.8 % Revenue Revenue increased $109.2 million, or 13.6%, to $912.0 million for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Based on our ongoing ADHERE patient registry, the average BMI of patients treated with Inspire therapy is 29 and the American Academy of Sleep Medicine guidelines recommend weight loss prior to surgery for patients with BMI over 35 and nonsurgical solutions for patients with BMI over 40.
Based on our ongoing ADHERE patient registry, the average BMI of patients treated with Inspire therapy is 29. The American Academy of Sleep Medicine guidelines recommend weight loss prior to surgery for patients with BMI over 35 and nonsurgical solutions for patients with BMI over 40.
Investing Activities Net cash used in investing activities for 2024 was $113.1 million and consisted primarily of the purchase of investments of $418.4 million, partially offset by $344.6 million of proceeds from sales or maturities of investments.
Net cash used in investing activities for 2024 was $113.1 million and consisted primarily of the purchase of investments of $418.4 million, partially offset by $344.6 million of proceeds from sales or maturities of investments.
Our proprietary Inspire system is the first and only FDA, European Union ("EU") Medical Devices Regulation ("MDR"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA.
Our proprietary Inspire system is the only FDA, European Union ("EU") Medical Devices Regulation ("MDR"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA.
We continue to make investments in research and development efforts to develop our next generations of the Inspire systems and support our future regulatory submissions for expanded indications and for new markets such as additional European countries and the Asia Pacific region.
We continue to make investments in research and development efforts to develop our future generations of Inspire systems and support our future regulatory submissions for expanded indications and for new markets such as additional European countries and the Asia Pacific region.
Additionally, we anticipate an increase in our stock-based compensation expense with grants of stock options, restricted stock units, performance stock units, and shares of our common stock purchased pursuant to our employee stock purchase plan.
Additionally, we anticipate an increase in our stock-based compensation expense with grants of restricted stock units, performance stock units, and shares of our common stock purchased pursuant to our employee stock purchase plan.
Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses consist primarily of compensation for personnel, including base salaries, stock-based compensation expense and commissions related to our sales organization, finance, information technology, human resource, and legal functions, as well as spending related to marketing, sales operations, and training and reimbursement personnel.
Selling, General and Administrative Expenses Selling, general and administrative ("SG&A") expenses consist primarily of compensation for personnel, including base salaries, stock-based compensation expense and commissions related to our sales organization, finance, information technology, human resources, and legal functions, as well as spending related to marketing, sales operations, and training and reimbursement personnel.
There can be no assurance that such transactions will be available to us on favorable terms, if at all. Below is a summary of short-term and long-term anticipated cash requirements under contractual obligations existing as of December 31, 2024.
There can be no assurance that such transactions will be available to us on favorable terms, if at all. Below is a summary of short-term and long-term anticipated cash requirements under contractual obligations existing as of December 31, 2025.
In 2024, our SG&A expenditures increased significantly over the prior year levels, and we anticipate further increases during 2025. Our SG&A expenditures, primarily for increasing headcount and advertising, may exceed any associated increases in revenues, and therefore would reduce our cash flow from operations.
In 2025, our SG&A expenditures increased significantly over the prior year levels, and we anticipate further increases during 2026. Our SG&A expenditures, primarily for increasing headcount and advertising, may exceed any associated increases in revenues, and therefore would reduce our cash flow from operations.
Financing Activities Net cash used in financing activities was $52.4 million for 2024 and consisted primarily of a $75.0 million payment for our ASR agreement and $5.2 million of taxes paid on net share settlement of equity awards, partially offset by proceeds from the exercise of stock options of $22.2 million and proceeds from the issuance of common stock from our Employee Stock Purchase Plan ("ESPP") of $5.6 million.
Net cash used in financing activities was $52.4 million for 2024 and consisted primarily of a $75.0 million payment for our ASR agreement and $5.2 million of taxes paid on net share settlement of equity awards, partially offset by proceeds from the exercise of stock options of $22.2 million and proceeds from the issuance of common stock from our ESPP of $5.6 million.
We anticipate further capital expenditures in 2025, primarily for additional manufacturing equipment and our SleepSync™ platform, computer hardware and software, and leasehold improvements on our corporate office buildings.
We anticipate further capital expenditures in 2026, primarily for additional manufacturing equipment and our SleepSync™ platform, computer hardware and software, and leasehold improvements on our corporate office buildings.
The primary objective of our investment activities is to preserve our capital for the purpose of funding operations while at the same time maximizing the income we receive from our investments without significantly increasing risk or decreasing availability.
The primary objective of our investment activities is to preserve our capital for the purpose of funding operations while at the same time maximizing the income we receive from our investments without significantly increasing 83 Table of Contents risk or decreasing availability.
We expect SG&A expenses to continue to increase as we expand our commercial infrastructure to both drive and support our planned growth in revenue and as we increase our headcount and expand administrative personnel to support our growth and operations as a public company including finance, legal, and human resources personnel and information technology services.
We expect SG&A expenses to continue to increase as we expand our commercial infrastructure to both drive and support our planned growth in revenue and as we increase our headcount and expand administrative personnel to support our growth and operations as a public company including finance, legal, and human resources personnel 80 Table of Contents and information technology services.
There can be no assurance, however, that our business will continue to generate cash flows at the same levels achieved in prior periods. Beyond the next 12 months, our cash requirements will depend extensively on the timing of market introduction, and extent of market acceptance of, our Inspire system.
There can be no assurance, however, that our business will continue to generate cash flows at the same levels achieved in prior periods. Beyond the next 12 months, our cash requirements will depend extensively on the extent of market acceptance of our Inspire system and the demand for our therapy.
We expect R&D expenses to increase in the future as we develop next generation versions of our Inspire system and SleepSync™ and continue to expand our clinical studies to further expand positive coverage policies from private commercial payors in the U.S. and enter into new markets including additional European countries and the Asia Pacific region.
We expect R&D expenses to increase in the future as we invest in our product pipeline, including future versions of our Inspire system and SleepSync™ and continue to expand our clinical studies to further expand positive coverage policies from private commercial payors in the U.S. and enter into new markets including additional European countries and the Asia Pacific region.
The primary driver of this change was an increase of $66.6 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount.
The primary driver of this change was an increase of $51.1 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount.
Our accumulated deficit as of December 31, 2024 was $291.9 million. We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our Inspire therapy. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of our Inspire therapy and to support regulatory submissions.
Our accumulated deficit as of December 31, 2025 was $146.5 million. We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our Inspire therapy. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of our Inspire therapy and to support regulatory submissions.
We believe that our existing cash and cash equivalents and available for sale investments, which totaled $516.5 million as of December 31, 2024, together with cash flows from operations, will provide liquidity sufficient to meet our cash needs and fund our operations and planned capital expenditures for at least the next 12 months.
We believe that our existing cash and cash equivalents and available for sale investments, which totaled $404.6 million as of December 31, 2025, together with cash flows from operations, will provide sufficient liquidity to meet our cash needs and fund our operations and planned capital expenditures for at least the next 12 months.
Likewise, the timing of FDA approval of a next generation product, if granted, and the associated commercial launch, could have a significant impact on the carrying value of the inventory of our previous generation product, and therefore our reported operating results. The net inventory balance was $80.1 million and $33.9 million as of December 31, 2024 and 2023, respectively.
Likewise, the timing of FDA approval of a next generation product, if granted, and the associated commercial launch, could have a significant impact on the carrying value of the inventory of our previous generation product, and therefore our reported operating results. The net inventory balance was $145.3 million and $80.1 million as of December 31, 2025 and 2024, respectively.
Operating assets include inventories, which increased as supply chain constraints continued to ease and inventory on hand increased to support higher sales and the launch of our next generation Inspire system, and accounts receivable, which increased due to the higher sales volume we typically experience late in the fourth quarter.
Operating assets include inventories, which increased as supply chain constraints continued to ease and inventory on hand increased to support higher sales and the launch of Inspire V neurostimulator, and accounts receivable, which increased due to the higher sales volume we typically experience late in the fourth quarter.
We typically seek to maintain higher levels of inventory to protect ourselves from supply interruptions, and, as a result, we are subject to the risk of inventory obsolescence and expiration, which could lead to inventory impairment charges.
We have experienced supply disruptions in the past. We typically seek to maintain higher levels of inventory to protect ourselves from supply interruptions, and, as a result, we are subject to the risk of inventory obsolescence and expiration, which could lead to inventory impairment charges.
Higher interest rates and capital costs, higher shipping costs and new or increased tariffs, increased costs of labor, international conflicts and terrorism, and weakening foreign currency exchange rates are creating additional economic challenges. These conditions may cause our customers to decrease or delay orders for our products.
Higher interest rates and capital costs, higher shipping costs and new or increased tariffs, regulatory changes, including changes to government funding of entitlement programs, increased costs of labor, international conflicts and terrorism, and weakening foreign currency exchange rates are creating additional economic challenges. These conditions may cause our customers to decrease or delay orders for our products.
Investing activities also included purchases of property and equipment of $39.1 million, mainly for testing systems and manufacturing equipment for our next generation Inspire system, our SleepSync™ platform, computer hardware and software, and leasehold improvements.
Investing activities also included purchases of property and equipment of $39.1 million, mainly for testing systems and manufacturing equipment for our next generation Inspire system, our SleepSync™ platform, computer hardware and software, and leasehold improvements. We also purchased strategic investments of $0.3 million.
The reserve for excess and obsolete inventory was $1.0 million and $2.4 million as of December 31, 2024 and 2023, respectively. Stock-Based Compensation We maintain an equity incentive plan to provide lon g-term incentives for eligible employees, consultants, and members of the board of directors.
The reserve for excess and obsolete inventory was $1.3 million and $1.0 million as of December 31, 2025 and 2024, respectively. 86 Table of Contents Stock-Based Compensation We maintain an equity incentive plan to provide lon g-term incentives for eligible employees, consultants, and members of the board of directors.
As of February 10, 2025, we have secured positive coverage policies with many U.S. commercial payors, including all large national commercial insurers, covering approximately 260 million lives in the U.S. In addition, all seven Medicare Administrative Contractors provide coverage of Inspire therapy when certain coverage criteria are met.
As of February 13, 2026, we have secured positive coverage policies with many U.S. commercial payors, including all large national commercial insurers, covering more than 300 million lives in the U.S. In addition, all seven Medicare Administrative Contractors provide coverage of Inspire therapy when certain coverage criteria are met.
To achieve these objectives, our investment policy allows us to maintain a portfolio of certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies.
To achieve these objectives, our investment policy allows us to maintain a portfolio of certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. At December 31, 2025, we had $159.8 million in U.S.
This change was primarily due to a decrease of $23.6 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator and our SleepSync™ platform, partially offset by an increase of $20.1 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense, and an increase of $1.1 million in regulatory and clinical studies expenses and quality compliance fees.
This change was primarily due to a decrease of $12.6 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our SleepSync™ programmer, and our SleepSync™ platform, and an increase in costs allocated to cost of good sold and inventory of $12.7 million, partially offset by an increase of $14.0 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense, and an increase of $0.3 million in regulatory submissions and clinical studies expenses and quality compliance fees.
The increase was attributable to a $164.9 million increase in sales of our Inspire system in the U.S and an increase of $13.1 million outside of the U.S.
The increase was attributable to a $101.0 million increase in sales of our Inspire system in the U.S and an increase of $8.1 million outside of the U.S.
Operating assets also include prepaid expenses and other current assets, which increased primarily due to miscellaneous receivables and interest income receivable on our higher investment balances. Operating liabilities include accrued expenses which increased primarily due to compensation and personnel-related costs, and accounts payable.
Operating assets also include prepaid expenses and other current assets, which increased primarily due to miscellaneous receivables and interest income receivable on our higher investment balances.
For the year ended December 31, 2024, we generated revenue of $802.8 million with a gross margin of 84.7% and net income of $53.5 million, compared to revenue of $624.8 million with a gross margin of 84.5% and a net loss of $21.2 million for the year ended December 31, 2023, and revenue of $407.9 million with a gross margin of 83.8% and a net loss of $44.9 million for the year ended December 31, 2022.
For the year ended December 31, 2025, we generated revenue of $912.0 million with a gross margin of 85.4% and net income of $145.4 million, compared to revenue of $802.8 million with a gross margin of 84.7% and net income of $53.5 million for the year ended December 31, 2024, and revenue of $624.8 million with a gross margin of 84.5% and a net loss of $21.2 million for the year ended December 31, 2023.
On the other hand, our gross margin may decrease slightly to the extent our yields decrease, or materials and labor prices increase due to supply chain issues and inflation, thereby increasing our per unit costs.
On the other hand, our gross margin may decrease slightly to the extent our yields decrease, or materials and labor prices increase due to supply chain issues and inflation, thereby increasing our per unit costs. However, our gross margin may also fluctuate from quarter to quarter due to seasonality and foreign currency exchange rates.
Selling, General and Administrative Expenses SG&A expenses increased $77.6 million, or 17.2%, to $529.6 million for the year ended December 31, 2024 compared to $452.0 million for the year ended December 31, 2023.
Selling, General and Administrative Expenses SG&A expenses increased $95.0 million, or 17.9%, to $624.6 million for the year ended December 31, 2025 compared to $529.6 million for the year ended December 31, 2024.
In addition, we highlight our compelling clinical data and value proposition to increase awareness and adoption amongst referring physicians. We build upon this top-down approach with strong direct-to-consumer marketing initiatives to create awareness of the benefits of our Inspire system and drive interest through patient empowerment. We believe this outreach helps to educate thousands of patients on our Inspire therapy.
We build upon this top-down approach with strong direct-to-consumer marketing initiatives to create awareness of the benefits of our Inspire system and drive interest through patient empowerment. We believe this outreach helps to educate thousands of patients on our Inspire therapy.
However, our gross margin may also fluctuate from quarter to quarter due to seasonality and foreign currency exchange rates. 78 Table of Contents Research and Development Expenses Research and development ("R&D") expenses consist primarily of product development, engineering, clinical studies to develop and support our products, regulatory expenses, quality assurance, testing, consulting services, prelaunch inventory, and other costs associated with the next generation versions of the Inspire system and SleepSync™, a cloud-based patient management system.
Research and Development Expenses Research and development ("R&D") expenses consist primarily of product development, engineering, clinical studies to develop and support our products, regulatory expenses, quality assurance, testing, consulting services, prelaunch inventory, and other costs associated with the next generation versions of the Inspire system and SleepSync™, a cloud-based patient management system.
We sell our Inspire system to hospitals and ambulatory surgery centers ("ASCs") in the U.S. and in select countries in Europe and Japan through a direct sales organization and we sell our Inspire system in Singapore and Hong Kong through distributors. Our direct sales force engages in sales efforts and promotional activities primarily focused on ENT physicians and sleep centers.
We sell our Inspire system to hospitals and ambulatory surgery centers ("ASCs") in the U.S. and in select countries in Europe and Japan through a direct sales organization and we sell our Inspire system in Singapore, Hong Kong, and Thailand through distributors.
Our sources of capital include sales of our Inspire system and registered offerings of our common stock. As of December 31, 2024, we had cash, cash equivalents and available-for-sale debt securities of $516.5 million, an increase of $47.0 million from $469.5 million as of December 31, 2023.
Our sources of capital include sales of our Inspire system and registered offerings of our common stock. As of December 31, 2025, we had cash, cash equivalents and available-for-sale debt securities of $404.6 million, a decrease of $111.9 million from $516.5 million as of December 31, 2024.
For the year ended December 31, 2024, 96.0% of our revenue was derived in the U.S. and 4.0% was derived outside of the U.S. No single customer accounted for more than 10% of our revenue. We rely on third-party suppliers to manufacture our Inspire system and its components. Many of these suppliers are currently single source suppliers.
No single customer accounted for more than 10% of our revenue. We rely on third-party suppliers to manufacture our Inspire system and its components. Many of these suppliers are currently single source suppliers. Currently, all of our manufacturing is done in the U.S. and most components for our Inspire system are sourced in the U.S.
The plan allows for the issuance of performance stock units ("PSUs"), and d uring 2022, 2023, and 2024, we granted PSUs to officers and key employees. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the three-year periods ending December 31, 2024, 2025, and 2026, respectively.
The plan allows for the issuance of performance stock units ("PSUs") which we grant to officers and key employees. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the three-year fiscal year periods from the date of grant.
Research and Development Expenses Research and development expenses decreased $2.4 million, or 2.1%, to $114.1 million for the year ended December 31, 2024 compared to $116.5 million for the year ended December 31, 2023.
Research and Development Expenses Research and development expenses decreased $11.0 million, or 9.6%, to $103.2 million for the year ended December 31, 2025 compared to $114.1 million for the year ended December 31, 2024.
In April 2024, Eli Lilly and Company ("Lilly") published headline results from its SURMOUNT-OSA trial demonstrating a 50.7% reduction in Apnea-Hypopnea Index ("AHI") for patients in the therapy arm of the study using tirzepatide, a GLP-1 injection.
In 2024, Eli Lilly and Company ("Lilly") published results from its SURMOUNT-OSA trial demonstrating a 50.7% reduction in Apnea-Hypopnea Index ("AHI") for patients in the therapy arm of the study using tirzepatide, and that 43% of participants treated with tirzepatide at the highest dose met criteria for disease resolution.
Management expectations related to the achievement of the performance goals associated with PSU grants is assessed each reporting period, which determines the amount of stock-based compensation expense recorded during the period.
Management expectations related to the achievement of the performance goals associated with PSU grants is assessed each reporting period, which determines the amount of stock-based compensation expense recorded during the period. The number of shares earned at the end of the three-year periods will vary based on actual performance, from 0% to 200% of the number of PSUs granted.
Our sales representatives do not maintain trunk stock. Since our inception in 2007, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our former credit facility, and equity offerings of our common stock.
For example, during 2025, we recorded a charge of $2.1 million for excess component parts related to our Inspire IV system. Since our inception in 2007, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our former credit facility, and equity offerings of our common stock.
If 200% of the PSUs outstanding as of December 31, 2024 are ultimately earned, the total stock-based compensation expense recognized over the five-year period ending December 31, 2026 will be $142.8 million.
If the performance goals are not met, no shares will be earned. If 200% of the PSUs outstanding as of December 31, 2025 are ultimately earned, the total stock-based compensation expense recognized over the next two-year period ending December 31, 2027 will be $92.9 million.
Working capital totaled $542.3 million as of December 31, 2024, an increase of $26.7 million from December 31, 2023. We define working capital as current assets less current liabilities.
Working capital totaled $487.6 million as of December 31, 2025, a decrease of $54.7 million from December 31, 2024. We define working capital as current assets less current liabilities.
Net cash provided by financing activities was $14.0 million for 2023 and consisted primarily of proceeds from the exercise of stock options of $25.8 million and proceeds from the issuance of common stock from our ESPP of $5.3 million, partially offset by $17.2 million of taxes paid on net share settlement of equity awards.
Financing Activities Net cash used in financing activities was $183.4 million for 2025 and consisted primarily of share repurchases of $175.0 million under our share repurchase authorizations and the payment of $23.0 million of taxes paid on net share settlement of equity awards, partially offset by proceeds from the exercise of stock options of $9.6 million and proceeds from the issuance of common stock from our Employee Stock Purchase Plan ("ESPP") of $5.0 million.
Other Income, Net Other income, net increased by $2.0 million, or 9.8%, to $22.4 million of income for the year ended December 31, 2024 compared to $20.4 million of income for the year ended December 31, 2023.
Other Income, Net Other income, net decreased by $7.6 million, or 34.1%, to $14.7 million of income for the year ended December 31, 2025 compared to $22.4 million of income for the year ended December 31, 2024.
Revenue information by region is summarized as follows: Year Ended December 31, 2024 2023 Change Amount % of Revenue Amount % of Revenue $ % (in thousands, except percentages) United States $ 771,040 96.0 % $ 606,178 97.0 % $ 164,862 27.2 % All other countries 31,764 4.0 % 18,621 3.0 % 13,143 70.6 % Total revenue $ 802,804 100.0 % $ 624,799 100.0 % $ 178,005 28.5 % Revenue generated in the U.S. was $771.0 million for the year ended December 31, 2024, an increase of $164.9 million, or 27.2%, over the year ended December 31, 2023.
Revenue information by region is summarized as follows: Year Ended December 31, 2025 2024 Change Amount % of Revenue Amount % of Revenue $ % (in thousands, except percentages) United States $ 872,086 95.6 % $ 771,040 96.0 % $ 101,046 13.1 % All other countries 39,895 4.4 % 31,764 4.0 % 8,131 25.6 % Total revenue $ 911,981 100.0 % $ 802,804 100.0 % $ 109,177 13.6 % 81 Table of Contents Revenue generated in the U.S. was $872.1 million for the year ended December 31, 2025, an increase of $101.0 million, or 13.1%, over the year ended December 31, 2024.
If the performance conditions are not met or not expected to be met, any compensation expense previously recognized associated with the grant will be reversed which will impact our operating results. Recent Accounting Pronouncements A discussion of recent accounting pronouncements is included in Note 2 to our financial statements contained in this Annual Report on Form 10-K.
If the performance conditions are not met or not expected to be met, any compensation expense previously recognized associated with the grant will be reversed which will impact our operating results.
Cost of Goods Sold and Gross Margin Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap, and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers.
However, our revenue growth rate has generally decelerated in recent periods, and it may continue to do so as a result of the difficulty of maintaining growth rates as our revenues increase to higher levels. 79 Table of Contents Cost of Goods Sold and Gross Margin Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap, and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers.
A combination of tongue base collapse and lateral wall collapse is identified as a complete concentric collapse of the upper airway. Inspire is contraindicated for complete concentric collapse.
In contrast, patients with a higher BMI are subject to a larger neck circumference and present predominantly with lateral-wall collapse. 78 Table of Contents A combination of tongue base collapse and lateral wall collapse is identified as a complete concentric collapse of the upper airway. Inspire is contraindicated for complete concentric collapse.
We also anticipate R&D expenses will increase in 2025, primarily related to the ongoing development of the SleepSync™ platform and next generation products.
We also anticipate R&D expenses will increase during 2026, primarily related to the ongoing development of the SleepSync™ platform and next generation products. We spent $38.5 million on purchases of property and equipment in 2025, mainly on manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software.
The increase in working capital was offset by the following factors: • a decrease of $14.8 million in cash and cash equivalents and short-term available for sale investments primarily due to the ASR we entered in November 2024 and the purchase of long-term available-for-sale investments and inventory, partially offset by proceeds from sales of the Inspire system, proceeds from the exercise of stock options, and interest and dividend income; and • an increase of $10.5 million in accrued expenses which increased primarily due to compensation and personnel-related costs.
The decrease in working capital was primarily due to the following factors: • a decrease of $137.3 million in cash and cash equivalents and short-term available for sale investments primarily due to $175.0 million of share repurchases made under our share repurchase programs, as well as inventory purchases and the payment of taxes on net share settlements of equity awards, partially offset by proceeds from sales of the Inspire system, proceeds from the exercise of stock options, interest and dividend income, and the increase in long-term available for sale investments; • an increase of $9.7 million in accrued expenses which increased primarily due to compensation and personnel-related costs; and • a decrease of $1.7 million in prepaid expense and other current assets which increased primarily due to increases in miscellaneous receivables and interest income receivable.
In late 2024, Zepbound (tirzepatide), which was FDA approved for weight loss in 2023, was also FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA. If GLP-1s are used to treat OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be reduced.
In late 2024, tirzepatide (marketed as Zepbound), a GLP-1 injection which was FDA approved for weight loss in 2023, was also FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA.
While we cannot quantify the impact, we believe that there could be a benefit to our business as a result of GLP-1s reducing the BMI of our prospective patients and increasing the number of eligible patients for our Inspire therapy, although there can be no assurance of such benefit at this time. 77 Table of Contents Macroeconomic Environment The global economy continues to experience increased inflationary pressures.
This reinforces our belief that the overall number of patients eligible for Inspire therapy will increase in the long-term due to the availability of GLP-1s, although there can be no assurance of such benefit at this time. Macroeconomic Environment The global economy continues to experience increased inflationary pressures and market instability.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For a discussion of our results of operations for the year ended December 31, 2023, including a year-to-year comparison between 2023 and 2022, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023. 81 Table of Contents Liquidity and Capital Resources We believe our balance sheet and liquidity as of February 10, 2025 provides us with flexibility, and that our cash, cash equivalents, and investments will satisfy our operating needs and capital expenditures for at least the next 12 months.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 For a discussion of our results of operations for the year ended December 31, 2024, including a year-to-year comparison between 2024 and 2023, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
The 2025 Medicare national average physician reimbursement for the DISE procedure is $94, a 2% decrease over the prior year amount. 75 Table of Contents Reimbursement in other countries can often be established through a combination of private (commercial insurance) and public funding sources, or at the hospital level through innovation budgets.
Reimbursement in other countries can often be established through a combination of private (commercial insurance) and public funding sources, or at the hospital level through innovation budgets. For the year ended December 31, 2025, 95.6% of our revenue was derived in the U.S. and 4.4% was derived outside of the U.S.
Cost of Goods Sold and Gross Margin Cost of goods sold increased $26.4 million, or 27.3%, to $123.0 million for the year ended December 31, 2024 compared to $96.6 million for the year ended December 31, 2023. The increase was primarily due to product costs associated with the higher sales volume of our Inspire system experienced during 2024.
The increase was primarily due to product costs associated with the higher sales volume of our Inspire system, and to a lesser extent, the $2.1 million charge associated with excess components related to Inspire IV. Gross margin was 85.4% for the year ended December 31, 2025 compared to 84.7% for the year ended December 31, 2024.
The increase in working capital was primarily due to the following factors: • an increase of $46.2 million in inventory balances which increased as supply chain issues eased and we increased inventory levels to support higher sales and the anticipated 2025 launch of our next generation Inspire system in the U.S.; • an increase of $3.2 million in accounts receivable due to higher sales which occurred during the fourth quarter of 2024; • an increase of $2.5 million in prepaid expense and other current assets which increased primarily due to increases in miscellaneous receivables and interest income receivable; and • a decrease of $0.2 million in accounts payable.
The decrease in working capital was offset by the following factors: • an increase of $65.2 million in inventory balances, as we increased inventory levels to support higher sales and the launch of Inspire V; • an increase of $26.6 million in accounts receivable due to higher sales which occurred late in the fourth quarter of 2025; and • a decrease of $2.1 million in accounts payable.
Overall revenue growth was primarily due to increased market penetration in existing centers, expansion into new territories and centers, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints.
Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.
Revenue generated outside of the U.S. was $31.8 million in the year ended December 31, 2024, an increase of $13.1 million, or 70.6%, over the year ended December 31, 2023.
Revenue generated outside of the U.S. was $39.9 million in the year ended December 31, 2025, an increase of $8.1 million, or 25.6%, over the year ended December 31, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.
OSA is a multifactorial disease with many independent factors including age, gender, weight, and neck circumference. Inspire is designed to address anteroposterior airway collapse, also known as tongue base collapse. Additionally, patients with a higher BMI are subject to a larger neck circumference and present predominantly with lateral-wall collapse.
If GLP-1s are used to treat OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be reduced. OSA is a multifactorial disease with many independent factors including age, gender, weight, and neck circumference. Inspire is designed to address antero-posterior airway collapse, also known as tongue base collapse.
Additionally, we created 48 new U.S. sales territories during 2024, bringing the total to 335 U.S. territories as of December 31, 2024. During 2023 and 2024, glucagon-like peptide 1 ("GLP-1s"), a class of drug indicated for diabetes and obesity, continued to gain popularity as a weight-loss drug.
For example, in August 2024, we received approval from the FDA for our Inspire V neurostimulator ("Inspire V,") which we began to market for sale in the U.S. in May 2025. Since 2023, glucagon-like peptide 1 ("GLP-1s"), a class of drug indicated for diabetes and obesity, has continued to gain popularity as a weight-loss drug.
At December 31, 2024, we had $59.6 million in money market funds, $267.4 million in U.S. Treasury debt securities, and $99.0 million in corporate debt securities, commercial paper, certificates of deposit, and asset-asset-backed securities. See Note 2 to our audited financial statements for additional information on our investments.
Treasury debt securities, $116.7 in corporate debt securities, $64.4 million in money market funds, and $23.3 million in commercial paper and asset-asset-backed securities. See Note 2 to our Notes to Consolidated Financial Statements included elsewhere in this Form 10-K for additional information on our investments.
This change was primarily due to an increase of $2.7 million in interest and dividend income due to higher cash, cash equivalents, and investment balances, partially offset by an increase in net losses of $0.7 million in foreign currency translation and remeasurement gains due to exchange rates.
This change was primarily due to an decrease of $5.7 million in interest and dividend income due to lower cash, cash equivalents, and investment balances, an impairment charge of $4.0 million on one of our strategic investments, and an increase of $0.1 million in interest expense, partially offset by an increase of $2.2 million in foreign currency translation and remeasurement gains due to exchange rates. 82 Table of Contents Income Taxes We recorded a total income tax benefit of $79.7 million for the year ended December 31, 2025 and $4.9 million of expense for the year ended December 31, 2024.
The remainder of the non-cash charges included depreciation and amortization expense which increased with additional purchases of property and equipment, accretion of investment discount due to higher investment balances, non-cash lease expense, stock issued for services rendered, and other, net.
The remainder of the non-cash charges included the recognition of a deferred tax benefit, depreciation and amortization expense which increased with additional purchases of property and equipment, an impairment of a strategic investment, accretion of investment discount on our available-for-sale investments, a change in the provision for estimated credit losses, and other, net.
Operating assets include inventories, which increased as supply chain constraints eased, and accounts receivable, which increased due to higher sales volume. Operating assets also include prepaid expenses and other current assets, which increased primarily due to various prepaid expenses and interest income receivable.
Operating assets include inventories, which increased as we continue to build inventory levels to support higher sales and the launch of Inspire V, and accounts receivable, which increased primarily due to higher sales which occurred during September 2025. Operating assets also include prepaid expenses and other current assets which increased slightly.
See section titled “Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in Part II, Item 5 of this report for stock repurchases during the quarter ended December 31, 2024 and Note 6 of our Notes to our Consolidated Financial Statements for further details regarding our Repurchase Program. 83 Table of Contents Cash Flows The following table presents a summary of our cash flow for the periods indicated: Year Ended December 31, 2024 2023 (in thousands) Net cash provided by (used in): Operating activities $ 130,246 $ 24,653 Investing activities (113,122) (294,822) Financing activities (52,393) 13,950 Effect of exchange rate on cash (118) 164 Decrease in cash and cash equivalents $ (35,387) $ (256,055) Operating Activities Net cash provided by operating activities was $130.2 million for 2024 and consisted of net income of $53.5 million, non-cash charges of $114.4 million, and a decrease in net operating assets of $37.7 million.
Cash Flows The following table presents a summary of our cash flow for the periods indicated: Year Ended December 31, 2025 2024 (in thousands) Net cash provided by (used in): Operating activities $ 116,976 $ 130,246 Investing activities 21,446 (113,122) Financing activities (183,449) (52,393) Effect of exchange rate on cash (310) (118) Decrease in cash and cash equivalents $ (45,337) $ (35,387) Operating Activities Net cash provided by operating activities was $117.0 million for 2025 and consisted of net income of $145.4 million, non-cash charges of $58.9 million, and a decrease in net operating assets of $87.4 million.
As of December 31, 2024 ($ in thousands) Total Fiscal 2025 After Fiscal 2025 Recorded contractual obligations: Operating leases (1) $ 41,330 $ 3,204 $ 38,126 Unrecorded contractual obligations: Purchase obligations (2) 85,968 85,968 — Total $ 127,298 $ 89,172 $ 38,126 (1) See Note 3 to our audited consolidated financial statements. (2) Primarily purchase obligations to suppliers for inventory.
As of December 31, 2025 ($ in thousands) Total Fiscal 2026 After Fiscal 2026 Recorded contractual obligations: Operating leases (1) $ 40,922 $ 3,196 $ 37,726 Unrecorded contractual obligations: Purchase obligations (2) 90,513 90,513 — Total $ 131,435 $ 93,709 $ 37,726 (1) See Note 3 to our Consolidated Financial Statements included elsewhere in this Form 10-K.
As of December 31, 2024, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
As of December 31, 2025, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources. 84 Table of Contents Repurchase Programs See section titled “Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in Part II, Item 5 of this report for a discussion of our share repurchase program and related stock repurchases during the quarter ended December 31, 2025 as well as Note 5 to our Consolidated Financial Statements included elsewhere in this Form 10-K.
Revenue growth in the U.S. was primarily due to increased market penetration in existing centers, the expansion into new territories and centers, and, we believe, increased physician and patient awareness of our Inspire system.
Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.
In addition, general corporate costs increased $8.6 million primarily due to computer equipment and software expense, bank fees, and depreciation expense, as well as an increase in travel expenses of $5.1 million, partially offset by a decrease of $2.7 million of marketing expenses primarily consisting of direct-to-consumer initiatives.
In addition, marketing costs increased $33.0 million, mainly for advertising, and general corporate costs increased $7.0 million, primarily due to legal fees, depreciation expense, computer equipment and software expense, and consulting fees. Also contributing to the increase were travel expenses, which increased by $3.9 million.
The procedures performed to implant, revise, or explant our Inspire IV device are described for billing purposes in the U.S. with Category I Current Procedural Terminology codes (64582, 64583, and 64584, respectively).
For example, the procedures performed to implant our Inspire IV device are described for billing purposes using Category I CPT code 64582. And for 2025, the procedures performed to implant our Inspire V device were described for billing purposes using Category I CPT code 64568. There are also other relevant CPT codes for revisions, explants and DISE.
Net cash provided by operating activities was $24.7 million for 2023 and consisted of a net loss of $21.2 million, non-cash charges of $86.6 million, and a decrease in net operating assets of $40.8 million.
Operating liabilities include accounts payable, which increased generally due to the timing of vendor invoice payments, and accrued expenses, which increased slightly. Net cash provided by operating activities was $130.2 million for 2024 and consisted of net income of $53.5 million, non-cash charges of $114.4 million, and a decrease in net operating assets of $37.7 million.
Removed
A Category I code (42975) is also used for Drug-Induced Sleep Endoscopy ("DISE") to evaluate sleep disordered breathing, which may be a necessary procedure to determine which patients are appropriate for Inspire therapy. In November 2024, the final 2025 Medicare reimbursement payments were announced.
Added
Our direct sales force engages in sales efforts and promotional activities primarily focused on ENT physicians and sleep centers. In addition, we highlight our compelling clinical data and value proposition to increase awareness and adoption amongst referring physicians.
Removed
The Medicare national average 2025 payment to implant our Inspire IV device in a hospital outpatient site of service is $30,474, an increase of 3% from the 2024 rate. The 2025 Medicare national average ASC reimbursement is $25,832, an increase of 4% from the 2024 rate.
Added
Third-party payors require physicians and hospitals to identify the service for which they are seeking reimbursement by using Current Procedural Terminology (“CPT") codes, which are created and maintained by the American Medical Association. Our various generations of Inspire therapy have been billed under different codes and reimbursement approaches throughout our history.
Removed
The 2025 Medicare national average physician reimbursement is $816 for implantation of a hypoglossal nerve stimulator, a 1% decrease over the 2024 payment. The reimbursement for the DISE procedure in the hospital setting is $1,724, a 7% increase over the prior year amount.
Added
In November 2025, the final 2026 Medicare reimbursement payments were announced. There has been, and still is currently, confusion on the appropriate reimbursement and coding for our products from CMS and Medicare Administrative Contractors ("MACs"), as well as other payors and stakeholders in the overall reimbursement and coding process.
Removed
In the ASC setting, the reimbursement for the DISE procedure is $792, a 714% increase from the 2024 amount.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeMarket conditions can impact the viability of institutions where our cash is held. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.
Biggest changeMarket 87 Table of Contents conditions can impact the financial stability of institutions where our cash is held and in the event of a failure, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.
Credit Risk As of December 31, 2024 and 2023, our cash, cash equivalents, and investments were maintained with financial institutions which we believe have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us, however our cash balances were in excess of insured limits.
Credit Risk As of December 31, 2025 and 2024, our cash, cash equivalents, and investments were maintained with financial institutions which we believe have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us, however our cash balances were in excess of insured limits.
We generally do not require collateral, and losses on accounts receivable have historically not been significant. No single customer represented more than 10% of our accounts receivable as of December 31, 2024 or 2023. Foreign Currency Risk The majority of our business is currently conducted in U.S. dollars.
We generally do not require collateral, and losses on accounts receivable have historically not been significant. No single customer represented more than 10% of our accounts receivable as of December 31, 2025 or 2024. Foreign Currency Risk The majority of our business is currently conducted in U.S. dollars.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect 86 Table of Contents on our ability to maintain and increase our gross margin and selling and marketing and operating expenses as a percentage of our revenue if the selling prices of our products do not increase as much as or more than these increased costs. 87 Table of Contents
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain and increase our gross margin and selling and marketing and operating expenses as a percentage of our revenue if the selling prices of our products do not increase as much as or more than these increased costs. 88 Table of Contents
A hypothetical 1% change in interest rates would have impacted interest and dividend income on our consolidated financial statements by approximately $3.6 million and $3.1 million for the years ended December 31, 2024 and 2023, respectively.
A hypothetical 1% change in interest rates would have impacted interest and dividend income on our consolidated financial statements by approximately $3.8 million and $3.6 million for the years ended December 31, 2025 and 2024, respectively.
We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the consolidated balance sheets. See Note 2 to our financial statements contained in this Annual Report on Form 10-K for additional information on our cash equivalents and available-for-sale marketable securities.
We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the consolidated balance sheets. See Note 2 of our Consolidated Financial Statements included elsewhere in this Form 10-K for additional information on our cash equivalents and available-for-sale marketable securities.
Our accounts receivable primarily relate to revenue from the sale of our Inspire system to hospitals and ASCs in the U.S. and Europe. We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base.
Our accounts receivable primarily relate to revenue from the sales of our Inspire system to hospitals and ASCs in the U.S. and Europe. We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and the broad diversification of our customer base.

Other INSP 10-K year-over-year comparisons