Inspire Medical Systems, Inc.

hello this is the operator today's call will begin shortly please continue to stand by thank you for your patience again this is the operator today's call will begin shortly please continue to stand by thank you for your patience Thank you. Thank you. Good day and thank you for standing by. Welcome to the Inspire Medical Assistance Q1 2022 webinar. financial results, and business update conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would like to hand the conference over to your speaker today, Megan Rokamp. Please go ahead.

Thank you all for participating in today's call. Joining me are Tim Herbert, President and Chief Executive Officer, and Rick Buholt, Chief Financial Officer. Earlier today, we released financial results for the three months ended March 31, 2022. A copy of the press release is available on our website. On this call, management will make forward-looking statements within the meaning of the federal securities laws. All forward-looking statements, including without limitation, those relating to our operations, financial results and financial condition, investments in our business, continued effects of the COVID-19 pandemic, full year 2022 financial and operational outlook, and improvements in market access are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ. Accordingly, you should not place undue reliance on these statements. See our filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q filed with the SEC today, for a description of these risks and uncertainties. INSPIRE disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and speaks only as of the live broadcast today, May 3, 2022. And with that, it is my pleasure to turn the call over to Tim Herbert. Tim?

Thank you, Megan. And thanks, everyone, for joining the call today for our first quarter 2022 business update. First, today is the fourth anniversary of our initial public offering, and we wish to recognize and thank all the shareholders who have supported Inspire Therapy, which has helped almost 25,000 patients address their obstructive sleep apnea. With that, we are pleased to report on a very strong first quarter with a 72% revenue growth over the same period last year. In this first quarter, our business did experience the expected seasonality But similar to 2021, we experienced the additional challenge from a resurgence in COVID cases. However, the pandemic impact dissipated as we moved through the quarter and inspired procedures quickly rebounded across the US and Europe to drive the strong results. Our commercial execution leveraged both the existing centers as well as the newly activated hospitals and ambulatory surgical centers. In addition, we continue to improve the process of connecting patients with healthcare providers through our advisor care program, as well as our expanded direct-to-consumer advertising campaign, thereby creating a greater number of appointments for patients seeking Inspire Therapy. In the first quarter, we generated worldwide revenue of $69.4 million, again, representing a 72% increase compared to the first quarter of 2021. Seasonality and the COVID resurgence negatively affected procedure volumes early in the quarter, but volumes rebounded nicely as the quarter progressed. As such, We have confidence in the outlook of our business for the remainder of 2022 due to the momentum in the second half of the first quarter, the positive trends in in-plant activity, and the planned expansion in a number of in-planting centers and new territories. Therefore, we are increasing our full year 2022 revenue guidance to a range of $336 to $344 million. from our previous guidance of $318 to $226 million. This guidance represents an increase of 44 to 47% over full year 2021 revenue of $233.4 million. As always, I would like to reiterate that our primary focus remains on patients to ensure that each and every one has the best possible outcome from Inspire Therapy. With that, let's now get into the details surrounding the first quarter, beginning with capacity. During the quarter, we added 74 new US implanting centers, ending the period with a net total of 733 centers. Similar to what we have reported over the past several quarters, the rate of growth of new ambulatory surgical centers is slightly higher than that of hospitals. At the end of the first quarter, ASC has made up 22% of all U.S. centers. The number of centers is net of the 25 inactive centers deactivated in the first quarter as discussed during our Q4 earnings call. We will continue to monitor and ensure the field team is focused on accounts that can provide the greatest benefits to patients moving forward. For the rest of the year, we continue to expect to add between 52 and 56 centers per quarter. Regarding the US sales team, we created 17 new sales territories in the first quarter, bringing our total to 174. While this was ahead of our guidance, we continue to expect to add 11 to 12 new territories per quarter during the remainder of 2022. We also increased the number of field clinical representatives by adding 14, ending the first quarter with 93. During the rest of the year, we will continue to scale our sales management and training teams to optimize our ongoing expansion and to focus on strong patient outcomes and center productivity. This builds upon the changes that we implemented early during the first quarter where we expanded our U.S. sales leadership team which now includes eight area vice presidents and 30 regional managers. As the team grows more comfortable with their roles, we expect higher productivity resulting in more INSPIRE procedures while maintaining and improving patient outcomes. Turning to reimbursement and coding, the new CPT codes for INSPIRE have been in place since January 1st which has allowed payers and implanting centers to get the new codes implemented into their systems. There are always some logistical issues when transitioning to the new codes, but the INSPIRE team did a great job with training implanting centers and working with payers to ensure a smooth transition. These new codes for both the INSPIRE procedure as well as the drug-induced sleep endoscopy will be an important benefit for Inspire Therapy and have a long-term impact. Finally, with the increased cost of components and materials, Inspire is implementing a 5% price increase for all centers in the U.S. beginning in May. We have contractual pricing agreements with all U.S. centers, and therefore the price increase will be phased in over the next several quarters, and therefore we expect the impact on 2022 revenue will be minimal. INSPIRE has not had a price increase for four years, while the facility reimbursement has increased approximately 9% over this time period. Our growth continues to focus around utilization improvements at existing centers and setting utilization targets for newly activated centers. Paramount to this is improving our ability to assist interested patients with making a connection with a qualified healthcare provider. Importantly, our outreach programs continue to be very effective in generating interest in Inspire Therapy, primarily through the InspireSleep.com website. For the first quarter, the number of visitors to our website was approximately 4.7 million. an increase of 170% year-over-year. And from these visits, we had approximately 24,000 physician contacts. To note, these physician contacts represent the calls and emails to the advisory care program or directly to a physician's office and does not include participation in community health talks. As we now have broader geographic physician and facility coverage across the United States, we have adapted our direct-to-consumer project to include national TV advertising buys. This is the key driver behind the significant growth in web activity, especially very early in the year. National buys are significantly more cost effective and simply provide greater exposure to our potential patient base and include many areas in the U.S. where there has not been any media activity. The growth in web activity leads patients to connect with our Advisor Care Program, or ACP, which now serves approximately 80% of our centers. We intend to continue to expand our ACP throughout 2022, which will include many technology advancements to improve our ability to assist patients make appointments as well as to help them through the overall process. With the number of calls and our growing experience with the ACP, we now have a significant data set to determine the key sticking points for patients along their process. Notably is the number of patients who have not had a sleep study for over two years as required by Medicare and many of the commercial insurance payers. We also realize that it can be challenging for patients to quickly obtain another sleep study. Therefore, we are working with our sleep physicians to improve this process and have also begun implementing technologies to add capacity in sleep centers. Recently, we announced partnerships with two private digital health companies, EnsoData and Agnami, which will further these efforts. EnsoData increases sleep capacity and efficiency with their FDA-approved sleep study analysis platform, EnsoSleep. Using artificial intelligence, EnsoSleep automates the scoring and analysis of in-lab and home sleep testing, allowing clinician time to focus on patients. EnsoSleep is available in over 500 sleep centers in the United States, analyzing over 30,000 sleep studies per month, and many Inspire centers are already using this technology. Agnami is an early-stage startup built by physicians to increase access to sleep apnea care by shifting diagnosis and treatment from the clinic to patients' homes. At the core is the IGNAMI app, which provides the interface between the patient and the sleep physician, allowing clinicians to see and manage patients from any location. Following a digital consultation, the physician can order a home sleep study to be sent directly to the patient. the patient can receive a completed sleep evaluation and clinician follow-up in just a few days. Moving on, our international business had a strong quarter driven by increased procedure volumes in Europe. We remain very optimistic about our European prospects, particularly in Germany. While our international business is not subject to as much seasonality as in the U.S., we did experience procedure delays due to COVID in Germany early in the quarter. As with the U.S., we have seen a strong rebound late in the first quarter and we expect this momentum to carry forward throughout the year. The team is excited about completing our initial procedures in the United Kingdom during the first quarter and have several additional procedures scheduled. We continue to refine the reimbursement in the U.K., and will begin training additional centers. Most recently, we have been notified that Inspire Therapy has been approved for country-wide reimbursement in France. This is a very positive step following years of developing the clinical evidence necessary. We will work with the French authorities over the next few quarters to determine the proper reimbursement level as we plan for a broader launch of Inspire Therapy in France. In Japan, we remain excited about the opportunity, along with our partner, Japan Lifeline, continue to train additional physicians following the first Inspire implant performed at Tokyo University in February. Multiple physician teams are now screening for potential patients at about 10 hospitals in Japan. As I stated on our last call, we have entered into agreements with distribution partners in Singapore and Hong Kong. Our initial focus is introducing Inspire Therapy in Singapore, working with physicians at Singapore General Hospital. We are pleased to announce that our partner, eSmed, has placed the initial order for product and the first implants are scheduled for late May. The physicians continue to discuss Inspire with other patients as we expect several more implants yet in the second quarter. Once Singapore is active, the team will continue to initiate Inspire programs in Hong Kong, as well as start the early planning in South Korea. In Australia, we continue to work with the authorities on establishing reimbursement in that country. Turning to R&D. We are very optimistic about our new Bluetooth-enabled patient remote that was approved by the FDA in December. As we said previously, this new version allows information from the implanted neurostimulator and the patient remote to be uploaded to the Inspire Cloud via patient smartphone, making it easier for physicians to monitor Inspire patients. We remain in the soft launch period, to provide us with a full system level test of the patient remote and InspireCloud interface. We continue to plan for a full product introduction at the American Academy of Sleep Medicine meeting in June. The InspireCloud patient management system continues to expand as we add centers in the U.S. and in Europe. We expect InspireCloud will become an important tool for physicians to monitor patients' experiences and outcomes. Later this year, we expect to submit our upgraded physician program for FDA review. This new programmer connects with Inspire Cloud and is key to the next step of providing remote patient programming. During the fourth quarter of 2021, we formally submitted our request for full-body MRI compatibility to the FDA. We continue to interact with the agency during the review and are confident that we will receive approval within the 180-day review period. This approval will not require any changes to the existing INSPIRE system. Longer term, we continue work on the design for our fifth generation neural stimulator. The INSPIRE 5 device will eliminate the pressure sensor and incorporate sensing inside the neurostimulator using an accelerometer to measure respiration. We continue to target FDA approval in late 2023. In summary, we continue to experience significant momentum in all key aspects of our business, and our focus on patient outcomes and physician education support our confidence in the continued growth of Inspire. Our core focus for 2022 remains increasing utilization at our existing centers, as well as increasing capacity by opening and training new centers. The continued expansion of our call center and investments in our DTC campaign support these initiatives. We remain extremely excited about the future prospects and are confident that we have the appropriate strategy in place to drive long-term shareholder value. With that, I'd like to turn the call over to Rick for his review of our financials.