Inspire Medical Systems, Inc.

Good afternoon, my name is Dilem and I'll be your conference operator today. At this time, I would like to welcome everyone to the INSPIRE Medical Systems third quarter 2022 conference call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. I'll now hand the conference over to your first speaker Eski Yaja, the Vice President of Investment Relations at INSPIRE. You may begin the conference.

Thank you, Jalem, and thank you all for participating in today's call. Joining me are Tim Herber, President and Chief Executive Officer, and Rick Duholz, Chief Financial Officer. Earlier today, we released financial results for the three and nine months ended September 30th, 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. Please 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, November 1, 2022. With that, it is my pleasure to turn the call over to Tim Herbert. Tim?

Thank you, Ezgi. And thanks, everyone, for joining our business update call for the third quarter of 2022. We are excited to again report on a very strong quarter with significant progress across all elements of our business. As always, and right up front, we again reiterate our commitment to patient outcomes, to ensure that each patient has the best possible experience with INSPIRE therapy. During today's call, we will highlight many key accomplishments that demonstrate our ongoing focus to the patients, including improvements in access to therapy, technology advancements introduced and in development, and planned activities to broaden the population that can benefit from INSPIRE. With that, let's review our results. In the third quarter, we generated revenue of $109.2 million, representing a 77% increase compared to the third quarter of 2021. We remain confident in the outlook of our business for the remainder of 2022, and therefore, we are increasing our full-year revenue guidance to a range of $384 to $388 million from our previous guidance of $354 to $362 million. This guidance represents an increase of 65 to 66% over full year 2021 revenue of $233 million. Our growth continues to focus on and is driven by utilization improvements at existing sites as well as the activation of new centers. We will continue this balanced approach to growth and highlight that in the third quarter, utilization improved significantly at existing centers and was the leading factor in growth during the quarter. We further increased our capacity by adding 59 new implanting centers ending the period with a total of 844 centers. The end of the third quarter, ambulatory surgical centers made up 23% of our U.S. centers. We will continue to monitor and ensure that the field team is focused on accounts that can provide the greatest benefit to the patients moving forward, and we continue to expect to add between 52 and 56 centers in the fourth quarter. Regarding the US sales team, we created 18 new sales territories in the third quarter, bringing our total to 209. For the fourth quarter, we continue to expect to add 11 to 12 new territories. We also increased the number of field clinical representatives by adding nine, ending the third quarter with 109. During the remainder 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 were implemented in the first quarter when we expanded our U.S. sales leadership team, which now includes 32 regional managers, an increase of two as compared to the second quarter, and eight area vice presidents. We expect increased productivity from the team, resulting in additional inspired procedures while maintaining and improving patient outcomes. 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 and Inspire Therapy primarily through the InspireSleep.com website. For the first nine months of the year, the number of visitors to our website was over 10 million, an increase of 98% year over year. And from these visits, we had approximately 60,000 physician contacts. Of note, these physician contacts represent calls and emails to our advisor care program or directly to a physician's office and do not include participation in community health talks or referrals directly from a patient's healthcare provider. In the third quarter, we refined our national television advertising campaign to improve reach in a more efficient manner. Through our ACP, we closely monitor the success rates of connecting patients with healthcare providers and are continuing to develop and implement technology advancements to further streamline this process. From a U.S. reimbursement perspective, we do not expect any major changes when the final OPPS rules are released today. The most pressing topic was the addition of a level six neuro APC or ambulatory procedure code, which was not proposed to be implemented back in July. But if this were reversed, we would expect that Inspire would be included as part of this new APC. From a site of service or physician reimbursement, we had very little change from the July proposed rule and do not expect any material changes when the final rule is released. Moving on, our international business continues to make strides. although during the quarter we experienced a 14% decrease in revenue from the third quarter of 2021, driven largely by unfavorable exchange rates. During the quarter, international revenue was less than 3% of global revenue, reflecting the significant growth in the U.S. market. There are many positives in our international business, and I'd like to start by highlighting France, Following many years working with the French authorities, we have been approved for countrywide reimbursement at rates consistent with those established in other countries around the world. Therefore, we are in the final process to have INSPIRE listed on the French registry as early as the beginning of 2023, and the team is preparing for commercial launch in that country. In Singapore, We are building momentum with additional procedures at our flagship centers, which are on track to become regional centers of excellence. The adoption in Japan remains slow, but we are energized by the recent activity, primarily with the scheduling of procedures at new sites. Further, we have hired a full-time country manager in Japan to oversee activities and support the growth of awareness and adoption of Inspire Therapy. Turning to R&D. We are very excited about our new Bluetooth-enabled patient remote, which we recently launched. This new remote is a key part of our next generation of our next generation Inspire digital platform branded SleepSync, which enables remote therapeutic monitoring through the new patient remote and a web-based patient management portal. Please note that we previously described the Sleep Sync as Inspire Cloud. We expect the Sleep Sync digital health platform will become an important tool for physicians to monitor patient experiences and outcomes. Before year end, we plan to submit our upgraded physician programmer for FDA review. This new programmer connects with Sleep Sync and is key to the next step of providing remote patient programming. Also in the third quarter, we began the commercial launch of our new silicone-based stimulation and sensing leads, which provide improved manufacturability, easier system implantation, increased long-term performance, and enhanced reliability. Longer term, We continue to work on the design of our fifth generation INSPIRE Neurostimulator. The INSPIRE device will eliminate the pressure sensor and incorporate sensing inside the neurostimulator using an accelerometer to measure respiration. We have strong confidence with the current design and are moving into qualification testing and continue to target FDA approval in late 2023. Finally, we continue to conduct research and clinical trials to increase the number of patients who can benefit from INSPIRE therapy. To this end, two key regulatory submissions were sent to the FDA to expand the INSPIRE indication. First, we submitted a request to approve INSPIRE for the pediatric population with Down syndrome. We have been working with the physician for quite some time to collect sufficient clinical evidence to support approval for this important group of kids. The second request is to increase the upper limit of our indication to include patients who have an apnea hypotonic index of up to 100 events per hour. The current indication is approved for patients with an AHI of up to 65 events per hour. In this same submission, we also requested approval to modify the warning for patients with a body mass index of up to 32. And with our current data, we submitted a request to the FDA to increase the BMI warning to patients with a BMI of up to 40. With this second submission, the FDA provided a breakthrough device designation, thereby reducing expected review time. In summary, We continue to experience significant momentum in all key aspects of our business and our focus on patient outcomes and physician education to 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 investment in our DTC campaign support these initiatives. Finally, the many R&D achievements during the first nine months of the year highlight our commitment to improving patient outcomes and enhancing both the patient's and healthcare provider's experience with Inspire Therapy. We remain extremely excited about our 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.