Inspire Medical Systems, Inc.

Good afternoon. My name is Dilem, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Inspire Medical System's first quarter 2023 conference call. All lines have been placed on 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I'll now hand the conference call to your first speaker, Esgi Yaja, the Vice President of Investor Relations at Inspire. You may begin the conference.

Thank you, Dilem, and thank you all for participating in today's call. Joining me are Tim Herbert, President and Chief Executive Officer, and Rick Buholz, Chief Financial Officer. Earlier today, we released financial results for the three months ended March 31st, 2023. 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 2023 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 Form 10-Q, which was filed with the SEC earlier this afternoon, 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 2nd, 2023. With that, it is my pleasure to turn the call over to Tim Herbert. Tim?

Thank you, Esgie. And thanks, everyone, for joining our business update call for the first quarter of 2023. As always, we first and foremost reiterate our commitment to patient outcomes and to ensure that each patient has the best possible experience with Inspire Therapy. During today's call, we will provide an update on our first quarter results and discuss our updated outlook for the full year 2023. To start, we want to highlight a very important milestone in the Inspire story. Today marks the fifth anniversary of our IPO, and what a tremendous five years it has been. Since our IPO, the company has surpassed 40,000 patients treated with Inspired Therapy, grown to over 800 employees, introduced many therapy improvements highlighted by the two-incision surgical approach, received a dedicated CPT code for reimbursement, and most recently, received approval for pediatric patients with Down syndrome. To celebrate this momentous occasion, along with the FDA approval of our pediatric Down syndrome indication, we had the privilege to ring the opening bell at the New York Stock Exchange last Thursday, and we were joined by Jesse Rivera, the first pediatric patient with Down syndrome to receive Inspire Therapy nine years ago. And we all celebrated as Jesse rang the bell. With that, let's review our results. In the first quarter, we generated revenue of $127.9 million, representing an 84% increase compared to the first quarter of 2022. This 84% growth rate represents our highest quarterly growth rate post the COVID pandemic. Our growth continues to be driven by higher utilization at existing centers and is complemented by the activation of new centers. Given the strong momentum we are seeing in our business, we now expect full year revenue to be in the range of $580 to $590 million, a 42 to 45% increase compared to 2022. In the first quarter, we continue to increase our capacity by adding 68 new implanting centers in the US, ending the quarter with a total of 973. For the remainder of 2023, we continue to expect to activate 52 to 56 centers per quarter. Regarding the US sales team, we created 17 new sales territories in the first quarter, bringing our total to 242. For the remainder of 2023, we continue to expect to add 12 to 14 sales territories per quarter. In the first quarter, the number of visitors to our website surpassed 3.4 million, which is significant. The website is the introduction for patients and the source of the growth in therapy adoption. In January of 2022, we initiated our first national media campaign, which resulted in a one-time spike in website visitors, surpassing the 3.4 million in the first quarter, but the current volume has us in a very strong position entering 2023. From these visits, we had over 19,000 physician contacts and have steadfastly improved our conversion of contacts to patients receiving therapy. Of note, our team has implemented several services to enhance the patient experience, including a patient nurturing program whereby we are leveraging our significant patient database to re-engage and help patients in their Inspire Therapy journey through proactive outreach. Secondly, our digital scheduling pilot continues to make strides and we are currently experiencing a 30% improvement in physician appointments in the pilot centers compared to traditional phone and email scheduling through our advisor care program, and are adding technology to support the next wave of participating centers. Further, we continue to focus on improving process time, including scheduling of sleep studies And one tool is our collaboration with Agnome, which is showing great promise to date. And finally, our focus continues towards increasing surgeon capacity and we see signs of improvement in the patient pathway and specifically by reducing the time from patient contact to implant, which continues to be approximately six months. Moving on. Our international business continues to expand, growing 15% in the first quarter over the prior year, despite ongoing headwinds from unfavorable exchange rates. There were several positives in our international business during the first quarter, including the strong performance in Germany, the Netherlands, and Switzerland. We finalized countrywide reimbursement in Belgium and have increased our commercial efforts there. Furthermore, We hired a country manager in France in anticipation of the formal listing of the recently announced countrywide reimbursement in that country. In Asia, we had strong sequential growth from the fourth quarter of 2022. We continue to be pleased with the progress in Singapore and completed our first two cases in Hong Kong. In Japan, We transitioned to a direct sales organization, launched Inspire.jp, and see good momentum with strong patient outcomes and growing patient flow. Turning to R&D. We continue to work on the qualification of our fifth generation Inspire Neural Stimulator. The Inspire 5 device will eliminate the pressure sensing lead and incorporates the sensor inside the neural stimulator using an accelerometer to measure respiration. We continue operational and production qualification as well as integration with the INSPIRE digital tools, specifically SleepSync. The testing is continuing as planned and the team is committed to submitting our application to the FDA by the end of this quarter. Given normal FDA review cycles, including time to respond to FDA questions, this could move approval into early 2024. Our SleepSync system continues to make progress since the launch of the Bluetooth-enabled patient remote, and we have experienced significant adoption in the number of users of SleepSync along with strong growth in the number of connected patients currently in the system. Another example of the expanded utility of Sleep Sync is the next release will incorporate the second version of our Adhere patient registry. The current Adhere registry is within 200 patients of the 5,000 patient cap, and moving forward, patients will be enrolled into the Adhere 2.0 registry, which will be integrated into SleepSync. Subsequent digital programs will incorporate a sleep monitoring device and remote patient programming. Regarding operations, we continue to make good progress with the production wrap of the silico-based stimulation and sensing leads. We are in an improved inventory position and growing the inventory levels to our goal of one quarter of safety stock. Inventory levels are strong for all other components, including the Inspire4 neurostimulator, the patient remote, and the physician programmer. In summary, we are experiencing significant momentum in all aspects of our business. We remain focused on patient outcomes and physician education to continue the adoption of our therapy. In 2023 and beyond, we will continue to increase utilization at our existing centers while adding capacity by opening and training new centers. The ongoing expansion of our call center and investment in our DTC campaign support these initiatives, and we are seeing enhanced productivity from these efforts, which is driving our improved financial performance. We remain extremely excited about our future prospects and are confident that we have the appropriate strategy in place to drive long-term stakeholder value. With that, I'd like to turn the call over to Rick for his review of our financials.