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spk02: 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 Systems first quarter 2024 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. I'll now hand the call over to your first speaker, Ezgi Yaja, the Vice President of Investor Relations at Inspire. You may begin the conference.
spk27: Thank you, Dylan, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer, and Rick Buchholz, Chief Financial Officer. Earlier today, we released financial results for the three months ended March 31, 2024. 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, full-year 2024 financial and operational outlook, and changes 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 we 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 7, 2024. With that, it is my pleasure to turn the call over to Tim Herbert. Tim?
spk10: Thank you, Eski. And thanks, everyone, for joining our business update call for the first quarter of 2024. We always start our earnings call by reiterating our commitment to delivering strong and consistent patient outcomes. Our mission is to put the patient first, and we are thrilled that over 65,000 patients have been treated with Inspire Therapy to date. Last week, we celebrated a major milestone with the 10-year anniversary of the FDA approving Inspire Therapy. This is only the beginning, and in the years ahead, we look forward to advancing the technology and growing therapy adoption for the many patients with untreated obstructive sleep apnea. With that, let's review our results. In the first quarter, we generated revenue of $164 million, representing a 28% increase compared to the first quarter of 2023. First quarter U.S. revenue totaled $155.8 million, a 25% increase over the same period last year. This revenue growth reflects increased physician and patient awareness, increased market penetration in existing centers, as well as expansion into 66 new implanting centers in the United States and 11 new U.S. sales territories. Outside the U.S., revenue increased 141% to $8.2 million. We're very happy to report a strong rebound in Europe and primarily in Germany since receiving derogation late in the fourth quarter. The derogation process has allowed us to continue to grow the adoption of Inspire Therapy. Finally, we continue to work diligently to obtain EU MDR approval, which we expect to receive in mid-2024. On our last earnings call, We indicated more pronounced seasonality of mid to high teens in the first quarter, and the team worked diligently and delivered revenue growth within the expected range while holding seasonality to 15%. With this strong start in our outlook for the remainder of the year, we are increasing our 2024 revenue guidance to $783 to $793 million, which represents 25 to 27 percent growth over 2023 revenue of 624.8 million dollars. Our net loss for the first quarter was 10 million dollars compared to the 15.4 million dollars in the prior year period representing a net loss per share of 34 cents compared to 53 cents in the first quarter of 2023. As our business continues to mature, we expect further operating leverage and now expect to be profitable for the full year 2024. Therefore, we are initiating first-time diluted net income per share guidance of 10 to 20 cents for the full year 2024. Switching our discussion. to a few key market developments. First, the Surmount OSA trial results reinforced our view that GOP1s will be complementary to our market opportunity and may provide a mechanism for potential patients to reduce their weight and qualify for Inspire Therapy. As a baseline, Inspire Therapy is currently designed to treat tongue-based collapse with stimulation of the hypoglossal nerve. Patients with a higher BMI are more likely to experience lateral wall collapse of the airway, which is not effectively treated with hypoglossal nerve stimulation. If they experience lateral wall collapse, these higher BMI patients, such as the patients in the Surmount OSA trial who had a mean BMI of 39, generally would not qualify for Inspire Therapy. Therefore, with the headline results of the Simone OSA trial, we believe many of the patients who experience significant weight loss, including those who benefit from the use of GOP1s, are likely to experience a reduction in their lateral wall collapse, which would allow them to qualify for Inspire. We look forward to reviewing the detailed study results when they become available. On a related note, With regards to the sleep endoscopy procedure, which is used to identify patients that are candidates for inspired therapy, we have completed the enrollment and quality assurance portion of the predictor study that is intended to identify a new approach to replace sleep endoscopy for a subset of patients. We are early in the data analysis phase, and we are identifying the populations that have predominantly tongue-based obstructions. Without surprise, and consistent with this amount of OSA results previously discussed, our initial focus with the PREDICTOR study is on patients with a lower BMI who may not have significant lateral wall collapse and therefore not require a sleep endoscopy. We will continue the analyses and move forward towards a peer-reviewed publication enabling us to work with payers to update their policies. Staying with our R&D activity, we are happy to report that the INSPIRE 5 submission is in review with the FDA, and assuming approval, we are on track for a soft launch in 2024 and a full launch in 2025. The team is focused on our operational readiness, which includes ensuring proper inventory levels prior to full launch. Further, we continue to make enhancements to our technology as evidenced by the commercial launches of our silicone-based leads and Bluetooth patient remote, the ongoing investments in our SleepSync digital platform, and most recently, the FDA approval of our new physician programmer, which connects directly with the SleepSync platform. Highlighting our market development activities, We continue to advance our medical education programs, and year to date, we had over 100 sleep fellows and close to 200 ENT residents attend our INSPIRE training programs. Further, we continue to increase our presence at primary care and cardiology conferences to drive increased awareness of INSPIRE therapy. Our direct-to-consumer awareness programs continue to be excellent and provide a strong pathway for patients to connect with the proper healthcare providers. Key to our success is our continuous improvement of our tools to assist the patient journey. It is important to note that we have the first and only FDA-approved closed-loop neurostimulation system to treat obstructive sleep apnea. And over the past 17 years, have built very strong clinical evidence with nearly 6,000 patients worldwide and detailed, compelling real-world evidence, including over 280 peer-reviewed publications and a strong reimbursement presence with over 260 million covered lives in the United States. We continue to advance therapy adoption and clinical evidence, including expansion of therapy indications to increase the number of patients who can benefit from Inspire Therapy. At Inspire, we have built a world-class team, including a direct commercial organization in the United States and numerous global markets. We have also invested heavily in research and development, commercial infrastructure, reimbursement, direct-to-consumer campaigns, medical education programs, and clinical trainers to drive continued awareness and adoption of Inspire Therapy while focusing on and improving upon our strong patient outcomes. In summary, we remain focused on the patient to continue the growth and adoption of Inspire Therapy. We will continue to execute our growth strategy of increasing utilization at existing centers while adding capacity by opening new centers. As we celebrate the 10-year anniversary of our FDA approval, we remain 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.
spk08: Thank you, Tim, and good afternoon, everyone. Total revenue for the first quarter was $164 million, a 28% increase from the $127.9 million generated in the first quarter of 2023. U.S. revenue in the first quarter was $155.8 million, an increase of 25% from the $124.5 million in the prior year period. Revenue outside the U.S. was $8.2 million, which is a 141% increase year over year. The global average selling price was consistent year over year and with the previous quarter, and we expect ASP to remain at this level for the remainder of 2024. Given the potential of new entrants in the future, we do not expect to continue to report this metric going forward. Gross margin in the first quarter was 84.9% compared to 84.4% in the prior year period. The increase was driven by improved manufacturing efficiencies and higher volumes. Total operating expenses for the first quarter were $154.5 million, an increase of 21% as compared to $127.5 million in the first quarter of 2023. This planned increase was due to the expansion of our sales organization, increased direct to consumer marketing programs, continued product development efforts, and general corporate costs. Interest and dividend income totaled $5.9 million in the first quarter compared to $4.3 million in the prior year period. This higher income was driven by higher interest rates on our increased cash and investment balances compared to a year ago. Net loss for the first quarter was 10 million compared to 15.4 million in the prior year period representing net loss per share of 34 cents compared to 53 cents in the first quarter of 2023. The weighted average number of shares outstanding for the first quarter was 29.6 million. We expect the full year diluted shares outstanding to be 30.4 million. Our total cash and investments were $469 million at March 31 and was consistent with our December 31 balance. The strong cash position allows us to remain focused on executing our growth strategy of increasing procedure volumes at existing centers while training and opening new implanting centers. We continue to expect to generate positive cash flow for the full year 2024. Moving on to 2024 guidance. With the strong trends we are seeing in our business, we now expect full year revenue to be in the range of $783 to $793 million, representing an increase of 25% to 27% compared to full year 2023 revenue. We expect full year gross margin to be in the range of 83% to 85%. we continue to expect to activate 52 to 56 new US centers and establish 12 to 14 new US sales territories during each remaining quarter in 2024. While we are early in our adoption and will continue to expand our footprint by opening new centers and territories, we believe profitability is a more relevant metric in tracking our financial performance going forward. With that said, Starting in 2025, we will guide to revenue growth and earnings per share. And as such, we will no longer provide center or territory guidance metrics. Given the strong momentum in our business and our improving leverage, we expect the diluted net income per share for the full year 2024 will be between 10 to 20 cents per share. In conclusion, our strong performance and business momentum provide us with confidence in our outlook for the remainder of 2024. With that, our prepared remarks are concluded. Dulem, you may now open the line for questions.
spk02: Thank you, sir. As a reminder, to ask a question, you will need to press star 11 on your telephone. To withdraw your question, please press star 11 again. We ask that you please keep your questions to no more than one question and one follow-up. And if time permits, we'll be more than happy to take more questions.
spk29: Please stand by while we compile the Q&A roster. And I show our first question comes from the line of Danielle Antalfi from UBS.
spk02: Please go ahead.
spk03: Hey, good afternoon, guys. Thanks so much for taking the question. Just a quick question on the U.S. performance in this quarter. It looks like 25% growth, very, very strong. But did, you know, did come in below expectations? I guess I don't know if you could comment a little bit on was this street mismodeling? I mean, it looks like the sequential decline in utilization was actually less in Q1 versus Q4 than it has been historically, so that's great to see. but maybe some of this dynamic on Medicare versus private pay mix. And most importantly, anything you're seeing from the private pay side, for example, United Health and this new dynamic with them of potentially requiring some sort of documentation around oral appliances. Sorry, that was a lot, but just any more color on U.S. performance. Thanks.
spk10: Thanks, Danielle. I think I got it. Yeah, we did talk a little bit about the seasonality expected in the quarter. We did have a strong Q1 last year offset with some of the silicon lead inventory that we were shipping, and we knew we had a strong Q4 coming in as well. So we expected the higher seasonality. The team did well. The team held tight to come in where we expected to be with 15% seasonality, and we do see the utilization continuing to be strong as we move forward going into the year, and therefore we have confidence in being able to increase our guide. We do understand the concerns over some of the private pay and the prior authorizations, and specifically UnitedHealthcare with oral appliance therapy. We are tracking that very closely. And with United, as we work hard to document the prior authorizations going in, and we don't see any significant pushback. At this point, don't believe it has any impact on our business. Again, feel we're in a good position moving forward for the rest of the year.
spk02: Thank you. And I show our next question comes from the line of Robbie Marcus from JP Morgan. Please go ahead.
spk24: Hi, this is Alan. I'm for Robbie. I had, I guess, a bit of a follow-up to the first question on the U.S. You know, despite the U.S. experiencing this heightened seasonality, you did end up raising the guide by, you know, I'd say a fair multiple of the B, largely driven by OUS. So what are you seeing that gives you confidence into the second quarter to raise guidance by this much? And should we think about that as something from utilization, doc ads, center ads?
spk10: I think it's all of the above. I think we do see good demand for the therapy across the board. We do see uptick in utilization as we move through the year. I think we did have confidence to increase the guide, focusing more on the latter half, but have confidence going forward with the demand for the product within the United States with the increased number of centers that we opened up and continue to drive utilization.
spk02: Thank you. And I show our next question comes from the line of Travis Steed from Bank of America. Please go ahead.
spk19: Hey, thanks for taking the question. I guess, you know, why do you think U.S. center utilization is slowing? It's kind of about, even if you exclude the new centers this quarter, it's kind of in line with the second half of last year, which is when you had some of the prior auth issues. I just really haven't seen the improvement there. So just curious, is there something going on with the new centers you're adding or older centers maturing or any kind of rep changes going on? And also curious why you're no longer I'm going to report the kind of the metrics we use to track utilization.
spk10: Right. I think that the utilization continues to be our focus. And I think if you kind of look back to where we were back on the first quarter, we're pretty consistent where we were a year ago when you take into effect the inventory shipments with silicone leaves. And we know we always have seasonality as we come out of Q4 and moving into Q1. And we tend to start wrapping back up and that again. gives us the confidence to be able to increase the guide as we move through the second half of the year. I think as we kind of look at as we start maturing the company and we focus on reporting on revenue and now we're very happy to start reporting on and committing to profitability for the company as we mature. I think it's become less important for us to report on number of centers and and the number of new ads, and there's also some proprietary reasons to be able to do that as well. But I think that we're making sure that we provide the proper information for people to really be able to model a business and really feel profitability is going to be a key to helping people out there.
spk02: Thank you. And I show our next question comes from the line of Adam Nader from Piper Sandler. Please go ahead.
spk20: Hi, good afternoon. Thank you for taking the questions. Wanted to start with a guidance question. So the raised guidance, I wanted to just better understand, are we, are you guys, you know, attributing that primarily to the OUS business? Is that, should we spread it across both U.S. and OUS? Just help us kind of, I guess, think through that. And then, you know, any color, Tim, that you're willing to provide on Q2 trends thus far in the quarter? I have the street at $188 million for Q2 consensus revenue. Curious if you're willing to give a comment there as well. I did have one follow-up. Thanks.
spk10: Okay. That sounds good. I think that when we look at it, we're seeing good progress in Europe. We did have a little bit of a rebound effect with the derogation in Germany, which is strong. But we're seeing strong momentum going forward there, too. So the European team is performing very well, as is the team in the United States. Okay. Well, I think there is a complimentary element to some growth in international revenue, which is wonderful. Yeah. Hi, Ann.
spk08: It's Rick. I'll add to that too. So historically, you know, we have experienced seasonality in the first quarter. And then as far as the composition of our full year revenue, that generally builds throughout the year. So I would say the increase in the guidance It should be mainly seen in the second half of the year.
spk20: I got it. And, guys, I apologize. I guess I'm a little confused. So the guidance raised is attributable to both the U.S. and a U.S. business going forward, which you kind of spread it across both those geographies. Is that correct?
spk08: Yes. There will be – from a – OUS perspective, we don't give quarterly guidance from an OUS and US perspective, but we did see some catch up in the first quarter outside the US. We did have a strong first quarter, but we expect to see some of the additional catch up into 2024, but to a little bit lesser extent. So we're not guiding towards any sequential growth outside the US, but we We look forward to continued good numbers outside the U.S.
spk20: Okay. Thanks for that, guys. And if I may, just with the follow-up, wanted to ask about Surmount OSA. You know, data came in pretty much as expected down the fairway. I did want to ask how you're thinking about any potential, you know, impact to the patient funnel, either in the back half of 24 or 25. Are you hearing anything in the field, you know, from docs or reps? you know, will folks look to potentially try a GLP-1 before going, you know, forward with an INSPIRE procedure, or do you think there's going to be no impact to the funnel? Thanks again for taking the questions.
spk10: Thanks, Adam. You bet. Yeah, so we talked to all our docs, and we talked to our field. We do hear discussions around the GLP-1s, and we know the patients with a higher BMI tend to get screened out with the sleep endoscopy, and there are patients who have reported being able to use the GOP-1 to be able to lose weight and therefore qualify for INSPIRE. So very early, early days, but we do get positive reports on that and look forward to continuing to focus on that as we move through the rest of the year.
spk02: Thank you. And I show our next question comes from the line of Callum Tishmarsh from Morgan Stanley. Please go ahead.
spk23: Thanks for taking the question, guys. Just on the recent commercial insurance updates, I know some of the policies kicked in in March. I'd be curious to hear about any early interest or momentum you've seen from those high BMI and AHI patients, as well as the pediatric Down syndrome population as well. Now they're in scope for coverage. Just any color on initial progress there would be great. Thanks.
spk10: Thank you very much. I think we've seen more progress with the high AHI, the high apneic hypotonic index, because that's a natural step for those patients to be able to receive approval, and we're able to move some of the prior authorizations in process to bring them in and move them forward. With the high BMI approval, remember that's just a change to the warning to allow patients with a BMI up to 40, but it's still very important that we treat tongue-based collapse versus lateral wall, and we do today still use sleep endoscopy to screen those out. Not that significant of an impact with the high BMI yet, but that's something, as we just talked about with the GOP ones, that perhaps we can leverage that to take advantage there. And the fun news is with the pediatric population, it's a group that we really care about. We continue to grow the awareness there, and we are opening up additional children's hospitals to be able to participate with INSPIRE. So we're starting to see some movement with that population as well.
spk02: Thank you. And our next question comes from the line of David Rescott from Bayer. Please go ahead.
spk21: Hey, can you guys hear me all right?
spk07: Yes, we can hear you well, David.
spk21: Oh, great. Thanks for taking the questions. I wanted to follow up on the kind of profit or the positive kind of profit guidance that you gave for the full year. Maybe just wondering what some of the bigger drivers are behind that. I know you talked about some more targeted kind of DTC spend in 2024 previously. Wondering how big of a piece that is. And when we think about the cadence of that through the year, should we expect that to be more back and loaded where you have a pretty positive Q4 that kind of outweighs the losses in the rest of the year? Or do you think in Q3 you have the potential to deliver a positive quarter as well?
spk08: Yeah, hey, David. It's Rick. I'll take that question. So yeah, in the first quarter, our DTC spend was $26 million, a little bit increased year over year. But as we've talked about in the past, in 2023, we spent about $100 million in DTC. And as we mentioned, with the increased demand from patients, physicians, and adding new centers, we'll continue those investments. But again, that rate will really be moderate or nearly flat for 2024, because we are focusing on more targeted digital advertising to go after qualified patients and hopefully improve that conversion. So from a profitability standpoint, as we continue to increase revenue, DTC spend will be flat versus 2023. R&D will continue to spend high teens percentage of revenue. And so that leverage will be gained in increased utilization. And so we put forth the new guidance, and that we're excited about, which is a bottom line of 10 to 20 cents earnings per share in the bottom line. Um, we, we mentioned before that we'd be profitable for the second half of the year, and now we're guiding to profitability for the full year, but we haven't broken down. In which quarter, you know, that we, we turned that corner, but we're excited about the ability to be profitable for the year.
spk02: Thank you. And I show our next question comes from the line of Anthony Patroni from Mizzou. Please go ahead.
spk11: No, thanks for getting us in here this afternoon. Hope everyone's doing well. One dynamic in the U.S. to explore a little bit, just the sort of push out of Inspire 5. Do you think there's maybe a little bit of pause that you saw in 2Q that could maybe extend in 1Q that can extend into 2Q? How did that dynamic play out in the quarter? And I'll have a quick follow-up. Thank you.
spk10: Sure. No, we don't see any delay. We like the progress we're making with Inspire 5. And the package is fully put together and it's in review with the FDA. And we're running our program and starting our soft launch later this year and full launch in 25. So we still remain very, very excited about the Inspire 5 portfolio that we'll be launching.
spk11: And maybe just a level set going back a little bit to UnitedHealthcare and the expanded coverage there. They did have one, you know, sort of preemptive step with mandibular repositioning devices. It seems like a minor step to us. Yet that label is greatly expanded. The coverage is greatly expanded to match FDA. So maybe just a little bit on the push-pull there. You think there's any slight hiccup from mandibular, but on the flip side, it seems like this is a great, you know, an expansive opportunity just from overall coverage standpoint. So how does that push and pull play out through the remainder of the year with United specifically? Thanks.
spk10: Yeah, thank you. I think that's a very good observation that you make there. And I think that we agree that the upside with the high AHI specifically, as well as to the pediatric population far outweighs the documentation that we put into the prior authorization for mandibular advancement devices or oral appliance therapy. And we think that our team works to make sure that the health care providers have the proper documentation in the prior authorizations that go to UnitedHealthcare. So we don't see a significant challenge from documenting the oral appliances, but we do see a good upside with especially the high AHI and then secondarily with the pediatric population. So yeah, great observation. Thanks.
spk02: Thank you. And I show our next question comes from the line of Chris Pasquale from . Please go ahead. Thanks.
spk13: Hey, guys. One quick one on predictor. Just any plans to present that data or disclose the headline results prior to publication?
spk10: I'm sure we'll probably have a presentation down the road. Where we stand today and with the timing of the AASM, which is the sleep meeting in June, I don't think we're going to be in a position present there, but we will be looking for a public conference as we work publication in parallel. So we'll still push for later in the summer or early fall possibly with the AAO ISS meeting, but we will look to get that information out as soon as we can.
spk13: Okay. And then just circling back to surmounts, When you think about your current patient population, I know if you look at the adhere registry, the average BMI was around 29. Do you think that's still an accurate reflection of the patients you're treating commercially or since the label expansion, has that shifted at all? Just want to draw a distinction between the patients that were in this study at baseline and who you guys are seeing on a day-to-day basis.
spk10: Yeah, I think good observation. Again, I think the patient and the BMI in the STAR trial is consistent with the BMI that we saw in our 5,000 patient adhere registry. And it reflects patients that have a sleep endoscopy and do not have significant lateral wall collapse. And that's very consistent with the reports of the Surmount OSA trial, who the patient started with the BMI at 39. So you would expect those patients to be predominantly lateral wall collapse and as they lose weight, they can relax that and expose the tongue base collapse that is so effectively treated with Inspire. So I think very, very good consistency from the data that we saw and really look forward to seeing additional data when it comes out hopefully this summer.
spk30: Thanks, Tim.
spk10: Thanks, Chris.
spk02: Thank you. And I show our next question comes from the line of Richard Newiter from Truist Securities. Please go ahead.
spk22: Hi, thanks for taking the questions. Maybe just first on Inspire 5, I guess is the anticipated launch timing the same as it was the last time you provided an update and then just on Inspire 5, how are you thinking about or potentially you know, anticipating people, whether it's physicians or consumers, waiting for the Inspire 5 to come out relative to the existing solution. I guess, is there a risk that there's a delay in treatment and, you know, however transient that might be, is that something that, A, is contemplated in guidance or, B, something you've thought about and preparing for?
spk10: Okay. Thanks, Rich. The first answer to your first question is yes, we are on running our plan and in line with what we talked about at our last earnings call. Number two is with the logic, yes, there's always a risk of patients being aware of it, but we will not be marketing this program until the full launch. And so we believe the risk of warehousing, if you will, or patients waiting for the new technology is going to be very, very low. We have this experience with past products that we've had that we haven't experienced any kind of delay from that perspective, but we're certainly aware of that, certainly will monitor that, but we do not believe that's going to have a significant impact as patients who have untreated moderate to severe sleep apnea are very motivated to receive therapy.
spk22: Got it. And maybe just one follow-up on what you are and aren't going to provide going forward. So it sounds like you guys are going to continue providing new account openings and utilization for the remainder of 24, but starting in 25, you're no longer going to provide new account openings. And if that's right, how are you going to help analysts and the investment community understand what the utilization trend is in the business, and what will you provide towards that end? Right.
spk10: That's correct. And what we're going to be focusing on is our top line revenue growth, as well as, more importantly, profitability going forward. And we'll continue with discussions with you. But I think the focus is really going to be top line, bottom line reporting to be consistent across industry.
spk02: Thank you. And I show our next question comes from the line of Shagun Singh from RBC. Please go ahead.
spk04: Great. Thank you so much. I was just wondering if you can talk about, you know, INSPIRE 5 and predictor study readout. You know, we've gotten some pretty good feedback on it and very specifically on INSPIRE 5. I was wondering if you had any take on potential impact in driving down operating times, you know, that could potentially increase utilization. And then on the predictor study, You know, just how meaningful could this be in speeding up that patient funnel? And then just lastly, I was wondering if there's any updates on trends in OSA diagnosis. I think previously you've called out a bunch of drivers like GLP-1s, AFib, DTC. I think there's general increase in awareness amongst the PCPs, et cetera. So just anything new you're seeing on the diagnosis front. Thank you for taking the questions.
spk10: Fantastic. I got them all. Okay. So with Inspire 5, yes, we do expect to have a reduction in operating time, operating room time for the surgeon, specifically because that will remove the pressure sensing lead, which is now going to be incorporated inside the Inspire 5 neurostimulator. So it's one less product that the surgeon needs to implant. And so we believe that that's going to have a significant reduction. I have talked in the past of our average OR times today being between 60 and 90 minutes. And we believe with Inspire 5, it could go down to between 45 and 60 minutes. So a significant reduction in the time to perform the procedure. So we think that's going to be very well accepted, both for the patient as well as the surgeon. Secondly, as far as the patient funnel goes, We know the time for a patient to contact a healthcare provider, go through the diagnostic process and get scheduled and receive inspired therapy takes a significant amount of time. And a key part of it in the middle is to perform the drug induced sleep endoscopy. It could add anywhere from one to three months to the time, depending upon the scheduling of that specific surgeon. So we believe with Predictor, if we can identify the population of the patients with low BMI that don't necessarily need to have a sleep endoscopy and can have an alternative review, that we can reduce the OR time for those patients. We believe patients with the higher BMIs likely will have to continue with sleep endoscopy, but we're going to keep working on the data analysis to be able to show that. But hopefully in a significant number of patients, we can show a in improvement in the patient experience, meaning the time from contact to receiving therapy. And then finally, talking about the trends in obstructive sleep apnea, not only with the awareness that the GLP-1 drugs can create, and those elements such as Oprah on a TV show really creates awareness. And when those patients go to their general practitioner, they will be diagnosed for diabetes. for heart failure and for obstructive sleep apnea. So we believe that will increase the diagnostic rate of obstructive sleep apnea. Secondly, patients are aware of how well they sleep. We have smart beds. There are watches that will come out that will track the quality of your sleep. So generally the society has become more aware of their quality of sleep and we believe that will just continue to increase. the awareness and the diagnostic rates for sleep apnea and therefore the opportunity for INSPIRE.
spk02: Thank you. And I show our next question comes from the line of John Block from Stiefel. Please go ahead.
spk31: Thanks, guys, and good afternoon. Hi, Scott. Tim, maybe just the first one. Any update on other privates, you know, call it coverage policies changing for the higher BMI-AHI Any update there and do you expect most on board by the end of 2024? And then the follow-up, Rick, just to shift gears, you know, I'm just curious about the guidance and profitability for the year. You guys continue to be, you know, a solid beat and raise story. So let's just say hypothetically the year ended at, I don't know, 825 million top line and not the 790 midpoint. How are you going to handle that? You know, do you see that flow through to the bottom line on the incremental dollar? Or is it one of those things where you sort of take that upside and plow it back into the business? I'm just curious if the 10 to 20 cents should move higher proportionally to the, you know, potential upside to the revenue targets. Thanks, guys.
spk10: Yeah. Hey, John. Let me take the first one, then hand it off to Rick. As far as the payers go, we have an active program sending communications out to each of the payers to make sure that they are aware. of the FDA approvals for the new indication and encouraging them to, excuse me, update their policies. They're making very good progress. We would like to have most of them taken care of by the end of the year, although Medicare is always challenging because with the MACs, you have to run through a fixed process to be able to meet with CMS, meet with the MACs, go through the update process to be able to get the policies updated and reviewed and implemented. So Medicare is always a little bit of a delay getting through there, but the commercial policies have responded quite well, and we expect to continue to keep pushing that, as you mentioned, for the rest of the year. Let me hand off to Rick on profitability response.
spk08: Sure. Hey, John. First of all, we have not changed our guidance philosophy, and that goes across all of our guidance metrics. But we also, you know, we stayed focused on improving center capacity and utilization. And so as we continue to improve utilization, let it be known that we continue to make investments in our business for our long-term growth. Our revenue growth has been outpacing our OPEX growth, and we're excited to announce that we'll be profitable for the full year on a gap basis. As we continue to make those investments with our 84% gross margins and our OPEX not growing quite as fast as revenue, could we see improved leverage? Yes, but we're not guiding to that at this point.
spk02: Thank you. And I show our next question comes from the line of Mike Krapke from Laring Partners. Please go ahead.
spk14: Hi, everyone. Thanks for sending that question. The first one, is there any scenario where some of the secondary endpoints from Surmount LSA that we could see at ADA could make you or you've heard KOLs think GLP-1s maybe could have a more negative impact on the business?
spk10: From the top line, data that was put forward, I think that's going to be a little bit of a struggle, if I understand the question. I think we look forward to seeing the detailed data, and it's hard to hypothesize on what that data is going to show, but I think if you look at the 51% reduction in AHI in the specific arm that was just therapy alone, I think that it's pretty indicative of what we can expect as we come into the summer. and that shows that they're able to help those patients with a higher BMI lose weight, thereby addressing their lateral wall collapse. So I think you'll see more of the same as we move into the summer months and be able to look at more specific details, specifically with different groups of BMI after they lose weight and then be able to look at the specific AHI reductions of different
spk14: ranges of bmi so really look forward to seeing that data but believe that data is again going to be in line with what we've talked about to show that these gop ones will be complementary to inspire got it understood and then maybe just separately you know you mentioned the impact of some of the wearable devices you know i know samsung got fda approval for their watch earlier this year seems like you might get a commercial launch of that bq is there any consideration of that in your guidance and then to what extent does that representative a source of potential upside, either near term or longer term?
spk10: I don't think specifically we've included the new technologies into our guide. I know it's still early days for the watches to come out, but smart beds have been in existence for some time, and I think our outreach programs are really key to driving our awareness, and we continue to spend a lot of time with general practitioners and cardiologists working our referral networks, which is the classic MedTech marketing as well, to continue to drive referrals. So we aren't that specific into our guide to be able to pin down that we're specifically dealing with the new technologies, but we do believe that they will have a positive impact in the future for sure.
spk15: Got it. Thanks very much.
spk10: Thank you.
spk02: Thank you. And I show our next question. It comes from the line of Michael Sircone from Jefferies. Please go ahead.
spk16: Hey, good afternoon, and thanks for taking my question. Just one for me. So, you know, on the competitive front, you know, you've got a competitor overseas that released some U.S. data, you know, and it seems like they're going to stress positive data or good results across both non-supine and supine positioning as maybe a point of differentiation, you know, when they start detailing in the U.S. Just wanted to get your take on, you know, have you had conversations with physicians, you know, your thoughts on how meaningful that could be and, you know, efforts or potential to counter detail, you know, those claims?
spk10: No problem. We don't think it has any impact. We've been talking about supine AHI with our physicians since 2007 when we launched Inspire. In fact, when I worked on this project inside Medtronic back in the late 90s and 2000, we're focused on supine AHI. So this is not a new phenomenon. Gravity affects sleep apnea. And when you lay supine, gravity pulls the tongue back harder then. if you lay on your side. When we program our devices, we program worst case. In other words, in a supine position. So we know with certain levels of energy required to treat supine AHI, that's what programs or that's what patients are programmed at. And then when they roll onto their side, you might argue that they are being overstimulated. And that's true because what we care about is making sure that we have equal treatment at both supine and non-supine. We had specific items in that in our STAR trial. So this is not a concern. We've been focused, laser-sharp focused on supine AHI since the day we started the company.
spk02: Thank you. And I show our next question comes from the line of Larry Bigelson from Wells Fargo. Please go ahead.
spk06: hey guys thanks for taking the question well one question for me and maybe it'll be a very short answer rick it's good to see the uh the profitability progress any any broad strokes on profitability goals uh beyond this year and and how should we be thinking about a tax rate thank you right so for 2025 um we're not providing overall guidance yet for 2025 but you know we're going to be profitable for 2024 and we're not expecting it to go backwards or
spk08: So we expect to be profitable for 2025 and thereafter. And as far as effective tax rate, we'll get more color on that. You know, we have a lot of NOLs that we will get to recognize on that. And so for purposes of model, we'll provide more clarity on effective tax rates in a future call.
spk25: All right. Thank you.
spk02: Thank you. And I show our next question comes from the line of Brett Fishman from KeyBank Capital Markets. Please go ahead.
spk26: Hi, this is actually Liz on for Brett. Thanks so much for taking the questions. Just one from me. Could you guys provide some updates on your broader DTC strategy and how it's been progressing?
spk10: Absolutely. We've, as you go back a couple quarters ago, we talked about refinement of our program and how we're really focusing our DTC more targeted to our demographic, and that's been very successful. We continue to grow DTC, but as Rick mentioned, we stay pretty consistent with where we were in 2023, and we're seeing revenue grow beyond that as we're capturing leverage from our DTC program. We continue with both national TV buys as well as with social media. But now we're also getting into targeted digital placement that's shown to be quite effective. So the DTC program has evolved since our commercial approval 10 years ago in 2014 and will continue to evolve as we learn more and find better ways to reach out to our specific patient population.
spk28: Great. Thank you. Thank you.
spk02: Thank you. And I saw next question comes from the line of Micropolar from Wolf Research. Please go ahead.
spk18: Good afternoon. Apologies if I missed this, but Salesforce, sales territory ads or creations in the quarter was 11. I think the guide for each quarter of the year was 12 to 14. I see you've reaffirmed the guide for the year, but I'm just curious in one Q11 versus 12 to 14, kind of, is that just timing anything to flag there? And, you know, I asked just because it seems like a slight Dave Kuntz, deviation and trend that was a metric you've been guiding for a long time and you typically were adding above the the quarterly guide, and this is a touch below so any any color on this one would be helpful.
spk10: Dave Kuntz, Michael it's I think the. Dave Kuntz, it's just timing, I think the we focus our new territory as based on where we are adding new centers and where the need is, and so we don't specifically target a number of. of new territories per quarter. And so there's always, as you know, a little bit of fluctuation in there from quarter to quarter, but not a lot of change here. We reinforced our guide going forward and maybe just a little bit of timing on who was ready in the first quarter to be able to add a new territory, and we'll continue that focus going forward. Did I jump early? Did you have a follow-up too, Michael?
spk17: That was good. Thank you, Tim.
spk02: Thank you. And I share our last question in the queue. It comes from Suraj Kalia from Oppenheimer & Co. Please go ahead.
spk05: Rick, Tim, can you hear me all right?
spk09: Yes, Suraj. How are you?
spk05: Good. I hope everyone is well. So, Tim, a couple of questions. I'll pose them right away, and hopefully you get the gist of it. First and foremost, Tim, in terms of supine, non-supine, right, There was a recent paper highlighting quite low responder rates and AHI reduction that inspires supine versus non-supine. So I guess if you could help reconcile your comment about the current titration based on a supine position. So help us understand why is the paper off if it is? That is one question. And the second question, quickly, Tim, if I could, I understand the consensus commentary about complementarity of GLIPS to OSA and to hypoglossal nerve and CPAP. I get all that. Tim, what I'd love to understand more is, aren't we looking at just one side of the coin, severely obese coming into, let's say, the obese category? But by the same token, the volume effect of overweight and obese patients That's 10 times that of severe, right? Shouldn't we be looking at the other side of the coin also? I'd love to get your perspective on that. Gentlemen, thank you for taking my questions.
spk10: No problem, Suraj. Thank you very much. Got them both. Going to go back and look at that paper. I think some of it was subjective evidence that was talked about and not the core evidence. But yeah, our focus is always around supine AHI. In fact, in our clinical studies, we literally screened out patients who did not. have supine AHI, or were only supine. So we evaluated that in the STAR trial. We've been evaluating that all the way through. It's very clear that supine with gravity is more challenging to treat, but we believe that that's been a key focus for INSPIRE since the beginning of the company, and we'll continue to focus on that going forward. Secondly, on the GOP1s being complementary, it's about the mechanism of action. I know we've talked about this quite a bit. And the higher BMI patients have more of a lateral wall collapse. Hypoglossal nerve stimulation is designed to treat tongue-based obstruction, not lateral wall collapse. So we know as the patients get a higher BMI that the GOP1s can be complementary to bring them to a lower BMI and relax the lateral walls. And to your question, the belief is, and I think what you'll see from the Surmount OSA trial, is patients who have a lower BMI do not have the same level of AHI reduction simply by the fact of the mechanism. They don't have lateral wall collapse, and GLP-1s are not designed to treat tongue-based collapse. That's what INSPIRE does. That's how the two become complementary to each other. So thanks very much for that, Suraj.
spk02: Thank you. This concludes the Q&A session for the conference. I'd now like to turn it back to Tim for closing remarks.
spk10: Thank you all for joining the call today. As always, I'm grateful to the growing team of dedicated Inspire employees for their enthusiasm, hard work, and continued motivation to achieve successful and consistent patient outcomes. The team's commitment to the patients remain unmatched and is the most important element to our success. I wish to thank all of our employees as well as the healthcare teams for their continued efforts as we remain focused on further expanding our business in the U.S., Europe, and Asia. For all of you on the call, we appreciate your continued interest and support of INSPIRE. We look forward to providing you with further updates in the months ahead. Thank you all very much.
spk29: This concludes today's conference call. You may now disconnect. you Thank you. Bye.
spk02: 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 Systems first quarter 2024 conference call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I'll now hand the call over to your first speaker, Ezgi Yajar, the Vice President of Investor Relations at Inspire. You may begin the conference.
spk27: Thank you, Dylan, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer, and Rick Buchholz, Chief Financial Officer. Earlier today, we released financial results for the three months ended March 31, 2024. 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, full-year 2024 financial and operational outlook, and changes 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 we 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 7, 2024. With that, it is my pleasure to turn the call over to Tim Herbert. Tim?
spk10: Thank you, Eski, and thanks, everyone, for joining our business update call for the first quarter of 2024. We always start our earnings call by reiterating our commitment to delivering strong and consistent patient outcomes. Our mission is to put the patient first And we are thrilled that over 65,000 patients have been treated with Inspire Therapy to date. Last week, we celebrated a major milestone with the 10 year anniversary of the FDA approving Inspire Therapy. This is only the beginning. And in the years ahead, we look forward to advancing the technology and growing therapy adoption for the many patients with untreated obstructive sleep apnea. With that, Let's review our results. In the first quarter, we generated revenue of $164 million, representing a 28% increase compared to the first quarter of 2023. First quarter U.S. revenue totaled $155.8 million, a 25% increase over the same period last year. This revenue growth reflects increased physician and patient awareness, increased market penetration in existing centers, as well as expansion into 66 new implanting centers in the United States and 11 new U.S. sales territories. Outside the U.S., revenue increased 141% to $8.2 million. We're very happy to report a strong rebound in Europe and primarily in Germany since receiving derogation late in the fourth quarter. The derogation process has allowed us to continue to grow the adoption of Inspire Therapy. Finally, we continue to work diligently to obtain EU MDR approval, which we expect to receive in mid-2024. On our last earnings call, we indicated more pronounced seasonality of mid to high teens in the first quarter, and the team worked diligently and delivered revenue growth within the expected range while holding seasonality to 15%. With this strong start in our outlook for the remainder of the year, we are increasing our 2024 revenue guidance to $783 to $793 million, which represents 25% to 27% growth over 2023 revenue of $624.8 million. Our net loss for the first quarter was $10 million compared to the $15.4 million in the prior year period, representing a net loss per share of 34 cents compared to 53 cents in the first quarter of 2023. As our business continues to mature, we expect further operating leverage and now expect to be profitable for the full year 2024. Therefore, we are initiating first-time diluted net income per share guidance of 10 to 20 cents for the full year 2024. Switching our discussion to a few key market developments. First, the Surmount OSA trial results reinforced our view that GOP1s will be complementary to our market opportunity and may provide a mechanism for potential patients to reduce their weight and qualify for Inspire Therapy. As a baseline, Inspire Therapy is currently designed to treat tongue-based collapse with stimulation of the hypoglossal nerve. Patients with a higher BMI are more likely to experience lateral wall collapse of the airway, which is not effectively treated with hypoglossal nerve stimulation. If they experience lateral wall collapse, these higher BMI patients, such as the patients in the Simone OSA trial, who had a mean BMI of 39, generally would not qualify for Inspire therapy. Therefore, with the headline results of the Simone OSA trial, we believe many of the patients who experience significant weight loss, including those who benefit from the use of GOP1s, are likely to experience a reduction in their lateral wall collapse, which would allow them to qualify for INSPIRE. We look forward to reviewing the detailed study results when they become available. On a related note, with regards to the sleep endoscopy procedure, which is used to identify patients that are candidates for INSPIRE therapy, we have completed the enrollment and quality assurance portion of the predictor study that is intended to identify a new approach to replace sleep endoscopy for a subset of patients. We are early in the data analysis phase, and we are identifying the populations that have predominantly tongue-based obstructions. Without surprise and consistent with this amount of OSA results previously discussed, our initial focus with the PREDICTOR study is on patients with a lower BMI. who may not have significant lateral wall collapse and therefore not require a sleep endoscopy. We will continue the analyses and move forward towards a peer-reviewed publication, enabling us to work with payers to update their policies. Staying with our R&D activity, we are happy to report that the INSPIRE V submission is in review with the FDA and, assuming approval, We are on track for a soft launch in 2024 and a full launch in 2025. The team is focused on our operational readiness, which includes ensuring proper inventory levels prior to full launch. Further, we continue to make enhancements to our technology as evidenced by the commercial launches of our silicone-based leads and Bluetooth patient remote the ongoing investments in our SleepSync digital platform, and most recently, the FDA approval of our new physician programmer, which connects directly with the SleepSync platform. Highlighting our market development activities, we continue to advance our medical education programs, and year-to-date, we had over 100 sleep fellows and close to 200 ENT residents attend our Inspire training programs. Further, we continue to increase our presence at primary care and cardiology conferences to drive increased awareness of inspired therapy. Our direct-to-consumer awareness programs continue to be excellent and provide a strong pathway for patients to connect with the proper healthcare providers. Key to our success is our continuous improvement of our tools to assist the patient journey. It is important to note that we have the first and only FDA-approved closed-loop neurostimulation system to treat obstructive sleep apnea, and over the past 17 years have built very strong clinical evidence with nearly 6,000 patients worldwide and detailed, compelling real-world evidence, including over 280 peer-reviewed publications and a strong reimbursement presence with over 260 million covered lives in the United States. We continue to advance therapy adoption and clinical evidence, including expansion of therapy indications to increase the number of patients who can benefit from INSPIRE therapy. At INSPIRE, we have built a world-class team, including a direct commercial organization in the United States and numerous global markets. We have also invested heavily in research and development, commercial infrastructure, reimbursement, direct-to-consumer campaigns, medical education programs, and clinical trainers to drive continued awareness and adoption of Inspire Therapy while focusing on and improving upon our strong patient outcomes. In summary, we remain focused on the patient to continue the growth and adoption of Inspire Therapy. We will continue to execute our growth strategy of increasing utilization at existing centers while adding capacity by opening new centers. As we celebrate the 10-year anniversary of our FDA approval, we remain 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.
spk08: Thank you, Tim. And good afternoon, everyone. Total revenue for the first quarter was $164 million, a 28% increase from the $127.9 million generated in the first quarter of 2023. US revenue in the first quarter was $155.8 million. an increase of 25% from the $124.5 million in the prior year period. Revenue outside the US was $8.2 million, which is a 141% increase year over year. The global average selling price was consistent year over year and with the previous quarter, and we expect ASP to remain at this level for the remainder of 2024. Given the potential of new entrants in the future, we do not expect to continue to report this metric going forward. Gross margin in the first quarter was 84.9% compared to 84.4% in the prior year period. The increase was driven by improved manufacturing efficiencies and higher volumes. Total operating expenses for the first quarter were $154.5 million, an increase of 21% as compared to $127.5 million in the first quarter of 2023. This planned increase was due to the expansion of our sales organization, increased direct-to-consumer marketing programs, continued product development efforts, and general corporate costs. Interest and dividend income totaled $5.9 million in the first quarter compared to $4.3 million in the prior year period. This higher income was driven by higher interest rates on our increased cash and investment balances compared to a year ago. Net loss for the first quarter was $10 million compared to $15.4 million in the prior year period, representing net loss per share of $0.34 compared to $0.53 in the first quarter of 2023. The weighted average number of shares outstanding for the first quarter was $29.6 million. We expect the full year diluted shares outstanding to be $30.4 million. Our total cash and investments were $469 million at March 31 and was consistent with our December 31 balance. The strong cash position allows us to remain focused on executing our growth strategy of increasing procedure volumes at existing centers while training and opening new implanting centers. We continue to expect to generate positive cash flow for the full year 2024. Moving on to 2024 guidance. With the strong trends we are seeing in our business, we now expect full year revenue to be in the range of 783 to 793 million, representing an increase of 25 to 27% compared to full year 2023 revenue. We expect full year gross margin to be in the range of 83 to 85%. We continue to expect to activate 52 to 56 new US centers and establish 12 to 14 new US sales territories during each remaining quarter in 2024. While we are early in our adoption, and we'll continue to expand our footprint by opening new centers and territories, we believe profitability is a more relevant metric in tracking our financial performance going forward. With that said, starting in 2025, we will guide to revenue growth and earnings per share. And as such, we will no longer provide center or territory guidance metrics. Given the strong momentum in our business and our improving leverage, we expect the diluted net income per share for the full year 2024 will be between 10 to 20 cents per share. In conclusion, our strong performance and business momentum provide us with confidence in our outlook for the remainder of 2024. With that, our prepared remarks are concluded. Dulem, you may now open the line for questions.
spk02: Thank you, sir. As a reminder, to ask a question, you will need to press star one one on your telephone. To rejoin your question, please press star one one again. We ask that you please keep your questions to no more than one question and one follow up, and if time permits, we'll be more than happy to take more questions.
spk29: Please stand by while we compile the Q&A roster. And I show our first question comes from the line of Danielle and Taufee from UBS.
spk02: Please go ahead.
spk03: Hey, good afternoon, guys. Thanks so much for taking the question. Hi. Just a quick question on the U.S. performance in this quarter. It looks like 25% growth, very, very strong. But did, you know, did come in below expectations? I guess I don't know if you could comment a little bit on with the streetness modeling. I mean, it looks like the sequential decline in utilization was actually less in Q1 versus Q4 than it has been historically, so that's great to see. But maybe some of this dynamic on Medicare versus private pay mix. And most importantly, anything you're seeing from the private pay side, for example, UnitedHealth and this new dynamic with them of potentially requiring some sort of documentation around oral appliances. Sorry, that was a lot, but... Too many for color on U.S. Thanks.
spk10: Thanks, Danielle. I think I got it. Yeah, we did talk a little bit about the seasonality expected in the quarter. We did have a strong Q1 last year offset with some of the silicon lead inventory that we were shipping, and we knew we had a strong Q4 coming in as well. So we expected the higher seasonality. The team did well. The team held tight to come in where we expect it to be with 15% seasonality. And we do see the utilization continuing to be strong as we move forward going into the year. Therefore, we have confidence in being able to increase our guide. We do understand the concerns over some of the private pay and the prior authorizations, and specifically UnitedHealthcare with oral appliance therapy. We are tracking that very closely. And with United, as we work hard to document the prior authorizations going in, and we don't see any significant pushback at this point, don't believe it has any impact on our business. Again, feel we're in a good position moving forward for the rest of the year.
spk02: Thank you. And I show our next question comes from the line of Robbie Marcus from J.P. Morgan. Please go ahead.
spk24: Hi, this is Alan. I'm for Robbie. I had, I guess, a bit of a follow-up to the first question on the U.S. You know, despite the U.S. experiencing this heightened seasonality, you did end up raising the guide by, you know, I'd say a fair multiple of the B largely driven by OUS. So what are you seeing that gives you confidence into the second quarter to raise guidance by this much? And should we think about that as something from utilization, doc ads, center ads?
spk10: I think it's all of the above. I think we do see good demand for the therapy across the board. We do see uptick in utilization as we move through the year. I think we did have confidence to increase the guide, focusing more on the latter half, but have confidence going forward with the demand for the product within the United States with the increased number of centers that we opened up and continue to drive utilization.
spk02: Thank you. And I show our next question comes from the line of Travis Steed from Bank of America.
spk19: Please go ahead. Hey, thanks for taking the question. I guess, you know, why do you think U.S. center utilization is slowing? It's kind of about, even if you exclude the new centers this quarter, it's kind of in line with the second half of last year, which is when you had some of the prior auth issues. I just really haven't seen the improvement there. So just curious, is there something going on with the new centers you're adding or older centers maturing? or any kind of rep changes going on, and also curious why you're no longer going to report the metrics we use to track utilization.
spk10: Right. I think that the utilization continues to be our focus, and I think if you kind of look back to where we were back on the first quarter, we're pretty consistent where we were a year ago when you take into effect the inventory shipments with silicone leads. We know we always have seasonality as we come out of Q4 and moving into Q1 and we tend to start wrapping back up and that again gives us the confidence to be able to increase the guide as we move through the second half of the year. I think as we kind of look at as we start maturing the company and we focus on reporting on revenue and now we're very happy to start reporting on and committing to profitability for the company as we mature. I think it's become less important for us to report on a number of centers and the number of new ads, and there's also some proprietary reasons to be able to do that as well. But I think that we're making sure that we provide the proper information for people to really be able to model the business and really feel profitability is going to be a key to helping people out there.
spk02: Thank you. And I show our next question comes from the line of Adam Mater from Piper Sandler. Please go ahead.
spk20: Hi, good afternoon. Thank you for taking the questions. Wanted to start with a guidance question. So the RAISE guidance, I wanted to just better understand, are you guys attributing that primarily to the OUS business? Should we spread it across both U.S. and OUS? Just help us kind of, I guess, think through that. And then, you know, any color, Tim, that you're willing to provide on Q2 trends thus far in the quarter? I have the street at $188 million for Q2 consensus revenue. Curious if you're willing to give a comment there as well. I did have one follow-up. Thanks.
spk10: Okay. That sounds good. I think that when we look at it, we're seeing good progress in Europe. We did have a little bit of a rebound effect with the derogation in Germany, which is strong. But we're seeing strong momentum. going forward there, too. So the European team is performing very well, as is the team in the United States. So I think there is a complementary element to some growth in international revenue, which is wonderful. Yeah.
spk08: Hi, Ann. It's Rick. I'll add to that, too. So historically, you know, we have experienced seasonality in the first quarter. And then as far as the composition of our full-year revenue, That generally builds throughout the year. So I would say the increase in the guidance should be mainly seen in the second half of the year.
spk20: I got it. And guys, I apologize. I guess I'm a little confused. So the guidance raised is attributable to both the US and US business going forward, which you kind of spread it across both those geographies. Is that correct?
spk08: Yes. There will be, from an OUS perspective, we don't give quarterly guidance from an OUS and US perspective, but we did see some catch up in the first quarter. Outside the US, we did have a strong first quarter, but we expect to see some of the additional catch up into 2024, but to a little bit lesser extent. We're not guiding towards any sequential growth outside the U.S., but, you know, we look forward to continued good numbers outside the U.S.
spk20: Okay. Thanks for that, guys. And if I may, just with the follow-up, wanted to ask about Surmount OSA. You know, data came in pretty much as expected down the fairway. I did want to ask how you're thinking about any potential, you know, impact to the patient funnel, either in the back half of 24 or 25. Are you hearing anything in the field, you know, from docs or reps? You know, will folks look to potentially try a GLP-1 before going, you know, forward with an INSPIRE procedure? Or do you think there's going to be no impact to the funnel? Thanks again for taking the questions.
spk10: Thanks, Adam. You bet. Yeah, so we talk to all our docs and we talk to our field. We do hear discussions around the GLP-1s, and we know the patients with a higher BMI tend to get screened out with the sleep endoscopy and And there are patients who have reported being able to use the GOP-1 to be able to lose weight and therefore qualify for Inspire. So very early, early days. But we do get positive reports on that and look forward to continuing to focus on that as we move through the rest of the year.
spk02: Thank you. And I show our next question comes from the line of Callum Tishmarsh from Morgan Stanley. Please go ahead.
spk23: Yeah, thanks for taking the question, guys. Just on the recent commercial insurance updates, I know some of the policies kicked in in March. I'm curious to hear about any early interest or momentum you've seen from those high BMI and AHI patients, as well as the pediatric Down syndrome population as well. Now they're in scope for coverage. Just any color on initial progress there would be great. Thanks.
spk10: Thank you very much. I think we've seen more progress with the high AHI, the high abnic hypotonic index. because that's a natural step for those patients to be able to receive approval. And we're able to move some of the prior authorizations in process to bring them in and move them forward. With the high BMI approval, remember, that's just a change to the warning to allow patients with a BMI up to 40. But it's still very important that we treat tongue-based collapse versus lateral wall. And we do today still use sleep endoscopy to screen those out. Not that significant of an impact with the high BMI yet, but that's something, as we just talked about with the GOP ones, that perhaps we can leverage that to take advantage there. And the fun news is with the pediatric population, it's a group that we really care about. We continue to grow the awareness there, and we are opening up additional children's hospitals to be able to participate with INSPIRE. So we're starting to see some movement with that population as well.
spk02: Thank you. And our next question comes from the line of David Rescott from Baird. Please go ahead.
spk21: Hey, can you guys hear me all right?
spk07: Yes, we can hear you well, dude.
spk21: Oh, great. Thanks for taking the questions. I wanted to follow up on the kind of profit or the positive kind of profit guidance that you gave for the full year. Maybe just wondering what some of the bigger drivers are behind that. I know you talked about some more targeted kind of DTC spend in 2024 previously. Wondering how big of a piece that is. And when we think about the cadence of that through the year, should we expect that to be more back and loaded where you have a pretty positive Q4 that kind of outweighs the losses in the rest of the year? Or do you think in Q3 you have the potential to deliver a positive quarter as well?
spk08: Yeah. Hey, David, it's Rick. I'll take, I'll take that question. So, um, yeah, in the first quarter, um, our DTC spend was, was 26 million, uh, a little bit increased over year over year. But as we've, we've talked about in the past in, in 2023, we spent about a hundred, a hundred million dollars in DTC. And as we mentioned, you know, with the increased demand, um, from patients, physicians, and adding new centers, we'll continue those investments. But again, that rate will really be moderate or nearly flat for 2024 because we are focusing on more targeted digital advertising to go after qualified patients and hopefully improve that conversion. So from a profitability standpoint, as we continue to increase revenue, DTC spend will be flat versus 2023. R&D will continue to spend high teens percentage of revenue. And so that leverage will be gained in increased utilization. And so we put forth the new guidance, and that we're excited about, which is a bottom line of 10 to 20 cents earnings per share in the bottom line. Um, we, we mentioned before that we'd be profitable for the second half of the year, and now we're guiding to profitability for the full year, but we haven't broken down in which quarter, you know, that we, we turned that corner, but we're excited about the ability to be profitable for the year.
spk02: Thank you. And I show our next question comes from the line of Anthony Patroni from Missoula. Please go ahead.
spk11: No, thanks for getting us in here this afternoon. Hope everyone's doing well. One dynamic in the U.S. to explore a little bit, just the sort of push out of Inspire 5. Do you think there's maybe a little bit of pause that you saw in 2Q that could maybe extend in 1Q that can extend into 2Q? How did that dynamic play out in the quarter? And I'll have a quick follow-up. Thank you.
spk10: Sure. No, we don't see any delay. We like the progress we're making with Inspire 5. And the package is fully put together and it's in review with the FDA. And we're running our program and targeting our soft launch later this year and full launch in 25. So we still remain very, very excited about the Inspire 5 portfolio that we'll be launching.
spk11: And maybe just a level set going back a little bit to UnitedHealthcare and the expanded coverage there. They did have one, you know, sort of preemptive step with mandibular repositioning devices. It seems like a minor step to us. Yet that label is greatly expanded. The coverage is greatly expanded to match FDA. So maybe just a little bit on the push-pull there. You think there's any slight hiccup from mandibular, but on the flip side, it seems like this is a great, you know, an expansive opportunity just from overall coverage standpoint. So how does that push and pull play out through the remainder of the year with United specifically? Thanks.
spk10: Yeah, thank you. I think that's a very good observation that you make there. And I think that we agree that the upside with the high AHI specifically, as well as to the pediatric population far outweighs the documentation that we put into the prior authorization for mandibular advancement devices or oral appliance therapy. And we think that our team works to make sure that the healthcare providers have the proper documentation in the prior authorizations that go to UnitedHealthcare. So we don't see a significant challenge from documenting the oral appliances, but we do see a good upside with especially the high AHI and then secondarily with the pediatric population. So yeah, great observation, thanks.
spk02: Thank you. And I show our next question comes from the line of Chris Pasquale from . Please go ahead. Thanks.
spk13: Hey, guys. One quick one on predictor. Just any plans to present that data or disclose the headline results prior to publication?
spk10: I'm sure we'll probably have a presentation down the road. Where we stand today and with the timing of the AASM, which is the sleep meeting in June, I don't think we're going to be in a position present there, but we will be looking for a public conference as we work publication in parallel. So we'll still push for later in the summer or early fall possibly with the AAO ISS meeting, but we will look to get that information out as soon as we can.
spk13: Okay. And then just circling back to surmounts, When you think about your current patient population, I know if you look at the adhere registry, the average BMI was around 29. Do you think that's still an accurate reflection of the patients you're treating commercially or since the label expansion, has that shifted at all? Just want to draw a distinction between the patients that were in this study at baseline and who you guys are seeing on a day-to-day basis.
spk10: Yeah, I think good observation. Again, I think the patient and the BMI in the STAR trial is consistent with the BMI that we saw in our 5,000 patient adhere registry. And it reflects patients that have a sleep endoscopy and do not have significant lateral wall collapse. And that's very consistent with the reports of the Surmount OSA trial, who the patient started with the BMI at 39. So you would expect those patients to be predominantly lateral wall collapse and as they lose weight, they can relax that and expose the tongue base collapse that is so effectively treated with Inspire. So I think very, very good consistency from the data that we saw and really look forward to seeing additional data when it comes out hopefully this summer.
spk30: Thanks, Tim.
spk10: Thanks, Chris.
spk02: Thank you. And I show our next question comes from the line of Richard Newiter from Truist Securities. Please go ahead.
spk22: Hi. Thanks for taking the questions. Maybe just first on Inspire 5. I guess is the anticipated launch timing the same as it was the last time you provided an update? And then just on Inspire 5, how are you thinking about or potentially – you know, anticipating people, whether it's physicians or consumers, waiting for the Inspire 5 to come out relative to the existing solution. I guess, is there a risk that there's a delay in treatment and, you know, however transient that might be, is that something that, A, is contemplated in guidance or, B, something you've thought about and preparing for?
spk10: Okay. Thanks, Rich. The first answer to your first question is yes. We are on running our plan and in line with what we talked about at our last earnings call. Number two is with the logic, yes, there's always a risk of patients being aware of it, but we will not be marketing this program until the full launch. And so we believe the risk of warehousing, if you will, or patients waiting for the new technology is going to be very, very low. We have this experience with past products that we've had that we haven't experienced any kind of delay from that perspective, but we're certainly aware of that, certainly will monitor that, but we do not believe that's going to have a significant impact as patients who have untreated moderate to severe sleep apnea are very motivated to receive therapy.
spk22: Got it. And maybe just one follow-up on what you are and aren't going to provide going forward. So it sounds like you guys are going to continue providing new account openings and utilization for the remainder of 24, but starting in 25, you're no longer going to provide new account openings. And if that's right, how are you going to help analysts and the investment community understand what the utilization trend is in the business and what will you provide towards that end?
spk10: Right, that's correct. And what we're going to be focusing on is our top line revenue growth, as well as more importantly, profitability going forward. And we'll continue with discussions with you. But I think the focus is really going to be top line, bottom line reporting to be consistent across industry.
spk02: Thank you. And I show our next question comes from the line of Shagun Singh from RBC. Please go ahead.
spk04: Great. Thank you so much. I was just wondering if you can talk about, you know, INSPIRE 5 and predictor study readout. You know, we've gotten some pretty good feedback on it and very specifically on INSPIRE 5. I was wondering if you had any take on potential impact in driving down operating times, you know, that could potentially increase utilization. And then on the predictor study, You know, just, you know, how meaningful could this be in speeding up that patient funnel? And then just lastly, I was wondering if there's any updates on trends in OSA diagnosis. I think previously you've called out a bunch of drivers like GLP-1s, AFib, DTC. I think there's general increase in awareness amongst the, you know, PCPs, et cetera. So just anything new you're seeing on the diagnosis front. Thank you for taking the questions.
spk10: Fantastic. I got them all. Okay. So with Inspire 5, yes, we do expect to have a reduction in operating time, operating room time for the surgeon, specifically because that will remove the pressure sensing lead, which is now going to be incorporated inside the Inspire 5 neurostimulator. So it's one less product that the surgeon needs to implant. And so we believe that that's going to have a significant reduction. We I have talked in the past of our average OR times today being between 60 and 90 minutes. And we believe with Inspire 5, it could go down to between 45 and 60 minutes. So a significant reduction in the time to perform the procedure. So we think that's going to be very well accepted, both for the patient as well as the surgeon. Secondly, as far as the patient funnel goes, We know the time for a patient to contact a healthcare provider, go through the diagnostic process and get scheduled and receive inspired therapy takes a significant amount of time. And a key part of it in the middle is to perform the drug induced sleep endoscopy. It could add anywhere from one to three months to the time, depending upon the scheduling of that specific surgeon. So we believe with Predictor, if we can identify the population of the patients with low BMI that don't necessarily need to have a sleep endoscopy and can have an alternative review, that we can reduce the OR time for those patients. We believe patients with the higher BMIs likely will have to continue with sleep endoscopy, but we're going to keep working on the data analysis to be able to show that. But hopefully in a significant number of patients, we can show a in improvement in the patient experience, meaning the time from contact to receiving therapy. And then finally, talking about the trends in obstructive sleep apnea, not only with the awareness that the GLP-1 drugs can create, and those elements such as Oprah on a TV show really creates awareness. And when those patients go to their general practitioner, they will be diagnosed for diabetes. for heart failure and for obstructive sleep apnea. So we believe that will increase the diagnostic rate of obstructive sleep apnea. Secondly, patients are aware of how well they sleep. We have smart beds. There are watches that will come out that will track the quality of your sleep. So generally the society has become more aware of their quality of sleep and we believe that will just continue to increase the awareness and the diagnostic rates for sleep apnea and therefore the opportunity for INSPIRE.
spk02: Thank you. And I show our next question. It comes from the line of John Block from CFO. Please go ahead.
spk31: Thanks, guys, and good afternoon. Hi, Scott. Tim, maybe just the first one. Any update on other privates, you know, call it coverage policies changing for the higher BMI-AHI Any update there? Do you expect most on board by the end of 2024? And then the follow-up, Rick, just to shift gears, you know, I'm just curious about the guidance and profitability for the year. You guys continue to be, you know, a solid beat and raise story. So let's just say hypothetically the year ended at, I don't know, 825 million top line and not the 790 midpoint. How are you going to handle that? You know, do you see that flow through to the bottom line on the incremental dollar? Or is it one of those things where you sort of take that upside and plow it back into the business? I'm just curious if the 10 to 20 cents should move higher proportionally to the potential upside to the revenue targets. Thanks, guys.
spk10: Yeah. Hey, John. Let me take the first one, then hand it off to Rick. As far as the payers go, we have an active program sending communications out to each of the payers to make sure that they are aware of the FDA approvals for the new indication and encouraging them to, excuse me, update their policies. They're making very good progress. We would like to have most of them taken care of by the end of the year, although Medicare is always challenging because with the MACs, you have to run through a fixed process to be able to meet with CMS, meet with the MACs, go through the update process to be able to get the policies updated and reviewed and implemented. So Medicare is always a little bit of a delay getting through there, but the commercial policies have responded quite well, and we expect to continue to keep pushing that, as you mentioned, for the rest of the year. Let me hand off to Rick on profitability response.
spk08: Sure. Hey, John. First of all, we have not changed our guidance philosophy, and that goes across all of our guidance metrics. But we also stayed focused on improving center capacity and utilization. And so as we continue to improve utilization, let it be known that we continue to make investments in our business for our long-term growth. Our revenue growth has been outpacing our OPEX growth, and we're excited to announce that we'll be profitable for the full year on a gap basis. As we continue to make those investments with our 84% gross margins and our OPEX not growing quite as fast as revenue, could we see improved leverage? Yes, but we're not guiding to that at this point.
spk02: Thank you. And I show our next question comes from the line of Mike Kratky from Laring Partners. Please go ahead.
spk14: Hi, everyone. Thanks for sending that question. The first one, is there any scenario where some of the secondary endpoints from Surmount LSA that we could see at ADA could make you or you've heard KOLs think GLP-1s maybe could have a more negative impact on the business?
spk10: From the top line, data that was put forward, I think that's going to be a little bit of a struggle, if I understand the question. I think we look forward to seeing the detailed data, and it's hard to hypothesize on what that data is going to show, but I think if you look at the 51% reduction in AHI in the specific arm that was just therapy alone, I think that is pretty indicative of what we can expect as we come into the summer. and that shows that they're able to help those patients with a higher BMI lose weight, thereby addressing their lateral wall collapse. So I think you'll see more of the same as we move into the summer months and be able to look at more specific details, specifically with different groups of BMI after they lose weight, and then be able to look at the specific AHI reductions of different ranges of BMI so really look forward to seeing that data but believe that data is again going to be in line with what we've talked about to show that these GOP ones will be complementary to INSPIRE.
spk14: Got it understood and then maybe just separately you know you mentioned the impact of some of the wearable devices you know I know Samsung got FDA approval for their watch earlier this year seems like you might get a commercial launch of that in pre-q Is there any consideration of that in your guidance? And then to what extent does that represent a source of potential upside, either near term or longer term?
spk10: I don't think specifically we've included the new technologies into our guide. I know it's still early days for the watches to come out, but smart beds have been in existence for some time. And I think our outreach programs are really key to driving our awareness and don't, and we continue to spend a lot of time with general practitioners and cardiologists and working our referral networks, which is the classic MedTech marketing as well to continue to drive referrals. So we aren't that specific into our guide to be able to pin down that we're specifically dealing with the new technologies, but we do believe that they will have a positive impact in the future for sure.
spk15: Got it. Thanks very much.
spk10: Thank you.
spk02: Thank you. And I show our next question. It comes from the line of Michael Sircone from Jefferies. Please go ahead.
spk16: Hey, good afternoon, and thanks for taking my question. Sure. Just one for me. So, you know, on the competitive front, you know, you've got a competitor overseas that released some U.S. data, you know, and it seems like they're going to stress – positive data or good results across both non-supine and supine positioning as maybe a point of differentiation, you know, when they start detailing in the U.S. Just wanted to get your take on, you know, have you had conversations with physicians, you know, your thoughts on how meaningful that could be and, you know, efforts or potential to counter detail, you know, those claims?
spk10: No problem. We don't think it has any impact. We've been talking about supine AHI with our physicians since 2007 when we launched Inspire. In fact, when I worked on this project inside Medtronic back in the late 90s and 2000, we're focused on supine AHI. So this is not a new phenomenon. Gravity affects sleep apnea. And when you lay supine, gravity pulls the tongue back harder then. if you lay on your side. When we program our devices, we program worst case. In other words, in a supine position. So we know with certain levels of energy required to treat supine AHI, that's what programs or that's what patients are programmed at. And then when they roll onto their side, you might argue that they are being overstimulated. And that's true because what we care about is making sure that we have equal treatment in both supine and non-supine. We had specific items in that in our STAR trial. So this is not a concern. We've been focused, laser-sharp focused on supine AHI since the day we started the company.
spk02: Thank you. And I show our next question comes from the line of Larry Bigelson from Wells Fargo. Please go ahead.
spk06: Hey guys, thanks for taking the question. Well, one question for me and maybe it'll be a very short answer. Rick, it's good to see the profitability progress. Any broad strokes on profitability goals beyond this year and how should we be thinking about the tax rate? Thank you.
spk08: Right. So for 2025, we're not providing overall guidance yet for 2025, but we're going to be profitable for 2024 and we're not expecting it to go backwards or So we expect to be profitable for 2025 and thereafter. And as far as effective tax rate, we'll get more color on that. You know, we have a lot of NOLs that we will get to recognize on that. And so for purposes of model, we'll provide more clarity on effective tax rates in a future call.
spk25: All right. Thank you.
spk02: Thank you. And I show our next question comes from the line of Brett Fishman from KeyBank Capital Markets. Please go ahead.
spk26: Hi, this is actually Liz on for Brett. Thanks so much for taking the questions. Just one from me. Could you guys provide some updates on your broader DTC strategy and how it's been progressing?
spk10: Absolutely. We've, go back a couple quarters, but we talked about refinement of our program and how we're really focusing our DTC more targeted to our demographic, and that's been very successful. We continue to grow DTC, but as Rick mentioned, we stayed pretty consistent with where we were in 2023, and we're seeing revenue grow beyond that, hence we're capturing leverage from our DTC program. We continue with both national TV buys as well as with social media. But now we're also getting into targeted digital placement that's shown to be quite effective. So the DTC program has evolved since our commercial approval 10 years ago in 2014 and will continue to evolve as we learn more and find better ways to reach out to our specific patient population.
spk28: Great. Thank you.
spk10: Thank you.
spk02: Thank you. And I saw next question comes from the line of Micropolar from Wolf Research. Please go ahead.
spk18: Good afternoon. Apologies if I missed this, but Salesforce, Sales Territory ads or creations in the quarter was 11. I think the guide for each quarter of the year was 12 to 14. I see you've reaffirmed the guide for the year, but I'm just curious in one Q11 versus 12 to 14, is that just timing, anything to flag there? And I asked just because it seems like a slight Dave Kuntz, deviation and trend that was a metric you had been guiding for a long time and you typically were adding above the the quarterly guide, and this is a touch below so any any color on this one would be helpful.
spk10: Dave Kuntz, Michael it's I think the. Dave Kuntz, it's just timing, I think the we focus our new territory as based on where we are adding new centers and where the need is, and so we don't specifically target a number of. of new territories per quarter. And so there's always, as you know, a little bit of fluctuation in there from quarter to quarter, but not a lot of change there. We reinforced our guide going forward and maybe just a little bit of timing on who was ready in the first quarter to be able to add a new territory, and we'll continue that focus going forward. Did I jump early? Did you have a follow-up too, Michael?
spk17: That was good. Thank you, Tim.
spk02: Thank you. And I share our last question in the queue. It comes from Suraj Kalia from Oppenheimer and Co. Please go ahead.
spk05: Rick, Tim, can you hear me all right?
spk09: Yes, Suraj. How are you?
spk05: Good. I hope everyone is well. So, Tim, a couple of questions. I'll pose them right away, and hopefully you get the gist of it. First and foremost, Tim, in terms of supine, non-supine, right, There was a recent paper highlighting quite low responder rates and AHI reduction that inspires supine versus non-supine. So I guess if you could help reconcile your comment about the current titration based on a supine position. So help us understand why is the paper off if it is. That is one question. And the second question quickly came if I could. I understand the consensus commentary about complementarity of GLIPS to OSA and to hypoglossal nerve and CPAP. I get all that. Tim, what I'd love to understand more is, aren't we looking at just one side of the coin, severely obese coming into, let's say, the obese category? But by the same token, the volume effect of overweight and obese patients That's 10 times that of severe, right? Shouldn't we be looking at the other side of the coin also? I'd love to get your perspective on that. Gentlemen, thank you for taking my questions.
spk10: No problem, Suraj. Thank you very much. Got them both. Going to go back and look at that paper. I think some of it was subjective evidence that was talked about and not the core evidence. But yeah, our focus is always around supine AHI. In fact, in our clinical studies, we literally screened out patients who did not. have supine AHI, or were only supine. So we evaluated that in the STAR trial. We've been evaluating that all the way through. It's very clear that supine with gravity is more challenging to treat, but we believe that that's been a key focus for INSPIRE since the beginning of the company, and we'll continue to focus on that going forward. Secondly, on the GOP1s being complementary, it's about the mechanism of action. I know we've talked about this quite a bit. In the higher BMI patients have more of a lateral wall collapse. Hypoglossal nerve stimulation is designed to treat tongue-based obstruction, not lateral wall collapse. So we know as the patients get a higher BMI that the GOP1s can be complementary to bring them to a lower BMI and relax the lateral walls. And to your question, the belief is, and I think what you'll see from the Surmount OSA trial, is patients who have a lower BMI do not have the same level of AHI reduction simply by the fact of the mechanism. They don't have lateral wall collapse, and GLP-1s are not designed to treat tongue-based collapse. That's what INSPIRE does. That's how the two become complementary to each other. So thanks very much for that, Taraj.
spk02: Thank you. This concludes the Q&A session for the conference. I'd now like to turn it back to Tim for closing remarks.
spk10: Thank you all for joining the call today. As always, I'm grateful to the growing team of dedicated Inspire employees for their enthusiasm, hard work, and continued motivation to achieve successful and consistent patient outcomes. The team's commitment to the patients remain unmatched and is the most important element to our success. I wish to thank all of our employees as well as the healthcare teams for their continued efforts as we remain focused on further expanding our business in the U.S., Europe, and Asia. For all of you on the call, we appreciate your continued interest and support of INSPIRE. We look forward to providing you with further updates in the months ahead. Thank you all very much.
spk02: This concludes today's conference call. You may now disconnect.
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