Inspire Medical Systems, Inc.

Good afternoon. My name is Dilem and I'll be your conference operator today. At this time, I'd like to welcome everyone to the INSPIRE Medical Systems Third Quarter 2024 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. I'll now hand the call over to your first speaker, Eski Yaja, the Vice President of Investor Relations at INSPIRE. You may begin the conference.

Thank you, Dilem, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer, and Rick Buchholz, Chief Financial Officer. Earlier today, we released financial results for the three and nine months ended September 30, 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, November 4, 2024. With that, it is my pleasure to turn the call over to Tim Herbert. Tim?

Thank you, Ezgi. And thanks, everyone, for joining our business update call for the third quarter of 2024. Let's start with what is most important, and that is the delivery of safe and effective therapy to our patients. And as of this call, we have surpassed 85,000 patients who have received Inspired Therapy. To ensure ongoing improvements in our system-level performance, we must continually monitor patient outcomes and invest in technology and programs to further advance inspired therapy, including the annual publication of our patient experience report, which is available on our website. Today, I would like to announce a recent peer-reviewed publication in the Journal of Clinical Sleep Medicine. that reviewed the real-world experience with Inspire since the original FDA approval in 2014. The investigators, led by Dr. Colin Huntley at the Thomas Jefferson University, reviewed data from over 20,000 patients showing a continued improvement in patient safety as documented by reviewing individual site experience as well as FDA and company databases. In fact, Within the first year after implant, explant rates have been shown to be less than 0.7% and revision rates reported as 1.5%, which are both significant improvements from the originally reported STAR trial. These new data set the bar on what is expected from hyperglossal nerve stimulation in the treatment of obstructive sleep apnea. This strong data translates into our business performance, and we are proud to report a successful third quarter. In the third quarter, we generated revenue of $203.2 million, representing a 33% increase compared to the third quarter of 2023. Third quarter US revenue totaled $195.8 million, also a 33% increase over the same period last year. This revenue growth reflects greater therapy adoption, primarily as a result of increased market penetration in existing centers, as well as expansion into 66 new implanting centers in the United States and 13 new U.S. sales territories. We now have 1,371 active US centers and 323 US sales territories. Utilization by account increased year over year and is consistent with the second quarter of 2024. Outside of the US, revenue increased 27% over the same period last year to $7.4 million. We saw strength in Germany, Switzerland, the Netherlands, and Belgium, and we began reimbursed procedures in France. We are increasing our 2024 revenue guidance to $793 to $798 million, which represents 27 to 28% growth over 2023 revenue of $625 million. This updated guidance reflects some revenue headwinds as a result of the hurricanes and related IV solution shortage impacts in the fourth quarter. Net income for the third quarter was $18.5 million compared to a net loss of $8.5 million in the prior year period, representing net income of 60 cents per share compared to a net loss of 29 cents per share in the third quarter of 2023. Given the strong performance we have seen year to date, we are raising the full year earnings per share guidance to $1.20 to $1.40. Highlighting a few key team accomplishments In September, we attended the American Academy of Otolaryngology and the International Sleep Surgical Society conferences in Miami. INSPIRE had a fantastic conference, including symposia led by exceptional faculty highlighting 10 years since FDA approval and how the INSPIRE care pathway leads to excellent outcomes in both academic and private practice settings. The investigators highlighted that INSPIRE is a proven therapy with significant and consistent outcomes demonstrated in over 300 publications and over 85,000 patients treated, resulting in coverage policies for Medicare and virtually all private plans. The presentations highlighted INSPIRE's commitment with an established national team of trusted INSPIRE professionals focused on patient outcomes in our easy to use sleep sync system. During these meetings, the investigators also presented data on the predictor study. As a reminder, the initial focus of the predictor study is to identify patients who may qualify for Inspire Therapy without requiring a drug-induced sleep endoscopy procedure. The data presented focused on patients with a BMI lower than 32 which are those without significant lateral wall collapse that is a key component of complete concentric collapse. We will continue to discuss this data with physicians and payers to streamline the patient's journey to receive inspired therapy. On the market access front, we are pleased with the final 2025 national Medicare outpatient payment rates for CPT code 64582, which calls for a slight increase to both the hospital outpatient rate to $30,474 and the ambulatory surgical center rate to $25,832. The final physician fee schedule for 2025 is consistent with the 2024 Medicare physician fee at $816. With respect to our market development activities, we continue to advance our medical education programs. In year to date, we have hosted over 250 advanced practice providers and inspired training programs with another 70 registered for training before year end. The primary focus of this initiative is to improve capacity in both sleep and ENT clinics to meet the strong patient demand we continue to see for inspired therapy. Further, we continue to increase our presence at primary care and cardiology conferences to drive increased awareness of inspired therapy. Our direct-to-consumer program remains strong and provides a pathway for patients to connect with the proper healthcare providers. In the third quarter, we continued to see operating leverage in our DTC expenses as we found ways to be more targeted and efficient in our digital advertising, which we believe has contributed to a significant increase in digital patient engagement at a lower cost. Going forward, we will continue to evaluate our DTC programs with the goal of enhancing patient awareness regarding inspired therapy. We continue to advance initiatives to improve the patient experience. And one example is that we now have over 250 centers using digital scheduling to book patient appointments. With digital scheduling, the patient's ability to schedule an appointment on their first attempt is increased, greatly improving the patient's journey to receive Inspire Therapy. Switching to product development. We have begun the soft launch of our new sleep sync programming system designed to increase the efficiency of Inspire patient management with greater accessibility and a comprehensive view of therapy history. Early feedback is promising and we expect full U.S. availability this year, enhancing capacity for patient follow-ups and improving experiences for patients and providers. As you know, in August, we received FDA approval for the INSPIRE V neurostimulation system. We are focused on operational readiness and building sufficient inventory, and we remain on track for a soft launch in late 2024 and a full launch in 2025. INSPIRE V incorporates respiratory sensing capabilities into the neurostimulator, eliminating the need to implant the pressure sensing lead. We believe this will provide benefits to the patient with one fewer component, to the physician with reduced surgical time, and to the company with reduced production complexity and costs. We continue to validate the coding scenarios with payers and Medicare contractors to help ensure we are prepared for the full launch in 2025. We expect to provide more color on our coding strategy in early 2025 once we finalize discussions with the payers. With the final OPPS rules released last week, we have set the pricing for Inspire 5 system to be consistent with the current Inspire 4 system. In summary, we remain focused on the patient to continue the growth and adoption of Inspire Therapy. We will execute our growth strategy of driving higher quality patient flow and increasing the capacity of our provider partners to effectively treat and manage more patients. Our key strategies include adding advanced practice providers, training and adding new implanters, increasing center independence, and driving the adoption of Sleep Sync and our digital tools, all of which are embedded strategies in our commercial team's objective to increase provider capacity. Looking ahead, we remain excited about our future 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.