Inspire Medical Systems, Inc.

Good afternoon, my name is Dilem and I'll be your conference operator today. At this time, I would like to welcome everyone to the INSPIRE Medical Systems fourth quarter and full year 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, Ezgi 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 Buhl, Chief Financial Officer. Earlier today, we released financial results for the three and 12 months ended December 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 2025 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-K, 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, February 10th, 2025. 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 fourth quarter and full year 2024. 2024 was filled with many important milestones, including surpassing 90,000 patients treated with Inspire Therapy, exceeding 350 peer-reviewed publications, the US FDA approval of the INSPIRE-5 Neural Stimulator, European Union medical device regulation approval, which included full-body MRI compatibility, the approval of country-wide reimbursement in France, and our first full year of profitability. We continue to strengthen our leadership team and recently announced an organizational change aimed at fueling our future growth. We welcome the new chief manufacturing and quality officer, Jason Kelly, who will lead our supply chain quality assurance and regulatory teams. Carlton Weatherby was promoted to the expanded role of chief strategy and growth officer and assumed leadership of the U.S. sales and marketing teams. Randy Ban transitioned to the newly created role of Executive Vice President of Patient Access and Therapy Development. A new team tasked with enhancing therapy outcomes and patient access, increasing focus on research and clinical evidence development, and leading our key opinion leader communications and medical society relationships. Randy will also continue to lead our international teams. The organization is energized by these enhancements and we look forward to another year of strong execution in 2025. Earlier in the year, we pre-announced that we generated revenue of $239.7 million, representing a 25% increase compared to the fourth quarter of 2023. Given our strong performance, we are reiterating our full year 2025 revenue guidance of $940 to $955 million, representing 17 to 19% growth year over year. Net income for the fourth quarter was $35.2 million compared to $14.8 million in the prior year period. represented diluted net income of $1.15 per share compared to 49 cents per share in the fourth quarter of 2023. With this, we are excited to announce that 2024 was our first full year of profitability with diluted net income of $1.75 per share compared to a loss of 72 cents in 2023. Further, we generated $130 million in operating cash flow for the full year, and we plan to improve profitability in 2025. As such, in 2025, we expect diluted net income to be in the range of $2.10 to $2.20 per share. As you know, in 2024, we received FDA approval for the Inspire 5 Neural Stimulation System. A key feature of the Inspire 5 device is that it incorporates respiratory sensing internal to the neural stimulator, eliminating the need to implant the pressure sensing lead. This feature is designed to provide benefit to the patient with one fewer component, to the physician with reduced surgical time, and to the company with reduced production complexity and costs. Further, the Inspire 5 device provides the capability for future software-based enhancements, including sleep detection for auto-activation and sleep performance tracking. We have already gained valuable experience with the Inspire 5 device with systems implanted in both Singapore and in the U.S., and early feedback has been positive. We are continuing with our limited market release in the US, and we will continue to gain further experience with Inspire 5 procedures at additional US sites as we move towards full launch during the year. The primary factor driving the timing of our full launch remains building sufficient inventory to support the expected demand in the US. For the procedures performed in the U.S. to date, all cases utilized CPT code 64568 and received prior authorization from the insurance carriers. CPT code 64568 was originally used by Inspire for the first eight years since our approval in 2014 and accurately describes the Inspire 5 procedure, namely one neurostimulator and one stimulation lead. The current CPT code 64582 was only incorporated a few years ago and will continue to be used with all Inspire 4 cases. We want to emphasize that the professional fee in CPT code 64568 appropriately reflects the reduced work of implanting the Inspire 5 system, specifically the elimination of implanting the pressure sensing leads. The surgical placement of the sensing lead has long been a source of discomfort for ENT surgeons as it is not where they typically operate. We believe the resultant reduction in surgical time associated with not placing the sensing lead will result in a comparable reimbursement rate for the surgeon on a time-adjusted basis. Further, we believe the benefits of surgeon comfort and confidence with the INSPIRE V procedure will free up surgeon time to perform additional INSPIRE cases and will encourage more surgeons to adopt INSPIRE therapy. The new INSPIRE SleepSync programming system has been fully launched in the United States. The goal for the new system is to provide more efficient patient programming and improved access to patient data to assist the health care provider in their decision making. A key feature of this system is that health care providers may utilize their own laptop or tablet and simply log into SleepSync to access programming screens. With this upgrade, Inspire is no longer required to provide laptops or tablets, further reducing operational complexities. With respect to our market development activities, we continue to advance our medical education programs. And in 2024, we hosted over 300 advanced practice providers, 300 ENT residents, and 150 sleep fellows at INSPIRE training programs. The primary focus of our APP, or Advanced Practice Provider Initiative, is to improve capacity in both sleep and ENT clinics to meet the strong patient demand we continue to see for Inspire Therapy. In 2025, we plan to increase the investments we are making in our medical education programs, including ongoing resident fellowship and APP training, continued participation in cardiology and primary care conferences, and initiating a continuing medical education program to support the awareness and adoption of Inspire Therapy in cardiology and primary care. We focus our patient marketing and education programs to deliver broad therapy awareness, as well as provide a pathway for patients to connect with a healthcare provider that offers Inspire through our website and advisor care program. In 2024, we designed our outreach programs to be more targeted. And one example is with our digital advertising strategy, which has contributed to a significant increase in patient engagement at a lower cost. In 2025 and beyond, we plan to continue to invest in our robust marketing programs with the goal of further enhancing patient awareness of Inspire Therapy and improving a patient's ability to connect with a healthcare provider. An exciting example to improve the patient experience is with digital scheduling, an online tool used by our advisor care program to directly submit electronic appointment requests to qualified healthcare providers on behalf of prospective patients. We currently have 300 centers using this tool, and we plan to expand this program in 2025. On the market access front, We continue to make progress updating our commercial payer policies to our expanded FDA labeling. Additionally, we facilitate patient access to Inspire Therapy by assisting patients in obtaining prior authorization coverage decisions from payers. In this regard, we have steadily expanded our prior authorization team to enhance our ability to provide this assistance. Before I turn the call over to Rick, I would like to provide one additional update. On January 17th, we received a civil investigative demand from the Department of Justice. The CID requests information relating to the marketing, promotion, and reimbursement practices associated with our products. We intend to fully cooperate with the investigation and provide the information requested. We are confident in the strength of our compliance programs and procedures, and we remain committed to conducting our business ethically and in compliance with applicable laws and regulations. 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, certifying additional surgeons qualified to implant-inspired therapy, and driving the adoption of SleepSync 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 our confidence 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.