Inspire Medical Systems, Inc.

and I'll be your conference operator today. At this time, I would like to welcome everyone to the INSPIRE Medical Systems second quarter 2025 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, Dalaim, and thank you all for participating in today's call. Joining me are Tim Herbert, Chairman and Chief Executive Officer, and Rick Buhols, Chief Financial Officer. Earlier today, we released financial results for the three months ended June 30, 2025. 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-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, August 4th, 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 second quarter of 2025. I'll start by highlighting some key takeaways of our second quarter results. I'll then discuss our updated 2025 guidance and provide additional context and rationale around the change. Then Rick will provide a financial review. We will then open the call for questions. It has been an impressive start to the year 2025, and we have achieved many key milestones. That said, I want to provide some important context on the challenges we are facing in the commercial rollout of our Inspire 5 next generation system, which began in May. As the quarter progressed, we encountered certain headwinds that slowed our efforts to transition customers to Inspire 5. While we are disappointed with the elongated timeframe we now expect for the rollout, we remain focused on advancing the transition of our customers to Inspire 5. To this end, We are taking concrete actions that we believe will allow us to complete this transaction in the next few quarters. Strong market demand, positive patient and surgeon feedback, and favorable clinical results give us conviction in our platform and ability to make a difference in the lives of our patients with obstructive sleep apnea. I'd now like to provide some detail regarding the challenges faced during the quarter. and the steps we're taking to actively address the factors at play. First, in the second quarter, many centers did not complete the training, contracting, and onboarding criteria required prior to the purchase and implant of INSPIRE V. Specifically, implementation of Sleep Sync has been the most challenging step to accomplish. Although not technically difficult, The approval process from our customers' IT departments has taken longer than expected. Additionally, some centers have been delaying implementing SleepSync until their first patients are scheduled to receive the Inspire 5 device. To increase the rate of implementation of SleepSync by our customers, we began and continue to leverage our technical teams. To date, We have completed the implementation at over 50% of the US centers. With these technical resources fully engaged, we expect to complete the vast majority by the end of the third quarter. As an aside, most of the units sold in the second quarter were Inspire 4s. Therefore, we did not experience much inventory destocking in the second quarter, the burndown of Inspire 4 inventory will remain a headwind in the second half of 2025 as we continue the transition to Inspire 5. The second challenge related to adoption of CPT code 64568 for Inspire 5 for Medicare patients. The approval of the code change was announced in April with a retroactive effective date of January 1st However, the software updates for claims, submissions, and processing did not take effect until July 1st. Thus, although traditional Medicare and Medicare Advantage patients could receive Inspire therapy, implanting centers would not be able to bill for those procedures until July 1st. Given this dynamic, many centers continued to treat Medicare patients with INSPIRE 4. With this software update now complete, we anticipate centers will ramp up their efforts to transition to INSPIRE 5. Third, certain patients opted to wait for the INSPIRE 5 device knowing its availability was imminent instead of being treated with INSPIRE 4. And as more centers transition to Inspire 5 into the third quarter, these patients should start receiving Inspire 5 therapy. Fourth, we intentionally held off on patient marketing and education spend and footprint expansion, namely new centers and territories, in the first half of the year. This was a strategic decision given all the resources required for the Inspire 5 transition. As we move into the second half of the year, we have ramped up both marketing and footprint expansion efforts to increase patient awareness and build capacity across the US. These investments have already started to be implemented and we have already experienced an increase in website activity, calls into our advisor care program, and appointments to healthcare providers. We continue to leverage our ACP to connect patients interested in Inspire Therapy with qualified physicians, including through the expansion of digital scheduling. In addition, we are ramping our medical education and local community health talk efforts to promote the launch of Inspire 5. These efforts should provide a tailwind into the second half of 2025 and beyond. Lastly, we believe some patients may be delaying inspired therapy to try GLP-1s. We are unable to quantify this and continue to believe GLP-1s present a tailwind long-term as we do hear of patients losing weight to qualify and receive inspired therapy. As an example, when a prospective patient fails the DICE procedure due to complete concentric collapse, our centers work with the patients to help address their high BMI, including prescribing a GOP-1. As a result of these headwinds, we are adjusting our full-year revenue guidance to a range of $900 to $910 million from our previous revenue guidance of $940 to $955 million, or a 4% reduction at the midpoint. The new revenue guidance reflects growth of 12% to 13% over 2024 revenue. We are also reducing our diluted net income per share to a range of 40 to 50 cents from our previous guidance of $2.20 to $2.30 per share to reflect this change in revenue guidance and to a lesser extent the planned increase in patient marketing cost for the second half of the year. I will now take a few minutes to highlight the success we have already seen with the INSPIRE V system and what to expect moving forward. The early results of our Singapore clinical study have been presented at the recent sleep meeting and demonstrated a 20% reduction in surgical times. This reduction will provide for increased capacity at centers. In fact, we have already noted that the US centers that have completed the transition to INSPIRE V have experienced a more than 20% increase in patient implants in the first half of 2025 as compared to the same period in 2024. From an efficacy standpoint, the accelerometer study we highlighted at recent investor conferences suggested significantly improved sensing capability, including an 86% inspiratory overlap with a patient's breathing. Synchronization with respiration is essential as the airway collapses during the inspiratory phase of respiration. The early review of AHI reductions appears very promising as well, and we plan to present this data at the upcoming ENT meetings in October. Regarding reimbursement. CMS recently released the 2026 proposed OPPS rules, which, if approved, would provide positive increases for Medicare reimbursement for the INSPIRE system. As you know, for INSPIRE 5, centers will be billing CPT code 64568, which has been accepted for plans covering over 90% of our 300 million covered lives, including Medicare. The national average Medicare hospital reimbursement for CPT code 64568 is proposed to increase to $32,000, up roughly $1,300 or 4% from 2024. And the ASC reimbursement is proposed to increase to $28,000, up $1,300 or 5% compared to 2024. Finally, The surge in reimbursement for CPT code 64568 is projected to increase to $660, up 11%, as compared to 2024. Should the proposed rules be finalized as expected in early November, the new reimbursement would take effect January 1, 2026. With respect to clinical evidence, we are very excited to have submitted the predictor manuscript to a leading journal and expect it to be published later this year. As a reminder, the clinical evidence proposes an algorithm which uses BMI and neck circumference to determine a patient's eligibility, thereby eliminating the need for a DICE procedure for the vast majority of patients. We're also excited to announce that We became a corporate champion of the American Academy of Otolaryngology. The sponsorship positions Inspire as a leading voice in ENT innovation, aligning with top thought leaders and decision makers. It also strengthens our brand and trust within the ENT community, which is vital for expanding Inspire's influence and adoption. It also provides a platform for collaboration and research and policy, thereby advancing Inspire's market leadership in hyperglossal nerve stimulation. Before I turn the call over to Rick, I'd like to take a moment and discuss the personnel announcement we made today. No one has lived up to our commitment to delivering strong patient outcomes more than Randy Band. our executive vice president, patient access and therapy awareness. Randy recently announced his intention to retire at the end of January, 2026. As one of our earliest team members and a long time commercial leader at Inspire, Randy has played a significant role in advancing access to Inspire Therapy and building a strong mission-driven organization. He will remain fully engaged in his current role into early next year to support a smooth and thoughtful transition. We are grateful to Randy for his many contributions and wish him the best in his well-earned retirement. At the beginning of this year, Carlton Weatherby assumed the lead of the U.S. sales and marketing teams and will continue to build upon the robust history of growth in the adoption of Inspire Therapy initiated by Randy many years ago. 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 high quality patient flow and increasing the capacity of our provider partners to effectively treat and manage more patients. Our key strategies include training advanced practice providers certifying additional surgeons qualified to implant spar 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 are confident about our future and that we have the appropriate strategy in place to drive long-term stakeholder value. We have our arms around the headwinds that I described and actions are already underway to accelerate the adoption of Inspire 5 in the latter half of the year. Looking beyond 2025, we continue to take actions to position the company for strong, profitable growth. With that, I'd like to turn the call over to Rick for his review of our financials.