Inspire Medical Systems, Inc.

Previous wording

For the six months ended June 30, 2025, 95.8% of our revenue was derived in the U.S. and 4.2% was derived outside of the U.S. No single customer accounted for more than 10% of our revenue during the six months ended June 30, 2025.

Current wording

For the nine months ended September 30, 2025, 95.7% of our revenue was derived in the U.S. and 4.3% was derived outside of the U.S. No single customer accounted for more than 10% of our revenue during the nine months ended September 30, 2025.

Previous wording

We typically seek to maintain higher levels of inventory to protect ourselves from supply interruptions, and, as a result, we are subject to the risk of inventory obsolescence, excess, and expiration, which could lead to inventory impairment charges. For example, during the quarter ended June 30, 2025, we recorded a charge of $2.1 million for excess component parts related to our Inspire IV system.

Current wording

We typically seek to maintain higher levels of inventory to protect ourselves from supply interruptions, and, as a result, we are subject to the risk of inventory obsolescence, excess, and expiration, which could lead to inventory impairment charges. For example, during the nine months ended September 30, 2025, we recorded a charge of $2.1 million for excess component parts related to our Inspire IV system.

Previous wording

Since our inception in 2007, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our former credit facility, and equity offerings of our common stock. We have devoted significant resources to research and development activities related to our Inspire system, including clinical and regulatory initiatives to obtain marketing approval, and sales and marketing activities. For the three months ended June 30, 2025, we generated revenue of $217.1 million with a gross margin of 84.0% and had a net loss of $3.6 million compared to revenue of $195.9 million with a gross margin of 84.8% and a net income of $9.8 million for the three months ended June 30, 2024. For the six months ended June 30, 2025, we generated revenue of $418.4 million with a gross margin of 84.4% and had a net loss of $0.6 million compared to revenue of $359.9 million with a gross margin of 84.8% and a net loss of $0.2 million for the six months ended June 30, 2024. Our accumulated deficit as of June 30, 2025 was $292.5 million.

Current wording

Since our inception in 2007, we have financed our operations primarily through sales of our Inspire system, private placements of our convertible preferred securities, amounts borrowed under our former credit facility, and equity offerings of our common stock. We have devoted significant resources to research and development activities related to our Inspire system, including clinical and regulatory initiatives to obtain marketing approval, and sales and marketing activities. For the three months ended September 30, 2025, we generated revenue of $224.5 million with a gross margin of 85.8% and had a net income of $9.9 million compared to revenue of $203.2 million with a gross margin of 84.1% and a net income of $18.5 million for the three months ended September 30, 2024. For the nine months ended September 30, 2025, we generated revenue of $642.9 million with a gross margin of 84.9% and had a net income of $9.3 million compared to revenue of $563.1 million with a gross margin of 84.5% and a net income of $18.3 million for the nine months ended September 30, 2024. Our accumulated deficit as of September 30, 2025 was $282.6 million.

Previous wording

Beginning late in the first quarter and continuing into the second quarter of 2025, in connection with awareness gained during our ongoing limited market release of the Inspire V system, we began to observe that some patients and physicians are delaying Inspire therapy until Inspire V is available at their location. Although Inspire V was fully launched in the U.S. in May 2025, an implanting physician and center must meet training, contracting, and onboarding criteria prior to purchasing and implanting Inspire V. We expect to continue to see patients delay Inspire therapy until centers meet these criteria and Inspire V is available at their location through the end of 2025. Additionally, beginning late in the first quarter and continuing into the second quarter of 2025, we began to observe that some of our customers were using their existing inventory of our Inspire IV system ("Inspire IV") prior to purchasing Inspire V systems. We continued to observe this during the remainder of the second quarter and into the beginning of the third quarter of 2025. While we cannot quantify the impact at this time or predict if these patterns may change, we anticipate that the occurrence of patients and physicians delaying Inspire therapy and the destocking by some of our customers of their existing Inspire IV inventory may impact our consolidated revenue until Inspire V is fully available at our customer locations and our customers have used their existing Inspire IV inventory, which we expect to primarily occur in the second half of 2025. We have continued to make Inspire IV systems available in the U.S. since the Inspire V launch and expect to continue to make Inspire IV systems available moving forward as inventory levels allow, and outside the U.S., subject to our receiving the appropriate regulatory clearances for Inspire V in foreign markets.

Current wording

Beginning late in the first quarter and continuing into the third quarter of 2025, in connection with awareness gained during our ongoing limited market release of the Inspire V system, we observed that some patients and physicians were delaying Inspire therapy until Inspire V is available at their location. Although Inspire V was fully launched in the U.S. in May 2025, an implanting physician and center must meet training, contracting, and onboarding criteria prior to purchasing and implanting Inspire V. We expect to continue to see patients delay Inspire therapy until centers meet these criteria and Inspire V is available at their location through the end of 2025 or early 2026. Additionally, beginning late in the first quarter and continuing into the third quarter of 2025, we observed that some of our customers were using their existing inventory of our Inspire IV system ("Inspire IV") prior to purchasing Inspire V systems. We continued to observe this during the remainder of the third quarter and into the beginning of the fourth quarter of 2025. While we cannot quantify the impact at this time or predict if these patterns may change, we anticipate that the occurrence of patients and physicians delaying Inspire therapy and the destocking by some of our customers of their existing Inspire IV inventory may impact our consolidated revenue until Inspire V is fully available at our customer locations and our customers have used their existing Inspire IV inventory, which we expect to primarily occur in the remainder of 2025 and early 2026. We have continued to make Inspire IV systems available in the U.S. since the Inspire V launch and expect to continue to make Inspire IV systems available moving forward as inventory levels allow, and outside the U.S., subject to our receiving the appropriate regulatory clearances for Inspire V in foreign markets.

Previous wording

Our direct-to-consumer marketing program's goals are therapy awareness, connecting patients with providers, and supporting the patient through their path to Inspire from start to finish. Our investments in advertising are designed to increase patient awareness and encourage them to visit our website. On our website, patients can explore educational materials and videos about sleep apnea, learn about the benefits of Inspire therapy, find physician and clinical site contact information, and stay informed about community awareness events. We also use the Inspire Sleep app as a valuable tool for patient education. Moving forward, we plan to refine and optimize our outreach strategies, with an emphasis on expanding digital advertising efforts to reach more qualified patients. We expect our direct-to-consumer expenditures to increase significantly over 2024 levels during the second half of 2025.

Current wording

Our direct-to-consumer marketing program's goals are therapy awareness, connecting patients with providers, and supporting the patient through their path to Inspire from start to finish. Our investments in advertising are designed to increase patient awareness and encourage them to visit our website. On our website, patients can explore educational materials and videos about sleep apnea, learn about the benefits of Inspire therapy, find physician and clinical site contact information, and stay informed about community awareness events. We also use the Inspire Sleep app as a valuable tool for patient education. Moving forward, we plan to refine and optimize our outreach strategies, with an emphasis on expanding digital advertising efforts to reach more qualified patients. We expect our direct-to-consumer expenditures to increase significantly over 2024 levels during the remainder of 2025.

Previous wording

We also continue to make significant investments to build our sales and marketing organization by increasing the number of U.S., European, and Japanese sales representatives and continuing our direct-to-consumer marketing efforts in existing and new markets. As of June 30, 2025, we had 348 U.S. sales territories and 259 field clinical representatives, as compared with 335 U.S. sales territories and 230 field clinical representatives as of December 31, 2024.

Current wording

We also continue to make significant investments in our sales and marketing by increasing our direct-to-consumer marketing efforts in existing and new markets and increasing the number of U.S., European, and Japanese sales representatives and sales support personnel. As of September 30, 2025, we had 336 U.S. sales territories and 268 field clinical representatives, as compared with 335 U.S. sales territories and 230 field clinical representatives as of December 31, 2024.

Previous wording

Since 2023, glucagon-like peptide 1 ("GLP-1s"), a class of drug indicated for diabetes and obesity, has continued to gain popularity as a weight-loss drug. In late 2024, Zepbound (tirzepatide), which was FDA approved for weight loss in 2023, was also FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA. If GLP-1s are used to treat OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be reduced. OSA is a multifactorial disease with many independent factors including age, gender, weight, and neck circumference. Inspire is designed to address antero-posterior airway collapse, also known as tongue base collapse. In contrast, patients with a higher BMI are subject to a larger neck circumference and present predominantly with lateral-wall collapse. A combination of tongue base collapse and lateral wall collapse is identified as a complete concentric collapse of the upper airway. Inspire is contraindicated for complete concentric collapse. In April 2024, Eli Lilly and Company ("Lilly") published headline results from its SURMOUNT-OSA trial demonstrating a 50.7% reduction in Apnea-Hypopnea Index ("AHI") for patients in the therapy arm of the study using tirzepatide, a GLP-1 injection. Subsequently, in June 2024, Lilly published additional results from its SURMOUNT-OSA trial demonstrating 43% of participants treated with tirzepatide at the highest dose met criteria for disease resolution. In this context, "disease resolution" means achieving an AHI of fewer than 5 events per hour, or an AHI of 5 to 14 events per hour and an Epworth Sleepiness Scale ("ESS") score of ≤10. ESS is a standard questionnaire designed to assess excessive daytime sleepiness. Given a baseline AHI of 50.3, and based on these results, we believe that most patients enrolled in the study will continue to have residual moderate to severe OSA that will require treatment and fall within Inspire’s FDA-approved indication. While weight loss may help reduce a patient’s AHI and other OSA symptoms, numerous other studies have shown that weight loss alone will not resolve OSA for the vast majority of patients. We expect GLP-1s may help patients address their lateral wall collapse, making them a potential candidate for Inspire therapy to the extent they also have tongue base collapse. Based on our ongoing ADHERE patient registry, the average BMI of patients treated with Inspire therapy is 29 and the American Academy of Sleep Medicine guidelines recommend weight loss prior to surgery for patients with BMI over 35 and nonsurgical solutions for patients with BMI over 40. While we cannot quantify the impact, we believe that some prospective patients are attempting a trial of GLP-1 medication to reduce their BMI and OSA severity prior to considering Inspire therapy. We believe that in the long term there could be a benefit to our business as a result of GLP-1s reducing the BMI of our prospect…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Since 2023, glucagon-like peptide 1 ("GLP-1s"), a class of drug indicated for diabetes and obesity, has continued to gain popularity as a weight-loss drug. In late 2024, Zepbound (tirzepatide), which was FDA approved for weight loss in 2023, was also FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA. If GLP-1s are used to treat OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be reduced. OSA is a multifactorial disease with many independent factors including age, gender, weight, and neck circumference. Inspire is designed to address antero-posterior airway collapse, also known as tongue base collapse. In contrast, patients with a higher BMI are subject to a larger neck circumference and present predominantly with lateral-wall collapse. A combination of tongue base collapse and lateral wall collapse is identified as a complete concentric collapse of the upper airway. Inspire is contraindicated for complete concentric collapse. In 2024, Eli Lilly and Company ("Lilly") published results from its SURMOUNT-OSA trial demonstrating a 50.7% reduction in Apnea-Hypopnea Index ("AHI") for patients in the therapy arm of the study using tirzepatide, a GLP-1 injection, and that 43% of participants treated with tirzepatide at the highest dose met criteria for disease resolution. In this context, "disease resolution" means achieving an AHI of fewer than 5 events per hour, or an AHI of 5 to 14 events per hour and an Epworth Sleepiness Scale ("ESS") score of ≤10. ESS is a standard questionnaire designed to assess excessive daytime sleepiness. Given a baseline AHI of 50.3, and based on these results, we believe that most patients enrolled in the study will continue to have residual moderate to severe OSA that will require treatment and fall within Inspire’s FDA-approved indication. While weight loss may help reduce a patient’s AHI and other OSA symptoms, numerous other studies have shown that weight loss alone will not resolve OSA for the vast majority of patients. We expect GLP-1s may help patients address their lateral wall collapse, making them a potential candidate for Inspire therapy to the extent they also have tongue base collapse. Based on our ongoing ADHERE patient registry, the average BMI of patients treated with Inspire therapy is 29 and the American Academy of Sleep Medicine guidelines recommend weight loss prior to surgery for patients with BMI over 35 and nonsurgical solutions for patients with BMI over 40. In October 2025, we conducted a survey of over 200 sleep physicians to better understand their treatment paradigm for OSA since the introduction of GLP-1s. The survey findings suggest that some physicians will prescribe a GLP-1 to patients prior to considering Inspire therapy. The survey findings also suggest that, with the availability of GLP-1s to treat OSA, the number of patients seeking diagnosis and treatment for OSA is increas…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The global economy continues to experience increased inflationary pressures and market instability. Higher interest rates and capital costs, higher shipping costs and new or increased tariffs, regulatory changes, including changes to Medicaid funding, increased costs of labor, international conflicts and terrorism, and weakening foreign currency exchange rates are creating additional economic challenges. These conditions may cause our customers to decrease or delay orders for our products.

Current wording

The global economy continues to experience increased inflationary pressures and market instability. Higher interest rates and capital costs, higher shipping costs and new or increased tariffs, regulatory changes, including changes to government funding of entitlement programs, increased costs of labor, international conflicts and terrorism, and weakening foreign currency exchange rates are creating additional economic challenges. These conditions may cause our customers to decrease or delay orders for our products.

Previous wording

We expect SG&A expenses to continue to increase as we expand our commercial infrastructure to both drive and support our planned growth in revenue and as we increase our headcount and expand administrative personnel to support our growth and operations as a public company including finance, legal, and human resources personnel and information technology services. Additionally, we anticipate an increase in our stock-based compensation expense with grants of stock options, restricted stock units, performance stock units, and shares of our common stock purchased pursuant to our employee stock purchase plan.

Current wording

We expect SG&A expenses to continue to increase as we expand our commercial infrastructure to both drive and support our planned growth in revenue and as we increase our headcount and expand administrative personnel to support our growth and operations as a public company including finance, legal, and human resources personnel and information technology services. Additionally, we anticipate an increase in our stock-based compensation expense with grants of restricted stock units, performance stock units, and shares of our common stock purchased pursuant to our employee stock purchase plan.

Previous wording

Revenue increased $21.2 million, or 10.8%, to $217.1 million for the three months ended June 30, 2025 compared to $195.9 million for the three months ended June 30, 2024. These results reflect an increase in sales of our Inspire system of $19.3 million in the U.S. and an increase of $1.9 million outside of the U.S. compared to the same prior year period. Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Current wording

Revenue increased $21.3 million, or 10.5%, to $224.5 million for the three months ended September 30, 2025 compared to $203.2 million for the three months ended September 30, 2024. These results reflect an increase in sales of our Inspire system of $18.6 million in the U.S. and an increase of $2.7 million outside of the U.S. compared to the same prior year period. Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Previous wording

Revenue generated in the U.S. was $400.8 million for the six months ended June 30, 2025, an increase of $57.2 million, or 16.6%, compared to the six months ended June 30, 2024. Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Current wording

Revenue generated in the U.S. was $214.4 million for the three months ended September 30, 2025, an increase of $18.6 million, or 9.5%, compared to the three months ended September 30, 2024. Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our

Previous wording

Revenue generated outside of the U.S. was $9.9 million in the three months ended June 30, 2025, an increase of $1.9 million, or 23.0%, compared to the three months ended June 30, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.

Current wording

Revenue generated outside of the U.S. was $10.1 million in the three months ended September 30, 2025, an increase of $2.7 million, or 37.3%, compared to the three months ended September 30, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.

Previous wording

Research and development expenses decreased $2.7 million, or 9.2%, to $26.2 million for the three months ended June 30, 2025 compared to $28.9 million for the three months ended June 30, 2024. This change was primarily due to a decrease of $5.9 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our physician programmer, and our SleepSync™ platform, partially offset by an increase of $3.1 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense, and an increase of $0.1 million in regulatory submissions and clinical studies expenses.

Current wording

Research and development expenses decreased $1.9 million, or 7.2%, to $24.2 million for the three months ended September 30, 2025 compared to $26.1 million for the three months ended September 30, 2024. This change was primarily due to a decrease of $5.3 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our physician programmer, and our SleepSync™ platform, and a decrease of $0.1 million in regulatory submissions and clinical studies expenses, partially offset by an increase of $3.5 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense.

Previous wording

SG&A expenses increased $27.4 million, or 20.8%, to $159.5 million for the three months ended June 30, 2025 compared to $132.1 million for the three months ended June 30, 2024. The primary driver of this change was an increase of $18.2 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount. In addition, general corporate costs increased $2.6 million primarily due to legal fees, computer equipment and software expense, and depreciation expense. Also contributing to the increase were marketing costs, which increased $4.8 million, and travel expenses, which increased $1.8 million.

Current wording

SG&A expenses increased $28.5 million, or 21.8%, to $158.9 million for the three months ended September 30, 2025 compared to $130.4 million for the three months ended September 30, 2024. The primary drivers of this change were an increase of $16.7 million in marketing costs, mainly for advertising, and $9.7 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount. In addition, general corporate costs increased $1.7 million primarily due to legal fees, computer equipment and software expense, and depreciation expense. Travel expenses also increased $0.4 million.

Previous wording

Other income, net decreased by $4.8 million, or 82.9%, to $1.0 million for the three months ended June 30, 2025 compared to $5.7 million for the three months ended June 30, 2024. The change was primarily due to an impairment charge of $4.0 million on one of our strategic investments which occurred in the quarter ended June 30, 2025, a decrease of $1.4 million in interest and dividend income due to lower cash, cash equivalents, and investment balances, partially offset by an increase of $0.7 in foreign currency translation and remeasurement gains.

Current wording

Other income, net decreased by $2.1 million, or 35.0%, to $3.9 million for the three months ended September 30, 2025 compared to $6.0 million for the three months ended September 30, 2024. The change was primarily due to a decrease of $1.9 million in interest and dividend income due to lower cash, cash equivalents, and investment balances. Also contributing to the decrease were foreign currency translation and remeasurement gains, which decreased by $0.2 million.

Previous wording

We recorded a provision for incomes taxes of approximately $1.3 million and $1.1 million for the three months ended June 30, 2025 and June 30, 2024, respectively.

Current wording

We recorded a provision for income taxes of approximately $3.6 million and $1.8 million for the three months ended September 30, 2025 and September 30, 2024, respectively. This $1.8 million increase was primarily due to an increase in federal taxes.

Previous wording

Revenue increased $58.5 million, or 16.3%, to $418.4 million for the six months ended June 30, 2025 compared to $359.9 million for the six months ended June 30, 2024. The increase was attributable to a $57.2 million increase in sales of our Inspire system in the U.S and an increase of $1.3 million outside of the U.S. Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Current wording

Revenue increased $79.8 million, or 14.2%, to $642.9 million for the nine months ended September 30, 2025 compared to $563.1 million for the nine months ended September 30, 2024. The increase was attributable to a $75.7 million increase in sales of our Inspire system in the U.S and an increase of $4.1 million outside of the U.S. Overall revenue growth was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some U.S. patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Previous wording

Revenue generated in the U.S. was $207.2 million for the three months ended June 30, 2025, an increase of $19.3 million, or 10.3%, compared to the three months ended June 30, 2024. Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Current wording

Revenue generated in the U.S. was $615.2 million for the nine months ended September 30, 2025, an increase of $75.7 million, or 14.0%, compared to the nine months ended September 30, 2024. Revenue growth in the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system, partially offset by ENT surgeon capacity constraints and some patients and physicians delaying Inspire therapy until Inspire V is available at their location or while they trial GLP-1 medications.

Previous wording

Revenue generated outside of the U.S. was $17.6 million for the six months ended June 30, 2025, an increase of $1.3 million, or 8.2%, compared to the six months ended June 30, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.

Current wording

Revenue generated outside of the U.S. was $27.8 million for the nine months ended September 30, 2025, an increase of $4.1 million, or 17.2%, compared to the nine months ended September 30, 2024. Revenue growth outside the U.S. was primarily due to increased market penetration, and, we believe, increased physician and patient awareness of our Inspire system.

Previous wording

Cost of goods sold increased $10.8 million, or 19.7%, to $65.4 million for the six months ended June 30, 2025 compared to $54.6 million for the six months ended June 30, 2024. The increase was primarily due to product costs associated with the higher sales volume of our Inspire system experienced during the first half of 2025, and to a lesser extent, the $2.1 million charge associated with excess components related to Inspire IV.

Current wording

Cost of goods sold increased $10.2 million, or 11.7%, to $97.2 million for the nine months ended September 30, 2025 compared to $87.0 million for the nine months ended September 30, 2024. The increase was primarily due to product costs associated with the higher sales volume of our Inspire system experienced during the first nine months of 2025, and to a lesser extent, the $2.1 million charge associated with excess components related to Inspire IV.

Previous wording

Gross margin decreased to 84.4% for the six months ended June 30, 2025 from 84.8% for the six months ended June 30, 2024. Gross margin for the six months ended June 30, 2025 was lower primarily due to the excess inventory component charges discussed above, somewhat offset by increased sales volume.

Current wording

Gross margin decreased to 84.9% for the nine months ended September 30, 2025 from 84.5% for the nine months ended September 30, 2024. Gross margin for the nine months ended September 30, 2025 was higher primarily due to increased sales volume as well as increased sales mix of the Inspire V system, which is less expensive to manufacture and therefore has a higher gross margin than the Inspire IV system, partially offset by the excess inventory component charges discussed above.

Previous wording

Research and development expenses decreased $3.7 million, or 6.4%, to $54.0 million for the six months ended June 30, 2025 compared to $57.7 million for the six months ended June 30, 2024. This change was primarily due to a decrease of $11.3 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our physician programmer, and our SleepSync™ platform, partially offset by an increase of $7.0 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense, and an increase of $0.6 million in regulatory submissions and clinical studies expenses and quality compliance fees.

Current wording

Research and development expenses decreased $5.6 million, or 6.6%, to $78.2 million for the nine months ended September 30, 2025 compared to $83.8 million for the nine months ended September 30, 2024. This change was primarily due to a decrease of $16.6 million in ongoing research and development costs, primarily with respect to our next generation versions of the Inspire neurostimulator, our physician programmer, and our SleepSync™ platform, partially offset by an increase of $10.5 million in compensation and employee-related expenses, mainly as a result of increased headcount and stock-based compensation expense, and an increase of $0.5 million in regulatory submissions and clinical studies expenses and quality compliance fees.

Previous wording

SG&A expenses increased $46.1 million, or 17.9%, to $303.8 million for the six months ended June 30, 2025 compared to $257.7 million for the six months ended June 30, 2024. The primary driver of this change was an increase of $35.6 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount. In addition, general corporate costs increased $5.3 million primarily due to legal fees, depreciation expense, computer equipment and software expense, and consulting fees. Also contributing to the increase were travel expenses, which increased by $3.6 million, and marketing costs, which increased by $1.6 million.

Current wording

SG&A expenses increased $74.6 million, or 19.2%, to $462.7 million for the nine months ended September 30, 2025 compared to $388.1 million for the nine months ended September 30, 2024. The primary driver of this change was an increase of $45.2 million in compensation, including salaries, commissions, stock-based compensation, and other employee-related expenses, mainly as a result of increased headcount. In addition, marketing costs increased $18.4 million, mainly for advertising, and general corporate costs increased $7.0 million, primarily due to legal fees, depreciation expense, computer equipment and software expense, and consulting fees. Also contributing to the increase were travel expenses, which increased by $4.0 million.

Previous wording

Other income, net decreased by $5.0 million, to $6.6 million for the six months ended June 30, 2025 compared to $11.6 million for the six months ended June 30, 2024. The change was primarily due to an impairment charge of $4.0 million on one of our strategic investments which occurred in the quarter ended June 30, 2025, a decrease of $2.3 million in interest and dividend income due to lower cash, cash equivalents and investment balances, partially offset by an increase of $1.3 million in foreign currency translation and remeasurement gains.

Current wording

Other income, net decreased by $7.1 million, to $10.5 million for the nine months ended September 30, 2025 compared to $17.6 million for the nine months ended September 30, 2024. The change was primarily due to a decrease of $4.2 million in interest and dividend income due to lower cash, cash equivalents and investment balances and an impairment charge of $4.0 million on one of our strategic investments which occurred in the quarter ended June 30, 2025, partially offset by an increase of $1.1 million in foreign currency translation and remeasurement gains.

Previous wording

We recorded a provision for income taxes of $2.4 million and $1.7 million for the six months ended June 30, 2025 and June 30, 2024, respectively. This change was primarily due to an increase in state and local taxes.

Current wording

We recorded a provision for income taxes of $6.0 million and $3.5 million for the nine months ended September 30, 2025 and September 30, 2024, respectively. This $2.5 million increase was primarily due to an increase in federal taxes.

Previous wording

As of June 30, 2025, we had cash, cash equivalents, and available-for-sale debt securities of $410.7 million, a decrease of $105.8 million from $516.5 million as of December 31, 2024. Working capital totaled $479.8 million as of June 30, 2025, a decrease of $62.5 million from December 31, 2024. We define working capital as current assets less current liabilities. The decrease in working capital was primarily due to the following factors:

Current wording

As of September 30, 2025, we had cash, cash equivalents, and available-for-sale debt securities of $410.9 million, a decrease of $105.6 million from $516.5 million as of December 31, 2024. Working capital totaled $475.6 million as of September 30, 2025, a decrease of $66.7 million from December 31, 2024. We define working capital as current assets less current liabilities. The decrease in working capital was primarily due to the following factors:

Previous wording

•a $101.4 million decrease in short-term available-for-sale investments and a $43.2 million decrease in cash and cash equivalents primarily due to the share repurchases made during the first quarter under our share repurchase program, as well as inventory purchases and the payment of taxes on net share settlements of equity awards, partially offset by proceeds from sales of the Inspire system, proceeds from the exercise of stock options, interest and dividend income, and the increase in long-term available for sale investments; and

Current wording

•a $85.6 million decrease in short-term available-for-sale investments and a $37.3 million decrease in cash and cash equivalents primarily due to the share repurchases made during the first and third quarters under our share repurchase programs, as well as inventory purchases and the payment of taxes on net share settlements of equity awards, partially offset by proceeds from sales of the Inspire system, proceeds from the exercise of stock options, interest and dividend income, and the increase in long-term available for sale investments;

Previous wording

•a $14.5 million increase in accounts payable due to the timing of vendor invoices.

Current wording

•a $20.6 million increase in accounts payable due primarily to the timing of vendor invoices; and

Previous wording

•a $41.5 million increase in inventory balances, as we increased inventory levels to support higher sales and the launch of Inspire V;

Current wording

•a $61.7 million increase in inventory balances, as we increased inventory levels to support higher sales and the launch of Inspire V;

Previous wording

•a $44.6 million increase in accounts receivable, a majority of which is due to a temporary delay in the delivery timing of customer invoices following the implementation of a new invoice portal and delivery process, which has since been resolved, and higher sales which occurred during June 2025;

Current wording

•a $14.9 million increase in accounts receivable, primarily due to higher sales which occurred during September 2025; and

Previous wording

•a $0.9 million increase in prepaid expense and other current assets.

Current wording

•a $2.1 million increase in prepaid expense and other current assets.

Previous wording

The primary objective of our investment activities is to preserve our capital for the purpose of funding operations while at the same time maximizing the income we receive from our investments without significantly increasing risk or decreasing availability. To achieve these objectives, our investment policy allows us to maintain a portfolio of certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. At June 30, 2025, we had $202.4 million in U.S. government securities, $83.1 million in money market funds, $76.7 million in corporate debt securities, and $24.7 million in certificates of deposit, commercial paper, and asset-backed securities. See Note 2 to our unaudited consolidated financial statements in this Quarterly Report for additional information on our investments.

Current wording

The primary objective of our investment activities is to preserve our capital for the purpose of funding operations while at the same time maximizing the income we receive from our investments without significantly increasing risk or decreasing availability. To achieve these objectives, our investment policy allows us to maintain a portfolio of certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. At September 30, 2025, we had $178.1 million in U.S. government securities, $63.0 million in money market funds, $98.1 million in corporate debt securities, and $21.9 million in commercial paper. See Note 2 to our unaudited consolidated financial statements in this Quarterly Report for additional information on our investments.

Previous wording

In the six months ended June 30, 2025, our SG&A expenditures increased significantly over the prior year levels, and we anticipate further increases during 2025. Our SG&A expenditures, primarily for increasing headcount and advertising, may exceed any associated increases in revenues, and therefore would reduce our cash flow from operations. We also anticipate R&D expenses will increase during the remainder of 2025, primarily related to the ongoing development of the SleepSync™ platform and next generation products.

Current wording

In the nine months ended September 30, 2025, our SG&A expenditures increased significantly over the prior year levels, and we anticipate further increases during 2025. Our SG&A expenditures, primarily for increasing headcount and advertising, may exceed any associated increases in revenues, and therefore would reduce our cash flow from operations. We also anticipate R&D expenses will increase during the remainder of 2025, primarily related to the ongoing development of the SleepSync™ platform and next generation products.

Previous wording

We spent $17.4 million on purchases of property and equipment in the six months ended June 30, 2025, mainly on manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software. We anticipate further capital expenditures in 2025, primarily for additional manufacturing equipment and our SleepSync™ platform, computer hardware and software, and leasehold improvements on our corporate office buildings.

Current wording

We spent $27.8 million on purchases of property and equipment in the nine months ended September 30, 2025, mainly on manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software. We anticipate further capital expenditures in 2025, primarily for additional manufacturing equipment and our SleepSync™ platform, computer hardware and software, and leasehold improvements on our corporate office buildings.

Previous wording

We believe that our existing cash and cash equivalents and investments, which totaled $410.7 million as of June 30, 2025, together with cash flows from operations, will provide liquidity sufficient to meet our cash needs and fund our operations and planned capital expenditures for at least the next 12 months. There can be no assurance, however, that our business will continue to generate cash flows at the same levels achieved in prior periods.

Current wording

We believe that our existing cash and cash equivalents and investments, which totaled $410.9 million as of September 30, 2025, together with cash flows from operations, will provide liquidity sufficient to meet our cash needs and fund our operations and planned capital expenditures for at least the next 12 months. There can be no assurance, however, that our business will continue to generate cash flows at the same levels achieved in prior periods.

Previous wording

The net cash used in operating activities was $4.0 million for the six months ended June 30, 2025 and consisted of a net loss of $0.6 million, non-cash charges of $82.5 million, and an increase in net operating assets of $86.0 million. The non-cash charges consisted primarily of stock-based compensation, which increased mainly as a result of the accelerated recognition of stock-based compensation expense for employees who are retirement eligible in accordance with implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement, and granting more equity awards to a greater number of employees as compared to the same prior-year period. The remainder of the non-cash charges included depreciation and amortization expense which increased with additional purchases of property and equipment, an impairment of a strategic investment, accretion of investment discount on our available-for-sale investments, a change in the provision for estimated credit losses, and other, net. Operating assets include inventories, which increased as we continue to build inventory levels to support higher sales and the launch of Inspire V, and accounts receivable, which increased primarily due to a temporary delay in the delivery timing of customer invoices following the implementation of a new portal and invoice delivery process, which has since been resolved, and higher sales which occurred during June 2025. Operating assets also include prepaid expenses and other current assets which increased slightly. Operating liabilities include accounts payable, which increased generally due to the timing of vendor invoice payments, and accrued expenses, which decreased primarily due to the payment of year-end bonuses and commissions.

Current wording

The net cash provided by operating activities was $64.5 million for the nine months ended September 30, 2025 and consisted of a net income of $9.3 million, non-cash charges of $115.7 million, and an increase in net operating assets of $60.5 million. The non-cash charges consisted primarily of stock-based compensation, which increased mainly as a result of the accelerated recognition of stock-based compensation expense for employees who are retirement eligible in accordance with implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement, and granting more equity awards to a greater number of employees as compared to the same prior-year period. The remainder of the non-cash charges included depreciation and amortization expense which increased with additional purchases of property and equipment, an impairment of a strategic investment, accretion of investment discount on our available-for-sale investments, a change in the provision for estimated credit losses, and other, net. Operating assets include inventories, which increased as we continue to build inventory levels to support higher sales and the launch of Inspire V, and accounts receivable, which increased primarily due to higher sales which occurred during September 2025. Operating assets also include prepaid expenses and other current assets which increased slightly. Operating liabilities include accounts payable, which increased generally due to the timing of vendor invoice payments, and accrued expenses, which increased slightly.

Previous wording

The net cash provided by operating activities was $8.8 million for the six months ended June 30, 2024 and consisted of a net loss of $0.2 million, non-cash charges of $55.5 million, and a decrease in net operating assets of $46.5 million. The non-cash charges consisted primarily of stock-based compensation, which increased mainly as a result of granting more equity awards to a greater number of employees as compared to the same prior-year period. The remainder of the non-cash charges included accretion of investment discount due to higher investment balances, depreciation and amortization expense which increased with additional purchases of property and equipment, non-cash lease expense, the benefit for estimated credit losses related primarily to accounts receivable with two healthcare systems, and stock issued for services rendered. Operating assets include inventories, which increased as supply chain constraints eased, and accounts receivable, which decreased due to collections on the higher sales volume we typically experience late in the fourth quarter. Operating assets also include prepaid expenses and other current assets, which increased primarily due to dividends receivable on our investments. Operating liabilities include accounts payable, which decreased generally due to reduced direct-to-consumer marketing spend in the second quarter of 2024, and accrued expenses, which decreased primarily due to the payment of year-end bonuses and commissions.

Current wording

The net cash provided by operating activities was $61.1 million for the nine months ended September 30, 2024 and consisted of net income of $18.3 million, non-cash charges of $83.6 million, and an increase in net operating assets of $40.8 million. The non-cash charges consisted primarily of stock-based compensation, which increased mainly as a result of granting more equity awards to a greater number of employees as compared to the same prior-year period. The remainder of the non-cash charges included accretion of investment discount due to higher investment balances, depreciation and amortization expense which increased with additional purchases of property and equipment, the benefit for estimated credit losses related primarily to accounts receivable with three healthcare systems, and other non-cash expenses. Operating assets include inventories, which increased as supply chain constraints eased and we increased inventory on hand to support higher sales, and accounts receivable, which decreased due to collections on the higher sales volume we typically experience late in the fourth quarter. Operating assets also include prepaid expenses and other current assets, which increased primarily due to a prepayment to a supplier for inventory components and accrued interest income. Operating liabilities include accounts payable, which decreased generally due to reduced direct-to-consumer marketing and research and development spend in the third quarter of 2024, and accrued expenses.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2025 was $45.0 million and consisted primarily of proceeds from sales or maturities of investments of $173.7 million, partially offset by the purchase of investments of $108.7 million and the purchases of property and equipment of $17.4 million, mainly on manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software, as well as $2.5 million for the purchase of strategic investments.

Current wording

Net cash provided by investing activities for the nine months ended September 30, 2025 was $33.4 million and consisted primarily of proceeds from sales or maturities of investments of $248.7 million, partially offset by the purchase of investments of $177.4 million and the purchases of property and equipment of $27.8 million, mainly on manufacturing equipment and tooling for Inspire V, development of our SleepSync™ platform, and computer hardware and software, as well as $10.1 million for the purchase of strategic investments.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 was $13.9 million and consisted primarily of the purchase of investments of $112.0 million and the purchases of property and equipment of $24.1 million, mainly for testing systems and production equipment for Inspire V, our SleepSync™ platform, computer hardware and software, and leasehold improvements, partially offset by the proceeds from sales or maturities of investments of $122.2 million.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $116.9 million and consisted primarily of the purchase of investments of $337.5 million and the purchases of property and equipment of $32.1 million, mainly for testing systems and production equipment for our next generation Inspire system, our SleepSync™ platform, computer hardware and software, and leasehold improvements, partially offset by the proceeds from sales or maturities of investments of $252.8 million.

Previous wording

Net cash used in financing activities was $84.1 million for the six months ended June 30, 2025 and consisted primarily of share repurchases of $75.0 million under our share repurchase authorization and the payment of $20.9 million of taxes paid on net share settlement of equity awards, partially offset by $8.6 million in proceeds from the exercise of stock options and $3.3 million in proceeds from the sale of common stock from our Employee Stock Purchase Plan ("ESPP").

Current wording

Net cash used in financing activities was $135.1 million for the nine months ended September 30, 2025 and consisted primarily of share repurchases of $125.0 million under our share repurchase authorizations and the payment of $22.4 million of taxes paid on net share settlement of equity awards, partially offset by $9.0 million in proceeds from the exercise of stock options and $3.3 million in proceeds from the sale of common stock from our Employee Stock Purchase Plan ("ESPP").