INSP Q2 results: beat and raise again

Inspire Medical Systems (INSP) released Q2 results, and it is another beat and raise.

Topline growth was over 300%, but that is kind of meaningless because Q2 was so affected by COVID last year. Also, sequential (31%) is not so useful because their business is seasonal, with the earlier quarters being slowest. If we compare versus Q3 of last year (which wasn’t very effected by COVID), it’s 47% growth, so still pretty tasty. Versus Q4 of last year, that’s 15% growth (again recall the seasonality of their business).

For the full year, they increased revenue growth guidance to 83.5%, from previous guidance of 68%. They have a history of doing this and I expect they may raise guidance again after the Q3 report.

They increased the number of centers which do their implants by 63 which exceeded their previous guidance. They now increased guidance for center expansion to ~50 per quarter.

Gross margin increased to 85.8%.

Anthem approved prior authorization for the implant this quarter, making it the last major national carrier to approve it and bringing total covered US lives to 260 million (over 70% of US population).

Other major initiatives (direct marketing, website, app development, R&D for next version of implant, etc.) seem on track.

Previously, they had estimated a ~250 million revenue rate to reach breakeven for profitability. They should reach that by next year at this growth rate. An analyst asked if they were still sticking with that number. They didn’t provide a numerical answer, but said they are really focusing on growth (so I’m guessing breakeven will be at a higher number as they spend money on expansion). But they didn’t seem to be dodging the idea of profitability. The answer actually seemed to show that they are confident in their plan for continued rapid expansion and establishing their market dominance.