INSP 10-K & 10-Q changes, risk factors and insider trading

We cannot ensure that our Inspire therapy will achieve or maintain broad market acceptance among physicians and patients. AnyAs a single-product company, any failure of the Inspire system to satisfy physician or patient demand or to achieve meaningful market acceptance will harm our business and future prospects.

If patients or physicians are not willing to change current practices to adopt our Inspire therapy to treat moderate to severe OSA, our Inspire therapy may fail to gain increased market acceptance, and our business will be adversely affected.

•lack of availability of adequate or clear third-party payor coverage or reimbursement;

If we are unable to achieve and maintain adequate levels of coverage or reimbursement for our Inspire system, or any future products we may seek to commercialize, our commercialbusiness, successfinancial condition or results of operations may be severelyadversely hindered.affected.

We currently derive all of our revenue from sales of our Inspire system and expect this to continue for the foreseeable future. The primary customers for our products are hospitals and ASCs. Our customers typically bill various third-party payors to cover all or a portion of the costs and fees associated with the procedures in which our products are used and bill patients for any deductibles or co-payments. Because there is often no separate reimbursement for supplies used in surgical procedures, the additional cost associated with the use of our products can affect the profit margin of the hospital or surgery center where the procedure is performed. Some of our target customers may be unwilling to adopt our products in light of the additional associated cost. Further, any decline in the amount payors are willing to reimburse our customers - whether resulting from payor decisions, changes in billing codes, or other factors could make it difficult for existing customers to continue using or to adopt our products and could create additional pricing pressure for us. If we are forced to lower the price we charge for our products, our gross margins will decrease, which could have a material adverse effect on our business, financial condition, and results of operations, and impair our ability to grow our business.

Several third-party payors do not currently cover our products and the related procedures because they have determined that our products and the related procedures are experimental or investigational. When our products and the related procedures are covered, they are reimbursed primarily on a per-patient prior authorization basis for patients covered by commercial insurers, under Local Coverage Determinations for patients covered by Medicare, and under U.S. government contract for patients who are treated by the Veterans Health Administration. CustomersDespite prior authorization approvals, it is possible that certain customers who perform the procedure may be subject to reimbursement claim denials upon submission of the claim. Customers may also be subject to recovery of overpayments if a payor makes payment for the claim and subsequently determines that the payor’s coding, billing or coverage policies were not followed. Our customers typically must directly bill patients enrolled with these third-party payors for the costs and fees associated with the procedures in which our products are used.

Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, no uniform policy of coverage and reimbursement for procedures using our products exists among third-party payors. Therefore, coverage and reimbursement for procedures using our products can differ significantly from payor to payor. Payors continually review new and existing technologies for possible coverage and can, without notice, deny or reverse coverage for new or existing products and procedures. There can be no assurance that third-party payor policies will provide full or meaningful coverage for procedures in which our products are used. If we are not successful in reversing existing non-coverage policies, or if third-party payors that currently cover or reimburse our products and related procedures reverse or limit their coverage in the future, or if other third-party payors issue similar policies, this could have a material adverse effect on our business. Overall, new products and changes in the industry can drive changes to (or a lack of clarity for) reimbursement. Our own products have been billed under different codes and reimbursement approaches throughout our history. Most recently, since the rollout of Inspire V in 2025, there has been confusion and changes (from both government healthcare programs and other payors and parties involved in setting reimbursement and coding) around the appropriate reimbursement and coding for our products that has the potential to adversely impact our revenues, business, financial condition and results of operations. For additional information, see Part I. Item a. "Business - Third-Party Reimbursement - Coding and Payment" and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview.”

Additionally, we compete with various other second-line therapies to treat OSA, including invasive surgical treatment options such as UPPP, MMA, robotic tongue reduction surgery, and, to a lesser extent, oral appliances, which are primarily used in the treatment of mild to moderate OSA. Pharmaceutical therapies to treat OSA are also emerging. Though we areWe currently the only neurostimulation technology designed to treat OSA that is approved for commercializationcompete in the U.S. byand certain countries outside of the FDA,U.S. wewith currentlyNyxoah, which markets an open-loop bilateral hypoglossal nerve stimulation device. We also compete outside the U.S. with LivaNova, which markets an open-loop neurostimulation device,device and recently announced completion of clinical trials of its device in the U.S. WePharmaceutical therapies to treat OSA are also competeemerging. outside the U.S. with Nyxoah, which markets an open-loop bilateral hypoglossal nerve stimulation device in certain countries outside the U.S., and is seeking FDA approval in the U.S. In 2023 and 2024, glucagon-likeGlucagon-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 December 2024, the FDA approved the GLP-1 drug Zepbound (tirzepatide) for the treatment of moderate to severe OSA in adults with obesity, and other GLP-1s are currently being clinically evaluated as a potential treatment for OSA. If GLP-1s are successful in treating OSA in an indication for which Inspire therapy is approved, demand for our Inspire system for patients with that indication could be reduced. Although we believe that there could be a benefit to our business as a result of GLP-1s reducing the BMI of our prospective patients and increasing the number of eligible patients for our Inspire therapy, there can be no assurance of such benefit.

We are, and may in the future become, party to litigation, regulatory proceedings or other disputes. In general, claims made by or against us in disputes and other legal or regulatory proceedings can be expensive and time-consuming to bring or defend against, requiring us to expend significant resources and divert the efforts and attention of our management and other personnel from our business operations. These potential claims may include but are not limited to personal injury and class action lawsuits, data privacy, intellectual property claims and regulatory investigations relating to the advertising and promotional claims about our products and services and employee claims against us based on, among other things, discrimination, harassment or wrongful termination. Any one of these claims, even those without merit,claims may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. Any adverse determination against us in these proceedings, or even the allegations contained in the claims, regardless of whether they are ultimately found to be without merit, may also result in settlements, injunctions or damages that could have a material adverse effect on our business, financial condition and results of operations.

In addition, we are currently a party to multiple adversarial proceedings with Nyxoah regarding our patent portfolio and the patents of third parties. For additional information, see Note 11, Commitments and Contingencies to the consolidated financial statements included elsewhere in this Form 10-K. These lawsuits and any future lawsuits to which we may become a party are subject to inherent uncertainties and could result in very substantial costs, divert our management’s attention and resources and materially harm our business, operating results and financial condition.

•receive adequate and clear coverage and reimbursement for procedures performed with our products; and

•develop anand maintain effective and dedicated sales and marketing team.

If we are unable to expand,effectively size, manage and maintain our direct sales and marketing organization we may not be able to generate revenue growth.

In order to generate future revenue growth, we plan to continue to expand the size and geographic scope of our direct sales organization. This growth may require us to split or adjust existing sales territories, which may adversely affect our ability to retain customers in those territories. For example, we recently reorganized our sales organization. Additionally, our future success will depend largely on our ability to continue to hire, train, retain, and motivate skilled sales and reimbursement personnel with significant industry experience and technical knowledge of implantable devices and related products. Because the competition for their services is high, we cannot ensure that we will be able to hire and retain additional personnel on favorable or commercially reasonable terms, if at all. Failure to hire or retain qualified sales and reimbursement personnel would prevent us from expanding our business and generating revenue. If we are unable to expand our sales and marketing capabilities, we may not be able to effectively commercialize our Inspire system, which could have an adverse effect on our business, financial condition, and results of operations.

Sales in markets outside of the U.S. accounted for approximately 4.4%, 4.0%, 3.0%, and 3.2%3.0% of our revenue for the years ended December 31, 2025, 2024, 2023, and 2022,2023, respectively. Our strategy is to increase our international presence in Europe, including Germany and the Netherlands, as well as other international markets, such as Japan, Singapore, Hong Kong, and Hong Kong.Thailand. This strategy is subject to a number of risks, including:

•changing tariffs and trade barriers, including potentialrecent and proposed changes in tariffs that may be proposedimposed by the Trumpcurrent U.S. presidential administration and any retaliatory tariffs by other countries;

•the burdens of complying with a wide variety of foreign laws and different legal standards; and

Our business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of medical devices. This risk exists even if a device is cleared, approved, or certified for commercial sale by the FDA or foreign regulatory authorities or notified bodies and manufactured in facilities regulated by the FDA or an applicable foreign regulatory authority. Our Inspire system is designed to affect, and any future products will be designed to affect, important bodily functions and processes. Any side effects, design defects, manufacturing defects, misuse or abuse associated with our Inspire system could result in patient injury or death. The medical device industry has historically been subject to extensive litigation over product liability claims, and we cannot offer any assurance that we will not face product liability suits. We may be subject to product liability claims if our Inspire system causes, or is alleged to have caused, patient injury or death. In addition, an injury that is caused by the activities of our suppliers, such as those who provide us with components and raw materials, may be the basis for a claim against us. Product liability claims may be brought against us by patients, healthcare providers or others selling or otherwise coming into contact with our Inspire system, among others. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm. In addition, regardless of merit or eventual outcome, product liability claims may result in:

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. Factors such as geopolitical events (including global events like the ongoing wars in Ukraine and Israel), inflationary pressures, public health crises, and U.S. election cycles have caused extreme volatility and disruptions in the capital and credit markets in recent years. Uncertainty or unfavorable global economic conditions could result in a variety of impacts to our business, including weakening demand for our Inspire system, and adversely impacting our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy has strained in the past and may in the future strain our manufacturers or suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. Further, the Trumpcurrent U.S. presidential administration has proposed or enacted tariffs and substantial changes to trade policies, which could adversely affect our business. For example, the Trumpcurrent U.S. presidential administration has imposed tariffs on certain foreign products, including most recently from Canada, Mexico and China, that in the past have resulted in and may result in future retaliatory tariffs on U.S. goods and products. We cannot predict whether these policies will continue, or if new policies will be enacted, or the impact, if any, that any policy changes could have on our business. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the economic climate and financial market conditions could adversely affect our business.

We rely extensively on information technology systems to conduct our business and collect, storestore, process and transmit confidential and sensitive information, including personal information of customers(or relating to) customers, patients and our employees and contractors. These systems affect,support, among other things, orderingmanufacturing and managingdistribution, materialssupply fromchain suppliers,management, shippingorder productsprocessing, tofinancial customers,reporting, processingpatients, transactions, summarizingregulatory and reporting results of operations, patient marketing, complying with regulatory, legal or tax requirements, data securitycompliance and other processescritical necessarybusiness to manage our business.functions. Our information technology systemssystems, operational technology environments, and those of our third-party service providers, vendors, contract manufacturers, strategic partners and other contractors or consultants are vulnerable to evolving cybersecurity threats. These threats include, but are not limited to, damage or interruption from computer viruses and malware (e.g. ransomware), naturalmisconfigurations, disasters,“bugs” or other vulnerabilities, malicious code, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes,attacks, maliciousdenial code,of employeeservice theftattacks, orinsider misuse,threats, human error, fraud, denialunauthorized oraccess, degradationand ofattacks service attacks,by sophisticated nation-state and nation-state-supported actorsactors. We have also outsourced elements of our information technology infrastructure, and as a result a number of third-party vendors may or unauthorizedcould access or use by persons inside our organization, or persons withhave access to systems inside our organization.confidential information.

There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our information technology systems and information. The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased and evolved. We and our third-party service providers and partners may also face increased cybersecurity risks due to our reliance on internet technology and employees who work remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If we or our third-party vendors were to experience a significant cybersecurity breach of our or their information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counter-parties and data subjects could be material. In addition, our remediation efforts may not be successful. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology and cybersecurity infrastructure, we could suffer significant business disruption, including transaction errors, supply chain or manufacturing interruptions, processing inefficiencies, data loss or the loss of or damage to intellectual property or other proprietary information. We may experience security breaches that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniquestechniques, including artificial intelligence, that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. Our third-party service providers and partners are also subject to these heightened risks. IfBecause we depend on third-party software components, open-source code, cloud service providers and contract manufacturers to develop, produce and support our products, a cybersecurity incident or vulnerability could introduce security flaws into our products, disrupt manufacturing operations, delay shipments or compromise sensitive data. Overall, if our systems are damaged or cease to function properly due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively compensate on a timely basis,breaches we may experience interruptions in our operations, which could have an adverse effect on our business and financial condition.

We and certain of our service providers are from time to time subject to cyberattacks and security incidents. We sell our products to hospitals and healthcare providers, and our devices and monitoring systems may interface with hospital networks and systems that we do not control. Healthcare institutions are frequent targets of cyberattacks, and such an event could impair device connectivity, disrupt patient monitoring, delay therapy delivery or otherwise negatively affect patient care, our customers and our overall reputation. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur, it could lead to unauthorized access, disclosure and use of confidential information, including personal information from our ADHERE patient registry or other patient information we create, receive, maintain or transmit, including with respect to our Inspire Cloud, SleepSync™ platform, or the Inspire Sleep app, which may be governed by HIPAA and other laws. These mobile applications and cloud-based platforms may be vulnerable to exploitation, authentication failures, data manipulation or unauthorized access. If a security breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws. Any such access, disclosure, or other loss of information could result in regulatory action or investigation, legal claims or proceedings, liability under laws that protect the privacy of personal information, and damage to our reputation.reputation, which could materially and adversely affect our business, results of operations or financial condition.

Further,Our ourcybersecurity and other insurance coverage involves exclusions and coverage limitations and may not be sufficient to cover the financial, legal, business or reputational losses that may result from a cybersecurity incident or an interruption or breach of our systems.

We do not have redundant facilities. We perform substantially all of our research and development and back-office activity at two locations in Golden Valley, Minnesota. The majority of our finished goods inventory is maintained at a third-party locationlocations in Tennessee.California and North Carolina. Our facility, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace. These facilities may be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, tornadoes, flooding, fires and other events, including climate change-related severe weather or disasters, power outages, and public health crises, which may render it difficult or impossible for us to perform our research, development and commercialization activities for some period of time. The inability to perform those activities, combined with the time it may take to rebuild our inventory of finished product, may result in the loss of customers or harm to our reputation. Although we possess insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and this insurance may not continue to be available to us on acceptable terms, or at all.

We bear the risk of warranty claims on our Inspire system.system, which can include defects arising from the design of our products and/or any third-party components. We may not be successful in claiming recovery under any warranty or indemnity provided to us by our suppliers or vendors in the event of a successful warranty claim against us by a customer or that any recovery from such vendor or supplier would be adequate. In addition, warranty claims brought by our customers related to third-party components may arise after our ability to bring corresponding warranty claims against such suppliers expires, which could result in costs to us.

Our estimates and assumptions that support the view that our existing cash, cash equivalents, short-term investments and revenue will be sufficient to meet our capital requirements and fund our operations for at least 12 months. However, we have based these estimates on assumptions thatmonths may prove to be incorrect, and we could spend our available financial resources much faster than we currently expect. Any future funding requirements will depend on many factors, including:

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period, is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs") and its research and development credit carryforwards to offset future taxable income. During 2024,2025, we finalized a detailed analysis to determine whether an ownership change has occurred through December 31, 2023,2024, and if a limitation exists. It was determined that December 11, 2018 was the only date that we experienced an ownership change. The study concluded that none of the federal net operating losses nor the federal R&D credits that were accumulated on December 11, 2018 will expire unused solely due to the limitations under Sections 382 and 383 of the Code. We are in the process of updating the analysis through December 31, 2024. Although unexpected, if we experienced an ownership change during 2024, the timing of our ability to utilize the tax attributes may be affected. As of December 31, 2024,2025, our gross federal NOL carryforward was $51.2fully million.utilized In addition,and our abilityfederal toR&D deductcredit netcarryover interestwas expense$10.1 may be limited if we have insufficient taxable income for the year during which the interest is incurred, and any carryovers of such disallowed interest would be subject to the limitation rules similar to those applicable to NOLs and other attributes.million. Future changes in our stock ownership, some of which might be beyond our control, could result in an ownership change under Section 382 of the Code. For these reasons, in the event we experience a change of ownership within the definition of Section 382 of the Code, we may not be able to utilize a material portion of the NOLs,remaining research and developmentR&D credit carryforwards or disallowed interest expense carryovers,carryforwards, even if we sustain profitability.

We are a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA"). Our proprietary Inspire system is the first and only FDA, European Union ("EU") Medical Devices Regulation ("MDR"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA. We have developed a novel, closed-loop solution that continuously monitors a patient’s breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway. Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level.

We sell our Inspire system to hospitals and ambulatory surgery centers ("ASCs") in the U.S. and in select countries in Europe and Japan through a direct sales organization and we sell our Inspire system in SingaporeSingapore, Hong Kong, and Hong KongThailand through distributors. Our direct sales force engages in sales efforts and promotional activities primarily focused on ENT physicians and sleep centers. In addition, we highlight our compelling clinical data and value proposition to increase awareness and adoption amongst referring physicians. We build upon this top-down approach with strong direct-to-consumer marketing initiatives to create awareness of the benefits of our Inspire system and drive interest through patient empowerment. We believe this outreach helps to educate thousands of patients on our Inspire therapy.

Although our sales and marketing efforts are directed at patients and physicians because they are the primary users of our technology, we consider the hospitals and ASCs where the procedure is performed to be our customers, as they are the purchasing agents of our Inspire system. Our customers are reimbursed according to the coding and correlated payment by various third-party payors, such as commercial payors and government healthcare programs. Our Inspire system is currently covered on a per-patient basis for patients insured by commercial payors, under Local Coverage Determinations for patients insured by Medicare and Medicare Advantage, and under U.S. government contract for patients who are treated by the Veterans Health Administration. As of February 10,13, 2025,2026, we have secured positive coverage policies with many U.S. commercial payors, including all large national commercial insurers, covering approximatelymore 260than 300 million lives in the U.S. In addition, all seven Medicare Administrative Contractors provide coverage of Inspire therapy when certain coverage criteria are met.

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 and expiration, which could lead to inventory impairment charges. For example, during 2022,2025, we recorded a charge of $2.8$2.1 million for obsolete inventory andexcess component parts related to productour introductions,Inspire includingIV the new silicone leads and the Bluetooth®-enabled patient remote.system.

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 year ended December 31, 2024,2025, we generated revenue of $912.0 million with a gross margin of 85.4% and net income of $145.4 million, compared to revenue of $802.8 million with a gross margin of 84.7% and net income of $53.5 million,million comparedfor tothe year ended December 31, 2024, and revenue of $624.8 million with a gross margin of 84.5% and a net loss of $21.2 million for the year ended December 31, 2023, and revenue of $407.9 million with a gross margin of 83.8% and a net loss of $44.9 million for the year ended December 31, 2022.2023. Our accumulated deficit as of December 31, 20242025 was $291.9$146.5 million.

We have invested heavily in product development. Our research and development activities have been centered on driving continuous improvements to our Inspire therapy. We have also made significant investments in clinical studies to demonstrate the safety and efficacy of our Inspire therapy and to support regulatory submissions. We continue to make investments in research and development efforts to develop our nextfuture generations of the Inspire systems and support our future regulatory submissions for expanded indications and for new markets such as additional European countries and the Asia Pacific region. For example, in August 2024, we received approval from the FDA for our next generation Inspire system,V neurostimulator ("Inspire V,") which we expectbegan to fullymarket launchfor sale in the U.S. in May 2025. In June 2023, we received approval from the FDA on an expanded indication which includes an increase on the upper limit of the Apnea Hypopnea Index to 100 events per hour from 65 and raises the Body Mass Index ("BMI") warning in the labeling to 40 from 32, and we also received FDA approval of our new physician programmer, called the SleepSync™ programmer, which we launched in the U.S. in late 2024. In March 2023, we received FDA approval to offer Inspire therapy to certain pediatric patients with Down syndrome.

During 2023 and 2024, glucagon-like peptide 1 ("GLP-1s"), a class of drug indicated for diabetes and obesity, 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 anteroposterior airway collapse, also known as tongue base collapse. Additionally, 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, aand GLP-1 injection. Subsequently, in June 2024, Lilly published additional results from its SURMOUNT-OSA trial demonstratingthat 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 2929. and theThe 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. Therefore,In October 2025, we believe there is notconducted a notablesurvey overlapof betweenover 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 patienttherapy. populationThe andsurvey findings also suggest that, with the patient population being treated with GLP-1s today. While we cannot quantify the impact, we believe that there could be a benefit to our business as a resultavailability of GLP-1s reducingto thetreat BMI of our prospective patients and increasingOSA, the number of eligiblepatients seeking diagnosis and treatment for OSA is increasing. We believe that some of these patients forwill see a reduction in their BMI into our indication, and that some of those patients will not have their OSA fully resolved and will require further treatment. This reinforces our belief that the overall number of patients eligible for Inspire therapy,therapy will increase in the long-term due to the availability of GLP-1s, although there can be no assurance of such benefit at this time.

The global economy continues to experience increased inflationary pressures.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.

Our business has grown rapidly in recent years, resulting in substantially increased revenues, and we expect that our business will continue to grow. However, our revenue growth rate has generally declineddecelerated in recent periods, and it may continue to do so as a result of the difficulty of maintaining growth rates as our revenues increase to higher levels.

We expect R&D expenses to increase in the future as we developinvest nextin generationour product pipeline, including future versions of our Inspire system and SleepSync™ and continue to expand our clinical studies to further expand positive coverage policies from private commercial payors in the U.S. and enter into new markets including additional European countries and the Asia Pacific region. We expect R&D expenses as a percentage of revenue to vary over time depending on the level and timing of initiating new product development efforts and new clinical development activities.

Selling, general and administrative ("SG&A") expenses consist primarily of compensation for personnel, including base salaries, stock-based compensation expense and commissions related to our sales organization, finance, information technology, human resource,resources, and legal functions, as well as spending related to marketing, sales operations, and training and reimbursement personnel. Other SG&A expenses include training physicians, travel expenses, advertising, direct-to-consumer promotional programs, conferences, trade shows and consulting services, professional services fees, audit fees, insurance costs and general corporate expenses, including facilities-related expenses.

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.

Other income, net consists primarily of interest and dividend income, minimal interest expense under our former credit facility,expense, the impacts of foreign currency transactions and remeasurements, and gains and losses on investments.investments, and an impairment charge related to a strategic investment.

As of December 31, 2024,2025, we had cash, cash equivalents and available-for-sale debt securities of $516.5$404.6 million, ana increasedecrease of $47.0$111.9 million from $469.5$516.5 million as of December 31, 2023.2024. Working capital totaled $542.3$487.6 million as of December 31, 2024,2025, ana increasedecrease of $26.7$54.7 million from December 31, 2023.2024. We define working capital as current assets less current liabilities. The increasedecrease in working capital was primarily due to the following factors:

•a decrease of $14.8$137.3 million in cash and cash equivalents and short-term available for sale investments primarily due to the$175.0 ASRmillion weof enteredshare inrepurchases Novembermade 2024under our share repurchase programs, as well as inventory purchases and the purchasepayment of long-termtaxes available-for-saleon investmentsnet andshare inventory,settlements of equity awards, partially offset by proceeds from sales of the Inspire system, proceeds from the exercise of stock options, and interest and dividend income;income, and the increase in long-term available for sale investments;

•an increase of $10.5$9.7 million in accrued expenses which increased primarily due to compensation and personnel-related costs.costs; and

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 December 31, 2024,2025, we had $59.6 million in money market funds, $267.4$159.8 million in U.S. Treasury debt securities, and $99.0 million$116.7 in corporate debt securities, $64.4 million in money market funds, and $23.3 million in commercial paper, certificates of deposit,paper and asset-asset-backed securities. See Note 2 to our auditedNotes financialto statementsConsolidated Financial Statements included elsewhere in this Form 10-K for additional information on our investments.

In 2024,2025, our SG&A expenditures increased significantly over the prior year levels, and we anticipate further increases during 2025.2026. 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 induring 2025,2026, primarily related to the ongoing development of the SleepSync™ platform and next generation products.

We spent $39.1$38.5 million on purchases of property and equipment in 2024,2025, mainly on testing systems and manufacturing equipment and tooling for our next generation Inspire system,V, development of our SleepSync™ platform, and computer hardware and software, and leasehold improvements.software. We anticipate further capital expenditures in 2025,2026, primarily for additional manufacturing equipment and our SleepSync™ platform, computer hardware and software, and leasehold improvements on our corporate office buildings.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of these risks and uncertainties, see the information in "Part I, Item 1A. Risk Factors” in our Annual Report. ThereOther than as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

MostIn recently,March in April 20262026, the American Hospital Association (AHA) recommended use of CPT code 64999 for Inspire V commercial cases. CPT code 64999 is an unlisted procedure code for the nervous system and is to be used when no specific CPT code exists to accurately describe a service. Because CPT code 64999 is non‑specific,non-specific, reimbursement determinations typically required additional supporting documentation, which may result in increased claims review and processing time (in which case we will provide additional education and support to customers). The AHA's quarterly newsletter that included this recommendation indicates that its guidance does not dictate coverage and reimbursement policy as determined by local Medicare contractors or any other payer; nor is it a substitution for the judgment of a qualified practitioner in the application of HCPCS codes. Currently, many commercial policies still publish CPT code 64568 as the code to be used for the Inspire V procedure. As a result, Inspire continues to recommend that providers consider using the code listed in the applicable payer policy (recognizing that the payer policies may not reflect current coding guidance) and consult their provider's own compliance, coding advisors, and payers as needed.

In terms of Inspire V Medicare cases, in February 2026, the Centers for Medicare & Medicaid Services (CMS) announced that it would implement a series of HCPCS Level II C‑codes which were published on April 1, 2026. These C‑codes apply only to facility billing and do not address professional (or physician) fee reimbursement. We currently believe all Medicare Administrative Contractor (MAC) local coverage determinations identify CPT code 64582 as the appropriate code. In addition, basedBased on information provided to us, most procedures billed year‑to‑date have been submitted and paid without the use of a modifier. Accordingly,We weare believecurrently itaware isof appropriatetwo forMACs providersthat torequire continuethe use of the -52 modifier when billing CPT code 64582 without64568. aBased modifier.on However,available itdata, isapplication importantof the modifier has resulted in physician reimbursement ranging from no reduction to noteapproximately that30% below the existing national average payment. Additional MACs may,may in the future,future require the use of a modifier for these services, which could affect professional fee reimbursement.

These and other recent coding and reimbursement decisions (particularly the uncertainty of the decisions and volatility of the announcements from multiple stakeholders) have adversely impacted our revenue in the first quarterhalf of 2026 and we anticipate that this will continue to adversely impact revenue during the remainder of 2026. Inspire is actively engaging with relevant stakeholders regarding the reimbursement uncertainty affecting Inspire V and is providing support as appropriate - with a goal of limiting and moving past the uncertainty as soon as possible. In the short-term, we are working to minimize potential delays and continue to support patient access to therapy. This includes providing proactive education and assistance to our field team, our customers and physicians. We are also seeking a long-term solution, including the creation of a separate CPT code. There can be no guarantee as to the timing or outcome of the CPT code application.

In addition, the Wasteful and Inappropriate Service Reduction Model (WISeR) program, which is a government initiative requiring prior authorization of Medicare cases in six pilot states, began in mid-January 2026. During the first quarter,half of 2026, we experienced delays due to the new WISeR requirements for traditional Medicare procedures in the six WISeR states which adversely impacted our revenue in the first quarter.half of 2026. We anticipate that this will continue to adversely impact revenue for the remainder of 2026.2026, although to a lesser extent than in the first half of the year.

We continue to make significant investments in our sales and marketing organization. In 2025, we began optimizing our sales model through targeted territory consolidation and increased field clinical representatives (FCRs). This enables territory managers to focus on therapy awareness, surgeon recruiting and training, and driving the adoption of Inspire therapy, while FCRs provide technical and clinical expertise as well as educational and field support. As of MarchJune 31,30, 2026, we had 284280 U.S. sales territories and 288301 field clinical representatives, as compared with 295 U.S. sales territories and 275 field clinical representatives as of December 31, 2025.

Comparison of the Three Months Ended MarchJune 31,30, 2026 and 2025

•Revenue increaseddecreased $3.3$16.5 million, or 1.6%,7.6%, to $204.6$200.6 million driven primarily by a decline in US revenue, partially offset by growth in theInternational. The U.S. and International regions. U.S. growthdecline was driven primarily by increased market penetration, partially offset by the adverse impacts of coding and reimbursement challenges and uncertainty as well as the WISeR program.challenges.

•Research and development expenses decreased $2.0$1.5 million, or 7.1%,5.8%, to $25.8$24.7 million, primarily due to anlower increasestock-based compensation costs due to accelerated stock-based compensation expense recognized in the prior year period and increased internal cost allocations into SG&A and cost of goods sold, partially offset by an increase in sourcingdevelopment costscosts, andmainly clinicalfor studiesour expenses.next generation generator.

•SG&A expenses increaseddecreased $7.9$12.2 million, or 5.5%,7.7%, to $152.2$147.3 million, primarily driven by higherlower payrollstock-based costs,compensation costs due to accelerated stock-based compensation expenses recognized in the prior year period as well as lower marketing expenses, and legal fees.expenses.

•Other income, net decreasedincreased by $2.1$2.6 million, or 37.7%,268.8%, to $3.5$3.6 million, primarily due to a $4.0 million impairment charge recognized in the prior year period, partially offset by a decrease in interest and dividend income due to lower average interest rates and lower average cash, cash equivalents, and investment balances.balances in the current period.

•The effective tax rate was 571.2%89.9% compared to 28.1%.(54.0)%. The increase in the effective tax rate was primarily driven by shortfallstax shortfall related to stock-based compensation,compensation. whichAdditionally, were driven by a decline in our stock price at award vesting and exercise compared to grant-date fair value (tax shortfall). Forfor the three months ended MarchJune 31,30, 2025, we maintained a full valuation allowance against federal and state deferred tax assets, which was subsequently released at December 31, 2025. The majority of our stock awards vest annually during the first quarter of each year, which will generally concentrate the tax impact related to the tax shortfall in the first quarter of the year.

Net cash provided by operating activities was $12.8$36.1 million for the threesix months ended MarchJune 31,30, 2026 compared to $6.7$4.0 million of net cash used in operating activities in the prior year period. The change was primarily driven by improved working capital, primarilymainly in payablesreceivables and receivables, partially offset by a higher net loss in the current period.inventories.

Net cash used in investing activities was $11.2$7.7 million for the threesix months ended MarchJune 31,30, 2026, compared to $1.6$45.0 million of net cash provided by investing activities in the prior year period. The change was primarily driven by higher purchases of investments, partially offset by higherlower proceeds from the sale or maturity of investments.

Net cash used in financing activities was $7.5$5.6 million for the threesix months ended MarchJune 31,30, 2026, compared to $87.8$84.1 million in the prior year period. The change was primarily driven by higher share repurchases in the prior year period.

As of MarchJune 31,30, 2026, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.