Medical technology company Inspire Medical Systems (NYSE: INSP) reported Q2 CY2026 results exceeding the market’s revenue expectations, but sales fell by 7.6% year on year to $200.6 million. The company’s full-year revenue guidance of $855 million at the midpoint came in 1.4% above analysts’ estimates. Its non-GAAP profit of $0.14 per share was significantly above analysts’ consensus estimates.
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Inspire Medical Systems (INSP) Q2 CY2026 Highlights:
- Revenue: $200.6 million vs analyst estimates of $194.7 million (7.6% year-on-year decline, 3% beat)
- Adjusted EPS: $0.14 vs analyst estimates of -$0.25 (significant beat)
- Adjusted EBITDA: $38.9 million vs analyst estimates of $27.68 million (19.4% margin, 40.5% beat)
- The company slightly lifted its revenue guidance for the full year to $855 million at the midpoint from $850 million
- Management raised its full-year Adjusted EPS guidance to $1.25 at the midpoint, a 25% increase
- Operating Margin: -0.3%, down from 4.4% in the same quarter last year
- Market Capitalization: $1.45 billion
“Our second quarter results reflect the increased discipline and focus we are bringing to the business as we continue to support customers through the evolving coding and reimbursement environment and invest in the long-term adoption of Inspire therapy,” said Tim Herbert, Chairman and CEO of Inspire Medical Systems.
Company Overview
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE: INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Inspire Medical Systems’s sales grew at an incredible 38.7% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Inspire Medical Systems’s annualized revenue growth of 12.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
This quarter, Inspire Medical Systems’s revenue fell by 7.6% year on year to $200.6 million but beat Wall Street’s estimates by 3%.
Looking ahead, sell-side analysts expect revenue to decline by 4.7% over the next 12 months, a deceleration versus the last two years. This projection doesn’t excite us and implies its products and services will see some demand headwinds.
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Adjusted Operating Margin
Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals.
Inspire Medical Systems was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 1% was weak for a healthcare business.
On the plus side, Inspire Medical Systems’s adjusted operating margin rose by 23.8 percentage points over the last five years, as its sales growth gave it immense operating leverage. Zooming in on its more recent performance, we can see the company’s trajectory is intact as its margin has also increased by 11.9 percentage points on a two-year basis.
This quarter, Inspire Medical Systems generated an adjusted operating margin profit margin of 15.3%, up 10.9 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Inspire Medical Systems’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q2, Inspire Medical Systems reported adjusted EPS of $0.14, down from $0.45 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Inspire Medical Systems’s full-year EPS to shrink by 40.9% from $2.27 to $1.34.
Key Takeaways from Inspire Medical Systems’s Q2 Results
It was good to see Inspire Medical Systems beat analysts’ revenue and EPS expectations this quarter. We were also excited its full-year revenue and EPS guidance outperformed Wall Street’s estimates as well. Zooming out, we think this was a solid print. The stock traded up 13.6% to $59.28 immediately after reporting.
Indeed, Inspire Medical Systems had a rock-solid quarterly earnings result, but is this stock a good investment here? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
