Hi, good morning. Welcome back. I'm Larry Biegelson, the medical device analyst at Wells Fargo, and it is my pleasure to host this fireside chat with the management team from Inspire Medical. With us, we have Carlton Weatherby, Chief Strategy and Growth Officer, and Ezgi Yagci, Vice President of Investor Relations. To format Q&A, if anyone has a question in the audience, please raise your hand. We'll call on you. Carlton and Ezgi, thanks so much for being here.
Larry, thanks for having us, as always.
It's our pleasure. So Carlton, let's dive into Inspire V. It would be great, please give us an update on the transition to Inspire V, where you are in the process today versus where you were on the Q2 call.
Happy to, and good morning, everyone. Larry, it's always an honor to share the stage with you. And as I expect, Inspire V is the first topic, and we could spend the whole time on that. As you know, in our Q2 call, it was essentially the headline of the call. And Inspire V is something we're incredibly excited about, and early signals on the impact of the product it is having in the local communities. It's in practice, it's been very positive. What we discussed on the Q2 call are the core elements of the launch process and what are required for accounts to begin purchasing and surgeons to begin implanting and managing patients with Inspire V, and put into three big buckets. The first bucket was surgeon training and certification.
And on the call, we said that we had about 90% of our surgeons who have been certified or signed off to do Inspire V. A fairly low bar because the procedure is getting even more simple and efficient. It's essentially an online module for them to go through and get trained. And so I'm happy to say that that 90% now is closer to 99%. So essentially, all surgeons who have been trained on that specific step in the process. The second step was the contract being amended and executed, which is more administrative. On the call, we said that we had about 70% of contracts that had gone through within our existing implanting accounts. And now we're at over 80%. And so showing progress on that step so that accounts can get to full readiness for Inspire V.
The third step, which I'll call the longest pole in the tent or rate limiting, was our SleepSync programmer, and that requires software to be downloaded within health systems, and it's taking longer and was the piece that was behind the other two requirements. During the call, we said that about 50% of our implanting sites had gone through the step of getting the SleepSync programmer installed or implemented, and today, we're closer to two-thirds, so over 60%, closer to 65% of our implanting accounts that have gone through that step, and so I'm excited to share meaningful progress even over the last six or so weeks since our Q2 call, and excited for the early signs we've seen for the implanting sites that are using Inspire V, that are showing higher throughput, higher volume, and still great outcomes.
That's helpful. So when do you expect the transition from Inspire IV to Inspire V to be complete? And does that mean the contracting has to go from 80, I think you said, to 100? That the SleepSync implementation has to go from called 66% to 100? When is the process going to be complete?
We expect to be complete by the time we're exiting 2025, but showing progress essentially through each quarter. By the end of this quarter, getting closer to 80% versus the two-thirds I described on the SleepSync programmer. By the end of the year, have all of these requirements checked for all of our implanting accounts. By the end of the year, having full adoption of the implanting accounts able to purchase and implant Inspire V.
You did mention the coding issue that came up on the call. Is that because that's basically behind you?
Correct. Yeah, the coding issue we described was tied to Medicare and ultimately a software update that they put in place in July. But the approval we got in April, that was retroactively applied to January. And so there may have been some confusion around that. But it wasn't until July 1st when I'll call it there was full clearance for submissions to be run through the process and the software with Medicare. And so that's behind us and no longer a headwind in the process.
You know, there were a couple of kind of big picture kind of, I guess, questions that came out of the Q3 call. Was it Q3? Q2 call?
Q2 call, yes.
For some of us, and one was the magnitude of the guidance reduction. It was about 4.5% by my math in the second half, I think, and it was all driven by, most of it, I think, by Inspire V, but we talked to doctors. Look, they see a benefit of Inspire V, don't get me wrong, okay, eliminating the sensing lead, but they still think Inspire IV is a good product, okay, and benefits patients, so why would the slower transition to Inspire V cause such a big reduction? It was basically like 4.5% for the year, about 9% for the second half. That was a little bit kind of, I guess, unclear to me.
Yeah, a great question. And we agree Inspire IV is still a great product and they still have access to that. What we saw and what we've seen since then is what we call this patient warehousing dynamic. And so patients essentially in the queue waiting for Inspire V, although Inspire IV is ready and available. And so we see the impact to what we call our patient funnel upstream. Because of that dynamic, as I said, we're not to full adoption of all of our accounts being ready and able to purchase Inspire V. And so while in some markets, accounts are waiting, patients are waiting as well. And so we saw an increase in that air pocket of patients waiting.
There was an element that we described as well in the back half of the year for destocking, which is a burning down of Inspire IV inventory while waiting for the replenishment of Inspire V. And so both of those dynamics we called out on the Q2 call, which are real, but we expect to be abated as we go through the year and get all of our accounts essentially on board with Inspire V. And so we call them near-term or transient headwinds associated with the launch that will go away as we get the product fully adopted.
Is there a point where you'll quantify or you could quantify some of this warehousing and the inventory destocking? And if you think it's going to be the warehousing is going to be abated by the end of the year, why wouldn't there be this catch-up, which would result in less of a guidance reduction if you kind of follow my logic?
I follow the logic. And we think, again, there'll be catch-up, but that'll continue through into 2026.
But still, it's over to next year.
Some of it is still on to next year, some of it. And then some of the what we called out in the Q2 call was also tied to the dynamic we're seeing with GLP-1 as well. We've always called this out as a tailwind over the long term, but we also mentioned from the near-term headwind of patient warehousing associated with GLP-1 trialing as well, which is a relatively new dynamic and different than what we discussed and saw with our sleep providers a year ago. And so that's another element that we expect to abate, but not going away over the next six months.
I had GLP-1 on my question list later, but I'll ask it now. I had it under competition, but since you mentioned it, I guess the big question in my mind is you said you think it'll abate. How do we know it doesn't get worse? How are you thinking about the impact of GLP-1 going forward? Ezgi and I have talked about this. We have one outlier, which is bariatric, and it still hasn't stabilized.
Yeah, it's still early. And so I don't want to trade the illusion of precision around the impact and the timing of it. We call it kind of two sides. There's one side where we see patients coming into our funnel, patients who were screened out because of high BMI and/or lateral wall collapse, who now get on GLP-1, lose weight, and are eligible for Inspire therapy. We've seen that in real time in practice, mostly anecdotal and hard to quantify. And then the other end of it is patients who are delayed in our funnel because they're trialing. And so the question as to how that continues to progress and when, whether it abates, and whether it's net neutral or net positive over time is honestly, it's still too early for us to tell.
And so, getting a lot smarter as we get more data and have more conversations, but too early to commit to what that impact will be.
What did you see in Q2? Maybe if you could talk about kind of what you're seeing. I think we all appreciate kind of how long-term it could be a net positive, but what are you seeing initially?
What we're seeing initially is those two dynamics. One, patients coming into our funnel because they now have gone on the GLP-1 and can go through the process to get Inspire therapy as a way to treat their obstructive sleep apnea, but also patients who are being delayed or falling out of the funnel because they want to try this new drug that can give them some resolution to their OSA and obesity, and I say some because we know that it doesn't bring to a full resolution, and so in many cases, it's being used in concert or combination with CPAP, but in any case, it's not going to lead to full resolution by itself, and if patients still are not able to benefit from CPAP, they would need an alternative like Inspire, and that can be used in combination with the GLP-1 drug as well.
And so again, patients coming in, but also patients delaying or falling out of the funnel is a dynamic we're seeing in the markets.
When do you think you could see more patients coming into the funnel from the BMI coming into the appropriate range?
I think as GLP-1 becomes more broadly adopted, that can be a net positive, which is what we've spoken to as well, and so we expect that to continue to increase as there's broader awareness around not just OSA more broadly, but also GLP-1 as an option for patients to treat it in concert with CPAP and ultimately Inspire.
Back to my question on the warehousing and the Inspire IV inventory work, then, have you thought about, I'm sure you have, helping quantify it so we can appreciate or have confidence in the ramp, especially Q3 to Q4? I mean, obviously, there's a lot of noise in the numbers right now, so it's kind of like a question mark. Is the guidance, particularly in the ramp in Q4, realistic? And it's hard to know without understanding some of these underlying dynamics.
Yep. A lot of thought and conversation around it. Still don't have a perfect way of quantifying these different, I call it, building blocks of how we think about the reduction in consensus forecast, knowing that all these play a factor. Again, we've talked already about GLP-1 and the impact that has positive and negative. We've talked about Inspire V, the warehousing, and then now the destocking. And so don't have, I'll call it, precision around what that can mean in terms of the output, the true impact from a numbers perspective. I'm curious if that's anything to add in terms of how we think about that tied to our guidance.
No, absolutely. I do think destocking is one where we could be a little more precise if it makes sense to do so, and we'll take that under advisement. As to the other issues, they're still more anecdotal in nature. We're trying to get smarter so we can look at that and try to give us, and we always do try to give as much visibility and transparency as we can when we know for sure. But right now, a lot of this is still anecdotal.
Maybe talk about just kind of the second half ramp and kind of what you assumed and just kind of level of confidence in that today, please?
Yeah, I look at the primary driver, and I hate to be a bit of a broken record, is Inspire V and getting that into more hands of more physicians in their local markets. And what we've seen is really positive outcomes, really great boost in productivity. We mentioned on the Q2 call a cohort of accounts that have been implanting Inspire V and year-over-year growth of over 20% first half compared to last year. And as we continue to expand into more accounts, we've seen that rate continue. And so we expect that to continue to be a catalyst. And for the reasons we've described, right, there's a more simplified procedure, which allows for more predictability and stacking of cases. And so more cases being done during Inspire case days, which we're realizing greater throughput and productivity there.
Also opening a door for new accounts and more new surgeons, which we talked about on the Q2 call, ramping up those activities now that we have Inspire V and brings more ENTs who are on the sidelines to now begin implanting, but also potentially allowing us to go into other specialties as well, and so we looked at Inspire V really being the catalyst for us to go deeper into existing accounts to drive productivity here on the back half, but also open the door for new implanting surgeons and accounts as well. We're continuing to expand our footprint, and so we'll be adding within our commercial organization territory managers and field clinical reps, leaning more on the field clinical reps for clinical support both in the operating room and in the managing provider clinics, so continue to do that work as well.
And then medical education is something that we continue to invest in across all specialties at every stage of the career. So early career programs for residents and fellows in sleep and ENT, but also training more surgeons as well as advanced practice providers. And we've talked quite a bit about that over the last several calls, the importance of the role that those mid-level professionals play, nurse practitioners and physician assistants, helping the management postoperatively and the longitudinally thinking about how do we make sure patients have the best outcome. And so medical education being another vector of growth for us in the back half.
If I listen to everything I've heard so far, it sounds like everything is on track, basically with Inspire V that you articulated, that you talked about on the Q2 call. I've heard everything. Everything sounds like it's in line with your expectations.
Everything we discussed in the Q2 call in line with those expectations and really excited about the progress we've made. And again, by the end of the year, being through those steps of the process so that we can be full steam ahead and everyone having the output that we're seeing with those.
So, no negative. Ask it a different way: no negative surprises that we should be aware of in terms of anything new that you would highlight, just everything kind of going as planned.
Going according to plan since the call. Anything else?
No, I mean, the only other comment I would make, Larry, is, as you know, we do have seasonality in our business. So we do have many patients on high-deductible health plans. So we tend to see an uptick in volumes in the fourth quarter, and that is captured in our guidance as we go here.
And I'll add, Larry, we're also publishing data to show what we said would be true with Inspire V in terms of safety, efficacy, objective adherence. And we'll be showing data at upcoming conferences next week in Singapore at the World Sleep Conference, where we'll speak to the improvements we've seen in terms of the primary outcomes, both clinically, but also in terms of the operational efficiency, which is really positive.
Is that data embargoed? I'm asking because could you give a sneak preview? Is there an abstract in the public domain?
I won't give a sneak peek, but I'll just tell you we focus on how do we think about efficacy, how do we think about objective adherence, which is really important in terms of the nightly experience for patients to ensure that they're using it, and then reductions in the objective disease burden as AHI. So more to come. I'm giving you a teaser, but you'll see more in the coming weeks.
Do we have to go to Singapore?
You don't have to go to Singapore. We will have similar and more broader data at the upcoming ISSS conference as well in October. We're looking at potentially press releasing that information so you don't have to go, but stay tuned.
I mean, Singapore's a great place.
Singapore's a great place.
It's a little far.
You don't have to go.
I asked you in the spirit of the question I asked about any kind of negative surprises, is if I think back the past couple of quarters, there have been a few unexpected updates. So that was kind of the spirit of why I asked that.
Larry, it's a fair question. And thank you for asking. And we take full accountability for what may have been negative surprises. I'm glad to say that those are behind us. We think about the Medicare complexity and now getting to full adoption with all the readiness criteria we described for Inspire V. And so full steam ahead. And I'm excited about what we'll see.
I would say the first big question I asked about the magnitude of the guidance reduction, the second one was kind of the deleveraging. And I can go through all the numbers, but I won't. But you've talked about increasing the DTC spend. If we look at, obviously, the EPS guidance came down. I mean, obviously, it looks like you're spending more to drive growth. Help us understand why that is, maybe what changed. And you've heard these questions before. I assume this is not new.
and it's a fair question. I think on the surface, a question around how much do we have to invest to grow has come up as we talked about increasing DTC on the back half of the year, which actually started in the middle of Q2. A part of that is, I'll call it timing and opportunistic spending with our biggest product launch in the company's history and ensuring that we put all of our muscle behind it, including broadening the direct-to-consumer advertising. We're doing a refresh of our marketing, extension of our brand with new content and commercials coming on the back half of the year, starting in a matter of weeks, and increasing the volume and frequency to make sure we can touch as many patients as possible with the world's best closed-loop neurostimulator.
So some of that is truly just capitalizing on this unique opportunity with a new product launch, which means we're increasing that investment in DTC for sure. At the same time, over the long term, seeing this as an opportunity for leverage as well, and so not losing sight of that and what we've committed to over the long term, seeing that increased leverage over time across a number of line items, including DTC marketing. Ezgi, anything to add on that?
No, I think that's fair. We do think it's really important to put our full weight behind this launch and support the launch of Inspire V. Going back to your earlier discussion, GLP-1s are out there, Lilly's marketing. So I think it's really important for us to continue to drive awareness. But over time, we do see opportunity to get more operating leverage.
One question we hear is, have you guys hit a ceiling? Is the TAM smaller? I'm sure you've gotten that question. What's your reaction to that?
My take is that the TAM is actually larger. The TAM is growing partly because of other factors outside of our control, like GLP-1s, bringing awareness to the importance of treating OSA. So an increase in the diagnosis rate that today is close to 20%, growing over time because of the work we're doing to build awareness, but also work other companies are doing, whether they're direct pure play competitors or other potential therapy options, as well as OSA being more prominent as an element of treatment guidelines for other conditions. We've talked about that with pulsed field ablation for atrial fibrillation and new technologies like wearables that are bringing more awareness to sleep health. And so firmly believe that the market is massive, but also growing far from contracting.
I think that the data supports that and is largely underpenetrated, which is why we continue to invest in building out the penetrating more deeply.
Okay. All right. So let's transition. We tackled one potential competitor, GLP-1.
Sorry to jump ahead.
No, no. It was perfect. Obviously, you have the first hypoglossal nerve stimulator competitor on the market in the U.S. How are you thinking about competitive trialing impacting? What did you embed in the 2025 guidance? How are you thinking about that going forward?
I'll start by saying we respect and welcome competition. It's something that we've been expecting and waiting for some time as Inspire built this market. In some ways, it's validation that there is attractive growth opportunity for people to join with us in. I look at the recent approval of Nyxoah's Genio device as an opportunity for us to continue to elevate our standard and an opportunity for others to come in and try to join us in this journey. We did include some modest but limited trialing into our guidance, mostly and likely in academic centers, which I believe they've been publicly disclosed will be their area of focus, but still limited. And again, it's early. And FDA approval is one step in the process. As many of us know, there's multiple other steps, especially when you think of reimbursement with coding, coverage, and payment.
We spend a lot of time now that they have peer-reviewed data dissecting what that data is and what it isn't and how it compares to what we've established as a standard of care for hypoglossal nerve stimulation and are increasingly confident around our position. As you look at the data that they've shown within their DREAM study, they had a relatively high rate of dropout, meaning patients completing full study from enrollment to 12 months. The rate was about 25% of the patients that did not complete 12 months compared to what we had in our STAR trial of 2% of patients falling out. Another area that's really important is safety, and when we look at the adverse event rate that they saw in their trial tied to device and procedure compared to ours, it was almost four times. We had 2% of device or procedure-related adverse events.
They had closer to 10%, and so there's elements of work to be done as you think about the data, and that gets readily accepted by providers, patients, and payers. The other piece I'll call out is, as you look at the procedural time, we talk a lot about efficiency with Inspire V from IV, going from 60-90 minutes to now more like 45-60 minutes. What they showed in the DREAM trial was an average of 132 minutes, so over two hours, and so again, we have set a high bar for safety, efficacy, and efficiency that every incoming competitor is going to have to compete with, but we did, to your question, include some modest trialing, mostly at academic centers in our guidance reduction.
But why do you think their discontinuation rate was so much higher?
I would likely tie that to adherence, and the adherence, meaning with our system, we have a simple nightly experience because it's a click of a button to activate the device. What there is, it is an adhesive that must be put on every night to recharge the battery. The question is, are patients willing to do that every night when they're not willing to put on a mask and hose, which is where patients are coming into this clinical hypoglossal nerve stimulation, so our strong belief is that they saw a high rate of dropout because patients were coming in off of a CPAP device that required a lot of them every night to use it to now try a new device that still requires that they put on essentially a patch to recharge the device.
And it's shown that not every patient is willing to do that. And so still to be proven out, but that's some of what we're suggesting and hearing has likely led to the high dropout rate.
The supine versus non-supine, you guys have shown some data, small data set. I think I saw showing that you're effective in both. Do you think you've kind of neutralized that marketing message from them?
We believe so. And this is something we've had evidence to speak to going back to the beginning of Inspire's clinical evidence strategy. And so not new news to us, but something we wanted to reinforce with the market to show that this is something that we demonstrated strong efficacy around as well. And hopefully, that neutralized the question as to whether this is a differentiator for a new competitor compared to Inspire, which the answer we believe is certainly no. But Ezgi Is there a nything to add?
I would just remind you that our patients are activated in the supine position so that we can confirm and ensure proper optimal therapy treatment regardless of sleep position, so I do think we have a good way to combat this and to your point, Larry, we have showed data on this as well.
Okay. And I guess, CC C, they're doing this ACCCESS trial. Is your approach that the PREDICTOR trial? Is that basically how you're addressing CC C?
I'd argue there's a few ways to address CC C, but I want to make sure we're all clear on what exactly that is. And when we think about hypoglossal nerve stimulation or stimulating a nerve to move the tongue forward and addressing what is anterior-posterior obstruction, and any approach that stimulates the hypoglossal nerve is simply addressing that mechanism of action, not addressing the lateral wall collapsing. And so our belief is that anyone that is doing hypoglossal nerve stimulation will only be addressing that mechanism of action. And there's a lot to be desired to address the lateral wall closing. Our approach to addressing that patient population is twofold. One is a PREDICTOR study you described, which allows us to get a sense of whether a DISE procedure is necessary for all patients based on their BMI and their neck circumference.
The other approach we've discussed publicly is an internal research project that we've begun with a dual-channel device that is both stimulating the hypoglossal nerve as well as a different nerve bundle that actually addresses that mechanism of action of the lateral wall collapsing, and if you're not addressing that mechanism, we don't believe there's an effective treatment to that type of obstruction, and so the question is, and as other competitors come into the space, is whether they can address that type of obstruction being lateral wall collapse while stimulating the hypoglossal nerve. Our evidence, and again, we have over 100,000 patients that have been treated and almost tens of thousands have been in the clinical trials, is that you cannot address that, and so it's still to be proven out, but we've heard that other competitors are trying to address that patient population.
We believe it's going to take more than hypoglossal nerve stimulation to do that.
And last one, you alluded to it with coding, reimbursement. And I know my guess is there's not much you might say publicly, but they're trying to use the same code as you. And there's questions around that. Are you willing to opine on that if you think that they're going to be able to use the same code as you?
We've heard that they plan on using the same code and don't want to get into details of their strategy. But we know that it is a very detailed process and that the coding must match the descriptor of the actual product. And so with our code, it ties specifically to what our product is with a stimulation electrode as well as an implantable pulse generator. And if the product form factor and descriptor doesn't match the code, then it'll be tough to get actual approval to use that code. So it's still to be determined. But we have a strong opinion that our code matches our technology and our product in ways that wouldn't match some of the incoming competition, including the Nyxoah Genio device. But I think the jury's still out.
Okay.
Ezgi, anything to add?
No, I think you captured it well.
Thanks. So let's transition to next year. You guys made some comments on the Q2 call about so the guidance this year is 12%-13%. I think you said you expect growth to accelerate next year. The street said 14%, a little slight acceleration. I guess my questions are, what are the drivers of the acceleration? And is that a good starting point?
I'll start by saying we're still early in our annual operating planning process, but it'd be remiss to not expect growth over the year, but still determining what that looks like, but the driver is starting with Inspire V. And I've talked quite a bit about that. Hopefully, for reasons people can appreciate, that that will be a vector of growth for the back half of the year, especially into 2026 while all accounts are fully adopted there, both because it's implanting efficiency that drives more throughput, but also, again, adding more implanters into our existing base as well. Then we'll have continued expansion of our footprint, so adding more centers, but also adding more of our field representatives who are driving the growth within their local markets, continuing to optimize and refine that commercial model as well, focus on productivity.
Larry, we talk often about our utilization rate and how we think about productivity and raising the bar from what is two implants per month on average across all of our accounts to greater than that, and so focusing on driving that growth going deeper into existing accounts while also continuing to invest in patient and physician education as well and marketing, and so those are really the three drivers that I think about for next year, and with Inspire V continuing to be at the top of the list.
I mean, it sounds like the warehousing spills a little bit into 2026, you said earlier. So that should be a little bit of a tailwind as well. What I didn't hear you talk about was the Inspire IV
destocking, and is that because the Inspire IV destocking that's happening is offset this year by Inspire V stocking? In other words, it's neutral in 2025?
I think it's a question of timing, but yes, that's a great way to put it. As they burn down Inspire IV therapy and replenish that with 5, where does that come within the quarter? End of the year, beginning of the year is still.
Without being too precise, but you expect to be largely completed with the Inspire V transition this year.
That's exactly right.
It's pretty much neutral this year.
That's the way I would think about it. The other tailwind that I'd touch on is, again, not formal approval, but we saw the proposed ruling for the fee schedule for next year. And the positives are there is that we saw increases that were proposed for both the hospital and ASC reimbursement rate for our code for Inspire V, but also the physician rate as well. And that going up almost 10%, a little above 10% from $600 to about $660 for the physician reimbursement for Medicare. And so that's another tailwind for Inspire V adoption as well.
Yeah. I didn't ask about it earlier, so I'll ask now because you brought it up. So Inspire IV, $800 for the physician fee, about. Inspire V, about $600, you said. And then it goes up to about $660 next year for the proposed rule is finally. Do you have any sense of the $800 to $600? If that's had any impact at all, when we're teasing out all these dynamics that you've talked about, how do we know that the physician fee, at least going from 8 to 6, hasn't had any impact?
It's a conversation we're having actively with our customers. And what we've said is, and what we've seen once they started planning Inspire V, they call it themselves a game changer. And well worth the time and energy. What we've said coming into this, and I remember standing on stage with you last year, was that we see it being essentially net neutral, right, from a time-adjusted basis, going from $800 to $600 while going from, on average, 60 to 90 minutes to 45 to 60 minutes, about $10 per minute in both cases, with room for even greater efficiency with Inspire V to make that gap even smaller.
Now, with Inspire V reimbursement going up to $660, that $10 per minute, if you use the same math, becomes more like $12-$13, which makes it more attractive for physicians to continue in planning Inspire V, if not increasing the volume there, so that's the nature of the conversation, but what we've seen is, once they get it in their hands, they see it being not just a faster, more simple procedure, but less complex and even more fun, and so it's why we're so focused on driving the adoption and getting all these accounts to fully having full access to this great technology.
You talked about Inspire V taking it to new specialties. Obviously, people have been asking about general surgeons. Is that the target, the potential new target audience, or are there others?
I consider that a potential new target audience. At the same time, we have almost 1,500 implanters trained predominantly that are ENTs, and we are far from fully penetrated in that ENT universe. About 8,000 head and neck surgeons that are ENT specialists that we have the opportunity to train. Many of them are on the sidelines because Inspire IV requires that step of the procedure where they're putting a sensing lead into the intercostal muscles that we can now bring over to Inspire V. And so it does open the door for new specialties to be more broadly adopted. But we're not taking our eye off the core customer base of implanting ENTs because there are so many of them still addressable in our market.
We didn't start to jump around, but back to 2026, you guys are making great progress on profitability. We talked about the top line, consensus at 14% versus the 12%-13% guidance this year. Any color commentary on margin progression going forward?
I'll leave that to people. I think we're limited in what we'll share for 2027.
Yeah. We're just kicking off our planning process for next year, so it would be premature to comment. We are very focused on the top line, but as we've noted, we're also committed to profitability, and there will be operating leverage over time.
I mean, Ezgi, I mean, you know the operating margin was about 4.5% in 2024. I'll just ask the question. Maybe I won't get an answer, but can you get back there next year?
There is absolutely a path to get there. But again, we have to take a look at where our investments are going, how much we're going to spend on DTC, what does our footprint expansion look like, what does our R&D pipeline look like. So there are a lot of puts and takes, and it would be premature to comment on whether we can get back there right now.
Carlton, we didn't talk about international. 3%-4% of sales has kind of been the historical trend. How much time do you spend? The U.S. is a big market, obviously. How much time do you spend? Your role is Chief Strategy and Growth Officer. How much time do you allocate to international? Is there any potential inflection outside the U.S.?
Yeah. First question, I spend the vast majority of my time focused on the U.S. opportunity because there's so much runway. And today, my peer and partner, Randy Ban, under his agreement, has all of the international business, and he's spending much more time than I am. But it is an area of focus for us today, being 3%-4% across about a dozen countries spanning Europe and Asia, making great traction, focused on regulatory reimbursement hurdles to go into new markets. We had big wins in France and Belgium with reimbursement that we're taking advantage of. We've seen great traction in Japan and Singapore, as well as the U.K. And so it is an area where we continue to invest and see growth, but not taking our eye off the ball, which is the domestic market where there's so much opportunity.
I'll call it fairly limited in terms of my specifically direct time and energy, but something that we see as a potential inflection. Now, whether three to four goes from five to 10 over the next two to five years is still a question. We're balancing as part of our long-range planning process.
What's the gating factor? Is it reimbursement? Is it just resources, infrastructure that you have? What's the gating factor outside the U.S.?
Yeah. I'd start with regulatory and reimbursement, but your comment about infrastructure is really important. As we built the market here in the U.S., we know what it takes to drive productivity across markets, and it requires the connection of implanting surgeon, predominantly ENT, to a managing referring physician in sleep and having that symbiotic relationship where there's constant patient flow and support. Building that infrastructure across multiple markets takes time, energy, and resources. And so we want to make sure we have a viable market opportunity with reimbursement before we start putting those pieces into place. But over time, we plan on doing that for sure because there is a great need across the world beyond the U.S. It's just a matter of, I'll call it when, not if.
Okay. A little bit of time left. I wanted to give you the last word. Really appreciate both of you being here. So Carlton or Ezgi, if there's anything we didn't cover you want to highlight or if you just want to summarize, make some closing remarks, the floor is all yours. And feel free to go a little bit over.
I'll just summarize by saying one, thank you again for the time, Larry. This is a great conference, and I really appreciate the opportunity to represent the great team at Inspire. And thank you to the Inspire team and all of our partners who allow us to do the great work we're doing, reinforce that the market opportunity that we've created is massive, growing, and grossly underpenetrated. And with our focus on outcomes, but also continuing to be fueled by innovations like Inspire V, but more to come, we're committed and inspired to have an even greater impact on a larger pool of patients. And I truly believe we're just getting started, Larry. So excited for that continued growth opportunity and the opportunity to demonstrate that.
Thank you again.