Shares of Inspire Medical Systems crashed Tuesday after the maker of implantable sleep apnea devices called out GLP-1 drugs for weighing on its second-quarter results.
Inspire stock plummeted 32.4%, closing at 87.91.
Leerink Partners analyst Mike Kratky noted the slower-than-expected rollout of Inspire's new Inspire V system and the soft guidance for the second half of 2025 will likely stoke massive investor scrutiny in the near term "especially with management explicitly pointing to GLP-1 adoption as a potential volume headwind."
GLP-1 drugs include Eli Lilly's Zepbound and Novo Nordisk's Wegovy. Both help patients lose weight and, notably, Lilly's drug is approved to treat obstructive sleep apnea. That's the same space where Inspire sells implantable devices.
"While we recognize the potential for incremental OSA awareness via wearables, we continue to believe that the GLP-1 bear thesis can't be disproved and there may be underappreciated downside to numbers from continued adoption of GLP-1 s in this patient population, especially with LLY's (direct to consumer) marketing ramping for patients with OSA," Kratky said in a report.
He cut his price target on Inspire Medical Systems shares to 116 from 149.
GLP-1s Weigh On Inspire Medical Systems
Across all products, Inspire Medical Systems reported $217.1 million in sales, up 11% year over year, and narrowly above forecasts for $214.3 million, according to FactSet. Adjusted profit ramped almost 41% to 45 cents per share, handily beating calls for 21 cents.
But Inspire also called out slower-than-expected center onboarding and SleepSync implementation. That prevented reimbursement for the new Inspire V system for some patients. Other patients are still waiting for the Inspire V over the older Inspire IV.
"The U.S. commercial launch is progressing slower than expected, and the timeline to complete the full transition to Inspire V has been pushed forward, which will impact financial results for the year," Chief Executive Tim Herbert said in a written statement.
For that reason, Inspire Medical Systems cut its full-year sales outlook to $900 million to $910 million. The midpoint is now $42.5 million lower than the outlook Inspire issued three months ago. Inspire also expected income to be in the range of 40 to 50 cents a share, well below its previous guidance for $2.20 to $2.30 per share.
"Despite valuation sitting at historically undemanding levels, we continue to see the risk/reward as balanced until management sets a bar for numbers which adequately underwrites the uncertainty around pro forma revenue growth, even off a lower 2025 base," Leerink's Kratky said.
He kept his market perform rating on Inspire shares.
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