Inspire Medical Systems, Inc. (NYSE:INSP) Q1 2023 Earnings Call Transcript

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Operator: Thank you. And I show our next question comes from the line of Travis Steed from Bank of America Securities. Please go ahead.

Travis Steed: Hey, thanks for taking the question in. Congrats in a good quarter. Maybe to quickly follow up on Larry’s competition question, maybe how would you think about the weight loss drugs and that competitive environment? And then the other question I’d have is just when you think about the higher revenue guide, how you’re thinking about the OpEx guide within that, if you are — would have the OpEx go up a little less than revenue and just kind of overall thoughts on margins and profitability again for this year. Thank you.

Tim Herbert: Fantastic. Let me touch base on the weight loss drugs coming out, and then Rick will touch base on OpEx. We really like the weight loss drugs and the challenge that we have as a therapy is our treatment is for tongue-based obstructions, and it doesn’t address lateral wall. No hypoglossal nerve stimulation system can treat lateral walls because we stimulate the genie glasses, which is a tongue movement that moves it forward. Lateral wall collapses related to higher BMI and so if we have patients that can lose 20%, even 30% weight loss with some of the new injectable drugs, we think that’s really a positive and really complimentary to inspire. Those — that weight loss will reduce lateral wall collapse, but it doesn’t address tongue-based collapse.

So the two of us need to work in concert together to be able to treat the higher BMI populations and really look forward to the day when we get more patients that can have relief from their high BMI to bring them down into the group that we can treat with Inspire. So I think it’s really complimentary and it’s very — and we’re quite encouraged by the development of those drugs. Hand off to Rick here for a discussion of OpEx.

Rick Buchholz: Yeah. Hey, Travis. As we we’ve trended the last several quarters, the revenue growth has outpaced the OpEx growth. And so with the new revised guidance of 42% to 45% for revenue on our updated guidance for the full year for 2023, we expect the OpEx to be less than that growth of revenue. Not significantly, but just maybe a little bit less than our revised updated guidance. And then as far as profitability, we’re not changing our tone on profitability. We know it’s important, but we’re going to continue to run our playbook. I want people to understand that we do have a discipline approach in our spending and our investments across our business and we demonstrated profitability in the fourth quarter of 2022. We’re not guiding to profitability at this time and we did lose some of that leverage in the first quarter because of our seasonality. But as we progress through the year, our plan is to show some improvement on that operating leverage.

Operator: Thank you. And I show our next question comes from the line of John Block from Stifel. Please go ahead.

John Block: Great guys. Thanks. Good afternoon. I’ll also ask both mine up front, I guess, was 1Q clean from an end user demand perspective or was there a small benefit from inventory levels rebuilding a bit, Tim. I just wasn’t really sure based on the inventory comments, it actually seemed like inventory could still be below normal levels. So any clarity there would be helpful. And then the number of centers were particularly solid, well above our estimate. So maybe just talk about the types of centers that are coming on board, importantly, what’s being done to ramp them quicker than previously and then I didn’t hear a percent of ASC. So if you got that handy, I’ll take that from you guys. Thank you.

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