- Earnings call transcript Q3 2022

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Operator

Good afternoon. My name is Dalen, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Inspire Medical Systems Third Quarter 2022 Conference Call. All lines have been placed in mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. hand the over Relations Vice now speaker, your at I'll Yagci, Ezgi President Instructions] the to conference first Inspire. [Operator of Investor

begin may the You conference.

Ezgi Yagci

call. all Thank participating thank Dalen, you you, in and today's for

Tim my contains turn This of November forward-looking that, call call cause projections with as the is could pleasure to reliance description otherwise. On and on Joining me broadcast are SEDAR whether the XX-Q, today, call report because with sensitive events statements, speaks released within Chief laws of statements. Tim? to Herbert, Form this XXXX. conference Accordingly, for President three we differ. today press by our new and the Officer. today, and is And results ended Exchange the Rick financial these XX, of future September on place the intention A make Executive Earlier XX, will and Financial financial forward-looking materially filings Buchholz, meaning Chief the Securities or or revise XXXX and should and to Laws. Tim website. and statements, Federal on to Officer; financial that financial not involve obligation, available of for with and nine live release over management months copy or improvements and limitation, any except update Securities including you statements these COVID-XX access information, continued or our events without undue results in to statements material and filed investments risks the those business, information operational it Herbert. based estimates our Commission the Inspire outlook, relating quarterly All results current a any forward-looking market risks XXXX. upon our uncertainties. condition, SEC the effects actual various only in financial or time year our are and These full disclaims as operations, assumptions. uncertainties of including pandemic, of required

Tim Herbert

Ezgi, for of you, call thanks everyone for our third quarter joining and update business Thank XXXX. the

We quarter with are elements very excited significant of a progress all business. on our report to across strong again

to ensure again each As always reiterate patient therapy. commitment has right that front, outcomes possible experience Inspire to up the we our patient best and with

of third full our This previous full We remainder range revenue year our in $XXX quarter from During key XXXX. that year including guidance today's therefore, the our patients, to of of represents for to focus the to and increase the million XX% improvements activities of $XXX therapy, we call, technology in planned will access highlight and introduced accomplishments many million, demonstrate advancements we development, to and to in benefit results. guidance we of XXXX, Inspire. to XXXX of of revenue broaden to $XXX.X revenue business of review XX% the increase million. compared outlook are the let's guidance million million. to generated that that, confident population remain representing With third the $XXX from $XXX a an our can a million XX% over quarter, our In ongoing $XXX increasing

on centers. new and utilization sites continues the is growth focus by as activation well Our at to as of improvements existing driven

of third quarter. made leading up factor quarter with continue We of the growth new in will approach period and this was at and the XX% that growth The XX our existing balanced in further adding We implanting highlight third centers. quarter improved increased to the centers utilization XXX ambulatory U.S. and surgical of the centers a in centers by centers. significantly our the end capacity total during

and to is ensure the that continue in benefit between expect patients greatest moving the and the field to quarter. and We XX focused will forward accounts team continue we fourth centers the on can XX to that monitor add to provide

Regarding the in to third U.S. bringing quarter, we created our XXX. sales total territories the sales new XX team,

to expect we XX quarter, to XX fourth the to For new add continue territories.

We with XXX. also adding increased the number quarter the nine, third clinical representatives of fields by ending

eight of ongoing the to And scale training on teams changes as remainder U.S. regional continue Presidents. and XX of area that team, compared expanded management quarter the quarter were our increase center patient to to we when sales year, now and to leadership implemented optimize expansion our the the in we two an upon includes the and first outcomes strong managers, will sales During second builds this which focus productivity. and our Vice

while our the ability productivity maintaining procedures resulting and a interested qualified a to with connection team additional this outcomes. expect is Inspire making patient to healthcare patients assist We improving from Paramount in provider. increased improving in with

programs our Inspire outreach be very and to inspiresleep.com in effective generating continue through primarily the website. Importantly, Therapy interest

any a visits, healthcare our For note, include we Of closely contacts. over our the was contacts had million, represent we to healthcare directly physician XX% are efficient of website from rates first-nine when neuro implemented do to final XX,XXX any year, advertising we to this provider. calls technology changes APC Care pressing streamline number health physician's today. ambulatory July manner. released. or to service rule was included The a visitors July. to this the change which addition to released be a most the OOPS not national not these final third Level was expect the a and in more XX X of code, from APC. providers the ACP, little approximately changes or from months develop community further procedure do our In the when office we continuing with back expect these are and rule part year would Program rules implement reimbursement, monitor topic patient’s proposed patients campaign had the quarter, in And our a very and and reversed, we television and increase or of of success perspective, is our to of reimbursement if From not From process. the over participation Inspire year. site But the U.S. expect talk Through directly material referrals were that improve do reach as connecting this (ph) new refined advancements proposed emails would physician an we or of in of positioned Advisor not major be

to Moving on, make continues business our international strides.

third from unfavorable during Although, in rates. by XX% we the experienced largely the of driven quarter, XXXX, decrease a exchange revenue quarter

There During by highlighting the business, international significant was to the positives many global than of U.S. I'd quarter, like France. X% start our reflecting revenue in the less international market. in are revenue growth and

with primarily of process Therapy. in and years those the procedures are registry procedures country manager commercial centers support authorities, excellence. rates country. we with activity at the time adoption world. are track remains have Inspire French launch additional established final early which are we have recent Japan in approved been The activities a we by countries countrywide regional awareness become flagship adoption we are reimbursement are of to on many the other we full to and scheduling working building energized the at Therefore, the the Singapore, Following that oversee centers, for in French that the beginning to in Further, new on listed around growth Japan for have consistent the of hired XXXX sites. with of of as preparing slow, in is as In and but momentum team Inspire with the

Turning to R&D.

which next the previously about our is excited which -- Inspire and patient generation as very a we SleepSync of next Inspire remote patient described enables we through are our remote enabled This new note We monitoring patient Bluetooth key management Please our digital generation the a part branded, web-based remote therapeutic new SleepSync, portal. remote recently platform launched. that new of Cloud.

SleepSync outcomes. to will patient tool Health the an become Digital expect for important We and monitor experiences platform physicians

long-term upgraded new Inspire and connects sensing began fifth in will the silicone-based accelerometer we Before physician to an our the with for commercial is next Also SleepSync providing implantation, stimulation to we programming. of manufacturability, of programmer using pressure and system year continue plan respiration. enhanced measure the third improved inside incorporate of remote Longer and The review. sensor FDA end, easier design patient Inspire new the to the the sensing on This device programmer quarter, our reliability. launch key leads, and our which step neurostimulator eliminate work we term, increased provide generation Neurostimulator. to performance submit

into approval We strong target moving have confidence XXXX. with current and qualification design are to testing continue in late the and FDA

patients trials increase key to to and of Therapy. number Inspire can were the end, FDA Finally, Inspire to two To we expand benefit the who sent the to this regulatory from clinical submissions conduct indication. continue research

pediatric the syndrome. request approve Down’s a to for submitted we First, population with Inspire

(ph). group to time some for We working evidence have for support important clinical quite with kids to this approval physician the sufficient been collect of

second an Apnea our is requested an to of same the indication hour. upper AHI warning data, And of hour. significant to have Index limit indication momentum FDA our XX key XX. Hypopnea thereby warning also Mass include expected up in request up of we patients BMI approval Body Inspire. increase With reducing current time. education per in device support provided current we patients to breakthrough with this per a to review to In the who submission, and to BMI with for continue business confidence XXX modify with is on events Index have our for request summary, to continued The experience aspects up events The XX. to all outcomes focus this FDA with to designation patients approved our the of the a In to submission, the of patients to our patient submitted increase to growth second and of physician a we of the up

our and remains as increasing for well in The continued training center existing as our centers by initiatives. Our core new focus campaign expansion and DTC XXXX support call opening these utilization of capacity increasing our centers. investment at

strategy year R&D have financials. experience confident healthcare term appropriate our extremely Inspire many our outcomes future drive remain value. highlight the to shareholder first that prospects over the the call and Rick the and to turn that, his of achievements patients are the to of With and long nine Therapy. both review patient commitment improving like the about place during We providers our for enhancing with excited in Finally, I'd to months we

Rick Buchholz

to revenue of third $XXX.X was basis, for everyone. in sequential and XX% was XXXX. good direct the a $XX.X addition a $XX.X of period. On prior the higher second the revenue several the Tim, centers, factors reflects compared U.S. from quarter a consumer the Total the in declined territory U.S. utilization third number of basis quarter On year-over-year. and year increase you, in centers, marketing million, the XXXX. million an new from generated million, $XXX.X in constant the of XXXX managers. million of implanting XX% growth XX% revenue expanded U.S. million revenue the quarter of including existing $XX.X grew afternoon, third in increase The a X% outside currency at the higher to Thank quarter

$X.X reported began XX,XXX to While XX% to from increase rates. the basis, The on currency million XX% price third U.S. revenue in was in reflects year period price due to prior prior foreign the exchange primarily uplift a in The compared average in year the May. decreased that period. reduction quarter our selling XX,XXX a

the We steadily throughout into U.S. of expect XXXX. remainder to and XXXX climb ASP

the a inventory higher is increase in during approach quarter ASP prior XX,XXX. the quarter to XXXX, we in XX,XXX was in lower obsolescence sales of the hospital by which driven for XX.X% parts. expect As various quarter Gross outside third Asia. primarily in the U.S. to our and margin was ASP the to cost compared and the distributor the rates due to compared year price decreased ASP U.S. of component XX,XXX systems, implemented exchange certain period, charges XX% unfavorable third with

introduction our in silicone the on the we the than impacted of the fourth quarter patient new cost inventory additional second we booked introductions still quarter. $X.X therefore of obsolescence charge and charges enabled leads previewed new As third fully by gross in quarter anticipate be Bluetooth margin these to third higher in higher inventory an remote resulted which call, not certain though quarter, the component to do the expect product new of related parts. We and million,

increase to return compared our the the year, continued drive margin expect the of million to third year was XX%. in and of the for make per expect operating continue third Total quarter operating plan growth margin The outstanding We $XX.X expenses XXXX. million. average loss to share the was the average For for for Net increased $XX.X general investments the of to levels key continued million was an shares to quarter we in third $X.XX of our anticipate to costs. expenses to our XXXX. increase to that corporate the third number loss of in $XX.X net period. The loss consumer about between quarter of The shares the development guidance for areas and number of business. we the in were $XXX.X prior efforts prior per $XX.X million quarter XX%. net $X.XX approximately quarter the compared fourth quarter the This was million. of increase in be weighted quarter term, product third compared ongoing of sales expansion weighted for $XX.X to is will share third gross marketing due to programs, full as direct organization, reflective gross of Longer to XX% XX% million,

the to quarter ended $XXX the million. We totaling cash balance with sheet. investments Moving and

quarter, and outstanding completed offering net with million $XX our paid an $XXX we proceeds the debt. million off equity of During of

September remaining debt. and for may implanting prepared With executing us had we strong remarks open with to and existing of implant year. performance training our our on concluded. allows you As us now new provide This at centers remainder growth the line opening Delan, confidence outlook procedure XX, strategy the cash In of conclusion, increasing volumes trends focused and of no recent for our are the centers. strong remain questions. in position that, the

Operator

of Instructions] Travis Bank from comes the [Operator America. And go of Please Steed question ahead. Thank from show you, line first our sir. I

Travis Steed

Hey, XX add maybe per now? on if know XX% great to as about just right quarter this and it ahead to that's see looking is curious well? a we revenue helpful guess way congrats new And just be quarter, about takes point I puts (ph) increases at well? this I as with on would again. to If talk should the at XXXX right continued centers a place Street in think XX hit and the comfortable if utilization growth you're point.

Tim Herbert

Travis. Hi,

next year worrying But see expect The course, seasonality. shouldn't is, think QX, right good looking we'll of think still news our I I that this forward, we're now. normal we about COVID year. QX

seasonality to QX. We by help upside encouraged adding to and further have drive insurance we we we as think quarter. that. continue need a move additional centers through yeah, still to the work flow deductible So the to we're But capacity We fourth in there centers, and with into plans the high always We'll and just expect we utilization. efficiencies, patient we continue but need keep continue to. to normal

the is So managers line around from to in that a for releasing We'll with cadence which And standpoint. add exciting our SleepSync running technologies now. many for we've years continue keep balance and in specifically that growth development the continue with territory news we'll we'll product been new system. improvements

Travis Steed

be at helpful (ph) would today Okay. fair. where well. comment is as the That's at Street Any on --

And in been we with little keep Just a growth. on to I question line had roughly question see of level? this can has is, why and a at guess not, better growing OpEx I you forward, and little follow-up start then OpEx. to spending growth the divergence bit a bit revenue a operating move between which revenue margins? we'll And as that.

Tim Herbert

and timing the date. later because plan key the into remote very annual a the a the leads quarter get had forward. with progress again, with R&D well We'll But the But accomplishments, We with more manage into with the qualification R&D revenue Absolutely. quarter we high the at great OpEx, as line. primarily in able silicone-based R&D QX into several accomplishments was getting the of we'll with significant moving charges. in new to Inspire moving a some that we be had device and think as X of

Travis Steed

Great. a on And again good Okay. congrats quarter.

Tim Herbert

Travis. Thanks,

Operator

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

Jonathan Block

also maybe XX follow-up. more little good just XX the it, good get and and FDA? the BMI, feedback BMI down the you can expand XX, in industry your just And I've guys, the from lot in a us you are And then want Thanks, to the from from any the the on curious, to industry, around a any going feedback the to got bit granular move release up initiatives shorter with response timing sort call out of steps the move ENTs a just on press the market. any Tim, next Great. But from afternoon. detail help that of road? just hearing the then to

Tim Herbert

Absolutely.

Down’s coming the or Syndrome with think long has pediatric with primary submission I the population first -- the (ph). been

As before, did physicians Credit we to wanted be we the for in get have but a FDA work And evidence population. able the we this that's with don't Mass think to fair the and persistence evidence to has to we that to clinical that collecting indication, that. out discussed and to Eye FDA. their the gone for broader Ear support goes

to the a patients So any problem being very would have other we always and really Because AHI above don't good the a patients up we're work the scrutiny excited off help try the The insurance AHI right? XX and up of but those that's to about options. able get prior to is authorization with with win, with try to label, kids. Medicare. And certainly to approval it's a XXX, payers

streamlined, So going straightforward that's we a think approach. to very be

careful BMI, with that. Going little bit we'll to be a

use able we with that. a conduct palate concentric that's higher the only south complete cannot sleep be adults at level still BMI, remember of that's a not an present Now to they collapse with for indication the and a to And warning. patient

that. think don't we bit, screen to that with the will with coverage Medicare little your as point above BMI about a work to a the it But careful XX. the continue be they commercial BMI patients. And to door want make certainly sure high those will with BMI just open I the XX a we expand very or to every patient to blindly of get said to of So managing through ENTs does payers

Jonathan Block

then looking Understood. the me, to shot. guessing I'm XQ of Rick, mid-XX%s implies sort Very to pardon let historically XXXX, helpful. XQ. going usually XQ sequential take out and ask growth me digit you, so just you're shift to to The for or XQ gears, guidance this, highXsingle a back someone's for digit mid-single And throwing

us So a call of this anything Is pause? to is Thanks function have just guys. conservatism just XQ here. a out you Inspire of of you exiting little bit more or the help October may gives that seen for typical there the what month into or out time

Rick Buchholz

haven't as pause, focus Really new changed And on implementing improve to tried drivers future our We're I mean, strategy. are at as our we about talked about, continuing increasing of the excited utilization the conversion there. we centers no that John. ACP initiatives well and we various to and existing other we adding guidance centers. with

excited So opportunity, the can put we forth stand behind. always guidance we we're at that but

Jonathan Block

Fair Rick. enough. Thanks,

Rick Buchholz

John. Thanks,

Operator

our Thank next comes share Marcus you. question ahead. Please And of from I from go JPMorgan. the line Robbie

Robbie Marcus

the helpful. across ground. limited was a the this per your a I of congrats that sort the looks moving of the Maybe of rep the center. for wondering board? seeing you if per math, and are to centers Thanks but it Is Are that's to the centers? all moving questions Clearly, fills picking on units start, you quarter. seeing would going handful across right on this base up on back like Just taking you're could -- my put the just of quarter Is trends utilization user direction, what it in the Great. utilization finer best how needle? nice point out a it most be on

Tim Herbert

seeing. Yeah. would it's the I across don't centers ever any single we're of and able board move think multifactorial. be digit to dial focus number an that the It's

more provide We're to the allowing two always and We've those to payment CPT we what's where patients code set new be of more newer we in care levels productive we've to the cases look and and back to being that drives kind of going go the the is to to but just the that had and with three programs, month point the outcomes going at at able our in did centers in and through kind of incision, and -- back outreach the patient multiple ability now being last their with proficiency able the programming improving managing implant changes the because techniques to is doing patients opened reimbursement, dedicate two, also utilization. capacity efficient the have the just all Inspire had. the drives patients of all think stable with take able what making centers over that's expectations years of with a practice surgeons because improved back to not notice driving whole these the any time really process. I it of consistent proficiency we're expectations the accounts

a step continue continue So to overall up going from long term it's stepping patient time and It's QX capacity. centers add with to and initiative. not increase. and flows to been QX on block This we're has OR utilization to to been function focus QX a

Robbie Marcus

follow-up to Great. that. Maybe a

or least at annualize it. CPAP recall now big start of the You've the

now the of program and think has is? advertising do national much metrics way you Do for put guys. back the a to well of Thanks XX your think of interest what you could And any this had months CPAP any You've will program. of a recall? size you durable national How the over the paid to lot grow advertising continue on time? you how this benefit kind if tailwind

Tim Herbert

the looking about that. we coming are what that patients CPAP benefit has that it's to think We pipeline coming business. don't coming by the and those affected program through know simply with a key of there tailwind Advisor through outreach is or We the future recall. been a to to we don't for said Again, it Program Care a are from and we're impact. going significant the know have who think amount headwind and CPAP But be unable patients We for consistent who our that Inspire. are significant

think that's we important. So really

markets I beginning year the of in campaigns, strong of year, real to haven't bolus regions think a we Since more go messaging the any market a out most then of the that started the to of seen go we a in saw national starting to in program every United And beginning higher nationally. because States. various we're from to Inspire we recently, going interest programming. rotational in from the we're we still when that's past. But the television advanced a accounts lot that level the are

As that on to And and you our patients And out a get Good efficiently. sporting bit tools physicians more Show manage messages more being efficient American an the Morning get to us all patients example, allow on improving in events. little of and able capacity, about website. then to improve may Today to our our finally, SleepSync becomes see to it's

showing So the and a gives programs of going us combination it's what really all return forward. the that's optimism

Robbie Marcus

Thanks. it. Appreciate

Tim Herbert

Thanks, Robbie.

Operator

Thank you. I Larry next the from Fargo. comes Biegelsen ahead. Please of Wells line show from question our And go

Larry Biegelsen

we and Rick. this but data the really my I'll strong what to get to should I hear of taking love think the know apnea another your that? here. saw I'd Tim, we on guess you for quarter love on about Hey, be, thoughts early, -- latest what quarter. it's your I question. congratulations your echo views hear Tim, Thanks

Tim Herbert

quite wasn't interpret high the extensive. was feedback kind just between patients data (ph) really where that is. of level appear some that they adenumab the populations. kind released the Inspire it too what we're because It Venn to was a outcomes, certain about did is of for future talking intersection in had success It's indicated but sure primary versus not difficult diagram Absolutely. just And

So be in really apnea pharmaceutical to the a we're positive a us. end sleep treat for confident that will

by think be overall of FDA. before many is to would sleep But still before need mild I that be highlight identified solution more more patients. again, we slightly and pharmaceutical of be to for think the Inspire, tend many, to will years more to to the any to But we kind the the the complementary encouraging It's indication final patients. approved moderate encouraging for it's kind which be that it's apnea certainly severe moderate it's would field.

patients I of will be awareness Inspire. for the care who are for which to we for think extensive it create and to will an amount indicated able there looking take of be

Larry Biegelsen

one And one Thanks. just quick me. for

when think asked you're the three the in is you would Thanks. market total I the by the total by call, was that, last about don't I about how AHI On still but increasing about that XX%? said and XX%. BMI market included increase Down’s increase, it about those indications thinking the addressable

Tim Herbert

target serve patients, do population, we right the it I such but to you is that our really market build certainly those that But expansion so. capacity target our is there, that an think how that again and Larry. number. a is reach TAM, lines to large It our we gets along highlight Down’s how do

Larry Biegelsen

for Thanks right. taking All questions the guys.

Tim Herbert

you. Thank

Operator

from question the go I comes from line Thank our Maeder And show ahead. Piper next you. Sandler. Adam Please of

Adam Maeder

the Hi, quarter. by U.S. think you start nice procedure you have centers questions on wanted to And off correctly, congrats for ASCs. ASCs? I Hi, Thank you volume Rick. that taking XX% if about are asking heard and said a the I of mix Tim. now your I Do if mix in care. where the Thanks. throughput different future, ahead, do ASC go Curious, could the other? about think seeing setting better you both you're how can of as centers versus share look settings we then we the and just volumes? the number one between And two in

Tim Herbert

Absolutely.

opportunity able of they capacity care another flexibility avenue of increase patients to challenge they're bit time the better a site frame and I an additional goes for during control really the service again a centers. number COVID to and level ASCs can open think was physicians take up the the because to little of good of to to the provides scheduling at be

of So our setting a there is hospital think number a -- XX% mix ASCs the the conducted there. less than are of Don't I number some of part in procedure of the scheduling exact or hospital the probably have versus overall but it's flexibility that session, centers. slightly in outpatient

Adam Maeder

then any And that had it. Got could mix I ahead, you And Tim, as I evolve? guess then color look on how just follow-up. quick Thanks. one

Tim Herbert

over Absolutely. during below We us published and the good And our Medicare were increased was that call. the did numbers payment ASC average final it XX,XXX. is the was last get reimbursement for payment, year to the news like XX,XXX, national right XX,XXX

just standpoint several less So momentum that is down bit $XXX. that's than or little from and than hospital payment a of positive less $XXX

a not news reimbursement is the becoming be especially good Medicare Level to the publish think mix. APC. when the acceptable be really a it reimbursement standpoint. did way, ASCs therapy, I you able But provide that look such to By new they at going overall for commercial So is from the X to

to more one will And think it the place talking I so the when leads to open to especially a Inspire the we're procedure, sensing it us the the door future, X about and be appropriate that can. we lead when to continues In incorporating for do eliminate add ASCs. of go the inside Inspire

come. for So will be it I years think an trend to ongoing

Adam Maeder

nice a into helpful, you. it's segue actually Tim. the Very Thank follow-up. And

flush in more heard granular you late kind where detail? more GEN-X of exactly you. Just prior stimulator, I to do little Thank ‘XX. how to a of think you submission could and is? just needed a on tracking detail that to to still timelines about what's Today, system I kind just bit in bit was say I the think hoping it's out little

Tim Herbert

Absolutely.

-- complete do. so have We testing, qualification the have a production we testing lot to of quality to the

FDA and implantable and this and FDA Class ready go significant complete especially III have amount gets the the validated device. have a review package equipment’s We to production to time to all the entire of package being all have the a test to that medical active

and then So properly to very packaged their all correctly, the to to do do, -- the current the steps we're all very sent do come working but but this testing documented year we to for we'll It's to be along FDA in completed to still going make XXXX, design, we good. we're and that, diligently late mid be the the beginning sure package qualification to review. of the in have but proper target It's to tight in diligent that get confident and approval able

Adam Maeder

you. Thank

Tim Herbert

Thanks, Adam.

Operator

I next ahead. line Pasquale Chris Research. from go show from question And the you. comes our of Please Thank Nephron

Chris Pasquale

hard it but Rick. extent a hear really curious on better staffing from you're yours. or holding into if with even about staffing we any to running seeing physicians business It's to numbers, Hey, but lot be we're you the your what productivity say issues it It's Tim. just ways something Difficulty]? your hospitals to [Technical Hey, I'm center without better back? was out peers' figured around work Could it calls, or than not at

Tim Herbert

couple a things. Well, of

we probably as patients. the of have One is, it. sitting four, ENT staffing have probably ENT Hospitals, Advisor there's you question calls out weeks answering in there people We're effect at phone having connection our at Program, our line The about have know, staffing challenges Care from news just our right? accept to techniques people challenges. the That's phones. technologies looking staffing The offices. directly We're office good ASCs five and is advance. scheduling offices with improve don't developing biggest our to challenges, no

and be ahead So cases our be get them. we're times little able to game just open to we advantage to of take block when the a able scheduled have to of the

a advantage they reduced the in with day. in cases second has day oftentimes scheduled can same physician in we add two The OR a third of case that have a kind is, time, if

utilization. improve and also able We're ASCs to different is to just our issue. ENTs centers I an service. be continue So of working ENTs continues and that. with OR to the don't that the mentioned need set more additional we OR as the of we an have time. factor additional avenues But specifically be get to to to open capacity flexibility But we're one cite as levels limiting before, give of no, opening at And staffing correct, looking the you're we

Chris Pasquale

to And of for rep one. to helpful. That's about five year then hires center this adds call guidance of a the for ratio

So far you're to three closer one. to it running

as add so Just than great force to seeing a to the or far? more different a just you you and you have curious expecting hiring than a were why been function that's sites sales to opportunistic of lot thought candidates little you're add of

Tim Herbert

that them centers And centers. did then we and for last forward. mid-range can with that quarter, I guess combination as productive. existing been being remember increase, is we allowing thereof. to But that, opening manages of planning the is and sites manager utilization each more territory purposely in a individual become to the lower at price we're number such new able opportunistic It slightly we've the the increase

a of maybe I for and just part, bit planning. it's little forward being effect it. think opportunistic on an the was that most But

Chris Pasquale

Thanks. Great.

Tim Herbert

Thank you.

Operator

the question Thank comes from our And of Rich next Newitter from Truist. you. show I line

Your line open. is

Rich Newitter

questions right. Thanks on taking the great for All congrats and quarter. another

Tim Herbert

Rich. Thanks,

Rich Newitter

Wanted the bit to focus P&L. a on little

of the lower a items as modeled. in think came SG&A remote percentage a then sales know margin. follow-up such bit than on on you of into of next think R&D I we But monitoring on at going just gross margin how lot Your R&D two a higher elevated patient well. I with we have these should Should as staying going as and we have the And levels? a Gen-X year? forward? was

Tim Herbert

Yeah.

and all the is think that we whole of little down several utilization lot The But the bit qualification. road. activity R&D projects. of units. help third X the with the qualification a right really a in that's up is of have building the we because going quarter SleepSync a said, timing completed Inspire we're I middle digital to Testing being the in

So it of expensive that is overall time project. an

but to it's now, stay bit going the it's to a important the little future So prospects right high patient. with

remote. Rick Bluetooth of earlier, silicone-based talked the then about we're that and excess inventory to the leads we from as gross continue So did write-off and the going margin the activity

Rich Newitter

think gross the of guess 'XX see with XQ I little mean, exception you margin I the more can leverage SG&A side, before I than though margins SG&A. generate for need that Okay. on a the you lowest I usual there, the

starting elevated the a SG&A on think some of follow-up should or R&D leverage So do margin. on have R&D I gross remain And just get then and remaining to we of you're bit elevated do kind and SG&A a back? comes

Rick Buchholz

continue know Rick. we're investment We levels will really forward. because Yeah. to the want Yeah, expand early it's but those But on so our R&D some we important, in efforts maintain, we line. leverage, going line we're Hi, on focused I we to continue for will get those top would have commercialization but continue improvement focus Rich. is to we some profitability. in SG&A demonstrated we as on improvement not It's the

Rich Newitter

bit you And much supply the margin. and component be you having on could just guys returning a carry then just you contemplated on parts. you what And talk to there, into the do XXXX chain chain little gross supply may in or anything comment Great. do safety market margin Rick, to move stock Okay. chip or being you what's How your as on the when about XX% in level? this disruption? if for potential eventually, spot hand? gross Is right

Rick Buchholz

Right.

So expect in we don't third in that charges the occurred in call in half of introduction would that have products the have with we talked quarter. quarter. charges this new the potentially of second the the We our additional sometime some our about that QX year fourth to and obsolescence

there of on days challenges, a inventory we're closely trying in they And so components, managing prices it. the addition, of number but higher are through monitoring hand. but to fight basis. charge we're basis it our and a also to other But XXX have daily some was they're the And issues It's about larger for points. continuing on model team,

So we're uplift will XX%. our around and be to full our that from higher for ASP continued with with guidance the year. XX% of be we still gross fourth with longer in said, the term sticking margin And expect the our XX% then quarter that coupled in price increase that to

Rich Newitter

lot. a Thanks Okay.

Tim Herbert

Thanks, Rich.

Operator

line ahead. Coover comes Phil And Goldman from go you. Thank I Sachs. from question show of Please the our next

Phil Coover

Hey, the for A I hear little didn't quarter. of you guys. think taking that force much of see is heard items, feedback lead for the what's a patients from few on was of going right the and bit early times compatible know to me. happened kind Thanks that extended I sales but benefit you're I indication approval cleanup the kind now, MRI the about that the there? if question are in I could. early something backlog that

Tim Herbert

We'll success the when early get Yeah. very in coming takes body puts and with will patient to that to those to for about that that certainly work the And be very, bringing having such of ease I full flow. team us in Thanks think pretty schedule a approved, promising MRI MRI. that timing, even that we're near just really the mind really concerned the to future approval for does X it's able be probably But up. but cases for Great be to is it the important help inclusive doing and additional patient further. Inspire patients through expand the future. very still

Phil Coover

short Is of That's the XQ? really of going impact line sight kind noticeable through are helpful. kind longer And a quantification or of of Is it term? that to relatively amount of be a any on order? coming patients that

Tim Herbert

have our a big consumer term I direct it's because we through patients longer have approach. the in really a to think pipeline number to impact the significant of

kind going specifically holding it's of of but because back MRI, we're it's which forward. positive to certainly hard distinguish So ones a

Phil Coover

but that headwind, side. Not know a helpful. the much it That's on well. a been as implants have little Okay. international might currency like I down bit is too discussion looks

time Just vacation? any talked end comments in know lot of a Thanks. about the or Western or commercial XQ. I on call Western at it's you Europe one internationally? Europe, efforts out Anything anything the

Tim Herbert

I cover strong to lot No, quarter the a first cases. second in of quarter. a the did quarter in the first pretty us good we have mean, in rebound hit quarter, the first We saw COVID

vacation. has always European quarter the Third

but right it -- that. think so more Europe U.S. seasonality than with has always there's probably I the

working and But be documentation still Netherlands. to is of good the Germany. business. out. very, CPAP the very up physicians seeing are still to But we're makes well. opening It proper that place really in take activities Germany I bulk doing centers. in key think have additional our the the guidelines up new to We're able be We I our of think to out Inspire did the between where oral with regards appliances kind in to get teams is come in and able

there. is then mentioned, reimbursement. of a And Switzerland, we strong highlight mention in and up the just not additional a Austria opened UK to their new training there. with our As centers France activity lot We've

Phil Coover

deferral more a rural situation sounds So pocket potential fair? the the like Is of that kind air German situation with appliances.

Tim Herbert

oral with oral -- those We still not again appliances. that are Inspire indication severe the does treated appliance know match Exactly. a there. group and And can moderate that's to not Inspire. be treats patients And the

again, I our that's it time documentation. all of that able to Germany the of again, with one think through don't the to work sites to have but takes we But much So just challenges there. that work be off anyways, was

Phil Coover

guys. Okay. Tim. All on quarters, Congrats lot a the Thanks right.

Tim Herbert

you. Thank

Operator

from Thank line I Oppenheimer. you. the question comes last of show our from And Suraj Kalia

is open. line Your

Suraj Kalia

Good afternoon, Tim, hear Rick. Can alright? you me

Tim Herbert

Yes, Suraj. How you? are

Suraj Kalia

doing What you Congrats on out per characterize pushing a are Hey, quarter. cases multiple of the do sites base. of Tim, XXX those great per to paraphrasing could percent are you'll mentioned them overall cases the currently install if new here, a you month? have month. and Maybe multiple

Tim Herbert

doing are the good quartiles, those year, are per that next of implants the doing a question. per specific centers top know That's us, that two don't We XXX really month. in about have those the quartiles, are probably that the front we but numbers

quadrants, other right? half argue So hard And area many those, them could but just of kind in count of to productive our of and way you on their of there. the how being the half kind of

Suraj Kalia

many know in to the now. Tim, its given it. a trying on it's your or in any question self-sustainment And also demonstrated How you define effort had get asked target to in do that well-oiled ago. region I your of DTC a where i.e. don't of terms this all need are region? I DTC, regions quarters advertising Got you Love is it's do own? there I'm specifically, now there region, and look, any that machine ROI a to perspective

Tim Herbert

being because the natural a get to more of national and certain do Suraj, physician in continue with are That We physicians that that TV. we There do in ENTs. have as examples with start areas the that. all do referral. their to of We brand, be said really partnership tie sleep grow demonstrate still Yes. to we

that's do to kind we of So do isolate specific it's but hard evaluation, to be really an important that areas know to part. able

won't of they to they to other an come Program will the go is to first. see Advisor speak their ad, Care may will educated, to through be the want The necessarily but they patients because side direct they doctor consumer website,

practice. the And sleep part branding physician so direct come will a that able private through physician, there's from a lot to indirectly from be be patients and of a or of even referral

So you'll think that's an very return. physicians going I see such the trend that forward. part of awareness influencing to it's to our continue website. happy because physicians private It's the and And change. of patients. We driving also know Inspire We their the practice sleep We're flow the education important business know with of in it's it's brand. influencing influencing

Suraj Kalia

that the questions. staffing any specifically all issues the you on my about? equation side of taking lab sleep Thank for there could you talk Are

Tim Herbert

two working towards sleep then for with for manage is. Thank there Yes, And to that minority Ognomy, make develop system. only physicians also And we with more to key you what you, by the easier SleepSync patients need and sleep getting that is with able to is, definition tools need sleep finally, partner Suraj, ENTs, really players them help the we to that to be from the question. more that capacity new patients. these patient are remote allows asking efficiencies to programming our it to with the to the the it thank SleepSync. to to because be able to to make manage a implant and remote brand via and remotely the work from implant physician. EnsoData. build we of with do not the work And data this need efficiencies because portal us work but And sleep a allows smartphone upload we remote patients more is physician product patient patient's efficient we are And we to investments, for

very Thank much. very, question. very good So you

Operator

to time. Tim remarks. I'd concludes further Thank closing for for back like the queue This it in you. turn this show no conference. at I the session now any to questions the Q&A

Tim Herbert

much. you Thank very

to comment, we Just call you final joining all today. for thank one last want the

most on our as in I grateful efforts to our their further commitment of hard the to growing business continued Inspire wish the and is all focused dedicated the well patient Inspire Asia. remain achieve as enthusiasm, employees U.S. consistent the we employees unmatched As to outcomes. for are for always, as in we important teams continued to thank Europe expanding team patients success remain and healthcare element motivation success. to and their team's The work of our

ahead. look Following you your interest support and to with call, providing stay Thank you the safe very Inspire the forward you appreciate and of continued much. months healthy. in on and further we Please updates

Operator

concludes you. This Thank conference today's call.

You may now disconnect.

Inspire Medical Systems (INSP) 2 Nov 222022 Q3 Earnings call transcript