The Centers for Medicare & Medicaid Services (CMS) issued a significant update on Thursday regarding the coverage of obstructive sleep apnea (OSA) under Current Procedural Terminology (CPT) code 64568 within National Coverage Determination (NCD) 160.18, a development directly affecting Inspire Medical Systems (NYSE: INSP).
CMS clarified that the inclusion of the International Classification of Diseases, Tenth Revision (ICD-10) diagnosis code G47.33, representing OSA, was mistakenly added as an approved indication. This erroneous coverage has now been rescinded, with CMS indicating that determinations related to coverage for CPT 64568 should be managed by individual Medicare Administrative Contractors (MACs). Consequently, these MACs will recalibrate the claims affected by the revision.
Despite ongoing uncertainties stemming from regulatory adjustments, financial data indicate that Inspire Medical Systems maintains a robust liquidity profile, boasting a current ratio of 5.29 and a balance sheet where cash reserves exceed debt obligations. This financial backdrop provides a cushion as the company navigates reimbursement policy shifts.
This change follows a sequence of events that began on November 21, 2025, when CMS initially reclassified CPT 64568 into Ambulatory Payment Classification (APC) 1580. This shift implied a near 50% increase in reimbursement rates for procedures performed in hospital and ambulatory surgical center environments, which was expected to materially benefit Inspire Medical Systems.
However, further revisions followed in December 2025. A CMS Local Coverage Determination (LCD) was updated to remove CPT 64568 after acknowledging its earlier erroneous addition. Noridian Healthcare Solutions, serving as a MAC, also updated its Hypoglossal Nerve Stimulation (HGNS) Billing and Coding guidance, confirming the removal of coverage for CPT 64568 across several contractor territories.
Market analysts have responded to these developments with cautious optimism. Evercore ISI sustained its Outperform rating on Inspire Medical Systems, assigning a $125.00 price target. The firm emphasized that Inspire’s financial guidance for fiscal year 2026 remains unchanged since prior forecasts did not incorporate any substantial reimbursement enhancement. This viewpoint aligns with broader analyst trends; according to InvestingPro data, five analysts have recently elevated their earnings estimates for the upcoming period.
Looking ahead, Inspire is poised to release its next earnings report on February 11. Analysis conducted via InvestingPro suggests that the company’s stock is undervalued compared to its inherent Fair Value, in spite of a relatively elevated Price-to-Earnings (P/E) ratio of 57.49. Over the past twelve months, Inspire reported a revenue growth rate of 16.81% and is projected to sustain profitability this fiscal year.
In recent company disclosures, Inspire Medical Systems announced preliminary fourth-quarter revenue of approximately $269 million, representing a 12% year-over-year increase and surpassing analyst consensus expectations pegged at $262 million. Jefferies responded by raising its price target to $100 while maintaining a Hold rating. Conversely, Truist Securities adjusted its price target downward to $120 from a previous level but kept their Buy rating, citing uncertainties arising from disputes between Medicare Administrative Contractors and CMS around pricing potential for 2026. Oppenheimer revised its rating on Inspire from Outperform to Perform following the CMS reimbursement ruling reversal.
Separately, Inspire Medical Systems announced a key leadership transition effective January 19, 2026. Matt Osberg has been appointed Chief Financial Officer, bringing over two decades of financial leadership experience, formerly serving as CFO at Apogee Enterprises. At the same time, outgoing CFO Richard J. Buchholz is set to join Impulse Dynamics as their new CFO commencing March 2, 2026. Buchholz's tenure facilitated a dramatic growth in Inspire's revenue, from $3.8 million in 2014 to upwards of $910 million in 2025.
This evolving situation underscores the dynamic interplay between regulatory agencies and healthcare technology providers, emphasizing the importance of regional administrative discretion within Medicare coverage decisions. Inspire Medical Systems’ financial resilience and sector analyst support indicate a measured capability to adapt amid reimbursement policy fluctuations.