Jefferies recently revised its price target on Inspire Medical Systems (NYSE: INSP), marking a decrease to $81.00 from the prior $100.00 valuation, while retaining a Hold recommendation on the shares. The newly set target closely parallels the stock's market price, which stands at approximately $80.81. However, data from InvestingPro indicates a wider range of analyst target prices, spanning from $81 to as high as $180, suggesting potential undervaluation relative to certain forecasts.
This downward adjustment aligns with updated guidance from the Centers for Medicare & Medicaid Services (CMS) concerning coverage criteria for obstructive sleep apnea (OSA) treatments. Specifically, CMS corrected a previous error related to the inclusion of the OSA diagnosis code as an approved indication under Current Procedural Terminology (CPT) code 64568. Instead of blanket coverage, CMS now delegates coverage determinations to Medicare Administrative Contractors (MACs), enabling localized discretion regarding claims adjudication.
Jefferies analyzes that this policy shift increases the possibility of widespread resistance by MACs when adjudicating coverage, which directly diminishes the prospect for the average selling price to exceed prior expectations established in company guidance. Furthermore, Jefferies anticipates that improved reimbursements for treatment facilities—previously seen as a catalyst for volume growth—may now offer restricted upside. These factors underpin Jefferies’ decision to lower the price target while maintaining a cautious stance with the Hold rating for Inspire.
Despite these headwinds, financial indicators for Inspire Medical Systems remain solid. InvestingPro research highlights that Inspire's balance sheet shows more cash reserves than debt obligations, and the company has realized revenue growth of 16.8% over the most recent twelve-month period. Investors interested in an in-depth perspective on Inspire Medical Systems can access additional analysis through an InvestingPro subscription.
Recent developments have also influenced market perceptions and analyst ratings of Inspire. The CMS update that rescinded OSA as a covered diagnosis for CPT code 64568 has repercussions on anticipated reimbursement levels, affecting the company’s revenue projections. In response, Truist Securities downgraded Inspire Medical’s rating from Buy to Hold, referencing the negative implications of the revised medical coding environment. Similarly, Oppenheimer adjusted its rating from Outperform to Perform, noting the CMS correction as a cause for re-evaluating the company’s performance outlook.
Separately, Inspire Medical Systems has experienced notable leadership transitions. Richard J. Buchholz, who served as chief financial officer for over a decade, has accepted the CFO role at Impulse Dynamics, effective March 2, 2026. Buchholz’s tenure at Inspire included overseeing the company’s initial public offering in 2018 and guiding the firm toward full-year profitability by 2024. During his leadership, Inspire's revenues expanded significantly, growing from $3.8 million in 2014 to surpassing $910 million by 2025. Buchholz’s departure represents a substantial shift for Inspire, occurring amidst these crucial reimbursement and rating developments.
Overall, Inspire Medical Systems faces a complex environment shaped by regulatory adjustments, evolving reimbursement frameworks, and organizational change. While maintaining a Hold rating, analysts and investors are monitoring these factors’ potential impact on the company’s operational and financial trajectory.
Jefferies has lowered its price target for Inspire Medical Systems to $81 from $100 while maintaining a Hold rating. The adjustment follows a Centers for Medicare & Medicaid Services revision on obstructive sleep apnea coverage, which now entrusts reimbursement decisions to local Medicare Administrative Contractors. This change has reduced upside potential in pricing and volume for Inspire Medical's products. Despite regulatory and rating challenges, Inspire maintains strong financial health and notable revenue growth.
Key Points
- Jefferies reduced Inspire Medical Systems’ price target from $100 to $81 while keeping a Hold rating amid CMS coverage changes.
- CMS corrected coverage for obstructive sleep apnea under CPT code 64568, delegating reimbursement decisions to local Medicare Administrative Contractors.
- Despite coverage uncertainties, Inspire exhibits strong financial health with more cash than debt and 16.8% revenue growth over the past year.
Risks
- CMS's decision to allow Medicare Administrative Contractors to determine coverage introduces uncertainty in reimbursement consistency, impacting revenue predictability for medical device companies.
- Reduced potential for price and volume upside stemming from coverage revisions may constrain Inspire Medical Systems’ earnings growth prospects.
- Leadership changes, including CFO Richard J. Buchholz’s departure, could affect corporate strategy and execution amidst a transition period.