Oppenheimer downgraded its stock rating for Inspire Medical Systems (NYSE: INSP) on Thursday, moving from an Outperform classification to Perform. This decision follows a correction issued by the Centers for Medicare & Medicaid Services (CMS) which rescinded a prior reimbursement inclusion for Obstructive Sleep Apnea under the vagus nerve stimulation national coverage determination (NCD).
The CMS notification indicated that the agency had "incorrectly added Obstructive Sleep Apnea as a covered indication under the vagus nerve stimulation NCD." This reversal negates the previous assumption that Inspire Medical would benefit from expanded reimbursement, posing financial headwinds for the company.
Analysis from InvestingPro suggests that despite the recent downgrade and regulatory changes, Inspire Medical is undervalued relative to its Fair Value, supported by a comprehensive set of 14 ProTips that address elements such as cash flow strength and earnings outlook.
The downgrade by Oppenheimer emphasizes several negative impacts from the CMS correction. These include the loss of anticipated facility fee increases and reduced possibilities for average selling price pass-through, both of which were expected to enhance financial performance. Nonetheless, Inspire Medical continues to maintain a favorable financial structure; its balance sheet shows more cash than debt and liquid assets exceeding short-term liabilities.
Furthermore, billing under CPT code 64582 combined with modifier 52 is anticipated by Oppenheimer to deliver a "net negative" effect on the company’s revenues. Additional concerns include expected downward pressure on inventory sales and the dynamics surrounding new site openings.
The research firm conceded that the timing of its prior upgrade was unfortunate, given the CMS reimbursement reversal, and recommended that Inspire Medical reassess its financial guidance for fiscal year 2026 in response to these regulatory developments.
Separately, Inspire Medical Systems recently announced preliminary fourth-quarter sales approximately totaling $269 million, representing a 12% increase year-over-year and exceeding consensus estimates of $262 million. This strong sales performance has led Jefferies to raise its price target to $100 while maintaining a Hold rating.
Conversely, Truist Securities reduced its price target to $120, citing uncertainties in pricing strategies for 2026 stemming from disagreements between regional Medicare Administrative Contractors (MACs) and CMS.
Notably, Oppenheimer has maintained an Outperform rating and a $175 price target following updates related to policies from Medicare Administrative Contractors, indicating divergent views within the analyst community.
In corporate developments, Inspire Medical Systems announced Matt Osberg as the incoming Executive Vice President and Chief Financial Officer, effective January 19, 2026. Osberg brings over twenty years of financial leadership experience from his previous roles at Apogee Enterprises and Best Buy.
Additionally, Impulse Dynamics named Richard J. Buchholz as CFO effective March 2, 2026. Buchholz formerly served as CFO at Inspire Medical Systems and played a pivotal role in the company's path to profitability.