How did INSP's Q4 earnings surprise investors?

Inspire Medical Systems (INSP) reported its fourth-quarter (Q4) 2024 earnings, surpassing investor expectations with a significant increase in revenue and earnings per share (EPS). Here's a detailed analysis of the earnings report and how it surprised investors:

1. **Revenue Growth**: INSP's Q4 revenue amounted to $239.7 million, marking a substantial 25% increase from the same quarter in the previous year. This growth was driven by a 22% rise in US revenue to $231.6 million and a 163% increase in international revenue to $8.1 million. The full-year revenue for 2024 was $802.8 million, reflecting a robust 28% year-over-year growth.

2. **Earnings Per Share (EPS)**: The company reported an EPS of $1.15 for Q4 2024, which was a significant upside surprise, as it exceeded the estimated EPS of $0.71 by approximately 135%. This substantial increase in EPS reflected improved profitability and operational efficiency.
3. **Net Income**: INSP reported a net income of $35.2 million for Q4 2024, representing a 15% net income margin. This was a notable improvement from the $14.8 million net income recorded in the same quarter of the previous year, indicating strong financial performance and operational effectiveness.
4. **Gross Margin**: The company maintained a robust gross margin of 85% for Q4 2024, which was slightly down from 85.4% in the prior year period. This demonstrated efficient cost management and a strong market position.
5. **Operating Cash Flow**: INSP generated $69.2 million in operating cash flow for Q4 2024, contributing to a total of $130.2 million for the full year. This positive cash flow highlighted the company's ability to generate liquidity from its operations.
6. **Market Expansion**: INSP's strategic expansion efforts were evident with the activation of 72 new US centers and the creation of 12 new US sales territories in Q4 2024. This enhanced market reach and is likely to support continued growth in the coming quarters.

Overall, INSP's Q4 earnings report exceeded investor expectations with strong revenue growth, improved profitability, and effective cost management. The company's strategic market expansion and innovative product offerings, such as the Inspire V neurostimulator, are likely to contribute to its sustained growth and success in the medical technology sector.