Why did INSP outperform forecasts in Q3?

Inspire Medical Systems (INSP) outperformed forecasts in Q3 due to several key factors:

1. Revenue Growth: Inspire Medical Systems reported a 25% increase in revenue for Q4 2024, reaching $239.7 million. This growth was driven by a 22% increase in US revenues and a significant 163% increase in international revenues. The company's full-year revenue for 2024 was $802.8 million, reflecting a 28% increase from the previous year.
2. Strong Earnings Performance: The company's diluted EPS for Q4 2024 was $1.15, well above the consensus estimate of $0.73. This EPS figure represents a substantial year-over-year increase, with a 390% increase in EPS reported in the same quarter of the previous year.
3. Gross Margin and Profitability: Inspire Medical Systems maintained a high gross margin of 85% for Q4 2024. The company's net income for the quarter was $35.2 million, resulting in a 15% net income margin. This profitability is a significant improvement from the previous year, when the company reported a net income of $14.8 million in Q4 2023.
4. Market Expansion and Product Innovation: The company's expansion into new markets and the introduction of new products, such as the Inspire V neurostimulator, have contributed to its growth. The Inspire V system received FDA approval in 2024 and is expected to be fully launched in 2025. This new product is likely to drive future revenue growth as it expands the company's market share.
5. Clinical Data and Patient Satisfaction: Inspire Medical Systems' strong clinical data and high patient satisfaction rates have been crucial for securing insurance reimbursements and driving adoption rates. This has contributed to the company's ability to increase its market share and revenue.

In conclusion, Inspire Medical Systems' outperformance in Q3 can be attributed to its robust revenue growth, strong earnings performance, high profitability, strategic market expansion, and continuous product innovation, along with favorable clinical results that boost its stock potential.