Inspire Medical Surges 31% on Major Medicare Reimbursement Hike
FDA & Biotech

Inspire Medical Surges 31% on Major Medicare Reimbursement Hike

The sleep apnea device maker's shares soared after regulators finalized a payment increase of roughly 50%, prompting multiple analyst upgrades.

Shares of Inspire Medical Systems (NYSE: INSP) surged nearly 31% in Monday trading after federal regulators approved a substantial increase in Medicare reimbursement rates for the company's implantable sleep apnea device, a move that analysts see as a significant catalyst for broader adoption.

The stock closed at $117.55, a gain of $27.68, boosting the company’s market capitalization to approximately $2.66 billion. The rally was ignited by the Centers for Medicare & Medicaid Services (CMS) finalizing new payment classifications that will boost reimbursement for Inspire's therapy by about $10,000 per procedure, representing a roughly 50% increase over 2025 rates.

Inspire Medical develops an implantable nerve-stimulation system that serves as an alternative to the commonly used continuous positive airway pressure (CPAP) machines for patients with obstructive sleep apnea. The new CMS rule, which takes effect in 2026, is a major financial tailwind for the company, as Medicare patients account for between 25% and 30% of its patient base.

Under the finalized 2026 payment rates, reimbursement to hospitals for the procedure will increase by approximately 33% to around $40,500. The change is even more pronounced for ambulatory surgery centers (ASCs), which will see a nearly 58% jump in reimbursement to about $42,400. This increase is expected to significantly improve the economic viability of the procedure for healthcare providers, potentially accelerating patient access and device adoption.

Wall Street analysts responded swiftly to the news. Stifel upgraded Inspire's stock to 'Buy' from 'Hold' and raised its price target to $110, citing the reimbursement boost as a key driver for future growth. Truist Securities also reacted favorably, maintaining a 'Hold' rating but increasing its price target to $128 from $84, while Nephron Research upgraded the stock from 'Hold' to 'Buy'.

"This is a significant win for Inspire," a Stifel analyst wrote in a note to clients. "The higher payment rates should alleviate provider concerns about procedure profitability and could unlock a new phase of growth for the company."

However, not all analysts were fully convinced the challenges are over. UBS maintained its 'Neutral' rating, noting that the company still faces hurdles with commercial insurance plans, which represent the larger portion of its business. While the Medicare decision is a clear positive, broader reimbursement coverage remains a key focus for investors.

The reimbursement news provides a much-needed boost for Inspire, whose stock has been under pressure for much of the year, trading far below its 52-week high of $216.01. The rally on Monday pushed the stock above its 50-day moving average for the first time in months. The positive catalyst also comes as the company navigates legal challenges, including investor lawsuits alleging the company was not transparent about the launch of a next-generation device.

Looking ahead, the enhanced Medicare reimbursement is expected to strengthen Inspire’s market position significantly. The key for the company will be leveraging this federal validation to secure more favorable terms with private payers and to continue demonstrating the clinical and economic benefits of its therapy in a competitive medical device landscape.