Inspire Medical Slips as Lawsuits Mount Over Device Launch
Shares fall over 2% after Hagens Berman and other firms allege the company misled investors on its next-generation sleep apnea device, compounding market anxieties from a prior guidance cut.
Inspire Medical Systems (NYSE: INSP) shares fell Wednesday as the medical device maker faces mounting legal pressure from a series of investor lawsuits alleging the company concealed significant problems with the launch of its next-generation sleep apnea treatment.
Shares in the Golden Valley-based company traded down 2.3% to $127.33 in morning trading. The decline follows announcements from law firms, including Hagens Berman, that they have filed securities class-action lawsuits. The suits claim Inspire Medical misled investors about the commercial viability and rollout of its updated device, the Inspire V.
The legal actions cap a period of intense turmoil for the company, which saw its stock plummet by approximately 32% on August 4, 2025. That crash was triggered when management unexpectedly announced an "elongated timeframe" for the Inspire V rollout and slashed its full-year earnings guidance by more than 80%. This abrupt reversal shattered investor confidence and erased months of gains for the stock.
The core of the lawsuits, detailed in a statement from Hagens Berman, alleges that Inspire failed to disclose critical issues with the Inspire V launch. The firm described the rollout as a "disaster," citing minimal demand due to customers holding a surplus of older devices and a failure to prepare clinicians and secure payor adoption for the new product.
Inspire Medical, which has a market capitalization of $3.76 billion, specializes in minimally invasive therapies for obstructive sleep apnea (OSA), a condition where breathing repeatedly stops and starts during sleep. Its main product is an implantable nerve stimulator that serves as an alternative to the more common CPAP machines. The Inspire V was intended to be a significant product cycle upgrade, driving future growth.
However, the company's August admission and subsequent fallout suggest a significant miscalculation in its go-to-market strategy. The investor lawsuits seek to represent shareholders who purchased INSP stock between the announcement of the new device and the subsequent guidance cut, a period during which the company's public statements allegedly painted an overly optimistic picture of the product's prospects.
The stock is now trading significantly below its 52-week high of $216.01, reflecting the deep skepticism that has taken root in the market. While the share price has recovered from its 52-week low of $70.77, the persistent legal challenges introduce a new layer of risk and uncertainty.
Analysts have remained largely on the sidelines, with a consensus hold rating on the stock. According to market data, the average price target sits at $117.73, suggesting that Wall Street does not anticipate a swift recovery to its prior highs. The company's quarterly revenue growth of 10.5% year-over-year has been overshadowed by a 43.6% decline in quarterly earnings growth, a direct reflection of the costs and strategic missteps associated with the Inspire V launch.
Inspire Medical has not yet issued a formal public statement addressing the specific allegations in the Hagens Berman lawsuit. The legal proceedings will now be closely watched for their potential financial impact, which could include significant legal fees and a potential settlement. For investors, the key focus will be on the company's ability to clear its existing inventory, successfully re-launch the Inspire V, and rebuild credibility with both the medical community and Wall Street.