Analyst warns Inspire Medical has a coding, GLP-1 problem
Inspire Medical has spent years building a compelling sleep apnea device story, but Bank of America says the stock now faces a reimbursement problem that could take longer to resolve than investors want to hear.
BofA Securities downgraded Inspire Medical (INSP) to Underperform from Neutral and lowered its price objective to $39 from $53, according to a note given to TheStreet by BofA Securities.
The firm said the new target is based on 1.0 times its 2026 sales estimate, down from its previous 1.5 times multiple, reflecting slower growth and continued uncertainty around reimbursement.
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"We do not see a path for the stock to work until there is clarity on coding," BofA analyst Travis Steed wrote in the note. The firm also lowered its 2027 earnings-per-share estimate to $1.00 from $1.15 and cut its 2028 EPS estimate to $1.28 from $1.35.
Inspire develops implantable neurostimulation technology for patients with obstructive sleep apnea.
The company says its proprietary Inspire system is the first FDA-approved neurostimulation technology for moderate to severe obstructive sleep apnea, and its investor materials highlight a market opportunity that still gives the company room to grow over time.
Coding uncertainty takes over the stock story
The issue worrying BofA centers on how physicians and centers get reimbursed for the Inspire V procedure.
Inspire acknowledged earlier this year that healthcare centers and physicians should bill under the most recent healthcare policies, and said it believed the Inspire V procedure would transition to CPT code 64582 with a -52 modifier.
The company also said it was seeking a long-term solution through the creation of a separate CPT code that would support appropriate reimbursement for the Inspire V procedure.
The analyst note says the AMA CPT Editorial Panel rejected the proposal for a new Category I code for leadless hypoglossal nerve stimulation at its May meeting, making the September meeting a key remaining chance for a 2028 code timeline.
The AMA's May 2026 CPT agenda included a request to establish a Category I code for implantation of a single-lead hypoglossal nerve neurostimulator electrode array and pulse generator, along with revisions tied to hypoglossal nerve codes.
The reimbursement pathway is important because coding clarity does not automatically solve payment uncertainty. CMS materials list existing hypoglossal nerve stimulation codes, including CPT 64582 for insertion of a hypoglossal nerve stimulator electrode and generator and breathing sensor electrode, while Inspire's new device has created questions around which code and modifier should apply in certain cases.
Inspire expects stabilization, BofA is less convinced
Inspire has tried to reassure investors that the disruption is manageable.
In its May 2026 investor presentation, the company reported first-quarter revenue of $204.6 million, up 1.6% from the same quarter last year, with an 86.5% gross margin and roughly $13 million in operating cash flow.
Inspire also guided for full-year 2026 revenue of $825 million to $875 million, adjusted operating income margin of 2% to 4%, and adjusted EPS of $0.75 to $1.25.
BofA sees that outlook as a tougher setup than the company's longer-term growth story implies.
The firm's note says Inspire's guidance assumes things begin improving, and that 2027 revenue can grow again after a difficult 2026. BofA lowered its 2027 organic growth estimate to about flat, reflecting concerns that prior authorization, reimbursement education, and coding friction may keep weighing on procedure volume.
The firm also flagged the patient journey as a factor that makes any slowdown harder to reverse quickly.
Inspire's own investor presentation says the path from initial contact to implant can take as much as six months, which means delayed authorizations or paused accounts could affect revenue well beyond a single quarter.
BofA sees more pressure beyond coding
The downgrade also reflects concerns that the reimbursement issue is arriving as Inspire faces other challenges. BofA said WiSeR's prior authorization confusion is affecting several states and creating another hurdle for centers already working through billing questions.
The firm also pointed to GLP-1 weight-loss drugs as a near-term pressure point.
BofA said some patients may pursue pharmacologic weight loss before moving ahead with Inspire therapy, potentially lengthening conversion timing and adding another step to the treatment decision process.
BofA said Inspire still has advantages, including a large installed base, physician familiarity, and a product with meaningful clinical history. The firm warned that credible alternatives from companies such as Nyxoah and LivaNova could give high-volume accounts more reason to test other options while Inspire works through the coding overhang.
BofA's call leaves room for a recovery if reimbursement clarity arrives faster than expected, GLP-1 drugs prove less disruptive, or competitors fail to gain traction. For now, the firm says investors may need to wait for a cleaner coding pathway before the stock can regain its footing.
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This story was originally published May 27, 2026 at 8:17 AM.