Dive Brief:
- Rick Buchholz is set to step down as CFO of Inspire Medical Systems at the end of the year, the company said Tuesday.
- Buchholz, who will continue in a financial advisory role until late February, is leaving Inspire after 11 years to pursue other professional opportunities. Inspire is searching for a new CFO.
- RBC Capital Markets analysts said in a note to investors that the news is unexpected but does not change their views on the company. Inspire reaffirmed its full-year financial guidance.
Dive Insight:
Inspire sells neurostimulator implants to treat obstructive sleep apnea, a condition in which the tongue blocks the airway. The blockage causes the patient to wake up, preventing quality sleep. The continuous positive airway pressure devices often used to treat OSA require people to wear a mask. Inspire’s implant delivers pulses to muscles to stop the tongue from blocking the airways, treating OSA without a mask.
Buchholz joined Inspire as CFO in 2014. Back then, the company had just received FDA approval for its first OSA implant and raised $40 million in a private financing round to fund the launch. Inspire went public in 2018.
The company recently launched Inspire V, an updated version of its implant. With Buchholz remaining involved with the company through February, RBC analysts said their views on the company are unchanged because the departing CFO will see the “Inspire V roll-out efforts through to completion.”
Sales of the new device rose more slowly than expected in the second quarter, prompting Inspire to lower its full-year guidance at the start of August. The company, which has reaffirmed its guidance, is forecasting full-year sales of $900 million to $910 million, down from a range of $940 to $955 million under its prior outlook.
Talking on an Aug. 4 earnings call, Inspire CEO Timothy Herbert said the revised guidance reflected delays to the onboarding of Inspire V buyers, a situation that prevented centers from billing for the new device until July 1, and patients deferring treatment until the updated model is available. Herbert named Inspire’s decision to defer investments in marketing and the availability of weight-loss drugs as other factors.
“We believe some patients may be delaying Inspire therapy to try GLP-1s,” Herbert said. “We are unable to quantify this and continue to believe GLP-1s present a tailwind long term as we do hear of patients losing weight to qualify and receive Inspire therapy.”
RBC analysts flagged the billing problem and onboarding delay as the significant factors behind the slow sales ramp. The billing problem should have been resolved at the start of July. The analysts said the slow rate of onboarding should largely be resolved by the end of the third quarter, fueling their prediction that the company will report a more than 20% sequential revenue increase in the fourth quarter.
