What Happened?
Shares of medical technology company Inspire Medical Systems (NYSE: INSP) fell 41.3% in the afternoon session after the company slashed its full-year revenue and profit forecasts, a move that overshadowed a second-quarter earnings beat.
The medical device maker lowered its 2025 revenue projection to a range of $900 million to $910 million, a significant drop from its previous estimate of $940 million to $955 million. The company also drastically reduced its net income per share guidance. Management attributed the weaker outlook to a slower-than-expected U.S. launch of its new Inspire V device, inventory issues with an older model, and some patients who delayed therapy to try GLP-1 weight loss drugs. In response to the disappointing forecast, several Wall Street firms, including JPMorgan and KeyBanc, downgraded the stock.
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What Is The Market Telling Us
Inspire Medical Systems’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Inspire Medical Systems and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 25 days ago when the stock dropped 4.7% on the news that the U.S. administration announced a sharp escalation in trade tensions by threatening new tariffs on Canada. The wider market sentiment turned negative after the White House announced plans to impose a 35% tariff on Canadian imports, sparking renewed fears of a trade war. This news prompted a sell-off across major U.S. indexes, including the S&P 500 and the Dow Jones Industrial Average, as investors grew concerned about the potential economic impact of escalating protectionist policies. The healthcare sector is especially vulnerable to such tensions due to its deeply integrated supply chains with Canada for pharmaceuticals and medical devices, meaning increased costs and potential disruptions.
Additionally, ongoing U.S. policy headwinds aimed at lowering drug prices and specific corporate challenges, like those faced by UnitedHealth Group, further compounded the sector's decline. As a result, the Health Care SPDR ETF (XLV) fell 1.0%, underperforming even as major indices pared some losses.
Inspire Medical Systems is down 60.1% since the beginning of the year, and at $75.52 per share, it is trading 65.2% below its 52-week high of $216.71 from September 2024. Investors who bought $1,000 worth of Inspire Medical Systems’s shares 5 years ago would now be looking at an investment worth $693.54.
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