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Item 1. Business

2025-02-10 compared with 2024-02-09 · 231 added, 304 removed, 484 unchanged (53% of the section changed)

We are a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA").

Our proprietary Inspire system is the first and only FDA-approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA.

Our proprietary Inspire system is the first and only FDA, European Union ("EU") Regulation No.

2017/745 ("MDR" or "EU Medical Devices Regulation"), and Japan Pharmaceuticals and Medical Devices Agency-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA.

We have developed a novel, closed-loop solution that continuously monitors a patient’s breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway.

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Inspire therapy is indicated for patients with moderate to severe OSA who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level.

In addition, patients in the United States ("U.S."), Japan, and Singapore must have been confirmed to fail or be unable to tolerate positive airway pressure ("PAP") treatments, such as continuous positive airway pressure ("CPAP"), and be 18 years of age or older, though there are no similar requirements for patients in Europe.

Physicians have treated more than 60,000 patients with Inspire therapy at over 1,300 medical centers across the U.S., Europe, and Asia.

Physicians have treated more than 90,000 patients with Inspire therapy at over 1,575 medical centers across the United States ("U.S."), Europe, and Asia.

Sleep apnea is a serious and chronic disease that negatively impacts a patient’s sleep, health, and quality of life.

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These invasive surgical procedures have limited or unpredictable clinical benefit, are irreversible, and can be extremely painful.

We believe that there is both an urgent clinical need and a strong market opportunity for an alternative to CPAP that is effective and minimally invasive.

Patients with CPAP intolerance are at risk of higher mortality and healthcare utilization.

Two recent findings published in 2022 from large healthcare outcome databases, including Medicare and the French national healthcare insurance database, have demonstrated, in a large national cohort, the risks and costs of CPAP intolerance.

Specifically, Medicare patients with untreated OSA had $20,000 in higher healthcare costs prior to their OSA diagnosis compared to those without OSA, and those with CPAP intolerance had higher risks of new cardiovascular events than those who were adherent.

We believe that there continues to be both an urgent clinical need and a strong market opportunity for an alternative to CPAP that is effective and minimally invasive.

Data shows that patients with CPAP intolerant OSA have a higher risk for mortality than patients with CPAP-tolerant OSA and higher healthcare utilization rates based on increased cardiovascular health risks.

Two recent findings published in 2022 from Medicare and the French national healthcare insurance databases have demonstrated, in large national cohorts, risks of CPAP intolerance.

Specifically, Medicare patients with CPAP intolerance had higher risks of new cardiovascular events than those who were adherent.

Similarly, the French national reimbursement database showed that in over 176,000 patients, CPAP non-adherent patients had a higher risk for mortality and new onset of heart failure than those who were adherent.

These findings show the urgency of treating CPAP-intolerant OSA to improve outcomes and reduce healthcare utilization.

Inspire therapy is an innovative, closed-loop, minimally invasive solution that provides comfort and convenience, resulting in high compliance for patients with moderate to severe OSA.

Once implanted, the Inspire system delivers electrical stimulation that causes a slight forward movement of the back of the tongue, which helps to

maintain an open airway, enabling the patient to inhale freely without interruption.

These findings show the urgency of treating CPAP-intolerant OSA to improve patient outcomes and potentially reduce healthcare utilization.

Inspire therapy is an innovative, closed-loop, minimally invasive solution designed to provide comfort and convenience, and which results in high compliance for patients with moderate to severe OSA.

Once implanted, the Inspire system delivers electrical stimulation that causes a slight forward movement of the back of the tongue, which helps to maintain an open airway, enabling the patient to inhale freely without interruption.

We believe our Inspire therapy provides the following benefits:

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The longitudinal study demonstrated an approximately 70% reduction in the median AHI in patients with moderate to severe OSA from a baseline of 29.3 events per hour to 9.0 events per hour at 12 months following initial treatment.

STAR trial follow-up has shown results similar to the initial data at 18 months, three years, and five years.

STAR trial follow-up has shown results similar to the initial data at 18 months, three years, and five years following initial treatment.

At five years, median AHI in patients with moderate to severe OSA remained low at 6.2 events per hour.

The effectiveness of Inspire therapy was further demonstrated by the results of the randomized controlled therapy withdrawal study, in which patients in the therapy withdrawal group regressed to near-baseline AHI levels while patients in the control group that continued therapy experienced sustained therapeutic benefits.

In addition to the STAR trial, we have established a global real-world patient registry ("ADHERE") to collect data on safety, effectiveness, weekly usage, overall compliance, and satisfaction from patients who have been implanted with an Inspire system for one year after implant.

The target enrollment of 5,000 patients was achieved in 2024 and patient follow-up is ongoing.

For more details on ADHERE, please see the section titled "Clinical Results and Studies—ADHERE Patient Registry" below.

We sell our Inspire system to hospitals and ambulatory surgery centers ("ASCs") in the U.S.

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We have secured positive coverage policies with many U.S.

commercial payors, including virtually all large national commercial insurers, encompassing approximately 260 million covered lives in the U.S.

commercial payors, including all large national commercial insurers, encompassing approximately 260 million covered lives in the U.S.

We are in active discussions with regional commercial insurers to establish additional positive coverage policies, as well as modify existing positive coverage policies to support reimbursement of Inspire therapy.

In parallel, a subset of our 28-person reimbursement team, which we refer to as our market access team, is focused on assisting patients and physicians in obtaining prior authorization approvals from commercial payors on a case-by-case basis in advance of treatment with our Inspire therapy.

In addition, all seven Medicare Administrative Contractors ("MACs") provide coverage of Inspire therapy when certain coverage criteria are met.

In parallel, a subset of our market access team, which we refer to as our prior authorization team, is focused on assisting patients and physicians in obtaining prior authorization approvals from commercial payors on a case-by-case basis in advance of treatment with our Inspire therapy.

In addition, all seven Medicare

Administrative Contractors ("MACs") provide coverage of Inspire therapy when certain medical necessity criteria are met.

We also have a U.S.

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We have a refined, efficient approach to advance patients, once identified, to placement of the Inspire system.

When required, our dedicated market access team helps patients and providers work with payors to secure prior authorization approvals in advance of initial treatment.

In addition, this team proactively works with payors to establish positive coverage policies when needed by highlighting the compelling clinical data and the value of our Inspire therapy.

This highly effective team has been successful in helping to secure reimbursement from hundreds of commercial payors to date, and positive coverage policies from most U.S.

commercial payors, including virtually all large national payors.

When required, our dedicated prior authorization team helps patients and providers work with commercial payors to secure prior authorization approvals in advance of initial treatment.

In addition, by highlighting the compelling clinical data and the value of our Inspire therapy, the market access team proactively works with payors to establish positive coverage policies where needed and update policies to match the FDA criteria where a policy already exists.

This highly effective team has been successful in helping providers and patients to secure reimbursement from hundreds of commercial payors to date, and positive coverage policies from most U.S.

commercial payors, including all large national payors.

• Strong research and development capabilities and comprehensive intellectual property portfolio.

Our commitment to driving innovation has allowed us to achieve continuous, significant improvements of our Inspire therapy.

For example, in 2023, we submitted a premarket approval ("PMA") supplement to the FDA for our next generation Inspire system.

Also in 2023, we received approval from the FDA on an expanded indication which includes an increase on the upper limit of the AHI to 100 events per hour from 65, and raises the Body Mass Index ("BMI") warning in the labeling to 40 from 32.

We also received FDA approval of our new physician programmer, called the SleepSync™ programmer, which we expect to formally launch in the U.S.

in 2024, and we received FDA approval to offer Inspire therapy to certain

pediatric patients with Down syndrome.

In 2022, we received FDA approval for additional magnetic resonance imaging ("MRI") scan conditions for use with Inspire therapy.

This full-body MRI approval expanded the Inspire use labeling that previously allowed only head, neck, and extremity MRI scans.

Also in 2022, the FDA approved new silicone-based stimulation and sensing leads, which provides improved manufacturability, easier system implantation, increased long-term performance, and enhanced reliability.

For example, in 2024, we received approval from the FDA for our next generation

Inspire system, which we expect to fully launch in the U.S.

We have a comprehensive patent portfolio to protect our intellectual property and technology, with rights as of December 31, 2024 to 98 issued U.S.

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We also continue to invest in our SleepSync™ platform, a cloud-based patient management system which allows patients and physicians alike to remotely monitor key compliance and outcomes measures for connected and coordinated care management, thereby optimizing therapy.

• Promote awareness among patients, ENT physicians, sleep centers, and referring physicians.

• Promote awareness of and reliance on Inspire therapy among patients, ENT physicians, sleep centers, and referring physicians.

We believe that many patients who have failed or cannot tolerate CPAP are unaware of our Inspire therapy as a safe and effective alternative treatment for moderate to severe OSA.

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• Expand our sales and marketing organization to facilitate adoption of our Inspire therapy.

We plan to continue to expand our sales and marketing organization and seek to recruit and train exceptionally talented sales representatives in existing and new markets in the U.S.

and in Europe to help facilitate further adoption and broaden awareness of our Inspire therapy.

We plan to continue to expand our sales and marketing organization and seek to recruit and train exceptionally talented sales representatives in existing and new markets to help facilitate further adoption and broaden awareness of our Inspire therapy.

Our success to date in developing new markets has been primarily due to our ability to identify new regions with high volume medical centers, educate ENT and sleep physicians, help generate steady patient demand, and provide sufficient support staff to our sales representatives.

We believe investing in a scalable, efficient direct sales force and continuing the development of our marketing efforts will help us broaden adoption of our Inspire therapy and drive revenue growth.

• Drive an increase in utilization of Inspire therapy at established centers.

In addition to continuing to expand our footprint more broadly, we will also focus on building stronger and deeper relationships with customers.

We have extensive learnings through our years of pioneering our hypoglossal nerve stimulation therapy, which we intend to use to educate providers on strategies that allow them to improve their identification and potential treatment of moderate-severe OSA patients.

• Invest in research and development to drive innovation and expand indications.

Our foundational commitment to driving innovation and improving patient lives fuels our desire for continuous product development.

We intend to invest in existing and next generation technologies to further improve our

products and clinical outcomes, optimize patient acceptance and comfort, and broaden the patient population that can benefit from our Inspire therapy.

Recent examples of our product innovation include the next generation of the Inspire system, which was submitted to the FDA for approval in June 2023, and FDA approval of our SleepSync™ programmer as discussed above.

We have launched a cloud-based patient management system called the SleepSync™ platform (formerly referred to as Inspire Cloud), which allows physicians to monitor patient compliance and more efficiently coordinate patient care, and in 2020, we launched the Inspire Sleep app for patients' smartphones.

In 2021, the FDA approved our new patient remote control which is Bluetooth® enabled.

A recent example of our efforts to expand our label indications for the Inspire system include obtaining FDA approval to offer Inspire therapy to certain pediatric patients with Down syndrome in 2023, which was approved in 2023.

Our foundational commitment to driving innovation and improving patient lives fuels our desire for continuous product

We intend to invest in existing and next generation technologies to further improve our products and clinical outcomes, optimize patient acceptance and comfort, and broaden the patient population that can benefit from our Inspire therapy.

Recent examples of our product innovation include the next generation of the Inspire system and our SleepSync™ programmer as discussed above.

A recent example of our efforts to expand our label indications for the Inspire system include obtaining FDA approval in 2023 to offer Inspire therapy to certain pediatric patients with Down syndrome.

Additionally in 2023, we received approval from the FDA on an expanded indication which includes an increase on the upper limit of the AHI to 100 events per hour from 65 and raises the BMI warning in the labeling to 40 from 32.

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We plan to continue to establish and strengthen our presence internationally.

Our goal is to further increase sales of our Inspire therapy in existing international markets in Europe, including Germany and the Netherlands, and in the Asia Pacific region, including Japan, Singapore, and Hong Kong.

We plan to expand our reach to markets in new regions, such as Australia, South Korea, and China.

Our goal is to further increase sales of our Inspire therapy in existing international markets in Europe, including Germany, France, and the Netherlands, and in the Asia Pacific region, including Japan, Singapore, and Hong Kong.

We also plan to expand our reach to markets in new regions, such as Thailand and South Korea.

We plan to strategically invest in new markets based on our assessment of market size and opportunity and prospects for compelling reimbursement coding and coverage.

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Overview of Inspire Therapy

Our proprietary Inspire system is the first and only FDA-approved closed-loop neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA.

Our Inspire system consists of a remote control and three implantable components:

• a pressure sensing lead, which detects when the patient is attempting to breathe;

• a neurostimulator, which houses the electronics and battery power for the device;

Our proprietary Inspire system is the first and only FDA-approved closed-loop neurostimulation technology that provides a safe and effective treatment for patients with moderate to severe OSA.

Both our Inspire IV and Inspire V systems consists of a remote control and the following implantable components (except as otherwise noted):

• in the Inspire IV system, a pressure sensing lead, which detects when the patient is attempting to breathe;

• a neurostimulator, which houses the electronics, battery power for the device, and, as to the Inspire V system, a respiratory sensor;

• a stimulation lead, which delivers electrical stimulation to the hypoglossal nerve.

The image below depicts the location of the Inspire system under the patient’s skin:

A pressure sensing lead is used to monitor the patient’s breathing.

A respiratory sensor is used to monitor the patient’s breathing.

Our proprietary algorithm tracks breathing patterns and the neurostimulator delivers electrical stimulation at the start of inspiration.

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After the initial activation, the patient is instructed to use the therapy each night by turning on their Inspire system before going to sleep using their remote control.

The following pictures depict the Inspire neurostimulator, shown with a quarter for scale, and the patient remote control, shown in hand for scale.

Patients turn their Inspire system on when they plan to go to sleep and turn it off when they awaken.

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The therapy is designed to provide stimulation for each breath to prevent obstructive events.

The following pictures depict the anatomy of a patient experiencing an OSA event.

The patient’s soft palate and the base of the patient’s tongue are obstructing the patient’s airway and limiting airflow to the lungs.

Obstructed Airway

The following pictures depict the anatomy of the patient after mild stimulation of the hypoglossal nerve, which caused the patient's tongue to move forward slightly, opening the patient's airway and restoring airflow to the lungs.

The effectiveness of Inspire therapy to relieve OSA is objectively measured during a sleep study or polysomnogram.

A sleep study records a patient’s breathing, airflow, and blood oxygen levels before and after activating the device.

A sleep study records a patient’s breathing, airflow, and blood oxygen levels before and after

activating the device.

Before activation, the patient experiences multiple periods of interrupted breathing, and oxygen levels repeatedly drop before the patient experiences a transient arousal that allows air intake.

The polysomnogram below shows that after activating Inspire therapy, the patient exhibited a more regular breathing pattern, higher and more consistent blood oxygen levels, and fewer or no transient arousals.

Polysomnogram Before and After Activation of Inspire System

Benefits of Inspire Therapy

We believe our Inspire therapy overcomes many of the limitations of CPAP and other current treatments of moderate to severe OSA by providing the following key benefits:

We believe our Inspire therapy overcomes many of the limitations of PAP and other current treatments of moderate to severe OSA by providing the following key benefits:

• Safe, effective, and durable treatment.

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At five years, median AHI remained low at 6.2 events per hour.

The results from our ADHERE patient registry also reflect similar median AHI reductions to the STAR trial in a real-world setting.

• Closed-loop system.

The Inspire system uses a proprietary algorithm to continuously monitor a patient’s breathing and provide electrical stimulation during the inspiratory phase, working with the body’s natural actions to keep the airway open during the breathing cycle.

The Inspire system uses proprietary algorithms to continuously monitor a patient’s breathing and provide electrical stimulation during the inspiratory phase, working with the body’s natural actions to keep the airway open during the breathing cycle.

• Comfortable and convenient therapy resulting in high patient satisfaction.

Data reported in the most recent publication of our ongoing ADHERE patient registry, which we established to follow patients who have been implanted with an Inspire system, demonstrated that patients used Inspire therapy an average of 5.7 hours per night an average of 12 months after initial treatment, with overall patient satisfaction reported to be at 90%.

Data reported in the most recent publication of our ongoing ADHERE patient registry demonstrated that patients used Inspire therapy an average of 5.7 hours per night an average of 12 months after initial treatment, with overall patient satisfaction reported to be at 90%.

• Strong patient compliance.

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Commercialization of Inspire Therapy

In the U.S., before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive FDA clearance or approval.

We obtained PMA for our Inspire system in 2014.

Additionally, we received a certificate of conformity for commercialization of our Inspire system in the European Union ("EU") in 2010 which allowed us to affix the CE mark on our device.

In the U.S., we obtained PMA for our Inspire system in 2014.

Additionally, we received a certificate of conformity for commercialization of our Inspire system in the EU in 2010 which allowed us to affix the European Conformity ("CE") mark on our device.

Japan's MLHW approved Inspire therapy to treat moderate to severe OSA in 2018 and was formally added to the Japan National Health Insurance Payment Listing in 2021.

Reimbursement in Singapore is handled through hospital innovation budgets or private health insurance sources .

In 2020, the Australian Therapeutic Goods Administration approved Inspire therapy to treat moderate to severe OSA, and we are currently seeking reimbursement coverage in Australia.

To commercialize our Inspire system, in the U.S., Europe, and Japan, we focus on physician and patient awareness and adoption of our Inspire therapy.

To commercialize our Inspire system, we focus on physician and patient awareness and adoption of our Inspire therapy.

To achieve this, our commercialization strategy primarily consists of our direct sales force engaging in sales efforts and promotional activities focused on ENT physicians and sleep centers and highlighting our compelling clinical data and value proposition.

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insurers now cover Inspire therapy.

For those payors that do not have a positive policy, Inspire provides assistance to patients and physicians in obtaining appropriate prior authorization approvals in advance of treatment.

For those commercial payors that do not have a positive policy, Inspire provides assistance to patients and physicians on a case-by-case basis to help support appropriate prior authorization approvals in advance of treatment.

Medicare also has positive coverage for all states, and we have a U.S.

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Inspire therapy is indicated for patients with moderate to severe OSA (AHI of 15 to 100) who do not have significant central sleep apnea and do not have a complete concentric collapse of the airway at the soft palate level.

Patients undergo a drug-induced sleep endoscopy performed by an ENT surgeon in order to confirm that they satisfy this anatomical requirement.

Patients undergo a drug-induced sleep endoscopy ("DISE") performed by an ENT surgeon in order to confirm that they satisfy this anatomical requirement.

In addition, patients in the U.S.

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The device has a programmed delay, typically 30 minutes, to allow patients to fall asleep naturally before the device activates.

It then delivers mild stimulation to the hypoglossal nerve, causing the tongue to move as the patient is inhaling.

It then delivers mild stimulation to the hypoglossal nerve, causing the

tongue to move as the patient is inhaling.

The remote enables patients to adjust the strength of the stimulation to optimize their therapy and comfort.

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The results of the STAR trial, our phase III pivotal clinical trial that served as the basis for the FDA approval of our PMA application, were published in the New England Journal of Medicine , and the results of additional clinical studies have been published in more than 350 peer-reviewed publications.

We have established a global patient registry, which we refer to as our ADHERE patient registry, to collect data on safety, effectiveness, weekly usage, overall compliance, and satisfaction from patients who have been implanted with an Inspire system.

The table below highlights key findings from certain of these studies and data from our ADHERE patient registry, including significant improvements in objective sleep measures and patient-reported quality of life measures, strong therapy compliance, and a favorable safety profile.

STAR Trial (1)

Patient Registry (1)

Evaluation (2)

Number of Inspire therapy patients 124 97 56 1,963 97

Time following implantation 12 months 5 years 12 months 12 months 3 months

AHI—Baseline 29.3 29.3 28.6 33.0 35.6

AHI—Therapy 9.0 6.2 9.5 10.2 6.3

ESS—Baseline 11 11 13 11 11

ESS—Therapy 6 6 7 6 6

FOSQ—Baseline 14.6 14.6 13.7 * *

FOSQ—Therapy 18.2 18.7 18.6 * *

Therapy compliance 86% daily;

93% 5+ days weekly 80% daily Average 39 hours per week;

89% ≥20 hours per week Average 5.7 hours per night Average >45 hours per week

* Not measured

(1) Median results

(2) Thomas Jefferson University Hospital ("TJUH") and University of Pittsburgh Medical Center ("UPMC").

Select Recent Clinical Results and Studies

ADHERE Patient Registry

We established our ADHERE patient registry to follow patients who have been implanted with an Inspire system, with a goal of collecting data on a group of at least 5,000 patients.

Data gathered on the first 1,963 patients published in the Journal of Clinical Sleep Medicine in 2022 showed that patients used Inspire therapy an average of 5.7 hours per night when measured an average of 12 months after implantation.

The target enrollment of 5,000 patients was achieved in 2024.

The most recent analysis, published in the Journal of Clinical Sleep Medicine in 2022 on 1,963 patients enrolled, showed that patients used Inspire therapy an average of 5.7 hours per night when measured an average of 12 months after implantation.

Median AHI was reduced from 33.0 events per hour to 10.2 events per hour and median ESS score improved from 11 to 6 over the same period.

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This same study demonstrated comparable outcomes across five disease severity groups.

Inspire Therapy Improves Patient Symptoms Similarly as CPAP

In 2021, the Cleveland Clinic published the first comparison of patient-reported outcomes between Inspire therapy and CPAP.

These results showed that Inspire therapy and CPAP had a similar improvement in patient symptoms of sleepiness, daytime energy, depression, and insomnia.

The results also showed that Inspire therapy patients were more likely to have a more clinically meaningful improvement in symptoms than CPAP patients.

This high degree of improvement was maintained through at least one-year in the Inspire therapy patients.

A second study, published by Dr.

Clemens Heiser and team at the Technical University of Munich in the Journal of Sleep and Breathing in 2022, compared two similar parallel cohorts of patients who were initiating use of Inspire therapy (n=63) or CPAP (n=63).

They found that Inspire therapy patients had larger improvements in sleepiness (an eight-point reduction in Epworth Sleepiness Scale (“ESS”) with Inspire therapy versus a four point reduction in ESS with CPAP), and numerically higher usage in Inspire therapy patients versus CPAP patients (five hours per night with Inspire therapy versus four hours per night with CPAP).

Additionally, the objective AHI outcomes were similar in both arms.

Taken together, we believe these results suggest that Inspire therapy may be superior to CPAP at improving disease.

There are now multiple studies in which Inspire showed equivalent improvements in OSA outcomes as CPAP, and similar, if not potentially higher usage than CPAP.

We believe these observed improvements could translate to better disease alleviation in patients unable to tolerate CPAP.

Large-scale Insights of Over Three Million Patient Nights from Inspire's SleepSync™ Patient Database Showing Real-World Results

Inspire's SleepSync™ patient management system helps physicians track therapy usage and outcomes, and the results of the first three million patient nights of data were presented by Dr.

Jordan Weiner at the 2022 American Academy of Otolaryngology conference and Dr.

Deborah Goss at the 2022 American Association of Sleep Medicine meeting.

These data, the largest to date evaluating outcomes from Inspire therapy, show the results of 3.7 million patient-nights in 12,017 patients across 491 practices.

These data showed that, in real-world use, Inspire therapy continued to show highly effective outcomes similar to the early clinical trials.

Objective outcomes such as AHI and ESS were in the normalized ranges, and very high therapy usage of seven hours per night in the first 90 days, demonstrate high usage despite a previous history of CPAP intolerance.

Inspire Therapy Outcomes are Consistent in Both Majority and Minority Populations

Two 2022 publications increased our focus on evaluating Inspire efficacy across a broader range of patient race and ethnicity by leveraging the ADHERE registry, which is a database of real-world Inspire therapy outcomes.

The first publication from Dr.

Meena Khan and team, published in the Journal of Clinical Sleep Medicine , demonstrated that both White and Non-White patients had similar improvements in sleep apnea severity, with no notable differences in usage, AHI, or sleepiness.

Similarly, a second analysis by Dr.

Linda Magaña, presented at the 2022 meeting of the American Academy of Otolaryngology, examined the differences between Hispanic / Latino and non-Hispanic / non-Latino patients, and found that it demonstrated comparable outcomes.

While there is an opportunity to continue to improve the adoption of Inspire therapy in minority populations, given the higher

incident rates and under diagnosis in these groups, we believe these two analyses provide additional evidence that Inspire therapy is equally effective across race and ethnicity.

Comparison of Sleep Surgery Complication Rates versus Inspire Therapy

A 2021 paper published in Otolaryngology – Open Journal found that Inspire therapy had a lower complication rate and shorter hospital length of stay compared with sleep surgery, despite the fact that the Inspire population was older and had more co-morbidities.

Combined with previous studies on sleep surgery outcomes, we believe these data demonstrate that Inspire therapy may improve outcomes compared to traditional sleep surgery in selected patients.

In 2022, a larger analysis was repeated on a national outcomes database, comparing post-operative operative safety and complication rates between Inspire therapy implants (n=1,201) versus palate surgery (n=3,364), which was the predominant OSA surgery prior to the introduction of Inspire therapy (Dr.

Ryan Nord, Otolaryngology – Open Journal , 2022).

This analysis found that Inspire therapy was safer than palate surgeries.

Inspire therapy implantation had a much lower risk of emergency room readmission and complication rates in the first 90 days after surgery.

We believe a reduction in post-operative complication rates may help reduce clinical utilization costs versus traditional sleep surgery.

Taken together, we believe these data suggest that Inspire therapy should be considered first prior to any traditional airway surgery.

Long-term Therapy Efficacy and Reliability Data

In 2023, two new findings were published showing the positive long-term effects of Inspire therapy.

The first publication titled, “Long-Term Generator Replacement Experience in Hypoglossal Nerve Stimulator Therapy Recipients With CPAP-Intolerant Obstructive Sleep Apnea” was published in the Otolaryngology–Head and Neck Surgery journal in October 2023.

In this paper, a team led by Dr.

Linda Magana at the University of Pittsburgh followed the initial patients from the STAR trial for approximately eight years after initial implant, making it the longest follow-up to date of Inspire therapy.

The findings reflect that these patients showed stable AHI outcomes consistent with the initial one-year outcomes, and high therapy usage of 7.2 hours per night.

Additionally, an abstract demonstrating the real-world evaluation of Inspire therapy system survival was presented at the SLEEP 2023 meeting in Indianapolis by Dr.

Colin Huntley from Thomas Jefferson University.

It showed that under real-world conditions, in over 20,000 device implants since January 2018, device explant and revision rates remained low and improved over time, despite increasing utilization.

Furthermore, the abstract suggested that these survival rates were reported to be at least similar to, if not slightly better than other implantable active medical devices.

Select Recent Clinical Results and Studies

Meta-analysis showed Inspire therapy has been effective over time

Do Hyun Kim and colleagues published a meta-analysis of hypoglossal nerve stimulation therapy effectiveness in 2024 in Otolaryngology–Head and Neck Surgery .

Meta-analysis is a statistical method to estimate effect size across data from high quality publications, i.e.

a “study of studies”, and can identify potential trends and consistency across a body of data.

They identified 44 studies (total of 8,670 patients) of sufficient quality for inclusion.

For 12 month follow up, they found that 82% of patients evaluated in this publication had an AHI<15 and a success rate of 80%, where success was defined as the patient’s residual AHI is no greater than half of the baseline AHI, and is also no greater than 20.

A similar trend was reported for three year follow up at which 74% of patients had an AHI<15 and a success rate of 73%.

The authors concluded that hypoglossal nerve stimulation is an effective treatment for obstructive sleep apnea that can significantly improve clinical outcomes over long-term

(three year) follow up.

We note that this meta-analysis included publications using other devices, but most of the data was from Inspire therapy patients.

Meta-analysis showed Inspire therapy is an effective alternative to other airway surgeries

Kim and colleagues published another meta-analysis in the Journal of Sleep Research in 2024 of papers that compared hypoglossal nerve stimulation outcomes to outcomes either from no treatment or from other airway surgeries (e.g., uvulopalatopharyngoplasty).

They identified ten papers (nine of which included only Inspire therapy patients) that met inclusion criteria for a total of 2,209 patients in the analysis.

Among their findings:

compared to airway surgeries and to PAP therapy, hypoglossal nerve stimulation therapy had higher rate of patients achieving AHI<15.

Analysis also showed that the hypoglossal nerve stimulation therapy success rate was higher than the success rate from all other evaluated airway surgeries.

Success was defined as residual AHI no greater than 20 and no greater than half of the baseline AHI.

The results of this meta-analysis suggest that hypoglossal nerve stimulation has shown results comparable to those evaluating PAP, and potentially superior to other airway surgeries, in reducing AHI, and that all therapies have demonstrated similar effectiveness in reducing daytime sleepiness.

The authors conclude that hypoglossal nerve stimulation could be an effective treatment for moderate to severe obstructive sleep apnea patients who are intolerant of PAP.

Post market surveillance data support the safety of Inspire therapy

Inspire partnered with implanting surgeons and sleep physicians to publish an analysis of Inspire’s post-market surveillance data in 2024 in the Journal of Clinical Sleep Medicine .

Medical device manufacturers are mandated by government regulations to collect and monitor adverse events such as surgical revisions or device explants.

Precise estimates of revision and explant rates were calculated by combining the post-market surveillance data with corresponding sales volume.

Of 20,881 Inspire therapy devices implanted at least one year prior to the analysis, 151 devices (0.7%) were explanted and 322 devices (1.5%) required a surgical revision procedure within a year of the implant.

A subset of 5,820 of these devices were implanted three years prior to the analysis, of which 156 devices (2.7%) were explanted, and 207 devices (3.6%) required a revision procedure between one and three years after implant.

Sales and Marketing

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In certain Asian markets, we rely on our distribution partners for local sales and promotional activities.

We also utilize direct communication channels to inform and educate patients about Inspire therapy and to enable them to connect with active clinical sites that offer our Inspire systems.

Our primary methods of patient outreach are Facebook, Google ad placements, radio advertisements (either local or satellite), and television advertisements (either local or national).

The objective of this outreach is to bring patients to our website, where they can find educational materials and videos on sleep apnea and the use and benefits of our Inspire therapy, contact information for physicians and clinical sites, and information regarding community awareness events.

We believe our patient outreach efforts have been effective in bringing potential patients to our website and facilitating contact with our clinical sites.

During 2023, we had nearly 13.4 million visits to our website, which generated approximately 65,000 contacts with physicians throughout the year.

In 2020, we launched the Inspire Sleep app for patients' smartphones.

We believe that direct patient education is essential to our ability to become a mainstay therapy which is why we intentionally invest in a robust direct-to-consumer marketing program.

We reach patients through national TV (both linear and streaming), Facebook, Google, and other high-performing digital channels.

Our goal is to ensure that all eligible OSA patients are aware of the therapy, can learn more on our website, and get connected with a doctor in their area to see if the therapy is right for them.

We believe that our direct-to-consumer program continues to be highly effective in driving patient engagement and conversion.

We also have the Inspire Sleep app for patients' smartphones.

This app is an educational tool for patients and also interfaces with our SleepSync TM platform to allow physicians to collect clinical data from patients directly.

We continue to enhance the functionality of this app as part of our overall digital platform development.

Since launch, over 110,000 copies of the app have been downloaded to smartphones.

Commercial Activities Outside of the U.S.

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We expect to continue to scale our commercial activities in Europe as we continue to develop country-wide reimbursement in additional markets.

We continue to work on the reimbursement process in Australia and hope to commercialize Inspire therapy there.

We also have regulatory approval in Thailand and are currently pursuing regulatory approval in Korea.

Third-Party Reimbursement

Our market access team is responsible for all of our reimbursement processes and initiatives.

Our team includes 28 professionals who are focused on all key aspects of reimbursement, which include coding, payment, coverage, and prior authorization.

Our team of professionals are focused on all key aspects of reimbursement, which include coding, payment, coverage, and prior authorization.

Coding and Payment

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Third-party payors require physicians and hospitals to identify the service for which they are seeking reimbursement by using Current Procedural Terminology (“CPT") codes, which are created and maintained by the American Medical Association.

The procedures performed to implant, revise, or explant our device are described for billing purposes using Category I CPT codes (64582, 64583, and 64584, respectively) to identify hypoglossal nerve stimulator services.

A Category I code (42975) is used for DISE, which is a required procedure to determine which patients are appropriate for Inspire therapy.

The procedures performed to implant, revise, or explant our Inspire IV device are described for billing purposes using Category I CPT codes (64582, 64583, and 64584, respectively) to identify hypoglossal nerve stimulator services.

A Category I code (42975) is used for DISE, which may be a necessary procedure to determine which patients are appropriate for Inspire therapy.

Physician reimbursement under Medicare is based on a defined fee schedule, the Medicare Physician Fee Schedule, through which payment amounts are determined by the relative values of the professional service rendered.

Medicare provides reimbursement to our hospital customers under the hospital outpatient prospective payment system ("OPPS") which provides bundled amounts generally intended to reimburse the hospital for all facility costs related to procedures performed in the hospital outpatient setting.

Medicare provides reimbursement to our hospital and ASC customers under the outpatient prospective payment system and ASC prospective payment system, respectively, which provide bundled amounts generally intended to reimburse the hospital or ASC for all facility costs related to procedures performed in the outpatient setting.

Reimbursement rates from commercial payors vary depending on the procedure performed, the commercial payor, contract terms, and other factors.

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We continue to have active discussions with commercial payors to establish new and modify existing positive coverage policies by highlighting our compelling and robust clinical data, increased patient demand, and support from leading medical societies and key opinion leaders.

We have been successful in obtaining prior authorization approvals from most commercial payors for the Inspire device and procedure.

Historically, commercial payors cover approximately 65% to 70% of Inspire implants in the U.S.

We estimate that the majority of patients who meet the FDA indication for Inspire therapy are covered by commercial insurance companies and we have secured coverage policies with virtually all major national commercial payors.

We have been successful in helping our customers and patients pursue prior authorization approvals from most commercial payors for the Inspire device and procedure.

Historically, commercial payors, including Medicare Advantage plans, cover approximately 65% to 70% of Inspire implants in the U.S.

We estimate that the majority of patients who meet the FDA-approved indication for Inspire therapy are covered by commercial insurance companies and we have secured coverage policies with all major national commercial payors.

All seven MACs provide coverage of Inspire therapy when certain coverage criteria are met.

Medicare beneficiaries have historically accounted for approximately 25% to 30% of all Inspire system implantations in the U.S.

Fee-for-service Medicare beneficiaries have historically accounted for approximately 25% to 30% of all Inspire system implantations in the U.S.

In addition, we have a contract with the U.S.

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Prior Authorization Approval Process

A second pillar of our reimbursement strategy includes leveraging our market access team to assist patients and physicians in obtaining appropriate prior authorization approvals in advance of treatment.

We believe our market access team is highly effective in working with patients and physicians to obtain prior authorizations for our Inspire system, including assisting with the appeals process.

Additionally, in late 2023, we engaged a third-party vendor to assist our internal team with prior authorization submissions in order to increase our capacity to meet patient demand.

We have received hundreds of prior authorization approvals from all of the largest commercial payors, for example Anthem, Cigna, Blue Cross Blue Shield, United Healthcare, and Humana.

A second pillar of our reimbursement strategy includes leveraging our prior authorization team to assist patients and physicians in obtaining appropriate prior authorization approvals from commercial payors in advance of treatment.

We believe our prior authorization team is highly effective in working with patients and physicians to support prior authorizations for our Inspire system, including assisting with the appeals process in the event of a denial.

Our customers have received thousands of prior authorization approvals from all of the largest commercial payors in the U.S., for example Elevance (formerly Anthem), Cigna, Blue Cross Blue Shield, and United Healthcare.

We believe we will continue to benefit from this efficient prior authorization process.

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As in the U.S., reimbursement decisions can change, resulting in the elimination or reduction of reimbursement payments, which could adversely affect our financial results and our ability to invest in and grow our business.

We currently have country wide reimbursement in Germany, the Netherlands, Switzerland, Belgium, the United Kingdom, and Japan.

We are in the final process to have the Inspire system included in the French Haute Autorité De Santé listing of products and services qualifying for reimbursement (LPPR) of approved technologies for reimbursement across the French health system.

We currently have country wide reimbursement in Germany, the Netherlands, Switzerland, France, Belgium, the United Kingdom, and Japan.

We continue to pursue permanent reimbursement in target markets across the Asia Pacific and Europe, including Spain and the Nordic region.

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in 2017, and in Europe in 2018.

Our next generation of the Inspire neurostimulator was submitted to the FDA for approval in June 2023, and our SleepSync™ programmer was approved by the FDA in 2023.

Our next generation of the Inspire neurostimulator, Inspire V, was approved by the FDA in 2024, and our updated SleepSync™ programmer was approved by the FDA in 2023.

Our Bluetooth®-enabled patient remote control was approved by the FDA in 2021 and the initial commercial launch occurred in 2022.

We have launched a cloud-based patient management system called the SleepSync™ platform, which allows physicians to monitor patient

compliance and more efficiently coordinate patient care.

We have launched a cloud-based patient management system called the SleepSync™ platform, which allows physicians to monitor patient compliance and more efficiently coordinate patient care.

In 2020, we launched the Inspire Sleep app for patients' smartphones.

The first version of the app was an educational tool, and the second version interfaces with the Inspire Cloud and allows physicians to collect clinical data from patients directly.

The app serves as an educational tool and, since 2022, interfaces with the patient remote and SleepSync™ platform, which allows physicians to monitor patient compliance and more efficiently coordinate patient care.

We continue to enhance the functionality of this app as part of our overall digital platform development.

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Our research and development team focuses on our products currently under development, including our clinical studies involving efforts to improve patient selection, expand indications, and simplify patient management, as well as feasibility studies in which we are evaluating new ways to deliver neuromodulation for OSA therapy and different design configurations to enhance product functionality for future generations of the Inspire system.

One example is our PREDICTOR study, which completed enrollment of 600 patients in early 2024, and which aims to remove the DISE requirement for patients less likely to have concentric collapse.

Our industry is subject to rapid change from the introduction of new products and technologies and other activities of industry participants.

We compete as a second-line therapy in the OSA treatment market for patients with moderate to severe OSA.

We consider our primary competition to be other neurostimulation technologies designed to treat OSA, though we are currently the only such technology approved for commercialization in the U.S.

Outside the U.S., we compete with LivaNova and Nyxoah.

LivaNova, which markets an open-loop neurostimulation device, is currently conducting clinical trials of its device in the U.S.

Nyxoah markets an open-loop bilateral hypoglossal nerve stimulation device in certain countries outside the U.S.

and is conducting its first pivotal trial as it seeks FDA approval in the U.S.

A drug candidate produced by Apnimed is entering a Phase 3 clinical trial to assess the viability of its pharmaceutical to treat OSA.

We believe other emerging businesses are in the early stages of developing neurostimulation devices or early-stage pharmaceutical approaches.

We also compete, both within and outside of the U.S., with invasive surgical treatment options such as UPPP, maxillomandibular advancement ("MMA") and robotic tongue reduction surgery, and, to a lesser extent, oral appliances, which are primarily used in the treatment of mild to moderate OSA.

We do not believe we directly compete with CPAP or other types of PAP devices because in the U.S., Inspire therapy is only indicated for patients who have been confirmed to fail or cannot tolerate PAP treatments, such as CPAP.

One example is our PREDICTOR study, the objective of which is to determine whether certain patient and/or patient anatomical characteristics, such as pharyngeal width (inside of the mouth), are predictors of the absence of complete concentric collapse at the soft palate, which could help eliminate the need for DISE in some Inspire patients who are less likely to have complete concentric collapse.

Enrollment of 600 patients in the study was completed in early 2024.

Our industry is subject to rapid change from the introduction of new products, technologies, pharmaceuticals, and various activities of industry participants.

We are positioned as a second-line therapy in the OSA treatment market for patients with moderate to severe OSA.

In the U.S., Inspire therapy is only indicated for patients who have been confirmed to fail or cannot tolerate PAP treatments, such as CPAP.

Within the treatment market for patients with moderate to severe OSA, we compete with providers of CPAP or other types of PAP devices, which include ResMed Inc., Philips BV, Fisher & Paykel Healthcare Corporation Limited, and various regional and new-entrant manufacturers.

Additionally, we compete with various other second-line therapies to treat OSA, including invasive surgical treatment options such as uvulopalatopharyngoplasty ("UPPP"), maxillomandibular advancement ("MMA"), robotic tongue reduction surgery, and, to a lesser extent, oral appliances, which are primarily used in the treatment of mild to moderate OSA.

Oral appliances and some other surgical treatments are better known to ENT physicians, sleep centers and the other physicians on whom we rely for referrals, but we believe physician awareness of our Inspire therapy is increasing.

Outside of the U.S., in addition to the Inspire therapy, other second-line therapy alternatives that compete with CPAP and PAP include therapies marketed by Nyxoah and LivaNova.

Nyxoah markets an open-loop bilateral hypoglossal nerve stimulation device in certain countries and is seeking FDA approval in the U.S.

LivaNova, which markets a neurostimulation device, is currently undergoing a randomized control trial in the U.S.

Additionally, a drug candidate produced by Apnimed is undergoing a Phase 3 clinical trial to assess the viability of its pharmaceutical to treat OSA.

In December 2024, the GLP-1 drug Zepbound (tirzepatide), was FDA approved for treatment of OSA in patients with obesity and moderate to severe OSA.

We believe other emerging businesses are in the early stages of developing alternative OSA treatment therapies or early-stage pharmaceutical approaches.

We believe that the primary competitive factors in the OSA treatment market are:

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• dedicated practice development and clinical training teams.

Some other OSA treatments against which we compete, such as oral appliances, MMA, and UPPP, have a greater penetration into the OSA treatment market.

We also compete with other medical technology companies to recruit and retain qualified personnel.

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We share co-exclusive rights with Medtronic under this license;

however, Medtronic may not exercise

its rights unless we make an assignment for the benefit of our creditors, file or have filed against us a bankruptcy petition or go into receivership.

however, Medtronic may not exercise its rights unless we make an assignment for the benefit of our creditors, file or have filed against us a bankruptcy petition or go into receivership.

We also granted to Medtronic certain worldwide, royalty-free, exclusive licenses to the patents Medtronic assigned to us, as well as other intellectual property (including but not limited to Technical Information (as defined in the Assignment and License Agreement)) that applies to a device and methods with certain specifications for use in the Field, to make, use, import and sell products, and to practice methods outside of the Field.

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Additionally, outsourcing provides expertise and capacity necessary to scale up or down based on demand for our Inspire system.

We select our suppliers to help ensure that our Inspire system and its components are safe and effective, adhere to all applicable regulations, are of the highest quality, and meet our supply needs.

We select our suppliers so that our Inspire system and its components are safe and effective, adhere to all applicable regulations, are of the highest quality, and meet our supply needs.

We employ a rigorous supplier assessment, qualification, and selection process with the goal of selecting and retaining suppliers that meet the requirements of the FDA and the International Organization for Standardization and quality standards based on our internal policies and procedures.

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We have experienced and continue to experience supply disruptions that began during the COVID-19 pandemic, but to date we have managed to avoid major delays in implant procedures due to those issues.

During the third quarter of 2023, we began experiencing an inventory supply issue related to our polyurethane-based stimulation leads, one component of the Inspire system currently used only in the European market.

We continue to expect delays to implant procedures.

These delays have impacted, and are expected to continue to impact our revenue, however, to a lesser extent than in prior year periods as a result of the derogations received thus far, and we believe would be further improved if we receive certification under the EU MDR.

During the third quarter of 2023 and into the first half of 2024, we experienced an inventory supply issue related to our polyurethane-based stimulation leads, one component of the Inspire system currently used only in the European market, as a result of delays in the EU MDR certification process.

This issue impacted our revenue in those periods, however, the issue has been resolved.

See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview” for additional information.

Government Regulation

Our products and our operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the European Economic Area ("EEA"), Japan, and in Australia (where our products are approved for sale but where we have not yet commercialized them).

As a global technology company, we are subject to significant government regulation, compliance requirements, fees and costs, both in the U.S.

These regulatory requirements subject our products and our business to numerous risks that are specifically discussed within Part I, Item 1A, “Risk Factors” within this Annual Report on Form 10-K.

Our products and our operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the European Economic Area ("EEA"), Japan, and in Thailand and Australia (where our products are approved for sale but where we have not yet commercialized

In the U.S., our products are subject to regulation as medical devices under the Federal Food, Drug, and Cosmetic Act ("FDCA") as implemented and enforced by the FDA.

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The approval/certification process varies from country to country and the time may be longer or shorter than that required for FDA clearance or approval.

We expect additional state, federal, and foreign healthcare reform measures to be adopted in the future, which may adversely affect our business.

For additional information, see Part I, Item 1A, “Risk Factors - Healthcare policy changes, including recently enacted legislation reforming the U.S.

healthcare system, could harm our business, financial condition and results of operations.”

FDA Premarket Clearance and Approval Requirements

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The PMA must also contain a full description of the device and its components, a full description of the methods, facilities and controls used for manufacturing, and proposed labeling.

Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review.

If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer, and can take up to several years.

An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device.

The FDA may or may not accept the panel’s recommendation.

If the FDA accepts a submitted PMA application for substantive review, it has 180 days under the FDCA to complete its review, although in practice, the FDA’s review

often takes significantly longer.

In addition, the FDA will generally conduct a preapproval inspection of the applicant or its third-party manufacturers’ or suppliers’ manufacturing facility or facilities to ensure compliance with the QSR.

The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).

The FDA will approve the device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s).

The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA or requirements to conduct additional clinical studies post-approval.

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Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.

Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the

device, require submission of a PMA supplement.

PMA supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel.

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Clinical Studies

Clinical studies are almost always required to support a PMA and are sometimes required to support a 510(k) submission.

Clinical studies are almost always required to support a PMA submission and may be required to support certain PMA supplements.

All clinical investigations of investigational devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption ("IDE") regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.

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A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.

An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound.

The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin.

If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical study to proceed under a conditional approval.

An IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.

In addition, the study must be approved by, and conducted under the oversight of, an Institutional Review Board ("IRB") for each clinical site.

The IRB is responsible for the initial and continuing review of the IDE, and may pose additional requirements for the conduct of the study.

If an IDE application is approved by the FDA and one or more IRBs, human clinical studies may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA.

An IDE supplement must also be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.

If an IDE application is approved by the FDA and one or more institutional review boards ("IRBs"), human clinical studies may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA.

If the device presents a non-significant risk to the patient, a sponsor may begin the clinical study after obtaining approval for the study by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements.

During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, study monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping, and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them.

The clinical investigators in the clinical study are also subject to FDA regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements.

Additionally, after a study begins, we, the FDA or the IRB could suspend or terminate a clinical study at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.

Additionally, after a study begins, the sponsor, the FDA or the IRB

could suspend or terminate a clinical study at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.

Expedited Development and Review Programs

Following passage of the 21st Century Cures Act, the FDA implemented the Breakthrough Devices Program, which is a voluntary program offered to manufacturers of certain medical devices and device-led combination products, including ours, that may provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions.

The goal of the program is to provide patients and health care providers with more timely access to qualifying devices by expediting their development, assessment and review,

while preserving the statutory standards for FDA marketing authorization.

The goal of the program is to provide patients and health care providers with more timely access to qualifying devices by expediting their development, assessment and review, while preserving the statutory standards for FDA marketing authorization.

The program is available to medical devices that meet certain eligibility criteria, including that the device provides more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, and that the device meets one of the following criteria:

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• establishment registration and device listing with the FDA;

• QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process;

• QSR requirements, which currently require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process;

• labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced, provide adequate directions for use, and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;

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• post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect public health or to provide additional safety and effectiveness data for the device.

Our manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities, controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.

Our manufacturing processes are required to comply with the applicable portions of the QSR, which currently cover the methods and the facilities, controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.

The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files.

As a manufacturer, our facilities, records, and manufacturing processes are subject to periodic scheduled or unscheduled inspections by the FDA.

Our failure to maintain compliance with the QSR or other

applicable regulatory requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products.

Our failure to maintain compliance with the QSR or other applicable regulatory requirements could result in the shut-down of, or restrictions on, our manufacturing operations and the recall or seizure of our products.

The discovery of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.

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Regulation of Medical Devices in the European Union

The European Union (“EU”) has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.

Until May 25, 2021, medical devices were regulated by Council Directive 93/42/EEC (the “EU Medical Devices Directive”), and Directive 90/385/EEC (“AIMDD”) which have been repealed and replaced by Regulation (EU) No 2017/745 (the “EU Medical Devices Regulation”).

Our current certificates have been granted under the EU Medical Devices Directive and the AIMDD whose regime is described below.

However, as of May 26, 2021, some of the EU Medical Devices Regulation requirements apply in place of the corresponding requirements of the EU Medical Devices Directive and the AIMDD with regard to registration of economic operators and of devices, post-market surveillance and vigilance requirements.

Pursuing marketing of medical devices in the EU will notably require that our devices be certified under the new regime set forth in the EU Medical Devices Regulation.

Medical Devices Directive

The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.

The validity of our certificates, initially granted under the AIMDD, has been extended by virtue of the amendment to the EU Medical Devices Regulation, specifically Regulation (EU) 2023/607 as regards the transitional provisions for certain medical devices.

Surveillance of the initial AIMDD certificate has been

transferred from our original notified body BSI, to our current notified body DEKRA.

This makes it possible for us to sell off inventory that is CE marked and labeled under the AIMDD.

The Inspire system is also now CE marked under the EU Medical Devices Regulation.

Unlike the EU Medical Devices Directive, the EU Medical Devices Regulation is directly applicable in EU member states without the need for member states to implement into national law.

In the EU, there is currently no premarket government review of medical devices.

However, all medical devices placed on the EU market must meet the essential requirements, including the requirement that a medical device must be designed and manufactured in such a way that it will not compromise the clinical condition or safety of

patients, or the safety and health of users and others .

In addition, the device must achieve the performance intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner.

Compliance with the essential requirements is a prerequisite for CE mark without which medical devices cannot be marketed or sold in the EU.

To demonstrate compliance with the essential requirements, medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification.

Except for low-risk medical devices ( Class I non-sterile, non-measuring devices ), where the manufacturer can self-assess the conformity of its products with the essential requirements (except for any parts which relate to sterility or metrology) , a conformity assessment procedure requires the intervention of a notified body.

However, all medical devices placed on the EU market must meet general safety and performance requirements, including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose.

Medical devices must be safe and effective and must not compromise the clinical condition or safety of patients, or the safety and health of users and – where applicable – other persons, provided that any risks which may be associated with their use constitute acceptable risks when weighed against the benefits to the patient and are compatible with a high level of protection of health and safety, taking into account the generally acknowledged state of the art.

Compliance with the general safety and performance requirements is a prerequisite for European conformity marking (“CE mark”) without which medical devices cannot be marketed or sold in the EU.

To demonstrate compliance with the general safety and performance requirements medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification.

Except for low-risk medical devices (Class I), where the manufacturer can self-assess the conformity of its products with the general safety and performance requirements (except for any parts which relate to sterility, metrology or reuse aspects), a conformity assessment procedure requires the intervention of a notified body.

Notified bodies are independent organizations designated by EU member states to assess the conformity of devices before being placed on the market.

A notified body would typically audit and examine a product’s technical dossiers and the manufacturer’s quality system.

If satisfied that the relevant product conforms to the relevant essential requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity.

If satisfied that the relevant product conforms to the relevant general safety and performance requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity.

The manufacturer may then apply the CE mark to the device, which allows the device to be placed on the market throughout the EU.

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In particular, there will be a new audit by the notified body before it will renew the relevant certificate(s).

Medical Devices Regulation

On April 5, 2017, the EU Medical Devices Regulation was adopted with the aim of ensuring better protection of public health and patient safety.

The EU Medical Devices Regulation establishes a uniform, transparent, predictable and sustainable regulatory framework across the EU for medical devices and ensures a high level of safety and health while supporting innovation.

Unlike the EU Medical Devices Directive and the AIMDD, the EU Medical Devices Regulation is directly applicable in EU member states without the need for member states to implement into national law.

This aims at increasing harmonization across the EU.

The EU Medical Devices Regulation became effective on May 26, 2021.

In accordance with its recently extended transitional provisions, both (i) devices lawfully placed on the market pursuant to the EU Medical Devices Directive or the AIMDD prior to May 26, 2021 and (ii) legacy devices lawfully placed on the EU market after May 26, 2021 in accordance with the EU Medical Devices Regulation transitional provisions may generally continue to be made available on the market or put into service, provided that the requirements of the transitional provisions are fulfilled.

However, even in this case, manufacturers must comply with a number of new or reinforced requirements set forth in the EU Medical Devices Regulation, in particular the obligations described below.

The EU Medical Devices Regulation requires that before placing a device, other than a custom-made device, on the market, manufacturers (as well as other economic operators such as authorized representatives and importers) must register by submitting identification information to the electronic system (Eudamed), unless they have already registered.

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Manufacturers are also notably responsible for entering the necessary data on Eudamed, which includes the UDI database, and for keeping it up to date.

The obligations for registration in Eudamed will become applicable at a later date (as Eudamed is not yet fully functional).

Certain obligations for registration in Eudamed are expected to become applicable in Q1 2026 (as Eudamed is not yet fully functional).

Until Eudamed is fully functional, the corresponding provisions of the EU Medical Devices Directive and the AIMDD continue to apply for the purpose of meeting the obligations laid down in the provisions regarding exchange of information, including, and in particular, information regarding registration of devices and economic operators.

All manufacturers placing medical devices into the market in the EU must comply with the EU medical device vigilance system.

Under this system, serious incidents and Field Safety Corrective Actions (“FSCAs”) must be

reported to the relevant authorities of the EU member states.

Under this system, serious incidents and Field Safety Corrective Actions (“FSCAs”) must be reported to the relevant authorities of the EU member states.

Manufacturers are required to take FSCAs defined as any corrective action for technical or medical reasons to prevent or reduce a risk of a serious incident associated with the use of a medical device that is made available on the market.

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The aforementioned EU rules are generally applicable in the EEA which consists of the 27 EU member states plus Norway, Liechtenstein, and Iceland.

Brexit and the UK Regulatory Framework

Since January 1, 2021, the Medicines and Healthcare Products Regulatory Agency (“MHRA”) has become the sovereign regulatory authority responsible for Great Britain (i.e.

England, Wales and Scotland) medical device market according to the requirements provided in the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) that sought to give effect to EU Medical Devices Directive and AIMDD whereas Northern Ireland continues to be governed by EU rules according to the Northern Ireland Protocol.

Following the end of the Brexit transitional period on January 1, 2021, new regulations require medical devices to be registered with the MHRA before being placed on the Great Britain market.

Manufacturers based outside the United Kingdom ("UK") need to appoint a UK Responsible Person that has a registered place of business in the UK to register devices with the MHRA.

Following the end of the United Kingdom's ("UK" withdrawal from the EU ("Brexit") transitional period on January 1, 2021, new regulations require all medical devices to be registered with the MHRA before being placed on the Great Britain market.

The MHRA only registers devices where the manufacturer or their UK responsible person has a registered place of business in the UK.

Beginning January 1, 2022, manufacturers based outside the UK need to appoint a UK responsible person that has a registered place of business in the UK to register devices with the MHRA.

On June 26, 2022, the MHRA published its response to a 10-week consultation on the post-Brexit regulatory framework for medical devices and diagnostics.

MHRA seeks to amend the UK Medical Devices Regulations 2002 (which are based on EU legislation, primarily the EU Medical Devices Directive and the EU In Vitro Diagnostic Medical Devices Directive 98/79/EC), in particular to create new access pathways to support innovation, create an innovative framework for regulating software and artificial intelligence as medical devices, reform IVD regulation, and foster sustainability through the reuse and remanufacture of medical devices.

Regulations implementing the new regime were originally scheduled to come into force in July 2023, but the MHRA has confirmed that the core aspects of the new regime are expected to apply by July 1, 2025.

Devices bearing CE marks issued by EU notified bodies under the EU Medical Devices Regulation, the EU Medical Devices Directive or AIMDD are now subject to transitional arrangements.

The MHRA has introduced legislation which provides that CE marked medical devices may be placed on the Great Britain market along following timelines:

• general medical devices compliant with the EU Medical Devices Directive or (EU) AIMDD with a valid declaration and CE marking can be placed on the Great Britain market up until the sooner of the expiration of the certificate or June 30, 2028;

• general medical devices, including custom-made devices, compliant with the EU Medical Devices Regulation can be placed on the Great Britain market up until June 30, 2030.

Following these transitional periods, it is expected that all medical devices will require a UK Conformity Assessed ("UKCA") mark.

Manufacturers may choose to use the UKCA mark on a voluntary basis prior to the mandatory deadlines.

However, UKCA marking will not be recognized in the EU.

The rules for placing medical devices on the market in Northern Ireland, which is part of the UK, differ from those in the rest of the UK.

Compliance with this legislation is a prerequisite to be able to affix the UKCA mark to our products, without which they cannot be sold or marketed in Great Britain.

Regulations implementing the new regime were originally scheduled to come into force in July 2023, but the MHRA confirmed that the core elements of the new framework are now expected to be in place in 2025.

In addition, on November 14, 2024, the MHRA launched a new consultation on proposals to update the regulatory framework for medical devices in Great Britain.

The MHRA consultation was opened until January 5, 2025, and it is expected that secondary legislation implementing the proposals would be introduced in 2025.

In addition, the trade deal between the UK and the EU generally provides for cooperation and exchange of information between the parties in the areas of product safety and compliance, including market surveillance, enforcement activities and measures, standardization-related activities, exchanges of officials, and coordinated product recalls.

As such, processes for compliance and reporting should reflect requirements from regulatory authorities.

Under the terms of the Northern Ireland Protocol, Northern Ireland follows EU rules on medical devices and devices marketed in Northern Ireland require assessment according to the EU regulatory regime.

Such assessment may be conducted by an EU notified body, in which case a CE mark is required before placing the device on the market in the EU or Northern Ireland.

Alternatively, if a UK notified body conducts such assessment, a “UKNI” mark is applied, and the device may only be placed on the market in Northern Ireland and not the EU.

Similarly, we are subject to regulations and product registration requirements in many foreign countries in which we may sell our products, including in the areas of:

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Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct

per se illegal under the federal Anti-Kickback Statute.

Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute.

Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances.

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The majority of states also have anti-kickback laws which establish similar prohibitions and in some cases may apply more broadly to items or services covered by any third-party payor, including commercial insurers and self-pay patients.

The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

A claim includes “any request or demand” for money or property presented to the U.S.

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Foreign laws and regulations may vary greatly from country to country.

For example, the advertising and promotion of medical devices is subject to some general principles set forth in EU legislation.

For example, the advertising and promotion of medical devices are subject to some general principles set forth in EU legislation.

According to the EU Medical Devices Regulation, only devices that are CE marked may be marketed and advertised in the EU in accordance with their intended purpose.

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These laws, which vary between jurisdictions (thus making compliance more complex), may limit or restrict the advertising and promotion of our products to the general public and may impose limitations on our promotional activities with healthcare professionals.

Many EU member states have adopted

specific anti-gift statutes that further limit commercial practices for our products, in particular vis-à-vis healthcare professionals and organizations.

Additionally, there has been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU member states have adopted national “Sunshine Acts” which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the United States, on medical device manufacturers.

Certain countries also mandate implementation of commercial compliance programs.

Also, many U.S.

states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.

Many EU member states have adopted specific anti-gift statutes that further limit commercial practices for our products, in particular vis-à-vis healthcare professionals and organizations.

Additionally, there has been a recent trend of increased foreign, federal, and state regulation of payments and transfers of value provided to healthcare professionals or entities.

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Manufacturers must submit reports by the 90th day of each calendar year.

Many EU member states have adopted national “Sunshine Acts” which impose similar reporting and transparency requirements (often on an annual basis) on certain drug, biologics and medical device manufacturers.

Also, many U.S.

In the EU, there has also been a recent trend of increased regulation of payments and transfers of value provided to healthcare professionals or entities and many EU

member states have adopted national "Sunshine Acts" which impose reporting and transparency requirements (often on an annual basis), similar to the requirements in the United States, on medical device manufacturers.

Certain foreign countries and U.S.

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Violation of any of the federal and state healthcare laws described above or any other governmental regulations that apply to device manufacturers may result in significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if the entity becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of operations.

In addition, responding to investigations of alleged violations of healthcare laws can be time-and resource-consuming and can divert management’s attention from the business.

Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

Even an unsuccessful challenge or investigation into our practices could cause adverse publicity and be costly to respond to.

Data Privacy and Security Laws

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In addition, certain foreign laws govern the privacy and security of personal data, including health-related data.

For example, the General Data Protection Regulation (the "GDPR"), imposes strict requirements for processing the personal data of individuals within the European Economic Area, or the EEA.

For example, the General Data Protection Regulation imposes strict requirements for processing the personal data of individuals within the EEA.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Healthcare Reform

and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably.

Among policy makers and payors in the U.S.

and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access.

Current and future legislative proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products.

The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our products.

The implementation of the Affordable Care Act (the "ACA") in the U.S., for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly.

The ACA, among other things, provided incentives to programs that increase the federal government’s comparative effectiveness research, and implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians, and other providers to improve the coordination, quality, and efficiency of certain healthcare services through bundled payment models.

Additionally, the ACA expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.

On June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted.

For example, the Budget Control Act of 2011, among other things, included reductions to Medicare payments to providers, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect into 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.

Additionally, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

In addition, the Medicare Access and CHIP Reauthorization Act of 2015 enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments began in 2019 that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations.

We expect additional state, federal, and foreign healthcare reform measures to be adopted in the future, any of which could limit the amounts that federal, state, and foreign governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure.

Anti-Bribery and Corruption Laws

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We also are subject to similar anticorruption legislation implemented in Europe through EU member state laws and under the Organization for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Segment Information

We globally manage our business within one reportable segment.

Segment information is consistent with how management reviews our business, makes investing and resource allocation decisions, and assesses our operating performance.

Historically, we have experienced seasonality in our first and fourth fiscal quarters, and we expect this trend to continue.

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patients' insurance deductibles reset, requiring more out-of-pocket costs, which negatively impacts our sales during this period.

We have also begun to experience some seasonality during summer months in the U.S.

and Europe, which we believe is attributable to the postponement of elective surgeries due to summer vacation plans of physicians and patients.

Human Capital

We pride ourselves on our innovative and collaborative work environment, which we believe has driven our success and which we seek to uphold by fostering an inclusive workforce, generous compensation and benefits, open communication, a focus on employee health, wellbeing and engagement, and robust training and development programs.

As of December 31, 2023, we had 1,011 employees, of which 960 are in the U.S., 45 are in Europe and six are in Japan.

We take pride in our innovative and collaborative work environment, which we believe has been key to our success.

We strive to maintain this environment by fostering an inclusive workforce, offering competitive compensation and benefits, promoting open communication, prioritizing employee health, wellbeing and engagement, and providing robust training and development programs.

As of December 31, 2024, we had 1,246 employees, of which 1,172 are in the U.S., 67 are in Europe and 7 are in Japan.

We increased the number of employees by 23% during 2024 to support the rapid growth of our business.

As of December 31, 2024, 49% of our workforce identified as female, and 16% identified as a member of minority racial group.

None of our employees are currently subject to a collective bargaining agreement or represented by a trade or labor union.

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We maintain, and all of our employees are expected to adhere to, our Code of Business Conduct and Ethics (the “Code of Conduct”), which serves as the foundation of our company’s culture.

All employees must certify they understand and comply with the expectations contained in the Code of Conduct.

We also maintain an anonymous hotline for employees to report concerns regarding violations of the Code of Conduct.

In addition, our employees complete training and education at least annually on a range of important topics related to our Code of Conduct.

All employees and individual contractors are expected to certify annually that they understand and will comply with the expectations contained in the Code of Conduct.

We maintain an anonymous hotline for employees to report concerns regarding violations of the Code of Conduct and a whistleblower policy addressing our policies and processes to protect the confidential anonymous reporting of concerns regarding accounting or auditing matters.

Compensation and Benefits

Our human capital strategies, initiatives, and outcomes are reviewed on a regular basis with our Board’s Organization and Compensation Committee to provide alignment with the company’s overall business strategies.

The Committee has engaged an independent consulting firm to assess the market competitiveness of our compensation programs and offerings.

We strive to pay competitive salaries and maintain a comprehensive benefits package that helps our employees and their families maintain health and well-being—both physically and financially.

Our human capital strategies, initiatives, and outcomes are reviewed on a regular basis with our Board’s Organization and Compensation Committee to ensure alignment with the company’s overall business strategies.

The Committee engages an independent consulting firm to assess the market competitiveness of our compensation programs and offerings.

Inspire most recently completed a pay equity analysis in 2024.

We expect to continue to review pay equity on a regular basis.

We believe strongly in providing employees with the opportunity to participate as owners of the company.

All of our full-time employees are eligible to receive annual grants of stock awards, which may include stock options, restricted stock units, or performance stock units, and can elect to participate in our employee stock purchase program.

Additionally, beginning in 2022, we incorporated a 401(k)-employer match for all U.S.-based employees.

Talent Management

All of our full-time employees are eligible to receive stock awards, which may include stock options, restricted stock units, or performance stock units.

employees are also eligible to elect to participate in our employee stock purchase program.

Our standard employee benefits package is available to all full-time employees (except for variations required by state or country-specific laws).

Standard U.S.

employee benefits available to all full-time employees include medical, dental, and vision insurance, identity protection, disability insurance, life and AD&D insurance, and paid holidays.

Beginning in 2022, we also incorporated a 401(k)-employer match for all U.S.-based employees.

Additionally, we recognize that Inspire employees have diverse needs for time off from work and maintain a flexible time off (“FTO”) policy, which provides all full-time employees the opportunity to take time off as needed without the need to accrue a specific amount of paid time off each year.

Our FTO policy allows employees to take time off for any reason, including vacation, personal time, volunteering, school commitments, and religious holidays not observed by our paid holiday calendar.

Talent Acquisition

With our aggressive growth objectives, it is imperative that we continue to hire exceptional talent and invest in the growth and development of our existing employees.

Inspire’s growth has required several strategies to attract talent and meet our headcount plans.

We have a strong internal referral network in which between 50-60% of all hires have been from internal referrals.

This is supplemented with search partners, who meet with our talent acquisition team on a quarterly basis to review and provide the most up-to-date public information to ensure potential candidates fully understand the potential Inspire can offer.

We develop and set an annual hiring plan to understand and plan for the organization’s talent recruitment and pipeline needs.

Inspire’s growth has required several strategies to attract talent and meet our growth plans, including a strong internal referral network.

We also work with search partners, who meet with our talent acquisition team on a quarterly basis to review and provide up-to-date public information to ensure potential candidates fully understand the potential Inspire can offer.

We follow a defined and consistent interview process for open positions, whether internal or external.

In order to support our talent attraction efforts, we partner externally with organizations, universities and colleges to assist with identifying talented pipelines.

Internally we continue to build and train hiring leaders on a structured interview process to attract talent.

Talent Management

We review our pay practices twice per year for all employees and address any identified gaps.

We are establishing training and development programs focused on decency, dignity and respect in the workplace.

We seek to foster a culture where learning is continuous.

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Growth is fostered through professional development and learning programs, as well as practical experience leading projects or teams.

Over 50% of our leadership promotions have been from within.

To support newly promoted leaders, we have a leadership program entitled, “Boss to Coach,” which is specially designed to help them succeed in their expanded roles.

Additionally, we provide leadership coaching opportunities through external partners.

New employees joining Inspire are provided with a comprehensive learning path consisting of three key components.

First, they gain an understanding of our organization, including our products, the customers and patients we serve, and the regulatory requirements to which we are accountable.

Next, training is conducted at the department level to build job role proficiency.

Finally, managers can opt to pair their new employee with a peer level new-hire success mentor to further foster engagement and confidence among new team members.

On an ongoing basis, employees have the opportunity to engage in professional development to enhance their Inspire-specific knowledge and skills and their business acumen.

These opportunities are available as scheduled in-person events or as just-in-time learning through unlimited access to LinkedIn Learning.

Additionally, Inspire offers reimbursement (up to $10,000 per calendar year) for tuition and related expenses.

Developing our leaders is crucial for engagement and business success and we encourage employees to evolve in their roles.

An established leadership development pathway supports the growth of our high performers from emerging leaders to effective managers, and further to strengthen coaching and performance management capabilities.

Additionally, one-on-one coaching is available for our leaders through external partners.

On an annual basis, our leadership team participates in a talent review and succession planning exercise to identify organizational needs, development opportunities, and potential future leaders.

This enables us to identify the resources and skill sets needed to meet our growth objectives.

To encourage further professional development of our employees, in 2022 we introduced a tuition reimbursement program for those pursuing an advanced degree.

Diversity, Equity, and Inclusion

Inclusion and Belonging

We strive to create a culture in which all employees feel heard, respected, and valued.

All new employees participate in training focused on appropriate, respectful, and inclusive workplace behavior.

In 2020, we created an engaging training initiative for all employees which encourages awareness of unconscious bias and microaggressions.

The goals of these programs are to encourage broad and diverse viewpoints to achieve the best outcomes for our patients, customers, and employees, and to build awareness of how our own behaviors impact our colleagues.

Since then, we have developed our programs to provide engaging, virtual harassment and bias re-training to all global employees.

In addition to new employee training focused on creating a harassment-free work environment, leaders are provided information and tools annually to allow them, with the assistance of our Human Resources team, to investigate and address issues.

The program, entitled “Humanity is our Superpower,” continued to expand in 2023.

Following the program, leaders meet as a team and review ideas for creating an environment where inclusion prospers.

During talent acquisition, our recruiting team reinforces with hiring managers the importance of seeking and engaging with candidates from all backgrounds.

We actively seek diverse candidates to participate in our Internship Program and routinely host recruiting events at college campus career fairs.

As of December 31, 2023, 48% of our workforce identified as female, and 15% identified as a member of minority racial group.

We have created a training initiative for all employees which encourages awareness of unconscious bias and microaggressions.

The goals of the training are to encourage broad and diverse viewpoints to achieve the best outcomes for our patients, customers, and employees, and to build awareness of how our own behaviors impact our colleagues.

Charitable Giving

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In 2023, we launched InspireGives, Inspire’s community outreach program aimed at serving the communities in which we live and operate through financial donations and volunteerism.

Our contributions seeks to provide crucial assistance to charitable organizations striving to treat critical illnesses, combat poverty and homelessness, ease hardship for people affected by disasters, eliminate barriers to equal opportunity, and support underserved communities to address inequities in health outcomes.

Our employees are passionate about improving the lives of others so we provide channels for our team members to identify opportunities to engage with new charitable organizations and events in our communities.

In 2023, we contributed nearly $85,000 to 15 local and national charitable organizations including healthcare charities and charitable organizations addressing other related causes.

Environmental, Social, and Governance

Our contributions seek to provide crucial assistance to charitable organizations striving to treat critical illnesses, combat poverty and homelessness, ease hardship for people affected by disasters, eliminate barriers to equal opportunity, and support underserved communities to address inequities in health outcomes.

Our employees are passionate about improving the lives of others, so we provide channels for our team members to identify opportunities to engage with charitable organizations and events in our communities.

In 2024, we contributed nearly $140,000 to local and national charitable organizations including health care charities and charitable organizations addressing other related causes.

Sustainability

As our business continues to grow and develop, we recognize the importance of making responsible business decisions for the benefit of our stakeholders, including our stockholders, customers, employees, partners, the communities in which we work and live, as well as the planet.

To that end, we have implemented a corporate Environmental, Social and Governance ("ESG") program and set short, intermediate and long-term ESG objectives.

We published our second ESG Report in December 2023, which is available on our website, and expect to continue reporting on our progress to our various stakeholders annually.

To that end, we have implemented a corporate sustainability program and set sustainability objectives.

We published our third Sustainability Report in May 2024, which is available on our website, and expect to continue reporting on our progress to our various stakeholders annually.

Available Information

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Our Corporate Governance Guidelines, Code of Business Conduct and Ethics, ESG Report, and the charters for the committees of our Board of Directors are also available free of charge at https://investors.inspiresleep.com.

Information on our

website, including our Corporate Governance Guidelines, Code of Business Conduct and Ethics, ESG Report, and committee charters, is not part of this or any other report we file with, or furnish to, the SEC.

Information on our website, including our Corporate Governance Guidelines, Code of Business Conduct and Ethics, ESG Report, and committee charters, is not part of this or any other report we file with, or furnish to, the SEC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business