What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-13 compared with 2025-02-10 · 265 added, 180 removed, 696 unchanged (39% of the section changed)

52 unchanged sentences

Operating lease right-of-use assets 23,532 23,314

Deferred tax assets 88,667 13

Other non-current assets 17,264 11,330

40 unchanged sentences

Income (loss) before income taxes 65,697 58,453 ( 19,906 )

Income taxes 4,944 1,247 613

Income tax (benefit) expense ( 79,725 ) 4,944 1,247

Net income (loss) 145,422 53,509 ( 21,153 )

1 unchanged sentence

Foreign currency translation (loss) gain ( 296 ) ( 65 ) 140

Unrealized (loss) gain on investments ( 199 ) 746 ( 120 )

Unrealized gain (loss) on investments 224 ( 199 ) 746

Total comprehensive income (loss) $ 145,350 $ 53,245 $ ( 20,267 )

18 unchanged sentences

Issuance of common stock 1,575 — 353 — — 353

Sale of common stock from follow-on public offering, net of offering expenses 1,150,000 1 243,800 — — 243,801

Issuance of common stock for employee stock purchase plan 27,480 — 5,299 — — 5,299

Stock-based compensation expense — — 82,470 — — 82,470

Other comprehensive loss — — — ( 31 ) — ( 31 )

Other comprehensive income — — — 886 — 886

Net loss — — — — ( 21,153 ) ( 21,153 )

Balance at December 31, 2023 29,560,464 30 917,107 800 ( 345,423 ) 572,514

Stock options exercised 595,188 1 25,808 — — 25,809

Vesting of restricted stock units 40,915 — — — — —

Shares held for tax withholdings ( 113,062 ) — ( 17,158 ) — — ( 17,158 )

Stock options exercised, net 376,730 — 21,897 — — 21,897

Vesting of restricted stock units, net 57,824 — ( 4,895 ) — — ( 4,895 )

Issuance of common stock 1,716 — 322 — — 322

1 unchanged sentence

Stock-based compensation expense — — 116,007 — — 116,007

Other comprehensive income — — — 886 — 886

Net loss — — — — ( 21,153 ) ( 21,153 )

Accelerated share repurchase of common stock ( 305,157 ) — ( 75,000 ) — — ( 75,000 )

Other comprehensive loss — — — ( 264 ) — ( 264 )

Net income — — — — 53,509 53,509

Balance at December 31, 2024 29,740,176 30 981,043 536 ( 291,914 ) 689,695

Stock options exercised, net 140,479 — 9,393 — — 9,393

Vesting of restricted stock units, net 57,824 — ( 4,895 ) — — ( 4,895 )

Vesting of restricted stock units and performance stock units, net 266,525 — ( 22,840 ) — — ( 22,840 )

Issuance of common stock 2,580 — 307 — — 307

2 unchanged sentences

Accelerated share repurchase of common stock ( 103,886 ) — — — — —

Other comprehensive loss — — — ( 264 ) — ( 264 )

Share repurchase of common stock ( 1,518,874 ) ( 1 ) ( 176,022 ) — — ( 176,023 )

Other comprehensive income — — — ( 72 ) — ( 72 )

Net income — — — — 145,422 145,422

12 unchanged sentences

Stock-based compensation expense 130,259 116,007 82,470

Deferred income taxes (benefit) ( 88,749 ) — —

Provision (benefit) for estimated credit losses 200 ( 768 ) 1,612

Impairment of strategic investment 4,046 — —

Other non-cash expenses 2,111 1,517 2,128

11 unchanged sentences

Purchases of strategic investments ( 10,118 ) ( 250 ) ( 250 )

Net cash used in investing activities ( 113,122 ) ( 294,822 ) ( 19,596 )

Net cash provided by (used in) investing activities 21,446 ( 113,122 ) ( 294,822 )

Financing activities

Payments on long-term debt obligation — — ( 24,500 )

Proceeds from the exercise of stock options 9,595 22,167 25,809

Proceeds from sale of common stock — — 243,801

Accelerated share repurchase of common stock — ( 75,000 ) —

Share repurchase of common stock ( 175,019 ) — —

Payment of taxes on net share settlement of equity awards ( 23,044 ) ( 5,165 ) ( 17,158 )

2 unchanged sentences

Effect of exchange rate on cash ( 310 ) ( 118 ) 164

(Decrease) increase in cash and cash equivalents ( 35,387 ) ( 256,055 ) 227,125

Decrease in cash and cash equivalents ( 45,337 ) ( 35,387 ) ( 256,055 )

Cash and cash equivalents at beginning of year 150,150 185,537 441,592

3 unchanged sentences

Property and equipment included in accounts payable and accrued expenses 4,773 3,386 4,018

Excise taxes accrued but not paid 1,004 — —

The accompanying notes are an integral part of these financial statements.

5 unchanged sentences

is 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 United States ("U.S.") Food and Drug Administration ("FDA"), European Union ("EU"), Medical Devices Regulation ("MDR"), and Japan Pharmaceuticals and Medical Devices Agency ("PDMA")-approved neurostimulation technology of its kind that provides a safe and effective treatment for patients with moderate to severe OSA.

Inspire therapy received premarket approval ("PMA") from the FDA in 2014 and has been commercially available in certain European markets since 2011 and certain Asia Pacific markets since 2021.

Our proprietary Inspire system is the first United States ("U.S.") Food and Drug Administration ("FDA"), European Union ("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.

Inspire therapy received premarket approval from the FDA in 2014 and has been commercially available in certain European markets since 2011 and certain Asia Pacific markets since 2021.

Summary of Significant Accounting Policies

8 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the consolidated financial statements.

We use significant judgment when making estimates related to the inventory reserves and stock-based awards.

We use significant judgment when making estimates related to the inventory reserves, stock-based awards, and income taxes.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results could differ from those estimates.

Follow-On Public Offering

In August 2022, we completed a follow-on offering that included our offer and sale of 1,150,000 shares of common stock at a public offering price of $ 215.00 per share.

We received net proceeds of $ 243.8 million after deducting underwriting discounts, commissions, and offering expenses.

Cash and Cash Equivalents

6 unchanged sentences

Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated using the balance sheet date exchange rate.

Sales and expenses denominated in foreign currencies are translated at transaction date exchange rates.

Foreign currency transaction gains and losses and the impacts of foreign currency remeasurement are recognized in other expense, net in the consolidated statements of operations and comprehensive income (loss).

For the years ended December 31, 2025, 2024, and 2023, we recognized a total of $ 1.0 million of gains, $ 0.9 million of losses, and $ 0.2 million of losses, net, respectively.

Any unrealized gains and losses due to translation

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date.

Sales and expenses denominated in foreign currencies are translated at exchange rates in effect on the date of the transaction.

For the years ended December 31, 2024, 2023, and 2022, we recognized a total of $ 0.9 million, $ 0.2 million, and $ 0.1 million of losses, net, respectively.

Any unrealized gains and losses due to translation adjustments are included in accumulated other comprehensive income within stockholders' equity in the consolidated balance sheets.

We had $ 0.2 million of unrecognized gain in our accumulated other comprehensive income balance as of both December 31, 2024 and 2023.

adjustments are included in accumulated other comprehensive income within stockholders' equity in the consolidated balance sheets.

We had $ 0.1 million of unrecognized loss and $ 0.2 of unrecognized gain in our accumulated other comprehensive income balance as of December 31, 2025 and 2024, respectively.

Our investments are classified as available-for-sale and consisted of the following:

4 unchanged sentences

Corporate debt securities 57,694 134 — 57,828

Certificates of deposit 7,684 10 — 7,694

Treasury debt securities 123,281 220 ( 2 ) 123,499

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Long-term investments $ 71,020 $ 109 $ ( 134 ) $ 70,995

The following table shows all available-for-sale investments in an unrealized loss position for which an allowance for credit losses has not been recorded and the related gross unrealized loss and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

December 31, 2025

4 unchanged sentences

Total $ 39,705 $ ( 11 ) $ — $ — $ 39,705 $ ( 11 )

There were no investments in an unrealized loss position at December 31, 2023.

December 31, 2024

Less than 12 Months 12 Months or Greater Total

Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

Corporate debt securities $ 11,728 $ ( 56 ) $ — $ — $ 11,728 $ ( 56 )

Treasury debt securities 69,402 ( 220 ) — — 69,402 ( 220 )

Total $ 81,130 $ ( 276 ) $ — $ — $ 81,130 $ ( 276 )

Investments are classified as available-for-sale and are reported at their estimated fair market values which are based on quoted, active or inactive market prices when available.

4 unchanged sentences

We recorded $ 0 of gross realized losses from the sale or maturity of available-for-sale investments during each of the years ended December 31, 2025, 2024, and 2023.

As of December 31, 2024, we had no investments with a contractual maturity of greater than two years.

As of December 31, 2025, we had no investments with a contractual maturity of greater than three years.

Currently, we do not intend to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be maturity.

9 unchanged sentences

Observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets.

Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly.

Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions.

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions.

We classify instruments within Level 1 if quoted prices are available in active markets for identical assets, which include our money market funds and U.S.

3 unchanged sentences

The money market funds and available-for-sale securities are held by two custodians who obtain investment prices from a third-party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class.

The following tables sets forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of December 31, 2024 and 2023.

The following tables set forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of December 31, 2025 and 2024.

Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

7 unchanged sentences

Corporate debt securities 116,673 — 116,673 —

Certificates of deposit 7,694 — 7,694 —

Asset-backed securities 1,201 — 1,201 —

2 unchanged sentences

Total cash equivalents and investments $ 364,163 $ 224,161 $ 140,002 $ —

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Fair Value Measurements as of

12 unchanged sentences

There were no transfers between levels during the years ended December 31, 2025 and 2024.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Concentration of Credit Risk

19 unchanged sentences

Specific accounts receivable are written off once a determination is made that the amount is uncollectible.

The write-off is recorded in the period in which the account receivable is deemed uncollectible.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

off is recorded in the period in which the account receivable is deemed uncollectible.

Recoveries are recognized when received and as a direct credit to earnings or as a reduction to the allowance for credit losses (which would indirectly reduce the loss by decreasing bad debt expense).

4 unchanged sentences

Charges (credits) to the allowance, net 923 957 1,622

Accounts written off, net of recoveries ( 1,725 ) ( 10 ) ( 50 )

Write-offs charged against the allowance ( 127 ) ( 1,554 ) ( 10 )

Recoveries of amounts previously reserved ( 596 ) ( 171 ) —

Balance at the end of the period $ 1,080 $ 880 $ 1,648

The increase in charges to the allowance during the year ended December 31, 2023 relate primarily to accounts receivable with two healthcare systems and the increase in accounts written off, net of recoveries during the year ended December 31, 2024 related primarily to accounts receivable with two healthcare systems.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

The increase in accounts written off, net of recoveries during the year ended December 31, 2024 related primarily to accounts receivable with two healthcare systems.

Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis, and consisted of the following:

Raw materials $ 19,097 $ 22,430

Work in process 13,837 —

Finished goods 112,359 57,688

1 unchanged sentence

We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized.

In August 2024, we received approval from the FDA for our next generation Inspire system, which we expect to fully launch in the U.S.

In August 2024, we received approval from the FDA for our Inspire V neurostimulator, which we began to market for sale in the U.S.

We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, incur charges to write down inventories to their net realizable value.

3 unchanged sentences

Property and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following:

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Internal-use software $ 33,168 $ 16,553

9 unchanged sentences

Capitalized internal-use software is amortized, and recognized as cost of goods sold or selling, general and administrative expenses, on a straight-line basis over the estimated useful life of three years .

Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease.

Construction in process is comprised primarily of manufacturing equipment.

Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to ten years .

Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease.

Depreciation and amortization expense was $ 14.0 million, $ 6.6 million, and $ 2.8 million during the years ended December 31, 2025, 2024, and 2023, respectively.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Strategic Investments

2 unchanged sentences

The balance of equity securities without readily determinable fair values was $ 16.4 million and $ 10.6 million as of December 31, 2025 and 2024, respectively.

We recognized an impairment charge of $ 0.4 million during the year ended December 31, 2023 due to a deterioration in the performance and quality of one of the equity securities that had an original carrying amount of $ 0.8 million.

There was no adjustment to the carrying amounts during the year ended December 31, 2024.

During the years ended December 31, 2025 and 2024, we invested $ 10.1 million and $ 0 in minority interests of private companies, respectively.

We recognized an impairment charge of $ 4.0 million during the year ended December 31, 2025 in other expense (income), net in the consolidated statements of operations and comprehensive income (loss) due to an observable price change of one of the equity securities that had an original carrying amount of $ 10.0 million.

No impairment charge was recognized during the year ended December 31, 2024.

Impairment of Long-lived Assets

4 unchanged sentences

Our cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors.

We did not record any impairment charges on long-lived assets, other than the $ 0.4 million discussed above in the Strategic Investments section, during the years ended December 31, 2024, 2023, or 2022.

We did not record any impairment charges on long-lived assets, other than strategic investments, during the years ended December 31, 2025, 2024, or 2023.

We recorded impairment charges on strategic investments of $ 4.0 million, $ 0.0 million, and $ 0.4 million during the years ended December 31, 2025, 2024, and 2023, respectively.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Accrued Expenses

13 unchanged sentences

Balance at the end of the period $ 587 $ 933 $ 1,100

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Revenue Recognition

12 unchanged sentences

We offer customers a limited right of return for our product in case of non-conformity or performance issues.

We estimate the amount of our product sales that may be returned by our customers based on historical sales and returns.

We estimate the amount of our product sales that may be returned by our customers based on historical sales and

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

As our historical product returns to date have been immaterial, we have not recorded a reduction in revenue related to variable consideration for product returns.

1 unchanged sentence

Cost of Goods Sold

Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers.

Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, warranty replacement costs, costs of supporting our digital platforms, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers.

The overhead costs include the cost of material procurement, depreciation expense for manufacturing equipment, and operations and quality supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel.

4 unchanged sentences

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Stock-Based Compensation

5 unchanged sentences

The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model.

Stock-based compensation expense is recognized on a straight-line basis over the vesting term for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is the vesting period or term to become eligible for a qualified retirement for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs.

We account for award forfeitures as they occur.

2 unchanged sentences

Advertising expenses were $ 114.9 million, $ 94.9 million, and $ 100.3 million during the years ended December 31, 2025, 2024, and 2023, respectively.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses, and operating lease liabilities – non-current portion in our consolidated balance sheets.

11 unchanged sentences

Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

As we have historically incurred operating losses, we have recorded a full valuation allowance against our net deferred tax assets.

We will continue to maintain a full valuation allowance until the point at which we are more certain than not that the deferred tax assets will be realized.

Therefore there is no provision for federal income taxes, but we do record provision for current state and foreign taxes, which includes a foreign tax reserve relating to uncertain tax positions.

Our policy is to record interest and penalty expense related to

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

uncertain tax positions as other expense in the consolidated statements of operations and comprehensive income (loss).

Prior to December 31, 2025, as we historically incurred operating losses, we recorded a full valuation allowance against our net deferred tax assets.

As of December 31, 2025, we determined that it is more-likely-than-not that our federal and a majority of state deferred tax assets will be realized.

As a result, we recorded a release of the valuation allowance associated with these deferred tax assets, which was due in part to achieving three years of cumulative taxable income and projected taxable income that is more than sufficient to realize our federal and a majority of state deferred tax assets.

We record a federal, state, and foreign tax provision, which includes a foreign tax reserve relating to uncertain tax positions.

We use financial projections to support our net deferred tax assets, which contain significant assumptions and estimates of future operations.

If such assumptions were to differ significantly, it may have a material impact on our ability to realize our deferred tax assets.

At the end of each period, we will reassess the ability to realize our deferred tax assets.

If it is more likely than not that we would not realize the deferred tax assets, a valuation allowance may need to be established against all or a portion of the deferred tax assets, which will result in a charge to tax expense.

Our policy is to record interest and penalty expense related to uncertain tax positions as other expense in the consolidated statements of operations and comprehensive income (loss).

Comprehensive Income (Loss)

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Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period.

For the periods presented with a net loss, diluted net loss per share is the same as basic net loss per share as all potentially dilutive shares consisting of outstanding stock options, unvested RSUs and PSUs, and shares issuable under our employee stock purchase plan were antidilutive in those periods.

For the periods presented with a net loss, diluted net loss per share is

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

the same as basic net loss per share as all potentially dilutive shares consisting of outstanding stock options, unvested RSUs and PSUs, and shares issuable under our employee stock purchase plan were antidilutive in those periods.

Purchase Commitments

1 unchanged sentence

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”).

The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction.

The guidance makes several other changes to the income tax disclosure requirements.

The amendments in ASU 2023-09 are effective for us in fiscal 2025, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application.

We are evaluating the impact of the standard on our income tax disclosures.

In March 2024, the SEC issued climate-related disclosure rules, which the SEC has subsequently stayed pending ongoing legal challenges.

If they survive litigation, the rules will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2).

Additionally, the rules will require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds.

We are currently awaiting the outcome of the litigation or other actions the SEC may take with respect to this rule.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income-Expense Disaggregation (Subtopic 220-40):

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We are currently evaluating the impact of adopting ASU 2024-03 on our financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350):

Targeted Improvements to the Accounting for Internal-Use Software .

This ASU modifies the criteria for when software costs may be capitalized by eliminating consideration of software project development stages and by enhancing guidance for the "probable-to-complete" threshold.

This ASU is effective for our annual reports beginning in 2028, and interim periods within those annual reporting periods.

Early adoption of this ASU is permitted.

We are currently evaluating the impact that adoption of this ASU may have on our financial statements and disclosures.

We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

We lease office space for our corporate headquarters under a non-cancelable operating lease.

8 unchanged sentences

These payments are made monthly and adjusted annually to reflect actual charges incurred for operating expenses, such as common area maintenance, taxes, and insurance.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

The following table presents the lease balances within the consolidated balance sheets:

13 unchanged sentences

Variable lease costs consist primarily of taxes, insurance, and common area maintenance costs.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Maturities of our lease liability for our operating lease are as follows as of December 31, 2025:

4 unchanged sentences

As of December 31, 2025, the remaining lease terms were 9.4 years and the weighted average discount rate was 4.9 %.

The operating cash (inflow) outflows from our operating leases were $( 3.3 ) million, $ 2.2 million, and $ 0.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Long-Term Debt

In March 2019, we amended our $ 24.5 million loan and security agreement, which we refer to as our former credit facility.

The debt was interest only until April 1, 2022 and was scheduled to mature on March 1, 2024.

The basic interest rate was the 30-day U.S.

LIBOR rate, subject to a floor of 7.60 %.

In addition to the principal and interest payments, we were required to pay a final payment fee of 3.50 % on all amounts outstanding, which was being accreted using the effective interest rate method over the term of the credit facility and was to be due at the earlier of maturity or prepayment.

Borrowings were prepayable in whole at our option, subject to a prepayment fee of 1.00 %.

In August 2022, we prepaid the outstanding principal balance of $ 19.4 million, the final payment fee of $ 0.9 million, and the prepayment fee of $ 0.2 million.

We had no remaining amounts outstanding under our former credit facility as of either December 31, 2024 or 2023.

The operating cash outflows (inflows) from our operating leases were $ 3.3 million, $( 3.3 ) million, and $ 2.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Employee Retirement Plan

3 unchanged sentences

Our match contributions are made to funds designated by the participant, none of which are based on Inspire common stock, and totaled $ 5.6 million, $ 4.7 million, and $ 3.7 million for the years ended December 31, 2025, 2024, and 2023 respectively.

Stockholders' Equity

Share Repurchase Program

In August 2024, our Board of Directors authorized the repurchase of up to $ 150.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means (the “share repurchase program”).

We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time.

The share repurchase program

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

will expire in August 2026, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.

Stockholders' Equity

Share Repurchase Programs

We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time.

The share repurchase program was set to expire in August 2026, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.

In November 2024, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a large financial institution to repurchase common stock as part of the 2024 share repurchase program.

3 unchanged sentences

We accounted for the variable component of shares to be delivered under the ASR Agreement as a forward contract indexed to our common stock, which met the criteria for equity classification, and therefore, was accounted for as a component of equity.

The ASR Agreement continued to meet the requirements for equity classification as of December 31, 2024.

As of December 31, 2024, no excise tax was accrued, as the aggregate fair market value of our stock issuances exceeded the fair market value of stock repurchases during the year.

In January 2025, we were notified of the early termination of the ASR Agreement.

1 unchanged sentence

The final number of shares received was based on the volume-weighted average price of our common stock during the term of the ASR Agreement, less a discount and subject to adjustment pursuant to the terms of the ASR Agreement.

The 305,157 shares of common stock received in November 2024, from the ASR Agreement, are the only shares repurchased during 2024.

The total shares repurchased under the ASR Agreement was 409,043 shares with the average share price of $ 190.29 .

During 2025, we purchased an additional 442,649 shares for the remaining $ 75.0 million under Rule 10b5-1 under the 2024 share repurchase program.

As of March 31, 2025, no amount remained available for future repurchases under the 2024 share repurchase program.

In August 2025, our Board of Directors authorized the repurchase of up to $ 200.0 million of our outstanding shares of common stock from time to time through open market transactions, privately negotiated transactions, tender offers, or other means (the “2025 share repurchase program”).

We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time.

The 2025 share repurchase program will expire in August 2027, subject to the earlier termination or extension by the Board, in its sole discretion and without prior notice.

During 2025, we purchased 1,076,225 shares for $ 100.0 million under Rule 10b5-1 under the 2025 share repurchase program.

Our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act.

Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the consolidated statements of equity.

As of December 31, 2025, $ 100.0 million remained available for future repurchases under the 2025 share repurchase program.

Stock-Based Compensation

As of December 31, 2024, there were 4,521,922 shares reserved for issuance under our equity incentive plan, of which 1,374,651 shares were available for issuance.

Stock-based compensation expense is recognized on a straight-line basis over the vesting term for stock options and RSUs, and over the performance period based on the probability of achieving the performance objectives for PSUs, and is reduced by actual forfeitures as they occur.

As of December 31, 2025, there were 4,598,570 shares reserved for issuance under the Inspire Medical Systems, Inc.

2018 Incentive Award Plan, of which 1,319,587 shares were available for issuance.

If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense.

Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock-based awards.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

During the year ended December 31, 2025, we recorded accelerated stock-based compensation expense of $ 11.2 million for employees who are retirement eligible in accordance with the implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc.

2018 Incentive Award Plan upon the holder's death, disability, or retirement.

Stock Options

1 unchanged sentence

The stock options include a four-year service period and 25 % vest after the first year of service and the remainder vest in equal monthly installments over the next 36 months of service.

Options are forfeitable in the event of termination other than for death, disability, or qualifying retirement.

Upon death or disability, all outstanding and unvested options accelerate and become fully vested.

Upon qualifying retirement, all outstanding and unvested options accelerate, become fully vested, and become exercisable in accordance with the original grant terms.

Unvested options are forfeitable in the event of termination other than for death, disability, or qualifying retirement.

Upon death, disability or qualifying retirement, all outstanding and unvested options accelerate and become fully vested.

The stock options have a contractual life of ten years .

The fair value per share of options is estimated on the date of grant using the Black-Scholes option pricing model.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

There were no stock options granted during the year ended December 31, 2025.

Option Value and Assumptions

Year Ended December 31,

2024 2023 2022

Weighted average fair value $ 113.56 $ 149.70

2 unchanged sentences

56.4 % - 58.2 %

56.2 % - 57.0 %

Risk-free interest rate 3.67 % - 4.71 %

3.49 % - 4.89 %

1.75 % - 4.18 %

Expected dividend yield — % — %

7 unchanged sentences

Expected Dividend Yield — The expected dividend assumption is based on our history of not paying dividends and our expectation that we will not declare dividends for the foreseeable future.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Stock Option Activity

14 unchanged sentences

Outstanding at December 31, 2024 2,160,149 $ 168.33 6.4 $ 89,052

Granted 247,048 $ 177.99

Exercised ( 163,445 ) $ 70.31 $ 13,739

2 unchanged sentences

Exercisable at December 31, 2025 1,627,185 $ 166.07 5.1 $ 38,524

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

The aggregate intrinsic value of options exercised is the difference between the estimated fair market value of our common stock at the date of exercise and the exercise price for those options.

5 unchanged sentences

The RSUs cannot be transferred and the awards are subject to forfeiture in the event of termination other than for death, disability, or qualifying retirement.

Upon death or disability, all outstanding and unvested RSUs accelerate and become fully vested.

Upon qualifying retirement, all outstanding and unvested RSUs remain outstanding and settle in accordance with the original vesting and payment terms.

Upon death or disability, all outstanding and unvested RSUs accelerate and become fully vested and settled.

Upon qualifying retirement, all outstanding and unvested RSUs remain outstanding and settle in accordance with the original vesting and payment terms applicable to such RSUs.

The RSUs granted to employees include three - or four-year service periods and vest in equal installments on each anniversary of the date of grant.

2 unchanged sentences

A summary of RSUs and related information is as follows:

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

Restricted Stock Units Weighted Average

17 unchanged sentences

Performance Stock Units

During 2022, 2023, and 2024, we granted PSUs to officers and key employees.

The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the three-year periods ending

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

December 31, 2024, 2025, and 2026, respectively.

We grant PSUs to officers and key employees.

The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the respective three-year periods from the year of grant.

The expense is recorded on a straight-line basis over the requisite service periods based on an estimate of the number of PSUs expected to vest.

4 unchanged sentences

Upon such a termination due to death or disability, a prorated amount of the target number of PSUs will accelerate and become fully vested.

Upon such a qualifying retirement, a prorated amount of the PSUs will be eligible to vest and settle based on the actual performance achievement in accordance with the original vesting and payment terms.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

A summary of PSUs and related information is as follows:

9 unchanged sentences

Granted 236,333 $ 199.70

Vested ( 143,518 ) $ 228.48 $ 26,759

Forfeited (51,078) $ 213.23

7 unchanged sentences

We issued 52,015 shares under the ESPP during 2025 and there were 1,332,425 shares available for future issuance under the ESPP as of December 31, 2025.

Due to our cumulative net loss position, a valuation allowance is required for all U.S.

deferred tax assets as of December 31, 2024, 2023, and 2022.

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

The components of our provision for income taxes are as follows:

The components of our provision (benefit) for income taxes are as follows:

2025 2024 2023

United States $ 4,103 $ 644 $ 342

Federal $ 3,708 $ — $ —

State 4,694 4,103 644

Foreign 624 854 603

Total current 9,026 4,957 1,247

Federal ( 71,200 ) — —

State ( 17,532 ) — —

Foreign ( 19 ) ( 13 ) —

1 unchanged sentence

Total provision for income taxes $ ( 79,725 ) $ 4,944 $ 1,247

The reconciliation of taxes at the federal statutory rate to our provision for income taxes are as follows:

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

We adopted ASU No.

2023-09 , Improvements to Income Tax Disclosures in fiscal year 2025 under the prospective method.

Under this new standard, we disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of 5% of the global pretax income.

The reconciliation of taxes at the federal statutory rate to our provision for income taxes are as follows for the year ended December 31, 2025:

Year Ended December 31,

Amount Percent

federal statutory tax rate $ 13,696 21.0 %

State and local income taxes, net of federal income tax effect (1)

( 10,198 ) ( 15.6 )

Foreign tax effects 223 0.3

Research and development ("R&D") tax credits ( 5,066 ) ( 7.8 )

Effect of cross-border tax laws (net of foreign tax credits)

Foreign-derived intangible income deduction (FDII) ( 776 ) ( 1.2 )

Change in valuation allowance ( 88,137 ) ( 135.1 )

Nontaxable or nondeductible items

Stock-based compensation 7,409 11.4

Executive compensation 2,618 4.0

Other 506 0.8

Total provision for income taxes $ ( 79,725 ) ( 122.2 ) %

(1) State taxes in Florida, Texas, California, Pennsylvania, Massachusetts, Kentucky, Michigan and South Carolina made up the majority (greater than 50%) of the tax effect in this category.

The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the years ended December 31, 2024 and 2023 are as follows:

Year Ended December 31,

Tax at federal statutory rate 21.0 % 21.0 %

1 unchanged sentence

Stock-based compensation 2.1 % 33.6 %

Research and development ("R&D") tax credit ( 7.8 ) 20.6 6.4

R&D tax credit ( 7.8 ) % 20.6 %

Other 2.2 % ( 4.6 ) %

2 unchanged sentences

Total 9.1 % ( 6.3 ) %

Income taxes paid (refunds received) disaggregated by federal, state, foreign taxes are as follows for the year ended December 31, 2025:

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

Year Ended December 31,

Federal $ 3,609

California 535

Other states 3,808

Total state 4,343

Total income taxes paid $ 8,324

Significant components of net deferred tax assets and liabilities were as follows:

11 unchanged sentences

Deferred tax liabilities:

Depreciation ( 5,245 ) —

Lease asset ( 5,761 ) ( 5,742 )

4 unchanged sentences

Total deferred income taxes $ 88,667 $ 13

Deferred income taxes reflect the tax effects of net operating loss tax credit carryforwards and the net temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

As of December 31, 2024, we had gross federal net operating loss carryforwards, which are no longer subject to expiration, of $ 51.2 million.

In addition, we had net operating loss carryforwards for state income tax purposes of $ 88.1 million which will begin to expire in 2025.

Deferred income taxes reflect the tax effects of net operating loss carryforwards, tax credit carryforwards, and the net temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

As of December 31, 2025, we had utilized all of the gross federal net operating loss carryforwards from prior years.

We had net operating loss carryforwards for state income tax purposes of $ 60.6 million, which will begin to expire in 2026.

We also have gross R&D credit carryforwards of $ 14.7 million as of December 31, 2025 which will expire at various dates beginning in 2034.

Utilization of the net operating loss carryforwards and R&D credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Code and similar state provisions.

During 2024, we finalized a detailed analysis to determine whether an ownership change has occurred through December 31, 2023, and if a limitation exists.

It was determined that December 11, 2018 was the only date that we experienced an ownership change.

The study concluded that none of the $ 126.5 million of federal net operating losses nor the $ 1.7 million of federal R&D credits that were accumulated on December 11, 2018 will expire unused solely due to the limitations under Sections 382 and 383 of the Code.

We are in the process of updating the analysis through December 31, 2024.

Although unexpected, if we experienced an ownership change during 2024, the timing of our ability to utilize the tax attributes may be affected.

Realization of the deferred tax assets is dependent upon the generation of future book income, if any, the amount and timing of which are uncertain.

Based on available objective evidence and cumulative losses, we believe it is more likely than not that the deferred tax assets are not recognizable and will not be recognizable until we have sufficient book income.

Accordingly, the net deferred tax assets have been offset by a valuation allowance, with the exception of less than $ 0.1 million in foreign deferred tax assets.

The valuation allowance decreased by $ 9.9 million and increased by $ 12.9 million during the years ended December 31, 2024 and 2023, respectively.

Utilization of the R&D credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Code and similar state provisions.

During the year ended December 31, 2025, we finalized an updated analysis to determine whether an ownership change had occurred

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

through December 31, 2024, and if a limitation exists.

It was determined that December 11, 2018 was the only date that we experienced an ownership change.

Based on our analysis of all positive and negative evidence available for the year ended December 31, 2025, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that the majority of our U.S.

federal and U.S.

states net deferred tax assets will be realizable.

Accordingly, we have recognized a non-recurring tax benefit of $ 88.8 million for the year ended December 31, 2025.

As of December 31, 2025, $ 5.7 million of our valuation allowance remained against certain tax attributes.

The valuation allowance decreased by $ 101.7 during the year ended December 31, 2025.

On July 4, 2025, the enactment of the One Big Beautiful Bill Act ("OBBBA") into law, marked a significant legislative development, resulting in substantial modifications to the U.S.

The OBBBA influences multiple facets of taxation, including, but not limited to, bonus depreciation, the current-year expensing of research and development costs, and international tax regulations.

The income taxes reported for the year ended December 31, 2025 incorporates all relevant tax provisions of this new law.

The changes to our gross unrecognized tax benefits were as follows:

2 unchanged sentences

Balance beginning of the year $ 146 $ 146 $ 146

Increase in balances related to current year tax positions — — 12

Decrease related to the current year ( 40 ) — —

Balance end of the year $ 106 $ 146 $ 146

54 unchanged sentences

For the periods presented with a net loss, diluted net loss per share is the same as basic net loss per share as all of the following potentially dilutive shares were antidilutive in those periods.

The components of net income (loss) per share are as follows:

Year ended December 31,

2025 2024 2023

Net income (loss) $ 145,422 $ 53,509 $ ( 21,153 )

Weighted average number of common shares outstanding — basic

29,368,892 29,763,395 29,302,154

Dilutive effect of stock options 317,986 594,726 —

Dilutive effect of restricted stock units 56,059 79,514 —

Dilutive effect of performance stock units 11,480 99,263 —

Dilutive effect of shares issuable under the ESPP 2,619 6,376 —

Weighted average number of common shares outstanding — diluted

29,757,036 30,543,274 29,302,154

Net income (loss) per share:

Basic $ 4.95 $ 1.80 $ ( 0.72 )

Diluted $ 4.89 $ 1.75 $ ( 0.72 )

The following common stock-based awards were excluded from the computation of diluted net income (loss) per common share for the periods presented because including them would have been antidilutive:

9 unchanged sentences

Under the Cost Sharing Agreement, we will reimburse the Entity 50 % of the cost of the Suite in exchange for the right to use the Suite for 50 % of the specified events at the Venue through August 2026.

We recognized expense of $ 0.2 million and less than $ 0.1 million for the use of the suite in SG&A expense in our consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2024 and 2023, respectively.

Commitments and Contingencies

We are involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims for punitive damages, which may not be covered by insurance.

We evaluate all matters and record liabilities for losses from legal proceedings when we determine that it is probable that the outcome will be unfavorable and the amount, or potential range, of loss can be reasonably estimated.

An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations or cash flows.

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Inspire and two of its executive officers were named as defendants in a purported federal securities law class action filed in the United States District Court for the District of Minnesota, captioned City of Hollywood Firefighters’ Pension Fund v.

Inspire Medical Systems, Inc., et.

, Court File No.

0:23-cv-03884 (the "City of Hollywood Lawsuit").

The plaintiff filed an amended complaint on April 19, 2024, which alleges violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5, which alleged violations relate to certain prior disclosures of Inspire about the effectiveness of a program intended to help certain customers establish independence in seeking prior authorization from payors for our Inspire therapy.

The plaintiff seeks to represent a class of shareholders who purchased or otherwise acquired Inspire common stock between May 3, 2023 and November 7, 2023.

The plaintiff seeks damages and other relief,

We recognized expense of $ 0.3 million, $ 0.2 million, and $ 0.1 million for the use of the suite in SG&A expense in our consolidated statements of

Inspire Medical Systems, Inc.

1 unchanged sentence

(Table amounts in thousands, except share and per share amounts)

including attorneys' fees and costs.

The defendants are vigorously defending this lawsuit.

On June 28, 2024, the defendants moved to dismiss the amended complaint in its entirety.

The motion is now fully briefed and was argued in November 2024.

On July 16, 2024, a stockholder derivative lawsuit was filed in the United States District Court for the District of Minnesota, purportedly on behalf of Inspire against certain of our present and former officers and directors and Inspire (as a nominal defendant), captioned Lawrence Hollin v.

Herbert, et al ., Court File No.

0:24-cv-02716 (the “Hollin Lawsuit”).

The Hollin Lawsuit arose out of the same subject matter as the City of Hollywood Lawsuit and alleged the following claims under common law and the Exchange Act:

(1) breach of fiduciary duty;

(2) unjust enrichment;

(3) waste of corporate assets;

and (4) as against the officer defendants, contribution under Sections 10(b) and 21D of the Exchange Act.

The lawsuit sought unspecified damages.

On September 5, 2024, counsel for Mr.

Hollin filed a motion for voluntary dismissal of the Hollin Lawsuit, which motion remains pending.

In addition, on January 17, 2025, we received a civil investigative demand (“CID”) from the Department of Justice U.S.

operations and comprehensive income (loss) for the years ended December 31, 2025, 2024, and 2023, respectively.

Commitments and Contingencies

We may from time to time be involved in claims, governmental inquiries or investigations, litigation and other legal proceedings arising in the ordinary course of business, some of which may seek monetary damages, including claims for punitive damages, which may not be covered by insurance.

Such matters, even if not meritorious, could result in the expenditure of significant financial and managerial resources.

An adverse determination in one or more of these pending matters could have an adverse effect on our consolidated financial position, results of operations or cash flows.

On November 6, 2025, the City of Pontiac Reestablished General Employees’ Retirement System, on behalf of itself and other similarly situated investors, filed a putative securities class action in the United States District Court for the District of Minnesota against the Company and certain of its executive officers, captioned City of Pontiac Reestablished General Employees’ Retirement System v.

Inspire Medical Systems, Inc., et al.

0:25‑cv‑04247‑PJS‑ECW (D.

Minn.) (the “City of Pontiac Lawsuit”).

The complaint alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b‑5 promulgated thereunder, based on purportedly materially false and misleading statements made between August 6, 2024, and August 4, 2025, regarding the launch of the Company’s Inspire V neurostimulator.

The complaint further alleged that when subsequent disclosures were made concerning issues with the Inspire V launch and the Company announced its third‑quarter fiscal 2025 results, the Company’s stock price declined, purportedly causing investor losses.

On December 23, 2025, the plaintiff filed a Notice of Voluntary Dismissal.

On December 29, 2025, the case was administratively closed without prejudice.

On December 22, 2025, the Indiana Public Retirement System, on behalf of itself and other similarly situated investors, filed a putative securities class action in the United States District Court for the Southern District of New York against the Company and certain of its executive officers, captioned Indiana Public Retirement System v.

Inspire Medical Systems, Inc., et al.

1:25‑cv‑10620 (S.D.N.Y.) (the “Indiana PRS Lawsuit”).

The Indiana PRS Lawsuit arises from the same underlying subject matter as the City of Pontiac Lawsuit.

It alleges the same violations of law and is based on the same or similar purportedly materially false and misleading statements made during the same class period, all of which relate to the launch of the Company’s Inspire V neurostimulator.

The plaintiffs seek, among other relief, unquantified compensatory damages, together with attorneys’ fees and costs.

On January 22, 2026, the Company and the individual defendants moved to transfer the case to the United States District Court for the District of Minnesota.

That motion remains pending.

The Company and the individual defendants intend to vigorously defend against the action.

No accrual for loss has been accrued or recorded in the Company’s financial statements as of, or for the period ended, December 31, 2025 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.

On January 17, 2025, we received a civil investigative demand (“CID”) from the Department of Justice U.S.

Attorney’s Office for the District of Minnesota pursuant to the False Claims Act in the course of the government’s investigation concerning allegations of false claims, including false claims arising from violations of the Anti-Kickback Statute, submitted to government payors in connection with our implant.

2 unchanged sentences

No assurance can be given as to the timing or outcome of the government’s investigation.

No amount of loss has been accrued or recorded in the Company’s financial statements as of, or for the period ended, December 31, 2025 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.

On May 30, 2025, Inspire filed a lawsuit against Nyxoah SA and its subsidiary Nyxoah, Inc.

(collectively “Nyxoah”) in the United States District Court for the District of Delaware, alleging that Nyxoah's Genio product infringes on

Inspire Medical Systems, Inc.

Notes to Consolidated Financial Statements

(Table amounts in thousands, except share and per share amounts)

certain of Inspire's U.S.

patents related to neurostimulation therapy for obstructive sleep apnea.

Inspire seeks a judgment of patent infringement and relief for such infringement, including monetary damages such as lost profits.

Nyxoah has denied infringement and has asserted counterclaims seeking declaratory judgments of invalidity and non‑infringement.

On December 18, 2025, Nyxoah filed three (3) petitions with the United States Patent Trial and Appeal Board seeking inter partes review (IPR) of the three patents asserted by Inspire in the lawsuit.

Because these matters are in their early stages, we cannot predict the outcome or estimate the range of potential loss.

On September 15, 2025, Nyxoah filed a lawsuit against us in the United States District Court for the District of Delaware alleging that the Inspire IV and Inspire V devices infringe certain of Nyxoah’s patents.

The lawsuit is in its early stages.

The Company intends to defend the claims in this lawsuit vigorously and believes it has good and substantial defenses to them, but there is no guarantee that the Company will be successful in these efforts.

No amount of loss has been accrued or recorded in the Company’s financial statements as of and for the period ended December 31, 2025 since the Company is unable to determine whether any loss ultimately will occur or to estimate the range of such loss.

On December 5, 2025, Nyxoah brought suit against Inspire and its wholly-owned subsidiary, Inspire Medical Systems Europe GmbH in the Unified Patent Court, Munich Division, alleging that the Inspire IV implantable neurostimulator infringes a patent owned by Nyxoah.

The lawsuit is in its early stages.

On January 27, 2026, a stockholder derivative lawsuit was filed in the United States District Court for the Southern District of New York, purportedly on behalf of Inspire against certain of our present and former executive officers and against all current members of the Board of Directors and Inspire (as a nominal defendant), captioned Korte v.

Herbert., et al.

1:26‑cv‑680 (S.D.N.Y.).

The lawsuit arises out of the same subject matter as the Indiana PRS Lawsuit described above and alleges the following claims:

(1) Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder;

(2) Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder;

(3) Section 20(a) of the Exchange Act;

(4) a common-law claim for breach of fiduciary duty;

(5) common-law aiding and abetting;

(6) unjust enrichment;

and (7) waste of corporate assets.

The lawsuit seeks unspecified damages.

The Company and the individual defendants intend to vigorously defend against the action.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data