Revenue increased by 84% YoY, an acceleration sequentially and the best quarterly increased in two years. In turn, management raised full year guidance by 3.5% at the midpoint, to $585MM.
I said in my Q3 earnings recap (posted on Nov 1, 2022) that my guess was they'd finally achieve positive full year FCF in 2023 and GAAP net profitability in 2024. Well, they beat me to the punch by squeaking out $2.5MM in FCF in 2022. Net profitability in 2023 will be tough but they increased their EBT margin by 1,200bps. FCF improved by even more. For a company already putting out gross margins above 83%, they have so much operating leverage room left.
US revenue continues to be the lion's share, coming in at >97% of total revenue. Call me crazy but people in countries outside of the US suffer from sleep apnea so I see it only as a matter of time before international revenue begins to accelerate rapidly.
Highlights from the call/quarter
- In March they announced FDA approval for pediatric patients with down syndrome. This expands their treatment for people with Down syndrome from aged 18 and up to aged 13 and up.
- Also in March they announced countrywide reimbursement in Belgium. This is just one step in what I see to be an avalanche of international approvals over the next 10+ years.
- They completed their first two cases in Hong Kong in Q1 and have been "pleased with progress in Singapore." Turning to Japan, they moved to a direct sales organization and are seeing "good momentum with strong patient outcomes and growing patient flow."
- They committed to submitting the FDA application for the Inspire V by the end of Q2 and are planning for early 2024 approval.
Inspire is squarely between two of my other medtech holdings, $SWAV
. ShockWave is now producing gobs of FCF and net income while TransMedics is heading towards positive FCF and net income but is still a couple years off. Inspire is turning that corner now and quite close.