Summary
RBC Capital has re-rated Inspire Medical Systems to Sector Perform from Outperform while cutting its target price to $90 from $175. The move reflects RBC’s view that reimbursement headwinds related to coding are likely to persist, which the firm says will reduce physician incentives and blunt Inspire’s competitive position. The company’s stock was trading around $81.33 and has declined nearly 16% in the last week.
Analyst action and rationale
RBC’s decision follows expert checks indicating that the coding environment for Inspire V is unfavorable. The firm quantified the likelihood of a favorable outcome as only "2-3% chance of a successful outcome." Because of that constrained outlook for reimbursement, RBC is trimming its 2026 estimates on the expectation that utilization will be lower than previously forecast. RBC additionally noted that Inspire’s 2026 guidance does not assume higher reimbursement.
Following a recent price decline the stock is trading at under 2x EV/NTM sales, according to RBC, but the firm said it is stepping to the sidelines until there is clarity on a definitive path forward.
Regulatory and market developments
Recent action by the Centers for Medicare & Medicaid Services has altered the reimbursement backdrop. CMS issued a correction that removed obstructive sleep apnea, or OSA, as a covered diagnosis for CPT code 64568. As a result, coverage decisions tied to that code will now be determined by individual Medicare Administrative Contractors rather than under a uniform CMS-covered diagnosis.
That coding change has prompted several analyst moves. Truist Securities downgraded Inspire from Buy to Hold and cut its price target to $96 from $120, citing the coding setback. Oppenheimer reduced its rating from Outperform to Perform following the CMS correction. Jefferies kept a Hold rating but lowered its price target to $81 from $100. These adjustments reflect the analyst community responding to the change in the reimbursement environment affecting the company’s products.
Market context and investor stance
RBC emphasized that the reimbursement question creates disincentives for physicians and places Inspire at a competitive disadvantage. The firm’s change in stance - moving from an Outperform rating to Sector Perform and cutting its price target by roughly half - signals heightened uncertainty about near-term adoption and revenue trajectory until there is a clear reimbursement resolution.
Investors and market participants are now awaiting further clarity on coding and coverage decisions from the relevant payers and contractors, which will determine whether utilization and sales estimates need further revision.