Everybody, Travis Steed, the medical device analyst for Bank of America, and glad to have Inspire Medical up next. So we have Tim Herbert, Chairman and CEO now, and Rick Buchholz, Chief Financial Officer, and everybody knows Ezgi as well, Head of Investor Relations. So thanks for joining us. Thank you very much. I think you want to open up with some opening remarks. I want to thank you for having us. I think that this is always a fun time to be in Vegas and sit in a hotel room all day and not have any fun, but that's okay. We have a lot of fun talking about our favorite subject, there's no question about it. We had quite an eventful week since our earnings call last week and had a lot of great discussions already. Look forward to having many more discussions with a lot of our partners going forward. We're pretty excited about the company, and we knew we had a little bit of a disconnect with expectations and how we delivered on the quarter. We certainly always have high expectations for ourselves going forward as well, but we want to reaffirm what we're all about as a commitment to growth of the company, and we're investing heavily and not on all aspects of our company from the R&D activity being in the high teens and the technology and the digital tools in our venture programs that we are investing in. Investing heavily in our scaling of our sales force. It's important to note that our sales team, half of those have only been with Inspire for probably under two years. And so we have quite a bit of education and growth with that organization to really understand, get comfort in their role, and to be able to gain confidence and conviction in their communications and driving their centers and driving the growth of the company. Finally, our direct-to-consumer is one where we're continuing to invest heavily in DTC. Now we're adjusting our direct-to-consumer because we continue to learn and we continue to change the DTC to target more of our target audience, and that being more of a younger population, whereas before we would do a lot of broad national TV buys, which is very important, but you'd bring in a lot of Medicare-age population, which is important because we want to treat that population as well, but we need to kind of continue to focus that. What we're excited about is we have confidence going forward that we're able to do an increase in our revenue guide for the rest of the year, and we think that's very important, but we're equally excited about being able to say that we're profitable for the full year, and we intend to stay profitable going forward. It's not because we're changing our business model to become profitable. It's because we're reaching a revenue point with our gross margin that allows us to become profitable while we continue to invest in the growth and the adoption of Inspire Therapy because there's so many more patients that need Inspire, and we just have years of growth ahead of us. Thank you very much. Yeah, of course. Thanks for coming. I'd like to talk about starting with the U.S. growth. So two months ago, roughly, you kind of guided U.S., or I guess globally, you said the business in Q1 you'd see more seasonality, down 15%-18%. In this quarter came out, you were down 18% sequentially. In the U.S., globally, it was 15%. It's kind of in line with expectations or in line with what you said, but you tend to leave a little bit more room there. So first of all, was there anything that kind of surprised you in the quarter that didn't play out? And then two, kind of why are you seeing kind of more seasonality in Q1? Sure. I think there's a little bit of a ripple effect going back all the way to the third quarter of last year. I think that we had our challenges with the prior authorization, and we corrected that. We brought the prior authorizations back in-house. We were able to get a lot of those files put together and submitted to the insurance companies to be able to move forward. And what that did is gave us a strong position in the last in the second two months of Q3 last year, but we pushed a lot of implants into the fourth quarter of 2023. Now you combine that with the environmental factor with the high deductible insurance plan, which is our normal seasonality in the fourth quarter. We had a large number of implants that we pushed forward, especially late in the year and in the December time frame, that we knew that we're working Saturdays on implants and taking care of a lot of people, but we knew that it's going to be a pushback. So when we got to our Q4 earnings call, we were able to have line of sight into the first quarter, and we knew that pushback would be low implants in January. We knew we'd be able to turn that and hit our stride back in February or March. We don't usually provide quarterly guidance. We always provide annual guidance. But in this case, it was important to be able to communicate that to the street that we expected higher than normal seasonality in the first quarter. A lot of that is the fatigue from coming through the fourth quarter, and we had line of sight to it. As we got to the end of the quarter, sure that seasonality was there. Tightness in the United States, as you mentioned. Yes, there is the ongoing challenge that everybody faces with Easter moving into March and two less selling days on the biggest time of the quarter for us certainly had a little bit of an impact. But I think what we learned a little bit is the sales team who I mentioned is about half our force is still with us less than two years. And so we are going through some growing pains, and we continue to build awareness and educate our team to have the conviction, the confidence to speak to physicians and keep growing that technology. But I think that growing pain kind of showed itself a little bit in the first quarter. As we got to the earnings call in Q1, we also have the line of sight going forward. We can also see the progression of what we expect for the rest of the year. That gives us confidence to be able to increase the revenue guide going forward. We don't believe we have structural problems with the organization. We think we have some additional education we need with our young or young new to Inspire field for us that will continue to grow. We'll continue to expand on that. It's not just the new territory managers. We now are up to 54-56 regional managers, many of which have been promoted from territory managers. We now have nine area vice presidents, many of which have been promoted from regional managers. We have very little turnover, but we create a significant amount of opportunity. People want to contribute more to the organization and be able to do people management and not just continue as a territory manager. So they move up and we backfill, and it creates an opportunity for us that we need to continue to educate and build consistency with the operation of each territory. We do that. We formed a whole new training team starting this year about what is it that a top territory looks like. How do we emulate that across the board? I think that is starting to play out. We're starting to see that, and you'll see that play out for the rest of the year. I know you asked me one question. I keep going. We also talked about on the earnings call that over time we're going to take away some of the guidance metrics that we provide. We're proud to say we're going to keep the revenue guide, and we're very happy to say now we're going to provide a profitability guide with earnings per share. As we continue going forward, the metric around sites and territory managers becomes less and less. So we announced that we're going to be discontinuing that in a year. We're going to continue to provide that information throughout the year so people can track how we're going to grow utilization through the year. We know when we come around to 2025, we will have to provide additional information to everybody. We've kind of coached people over the years to use utilization as a tool to build your models. So we're going to continue to have to show confidence that we have in the strength of the organization rather than us just sitting on the stage. So as we evolve to 2024 and get into 2025, we'll continue to discuss what kind of information we need to provide next year to be able to build that confidence. But in the meantime, you're going to continue to get those metrics throughout the year, and we continue to push hard to continue to grow this organization, grow the adoption of Inspire Therapy, and continue to invest in growth in the adoption. Yeah, I was looking at the model earlier. Your sales force has tripled since COVID and doubled since 2022. When do you feel like some of the growing pains that you kind of experienced in the sales force, when do you feel like you first started seeing that? And do you feel like that was kind of the biggest disconnect between kind of what we're seeing in Q1 versus kind of what actually played out? No, I think there's a little bit to that, but I think it really comes back to the Q3. So remember the corrective actions we put in back in the third quarter, and number one priority is bring the prior authorizations back in-house. But we also added the commission bonus for the sales reps to focus on individual patients, not just broadly on utilization. And I think that kind of showed a little bit of varying of experience that a lot of the newer patients, they didn't have the experience. Remember the old days when you used to take three months to get an individual prior authorization? So we need to kind of bring that back to the forefront and continue to work through the education with our sales team and really kind of grow the consistency of operations across the territories. I think that kind of comes into play a little bit as we push through Q4 because there's a lot of grind in Q4 to get all those cases done, and the patients are demanding it with their high deductible plan, and then that shows with the pushback that we saw in Q1. But it also shows with the confidence going forward into Q2 and the rest of the year. Do you think a lot of this was driven more by kind of the compensation changes in the rep model, or is it more you're bringing in newer reps and promoting kind of very productive reps to territory managers, and so you've got like a little bit of a pocket and you're missing revenue there? I think it's more the opportunities that we create. I think we're up over 290 territory managers now, but up to 50+ regional managers, nine area vice presidents. That's a lot of opportunity. While we do like to bring in regional managers and area vice presidents from the outside to help with cultural infusion and learn a lot more things that can make the sales force better, it still takes time for the sales team to get their footing and to get on board. For an expert sales rep to move into a people management position is always challenging. We spend a lot of time coaching the regional managers, but in the long run, it's going to make this organization so much stronger. So we want to deliver every quarter, and we obviously have high expectations for ourselves. Were we where we wanted to be in Q1? Certainly wanted to be higher than that. But I think we understand the dynamics and can see the patient flow and the demand that we have for our product, but we need to continue to be able to grow the capacity of the ENT physicians. And in some pockets, such as down in Florida, there's an area where the ENTs recommended we train general surgeons, and the general surgeons are doing the cases today. So it's just another opportunity to grow capacity by bringing in other surgeon specialty into the fold. The 298 reps you've got now, at what point do you think kind of they'll be fully productive? Is that kind of later this year, or is it more of a next year thing? Well, I think they're going to continue to be more productive every single day. While the guide won't be there next year talking about regional managers, we've been very consistent at the number of territory managers that we bring on a quarterly basis, and that's a less percent of the overall total. So as we continue to grow with experience, that will continue to be more broadly disseminated across the entire sales force because you have a less and less percentage added in every quarter. So I think we're seeing it now. You're going to continue to see it day by day as we continue to move forward. The second half acceleration that you're kind of seeing in your full year guidance, is that baking in that improvement in the sales force? I think that's just natural progression of the business. So yes, the answer is we expect continued efficiencies built into the team going forward. We know we need continued expansion of ENT capacity. We know the patient demand is there, and we can see the pipeline, and we can see the time from a patient calling in to implant can run as much as six months. And so that shows the backlog that we have. We need to reduce that, and we need to improve that patient experience, be able to knock that down. Pre-COVID, that used to be around four months. And then since COVID kind of had a challenge with the world, and so that's kind of extended back to six months. And we need to continue to improve on that as we continue to move forward. A lot of that is building efficiencies inside the operating room. Inspire V reduces OR time, improves the physician ability to do more cases in a day. Predictor provides an opportunity to be able to not require patients to go into a sleep endoscopy, to be able to remove that part of the process that consumes time, and it is not additive to the patient experience. We need to improve efficiencies within the operating room, but also outside the operating room where we can have staff at the ENT's office do a lot of the initial diagnostics, a lot of the education, certainly rely on the sleep physician to do all the longitudinal management, thereby creating an opportunity where the ENT can spend more time in the operating room doing procedures where they can be the most effective, and they can get the greatest amount of reimbursement to pay for the expenses of their practice. And I mean, you're saying all this, it sounds like the demand for this procedure hasn't changed at all. You're doing the same things. You're still growing your reps and centers. Is there any reason why we can't kind of get back to some of the utilization growth, like the way we would track it if you did keep disclosing the numbers where into next year we could see kind of good utilization growth again in this business model? I think we're going to provide utilization for the rest of the year, and I think that you're going to see that utilization continue to grow as we go through the year. That's the focus that we have to be able to take care of the patient demand that we have. Patient demand continues to be as high as it's ever been. I highlight the one example we had with television commercials during the Iowa-LSU women's basketball game, where it was so tremendously watched across the U.S. and the amount of web activity just that day really shows the demand and our ability to build our brand awareness. But it's not just that. It's about making sure that we educate the family doctors. Because when a patient sees an ad and they go to the website and they need to get educated, they're not going to do anything until they go talk to the family doctor and get their opinion. Or they also, because of their insurance plan, they need a referral to see a specialist anyways. And so we need to make sure that the family practice doctors are knowledgeable to be able to talk about Inspire. We talk about existing sleep physicians who have patients who are noncompliant to CPAP to make sure they are well-versed on Inspire to be able to refer those patients to have Inspire. Pulsed field ablation, big buzzword on atrial fibrillation. If you treat atrial fibrillation without addressing a patient's moderate to severe sleep apnea, there's a 57% chance of recurrence. And finally, the GLP-1 effect. When Oprah goes on TV and talks about the benefits of GLP-1s and the web activity that comes from that and the patients that flock to their general practitioners to get a GLP-1, they're all going to get diagnosed for diabetes, heart failure, and obstructive sleep apnea. That is going to just increase the diagnostics rate for sleep apnea and just create another value going forward. So yes, we're going to continue to push utilization going forward because the best outcomes that we have are with centers that have the highest utilization because those centers are the most practiced. Are you good with where the street kind of shook out on U.S. revenue for Q2 and globally? Just kind of the splits or didn't have an issue with kind of mismodeling? Yeah, I think the Q1. I think people again, our expectations remain very high in the first quarter. We try to be transparent. We try to be transparent all the time, but certainly providing some guide on where we expected Q1 to be. I think the third-party data kind of got out in front of it and kind of really had some impact on people's expectations that was quite different than what our actuals were. And so we're careful about going forward and communicating with yourself. But I think that we're comfortable where people line up around Q2. We're going to be focusing on that utilization to be able to achieve that. But again, we have confidence going forward to the point that we're able to increase revenue guide for the whole year. It sounds like utilization, given all the stuff you're talking about, should probably improve again next year on a full year basis kind of versus this year, even before Inspire V. We want to continue to grow the adoption. I think the key to do that is we want to leverage same-store sales. The reason, again, because the best outcomes come from the centers that provide the greatest number of procedures because they're very, very well practiced. We'll continue to scale our sales force. We'll continue to add new centers, but we're adding them as a lesser percentage of the greater whole. That means that the utilization and same-store sales is really going to continue to drive our growth, and that's really an important focus to us. By definition, the answer to your question is yes. That's helpful. Maybe looking at the centers, and for those that don't know, you can remind people kind of where the average is, but kind of think about where the utilization is and kind of the top quartile today. Sure. I think it's really important to understand the characteristics of the centers that we're talking about. And so in the early days, when you get approval from the FDA, and we're celebrating 10 years approval from the FDA and how proud we are and having 65+ patients have received Inspire Therapy, and the outcomes are tremendously strong, and we're very proud about that, and we're going to continue to focus on the growth there. As you get approval in the first centers that come on board, the early adopters are the academic centers. And they're very important because they're the same partners that do the research, and they do the clinical studies, and they publish, and they talk about it, and they get on a podium and talk about the benefits of the therapy. They're very, very important, but they also are those that can grow to only a certain level of utilization. So when you have yourself or some of your associates will have an expert call, and they'll bring in a KOL, and the KOL will say, "Yeah, but I'm capped out. I'm maxed out." Well, that's because they're an academic center, and they still spend a lot of their time on research and clinical activity, and they only have so much time to see patients. They only get one OR day a month. So yeah, naturally, they're going to cap out as far as utilization, but it's a very, very important core part of our business. But when we all go to the doctor, we see our family practice at a private hospital. The only time we go to the academic center is to see a specialist. Inspire has passed academia. Inspire has now grown to a point where we are general healthcare, and the top centers with the highest utilization are those community hospitals, right? The top sales rep for Inspire lives outside of St. Louis in a small community, generating $7.5 million by himself, right, with a couple of centers that have very high utilization because people want healthcare where they are. Our highest centers, the top ones, are doing as much as 15 procedures a month. We'll continue to push that. You're going to see centers pushing higher hundreds, if not 200, this year. We have multiple centers doing more than 100 procedures in the year, whereas a couple of years ago, that was only one, right? That's going to continue to grow. And then the new centers coming through, those that have been opened up in the last couple of years, it still takes time for them to understand how their systems work, understand how each of the players within the system are comfortable with each other, how the patient flow is optimized, and to build the confidence and the conviction for physicians to talk to their patients saying, "I've done a lot of Inspire. I know the results of Inspire. Inspire can work well for you." And it takes time for people to mature into that level to be able to grow that utilization. So the centers that we're opening predominantly are more of the private system now more than the academics. The majority of the academics are the early adopters and have already been open. Then the final group is most of the surgeons have a secondary set of service. That's really used as an overflow. Just if there's not OR space inside the existing hospital, that they can do that as an overflow. We never expect those sites to really have the high utilization, but the key is to get all the private centers moving all the way through. That's really going to be the focus as we continue to move forward. What percent of your centers are overflow at this point, and what was that number last year? I think maybe 25%. I think it's pretty consistent with that, maybe a little bit higher now than it was. It's been trending up the past year. So I mean, it really started during COVID when patients didn't want to go into the HOPD setting. So we started opening up ASCs as secondary sites of service. It's about 25% of our mix now, but it has been ratcheting up the past couple of years. So that was part of the consideration. We drive same-store utilization, but based on the center disclosure that we make, it doesn't tell the story of what is actually happening to our utilization with 25% of sites being secondary sites of service and adding 60 new centers every quarter where 50% of our centers have been opened in the past two years. So we're diluting that utilization metric. It doesn't tell the full story, and we felt it was a good time to telegraph we're going to be pulling back that metric. We'll need to have a conversation about the appropriate KPI to provide going forward. It won't be a guidance metric, but could we disclose something on a quarterly or annual basis? We'll certainly take a look at that. But the way we think about utilization and the center disclosures we are making, that metric was losing relevance, and we had to pull it back. Nothing to read into pulling it back on this quarterly call and timing? No. No, I think we want to give awareness to people. We want to put, I mean, we tend to be, we want to be transparent. And so while we laid it out for everybody, we also said we're going to continue to provide that for a full year going forward, right? We're going to give that for the balance of the year so people can track, and they can see how we are focusing on that. That's great. What percent of your centers are academic at this point? Tough to say. Hard to argue. We probably argue in the 20%-25% range, but that's. They're lower volume. So they're not anywhere near kind of the 15% kind of top quartile? Some of them, [audio distortion]. No, The Ohio State has always been one of the top producing, and so we're very proud of them. And so there's other some of the academic centers have been long partners: University of Pittsburgh Medical Center, Thomas Jefferson. Some of the academics who have multiple surgeons and partnerships with sleep have adopted the new model to be able to focus on having partners. So some of the academic centers are very high utilization centers. I was just trying to think if that's probably maybe if you do see when competition comes into the market, I would assume the academic centers are probably the ones that. Be the early adopters. One of the early adopters again. And so just trying to think about that impact. And while we're on that topic, though, I don't need anything on competition that you want to talk about or how to get investors comfortable with that risk longer term. I think so. I think that's probably true, that that's the role of the academics, is to understand new technology, to perform the clinical studies, and to be able to evaluate new approved technologies. We expect that of everybody, right? We're very comfortable with that. I think competition starting out, we need to say it's a good thing. Competition really builds credibility for the technology. There's multiple parties out there investigating electrical stimulation of the hypoglossal nerve to treat obstructive sleep apnea. We welcome the research. It advances the science, and it makes everybody smarter. Now, there's also companies right now approaching the time where they're going to submit to the FDA. I think the data that has been shown to date is very high level. It's just the headline data on two companies right now. I think we need to see a little bit more detail on that data before we can make any accurate comparisons. Also remember that we're at the point now. Inspire is to the point we have 260 peer-reviewed publications on a number of clinical studies from the STAR Trial. There are 5,000-patient registry. The depth of the safety and efficacy of Inspire is very well documented, and we set the bar high. The key is we set the expectation that any competition coming into this market has to be at that level. So I think that we will see competition in the future. We know that. We know what we have created as an opportunity for patients to be able to receive a therapy to be effectively treated with their sleep apnea. It invites competition in, and we will see it, and we welcome it. We continue to invest high teens in our R&D to be able to really make sure we're ready to go on Inspire V, which is a platform that can lead to Inspire VI and Inspire VII and Inspire VIII, and our digital program to be able to help manage a large number of patients in the sleep lab for the sleep physicians. We know we're going to have competition. I think we've positioned ourselves very, very strong to be able to welcome them too. Yeah, we're not going to make it easy. We're going to make sure that the expectations are set very high, that this is what you do to take care of patients, and you treat them with this level of safety and efficacy going forward. For Inspire V, soft launch later this year, full launch next year. What's the soft launch look like? How quickly can this roll out? There's some investors kind of worry about a slowdown in your core procedures ahead of the launch. So how do you get people comfortable with that? I think where we are today, it's more about operational readiness. The system's fully qualified. The design, all the testing is complete. We have completed all the manufacturing activity, the test equipment. So we've done the first article on manufacturing qualification complete. That is part of the package that went to the FDA. We have been purchasing material to be able to prepare ourselves for that launch, and we're starting up the manufacturing lines right now as we speak to start being ready for that launch. This is not just a neurostimulator. This is the entire system of Inspire. The patient remote has a new software to be able to communicate with the Inspire V device. The physician programmer has changed to a SleepSync programmer that directly logs into SleepSync. And so physicians will now be able to use their own Surface or their own laptops to be able to communicate with the cable that talks to the device. We're updating the SleepSync system to be able to handle information from the neurostimulator via the patient's smartphone. So it's a system-level device that we're launching. The soft launch is to make sure we're ready. And so we're going to just have a few sites that we'll be doing how many cases to make sure everything is ready to go before we have a full launch. And that's not surprising for any other key product within or outside of MedTech to make sure that you're ready to go before we do the full launch. We don't talk about it a lot in the field. We'll talk about Inspire V here in the investor community because it's a very important topic for everybody. But people in the field won't really start communicating that until the time that we're ready to launch. We don't expect to really see an air gap or patients waiting to receive the new therapy. Got to remember, Inspire IV is a very strong therapy that we've invested heavily in and has been implanted since 2018, has really a strong safety profile. And the patients still have two incisions. They really don't know the difference between Inspire IV and Inspire V as it is today. So we believe Inspire IV will continue all the way through until we launch Inspire V. But we want to make sure we're ready and have sufficient inventory so when we launch it, we don't have any risks of a stock out because we do think it's a quick conversion. Rick, any last-minute question on margins? Obviously, gave EPS guidance for the first time. How are you thinking about letting revenue upside flow to the bottom line and kind of the commitment to kind of keep this steady margin progression going forward? Yeah. We're excited to announce profitability for the full year and beyond, as Tim mentioned. So with our 84% gross margins, we continue to drive utilization or go deeper into accounts. Those additional revenue dollars will fall to the bottom line and drive further leverage. Great. I think we're out of time. I wish we had 30 more minutes, but we don't, so. We ran the clock on that. Sorry. That's all right. At least we had two hours last night for dinner. That's right. Thanks. Thank you very much, Travis. Appreciate it. Appreciate it.