What Happened?
Shares of medical technology company Inspire Medical Systems (NYSE: INSP) jumped 28.6% in the afternoon session after the Centers for Medicare & Medicaid Services (CMS) finalized a rule significantly increasing payment rates for the company's sleep apnea procedures.
Starting in 2026, hospitals and surgical centers will receive approximately $10,000 more per procedure compared to current rates. This regulatory win is a massive catalyst for Inspire because Medicare accounts for roughly 25-30% of its patient mix. The increased reimbursement provides a strong financial incentive for hospitals to prioritize these surgeries, which should drive higher procedure volumes.
Reacting to the news, Stifel upgraded the stock from "Hold" to "Buy" with a new price target of $110. Analysts noted that the company's previous struggles are turning into opportunities. Specifically, they believe that "patient warehousing", where surgeries were delayed in anticipation of better rates, will likely result in a surge of volume in 2026. With advertising spend also ramping back up, the outlook for the medical device maker has improved substantially.
Contributing to the positive news, healthcare stocks surged after a Politico report revealed the White House plans to pitch a two-year extension of Obamacare subsidies. The proposal would extend subsidies set to expire at the end of the year, with new eligibility limits for individuals with incomes up to 700% of the federal poverty line. These subsidies, a key part of the Affordable Care Act (ACA), help lower the cost of health insurance for consumers. An extension would likely support sustained enrollment, improving the demand and growth forecasts for healthcare companies.
Is now the time to buy Inspire Medical Systems? Access our full analysis report here.
What Is The Market Telling Us
Inspire Medical Systems’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. But moves this big are rare even for Inspire Medical Systems and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 8% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut.
New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
Inspire Medical Systems is down 38.5% since the beginning of the year, and at $116.28 per share, it is trading 46% below its 52-week high of $215.42 from January 2025. Investors who bought $1,000 worth of Inspire Medical Systems’s shares 5 years ago would now be looking at an investment worth $633.37.
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