INSP

Inspire is a genuinely high-quality business: the only FDA/EU-MDR/Japan-approved hypoglossal-nerve-stimulation therapy for moderate-to-severe OSA, 85.4% gross margin, an essentially unlevered balance sheet (liabilities/equity 0.16x, $781M equity), 18.6% ROE, and $117M operating cash flow funding a $175M buyback that shrank the share count 3.6%. It crossed into GAAP profitability in FY2024 and the trend held in FY2025. On the surface the stock looks cheap at a 9.2 P/E and 1.4 P/S — undemanding for a profitable, net-cash medtech leader.

But the headline P/E is flattered. Operating income was only $51M (5.6% operating margin), yet net income was $145M (15.9% net margin) and EPS jumped +179% — net income materially exceeds operating income, so the earnings surge is driven by below-the-line items (most plausibly a tax benefit) rather than the core P&L. On operating earnings the multiple is far richer than 9.2x, so the 'cheap' framing should not carry the thesis. Meanwhile the growth engine is decelerating sharply: revenue grew +75%, +53%, +28%, then +13.6% across FY22–FY25. A 14%-grower at thin operating margins is a very different stock than the hypergrowth story this was.