What Happened?
Shares of medical technology company Inspire Medical Systems (NYSE:INSP) fell 17.5% in the afternoon session after regional Medicare administrators unexpectedly removed coverage for the company's newest medical device.
Two major contractors, known as Noridian and CGS, cut the essential "billing code(64568)" that doctors use to request payment from insurance for its new Gen 5 system. This change was a significant blow because it effectively blocks hospitals in those regions from getting paid for the procedure. Without a guarantee of reimbursement, it became tougher to predict how quickly doctors would adopt the new technology.
Analysts, such as those at Piper Sandler, expressed surprise that the contractors would revoke coverage for the FDA-approved device so abruptly. While they expressed optimism that the policy would eventually be amended to reinstate the code, the immediate threat to adoption rates and cash flow triggered a sharp sell-off.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. 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 34 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 1 day ago when the stock gained 3% on the news that RBC Capital significantly raised its price target on the stock. The firm adjusted its target to $175.00 from a previous $125.00, a 40% increase that signaled strong confidence in the company. Alongside the higher price target, RBC Capital analyst Shagun Singh maintained an 'Outperform' rating on the stock, reinforcing a positive outlook for the medical device maker.
Inspire Medical Systems is down 49.8% since the beginning of the year, and at $95.03 per share, it is trading 55.9% 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 $511.71.
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