With no competition, Minnesota maker of sleep apnea device doubled sales last year

Inspire Medical Systems Inc. makes an implantable device to treat sleep apnea, but the company's financials are far from sleepy.

The Golden Valley-based company announced Tuesday after market close that its 2021 revenue would be between $233 million and $233.4 million, a robust increase of about 102% over the previous year.

In 2016, the company tallied just $16.4 million in revenue. The preliminary numbers for 2021 represent a 1,300% increase in its sales over the last five years. It ranks among the fastest-growing public companies in Minnesota.

The company said its rapid growth is fueled by high consumer demand and low — or no — competition from other device makers.

Inspire developed the first-ever implantable neurostimulation device to treat obstructive sleep apnea. No one else has created a similar product and brought it to market. In its niche, Inspire Medical has zero competition.

"We are the only ones doing this," said Tim Herbert, Inspire's chief executive. Other companies have competing products in development, but they are still several years away from approval by the U.S. Food and Drug Administration (FDA), he said.

Until now, sleeping masks have been the standard treatment for sleep apnea. These mask devices provide continuous positive airway pressure (CPAP), but many patients find them uncomfortable.

Inspire's device is FDA-approved for people who can't tolerate CPAP, Herbert said. As such, the implant is covered by most insurance providers, including Medicare.

The company recently received FDA approval for a Bluetooth-enabled patient remote control that pairs with the implanted device.

Inspire has been able to avoid many of the pandemic challenges faced by its medical technology peers, like delayed elective surgeries.

"How we're able to continue to grow is we are outpatient surgery," said Herbert. "We don't take up hospital beds."

The company added 81 more U.S. implanting centers to its network last quarter, more than it forecast. The procedure takes 90 minutes. It has the same basic technology as a pacemaker and is powered by a lithium battery which lasts 11 years.

"Importantly, our robust pace in the opening of new centers includes a growing number of [Ambulatory Surgical Centers], which continue to increase at a higher rate than the addition of hospitals," Herbert said in the financial news release.

Inspire went public at $24 a share in April 2018. It closed at about $237 a share Wednesday, an impressive 887% increase in just three-and-a-half years..

The financial results are preliminary and unaudited. The company will report full financial results on Feb. 8.

But like many growth companies, Inspire Medical has yet to post a profit. For the first nine months of 2021, Inspire reported revenue of $155 million and a net loss of $39.65 million.

The sleep apnea market is big. It's a relatively common condition in the U.S. that affects more than 30 million Americans, according to the American Sleep Apnea Association. Untreated, it can lead to more serious conditions such as heart failure, high blood pressure and strokes.

Inspire Medical grew out of medtech giant Medtronic in 2007. Herbert had worked at Medtronic in a variety of management roles, including product development and clinical research.

"This is a therapy that we were not able to fund inside Medtronic. In partnership with Medtronic, we created a new company," said Herbert. He said that Medtronic still owns a "very small" stake in the company.

"[It] started with just myself down in my basement," recalled Herbert. The company now has more than 500 employees. Herbert has been CEO since the company's inception.

Inspire began selling the product in Europe in 2011 and in the U.S. in 2014. Herbert said that in December the company marked treating its 20,000th patient with its unique system.

Inspire Medical's treatment is available in 48 states and throughout Europe. Herbert said that the company will soon see the first implant for cases in Japan and is looking to expand further into Asia.