Company: INSP
Filing Date: 2025-11-03
Form Type: 10-Q
Source: 0001609550-25-000053
Chunk: 87

Company: Inspire Medical Systems, Inc.
Filing Date: 2025-11-03
Form: 10-Q
Item: Part I, Item 8
Chunk 87
---
 shares available for future issuance under the ESPP as of September 30, 2025. The current purchase period under the ESPP began on July 1, 2025 and ends December 31, 2025. 

7. Income Taxes

At both September 30, 2025 and December 31, 2024, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position. We recorded income tax expense of $3.6 million and $1.8 million for the three months ended September 30, 2025 and 2024, respectively, and $6.0 million and $3.5 million for the nine months ended September 30, 2025 and 2024, respectively. The income tax expenses reflect federal, state, and foreign income tax expense in both of the nine months ended September 30, 2025 and September 30, 2024.We filed our 2024 U.S. federal income tax return during the third quarter of 2025. Upon filing our return, our gross federal net operating loss carryforward as of December 31, 2024 was $51.3 million, which is not subject to expiration. In addition, net operating loss carryforwards for state income tax purposes of $88.0 million, of which we estimate that $4.1 million of Minnesota net operating loss will expire unused in 2025. We also have gross R&D credit carryforwards of $16.6 million as of December 31, 2024, which will expire at various dates beginning in 2030.Utilization of the net operating loss carryforwards and R&D credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Code and similar state provisions. During 2025, we finalized an updated analysis to determine whether an ownership change had occurred through December 31, 2024, and if a limitation exists. It was determined that December 11, 2018 was the only date on which we experienced an ownership change. The study concluded that none of the $126.5 million of federal net operating losses nor the $1.7 million of federal R&D credits that were accumulated on December 11, 2018 will expire unused solely due to the limitations under Sections 382 and 383 of the Code. Realization of the deferred tax assets is dependent upon the generation