Company: INSP
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001609550-25-000011
Chunk: 99

Company: Inspire Medical Systems, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 8
Chunk 99
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 net of recoveries during the year ended December 31, 2024 related primarily to accounts receivable with two healthcare systems.

98

Table of ContentsInspire Medical Systems, Inc.Notes to Consolidated Financial Statements(Table amounts in thousands, except share and per share amounts)

InventoriesInventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis, and consisted of the following:December 31,20242023Raw materials$22,430 $6,115 Finished goods57,688 27,770 Total inventories, net of reserves$80,118 $33,885 We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized. In August 2024, we received approval from the FDA for our next generation Inspire system, which we expect to fully launch in the U.S. in 2025.We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, incur charges to write down inventories to their net realizable value. The determination of a reserve for excess and obsolete inventory involves management exercising judgment to determine the required reserve, considering future demand, product life cycles, introduction of new products, and current market conditions. The reserve for excess and obsolete inventory was $1.0 million and $2.4 million as of December 31, 2024 and 2023, respectively.Property and EquipmentProperty and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following:December 31,20242023Internal-use software$16,553 $2,270 Manufacturing equipment29,117 7,245 Other equipment4,981 2,173 Leasehold improvements10,057 2,356 Construction in process24,975 33,211 Property and equipment, cost85,683 47,255 Less: accumulated depreciation and amortization(13,758)(7,271)Property and equipment, net$71,925 $39,984 Internal-use software costs are capitalized during the application development stage. Costs related to planning and post implementation activities are expensed as incurred. Capitalized internal-use software is amortized, and recognized as cost of goods sold or selling, general and administrative expenses, on a