Company: INSP
Filing Date: 2025-02-10
Form Type: 10-K
Source: 0001609550-25-000011
Chunk: 82

Company: Inspire Medical Systems, Inc.
Filing Date: 2025-02-10
Form: 10-K
Item: Item 7
Chunk 82
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 computed on a first-in, first out basis. We estimate the recoverability of our inventory by reference to internal estimates of future demands, introduction of new products, and product life cycles, including expiration of inventory prior to sale. 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. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demand could have a significant impact on the carrying value of our inventories and reported operating results. Likewise, the timing of FDA approval of a next generation product, if granted, and the associated commercial launch, could have a significant impact on the carrying value of the inventory of our previous generation product, and therefore our reported operating results. The net inventory balance was $80.1 million and $33.9 million as of December 31, 2024 and 2023, respectively. The reserve for excess and obsolete inventory was $1.0 million and $2.4 million as of December 31, 2024 and 2023, respectively.

Stock-Based Compensation

We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of performance stock units ("PSUs"), and during 2022, 2023, and 2024, we granted PSUs to officers and key employees. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the three-year periods ending December 31, 2024, 2025, and 2026, respectively. Management expectations related to the achievement of the performance goals associated with PSU grants is assessed each reporting period, which determines the amount of stock-based compensation expense recorded during the period. The number of shares earned at the end of the three-year periods will vary based on actual performance, from 0% to 200% of the number of PSUs 

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granted. If the performance goals are not met, no shares will be earned. If 200% of the PSUs outstanding as of December 31, 2024 are ultimately earned, the total stock-based compensation expense recognized over the five-year period ending December 31,