Company: INSP
Filing Date: 2025-08-04
Form Type: 10-Q
Source: 0001609550-25-000032
Chunk: 30

Company: Inspire Medical Systems, Inc.
Filing Date: 2025-08-04
Form: 10-Q
Item: Part I, Item 1
Chunk 30
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 value of those awards as expense in the consolidated statements of operations and comprehensive income (loss). We estimate the fair value of stock options using the Black-Scholes option pricing model and the fair value of RSUs and PSUs is equal to the closing price of our common stock on the grant date. The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is the vesting period or term to become eligible for a qualified retirement for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs. We account for award forfeitures as they occur.Advertising ExpensesWe expense the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $24.7 million and $23.2 million during the three months ended June 30, 2025 and 2024, respectively, and $45.7 million and $48.8 million during the six months ended June 30, 2025 and 2024, respectively.Leases Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses, and operating lease liabilities – non-current portion in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based 

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

on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments, and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a non