Inspire Medical Systems, Inc.

Case Details

Class Period: May 3, 2023 - November 7, 2023
Date Filed: December 22, 2023
Case Number: 0:23-cv-03884
Jurisdiction: District of Minnesota
icon-casetype Case Type: Securities Case

Case Summary

On December 22, 2023, Saxena White filed a securities fraud class action against Inspire Medical Systems, Inc., and certain of its senior executives, for violations of the Securities Exchange Act of 1934. The Complaint alleges that, during the relevant time period, Inspire Medical made materially false and misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects, thus artificially inflating the Company’s stock price and causing investors to suffer substantial losses when the truth eventually emerged.

Inspire Medical is a medical technology company that develops and commercializes minimally invasive products for patients with obstructive sleep apnea (“OSA”) that require prior authorizations from doctors. In 2022, Inspire Medical introduced a pilot program (the “Acceleration Program”) through which the Company’s Advisor Care Program team, with the customer on the phone, would directly access doctors’ electronic schedules and schedule doctor appointments online, without the need for phone calls. Throughout the class period, Defendants touted the Acceleration Program’s effectiveness, claiming that the program had achieved a “30% improvement in physician appointments,” and that by August 2023, “about 60-plus centers are using the tool right now.”

The class action alleges that, during the class period, Defendants misled investors and/or failed to disclose that: (1) despite the Acceleration Program, customers were encountering challenges with the prior authorization submission process, including with the scheduling of appointments; (2) a slowdown in prior authorization submissions arising from these challenges led to a shortfall of hundreds of procedures to implant the Company’s OSA device; and (3) as a result, Defendants’ positive statements about the Company’s financial guidance, business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.

The truth emerged after the close of markets on November 7, 2023, when the Company announced disappointing earnings results for the third quarter of 2023, including “a decline in prior authorization submissions for patients seeking Inspire therapy.” Inspire Medical further admitted it had started to “track” problems with the Acceleration Program no later than the second quarter of 2023, the Company “had strong confirmation” of the problems with the Acceleration Program, and the Company “realized we needed to take some corrective action.” In response to this news, shares of Inspire Medical declined approximately 20%, from a closing price of $161.74 per share on November 7, 2023, to a closing price of $129.95 per share on November 8, 2023.

On February 20, 2024, Saxena White filed a motion for Lead Plaintiff and Lead Counsel on behalf of a class of purchasers of Inspire Medical common stock, and on February 21, 2024, the court appointed City of Hollywood Firefighters’ Pension Fund as Lead Plaintiff and Saxena White as Lead Counsel.

On April 19, 2024, Lead Plaintiff filed its amended complaint. On June 28, 2024, Defendants’ filed a motion to dismiss the amended complaint.