Inspire Medical Faces Securities Lawsuit Over Misleading Device Launch Claims: What Investors Need to Know
Did you invest in Inspire Medical Systems (INSP) between August 6, 2024, and August 4, 2025? If so, you might be affected by a recently filed securities class action lawsuit. This legal action alleges that Inspire Medical made false and/or misleading statements regarding the launch of its new Inspire V device, potentially leading to significant financial losses for investors. On August 5, 2025, Inspire Medical Systems (NYSE: INSP) stock plunged 27% after the company’s disappointing quarterly results and guidance prompted several Wall Street firms to downgrade the shares.
What’s Happening with Inspire Medical?
Inspire Medical Systems, Inc., a medical technology company focused on developing and commercializing innovative solutions for treating obstructive sleep apnea, is facing a class action lawsuit. The lawsuit, City of Pontiac Reestablished General Employees’ Retirement System v. Inspire Medical Systems, Inc., No. 25-cv-04247 (D. Minn.), was filed in the United States District Court for the District of Minnesota. The case alleges that Inspire Medical and certain of its top executives violated the Securities Exchange Act of 1934.
The core of the issue revolves around the launch of Inspire Medical’s latest device, the Inspire V. This device utilizes a sensor and neurostimulator designed to improve respiration during sleep. Throughout the period between August 6, 2024, and August 4, 2025, it’s alleged that Inspire Medical made overly optimistic statements about the Inspire V launch, leading investors to believe it would be a seamless and successful transition.
Allegations of Misleading Statements
The lawsuit claims that Inspire Medical misled investors by:
- Overstating Demand: Asserting strong demand for Inspire V when, in reality, providers had significant surplus inventory of the older Inspire IV model and were hesitant to switch to the new device.
- Failing to Disclose Launch Issues: Not informing investors that many treatment centers hadn’t completed the necessary training, contracting, and onboarding procedures required for Inspire V.
- Hiding IT and Reimbursement Problems: Neglecting to mention that basic IT systems, including customer approval processes and updated insurance claims software, weren’t in place at the time of launch, and that Medicare reimbursement was not in effect until July 1, 2025.
The Impact on Investors
The truth, according to the lawsuit, began to emerge on August 4, 2025, when Inspire Medical revealed that the Inspire V launch was facing an “elongated timeframe” due to these previously undisclosed issues. The company also admitted that software updates for billing Medicare patients didn’t take effect until July 1, 2025, preventing centers from billing for Inspire V procedures before that date.
As a result, Inspire Medical was forced to reduce its 2025 earnings guidance by more than 80%. This news sent the company’s stock price plummeting, causing significant losses for investors. On August 5, 2025, the stock price plunged 32%.
What is a Securities Class Action?
A securities class action is a lawsuit filed by investors who have suffered financial losses due to alleged violations of securities laws. These lawsuits typically arise when a company makes false or misleading statements about its business, operations, or financial prospects, causing the company’s stock price to drop when the truth is revealed.
Understanding the Legal Framework
Securities class actions are often brought under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, which prohibit fraudulent activities in connection with the purchase or sale of securities. To succeed in a securities class action, plaintiffs must prove that the defendant made a false or misleading statement, that the statement was material, that the plaintiffs relied on the statement, and that they suffered damages as a result.
What Can Investors Do?
If you purchased or acquired Inspire Medical Systems common stock between August 6, 2024, and August 4, 2025, you may be eligible to participate in the class action lawsuit. The deadline to seek appointment as lead plaintiff is January 5, 2026.
Here’s what you should consider doing:
- Contact a Securities Attorney: Discuss your legal rights and options with an experienced securities attorney. They can help you understand the details of the lawsuit and assess your potential for recovery.
- Preserve Documentation: Gather and preserve all documents related to your investment in Inspire Medical Systems, including brokerage statements, transaction confirmations, and any communications you had with the company or your broker.
- Stay Informed: Keep up-to-date on the progress of the lawsuit by monitoring court filings and news reports.
The Role of “Corrective Disclosure”
In securities litigation, a “corrective disclosure” is a statement or action that reveals the truth about a previously misrepresented or omitted fact. The stock drop on August 4, 2025, following Inspire Medical’s announcement of launch delays and reduced earnings guidance, is considered the corrective disclosure in this case. This disclosure is crucial because it marks the point at which the market learned the truth about the Inspire V launch, and it’s used to calculate the damages suffered by investors.
The Importance of Materiality
For a statement to be considered misleading under securities laws, it must be “material.” A material fact is one that a reasonable investor would consider important in making an investment decision. In the case of Inspire Medical, the lawsuit alleges that the company’s misstatements about the Inspire V launch were material because they misled investors about the company’s growth prospects and financial performance.
Potential Outcomes and Recoveries
Securities class actions can result in significant recoveries for investors who have been harmed by corporate fraud. If the plaintiffs are successful in the Inspire Medical case, investors who purchased the company’s stock during the class period could receive compensation for their losses. The amount of compensation will depend on several factors, including the number of shares purchased, the purchase price, and the extent of the decline in the stock price.
Has Inspire Medical commented on the lawsuit?
As of December 1, 2025, Inspire Medical has not issued a formal press release addressing the specifics of the lawsuit. However, the company’s filings with the Securities and Exchange Commission (SEC) will likely contain information about the litigation as it progresses.
What is the next step?
The court will now consider motions for the appointment of a lead plaintiff. The lead plaintiff is a representative of the class of investors who will oversee the litigation on behalf of all class members. Once a lead plaintiff is appointed, the case will proceed to the discovery phase, where both sides will gather evidence and information.
Has Inspire Medical had other issues?
On September 3, 2025, Inspire Medical Systems’ shares fell 9.7% after management flagged multiple near-term headwinds at a bank conference, which spooked markets following a bad quarter and the CFO stepping down.
Conclusion
The securities class action lawsuit against Inspire Medical Systems highlights the importance of accurate and transparent communication between companies and investors. When companies make false or misleading statements, they can be held liable for the resulting financial losses suffered by investors. If you believe you have been affected by the alleged misrepresentations in this case, it’s crucial to seek legal advice and take steps to protect your rights.