Wolfe Research downgraded Inspire Medical Systems to Peer Perform, citing a reversal in U.S. Medicare reimbursement that has eliminated a key pricing tailwind. The brokerage had previously maintained a bullish stance based on strong facility incentives and meaningful pricing opportunities tied to reimbursement changes.

The reversal came after the Centers for Medicare & Medicaid Services moved to undo earlier payment adjustments, removing what Wolfe described as a potential boost and creating a possible headwind. The firm noted that reduced physician incentives could weigh on procedure volumes, while the company now faces a more complex competitive landscape including pressure from rivals like Nyxoah SA and LivaNova PLC.

Wolfe acknowledged the stock appears inexpensive on valuation but said the reimbursement reversal undermines confidence in near-term earnings potential. The earlier investment thesis had relied on signs the company was nearing the end of a period of estimate cuts and beginning to show profitability. With the pricing opportunity now removed and policy uncertainty rising, the firm said the outlook has become more difficult to model, leading it to step back from a positive rating.