Critical Analysis: Inspire Medical Systems (NYSE:INSP) and iRhythm Technologies (NASDAQ:IRTC)

Inspire Medical Systems (NYSE:INSP) and iRhythm Technologies (NASDAQ:IRTC) are both healthcare companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, profitability, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

94.9% of Inspire Medical Systems shares are owned by institutional investors. 2.2% of Inspire Medical Systems shares are owned by company insiders. Comparatively, 1.0% of iRhythm Technologies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Inspire Medical Systems and iRhythm Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Inspire Medical Systems	11.43%	7.32%	6.39%
iRhythm Technologies	-4.52%	26.88%	4.32%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Inspire Medical Systems and iRhythm Technologies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Inspire Medical Systems	3	13	3	1	2.10
iRhythm Technologies	1	2	13	1	2.82

Inspire Medical Systems currently has a consensus price target of $71.24, suggesting a potential upside of 14.81%. iRhythm Technologies has a consensus price target of $164.07, suggesting a potential upside of 85.02%. Given iRhythm Technologies’ stronger consensus rating and higher probable upside, analysts plainly believe iRhythm Technologies is more favorable than Inspire Medical Systems.

Earnings and Valuation

This table compares Inspire Medical Systems and iRhythm Technologies”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Inspire Medical Systems	$911.98 million	1.97	$145.42 million	$3.44	18.04
iRhythm Technologies	$747.14 million	3.99	-$44.55 million	($1.17)	-75.79

Inspire Medical Systems has higher revenue and earnings than iRhythm Technologies. iRhythm Technologies is trading at a lower price-to-earnings ratio than Inspire Medical Systems, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Inspire Medical Systems has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, iRhythm Technologies has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500.

About Inspire Medical Systems

Inspire Medical Systems is a medical technology company focused on treatments for obstructive sleep apnea, a condition in which breathing repeatedly stops or becomes restricted during sleep. Founded in 2007 and based in Minnesota, the company develops implantable devices intended for certain patients who cannot use or benefit from conventional positive airway pressure therapy. Its primary product, the Inspire Upper Airway Stimulation system, uses an implanted device to monitor breathing and deliver mild stimulation to the hypoglossal nerve, helping keep the airway open during sleep.

About iRhythm Technologies

iRhythm Technologies is a medical technology company that develops digital solutions for detecting and monitoring heart rhythm disorders. Its services combine wearable electrocardiogram (ECG) devices with cloud-based data analysis and clinical reporting to help healthcare professionals assess patients for conditions such as cardiac arrhythmias. The company’s Zio product line includes wearable ECG monitors, such as Zio XT, which records a patient’s heart activity during an extended monitoring period. iRhythm also offers Zio AT, a monitoring service designed to provide clinicians with ECG data during the monitoring period.