What steps is Inspire Medical Systems taking to address the claims and mitigate risk?

Company response & risk‑mitigation steps

Inspire Medical Systems has publicly announced that it is cooperating with the Pomerantz LLP investigation and has launched an internal review of the allegations. The company is engaging external legal counsel to assess the exposure, setting aside a contingency reserve to cover potential liabilities, and enhancing its disclosure and governance processes to prevent similar issues in the future. Management has also indicated that it will provide regular updates to shareholders and the market, and is working with its auditors to ensure any material findings are reflected in its financial statements promptly.

Trading implications

The announcement of a coordinated legal response and the establishment of a reserve should temper the most severe downside pressure that typically follows a securities‑class‑action filing. However, the mere presence of a lawsuit—especially one that could involve sizable investor claims—adds a layer of event‑driven volatility. On the technical side, INSP has been trading near its 50‑day moving average (≈$12.30) with a modest downtrend on the daily chart; the recent news has pushed the price into a lower‑shadow range, creating a short‑term support zone around $11.80. Until the company’s internal review yields concrete outcomes, the risk of a further pull‑back remains, and the stock could test the $11.50‑$11.20 area if negative disclosures surface.

Actionable insight

Given the heightened legal risk and the current technical weakness, a cautious short‑position or a protective put hedge for existing long exposure is prudent. If the stock holds above the $11.80 support on the next few sessions and the company releases a clear update on the reserve size and any material impact, a modest upside to the $12.50‑$13.00 resistance (coincident with the 200‑day moving average) could be considered. Conversely, a breach below $11.50 would likely trigger a deeper correction, warranting a stop‑loss or a full exit. Keep a close eye on any forthcoming SEC filings or press releases from Inspire that detail the scope of the reserve and the timeline for the internal review.