We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of restricted stock units (RSUs), performance stock units (PSUs), and non-statutory and incentive stock options to employees, and RSUs, PSUs, and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan (ESPP) which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. As of June 30, 2026, there were 7,707,539 shares reserved for issuance under our equity incentive plan, of which 3,376,977 shares were available for issuance.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is the vesting period or term to become eligible for a qualified retirement for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs, and is reduced by actual forfeitures as they occur. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock-based awards.

The table below sets forth the number of stock-based compensation awards granted during the six months ended June 30, 2026, along with the weighted average grant date fair value. There were no stock options granted during the six months ended June 30, 2026.

2Performance condition awards which generally vest over a three-year period, shown with the grant amount equal to the target number of performance shares based on the share price at grant date. These awards allow for the right to receive a variable number of shares, between 0% and 200% of target, dependent on being employed at the end of the performance period and achieving defined performance goals.

Total share-based compensation expense included in the consolidated statements of operations was $31.2 million and $41.7 million for the three months ended June 30, 2026 and 2025, respectively, and $61.9 million and $72.8 million for the six months ended June 30, 2026 and 2025, respectively. During the three-month period ended June 30, 2025, we recorded accelerated stock-based compensation expense of $11.2 million for employees who are retirement eligible in accordance with the implementation of changes to the treatment of equity awards under the Inspire Medical Systems, Inc. 2018 Incentive Award Plan upon the holder's death, disability, or retirement.

As of June 30, 2026, there was $199.3 million of unrecognized stock-based compensation expense related to outstanding stock options, RSUs, and PSUs, that is expected to be recognized over a weighted-average period of 2.1 years.