10-KPeriod: FY2010

INTUITIVE SURGICAL INC Annual Report, Year Ended Dec 31, 2010

Filed February 1, 2011For Securities:ISRG

Summary

Intuitive Surgical, Inc. (ISRG) reported robust growth for the fiscal year ended December 31, 2010, with total revenue increasing by 34% to $1.41 billion. This growth was primarily driven by increased adoption of the da Vinci Surgical System across various procedures, particularly da Vinci Hysterectomy (dVH) and da Vinci Prostatectomy (dVP). The company saw a significant rise in system sales, with 441 units sold, up from 338 in the previous year, and a growing installed base of 1,752 systems worldwide. The company's business model is characterized by both capital equipment sales and recurring revenue from instruments, accessories, and service. Recurring revenue represented 53% of total revenue in 2010, highlighting the sticky nature of their customer base and the ongoing utilization of their systems. Investment in research and development remained strong, with $116 million allocated, indicating a continued focus on product innovation and expansion into new surgical specialties. The company also reported a healthy financial position, with $1.61 billion in cash, cash equivalents, and investments, providing ample resources for future growth and operations.

Financial Highlights

46 data points
Beta

Revenue

$1.41B

72.9% Gross Margin

Net Income

$381.80M

27.0% Net Margin

EPS (Diluted)

$1.05

Total Assets

$2.39B

Cash & Equivalents

$279.80M

Free Cash Flow

$545.80M

Financial Statements
Beta
Revenue$1.41B
Cost of Revenue$383.00M
Gross Profit$1.03B
R&D Expenses$116.00M
SG&A Expenses$358.80M
Operating Expenses$474.80M
Operating Income$555.20M
Net Income$381.80M
EPS (Basic)$1.08
EPS (Diluted)$1.05
Shares Outstanding (Basic)352.80M
Shares Outstanding (Diluted)362.70M

Key Highlights

  • 1Total revenue grew 34% year-over-year to $1.41 billion, driven by strong demand for da Vinci Surgical Systems.
  • 2441 da Vinci Surgical Systems were sold in 2010, an increase from 338 in 2009, expanding the installed base to 1,752 systems globally.
  • 3Recurring revenue (instruments, accessories, and service) accounted for 53% of total revenue, reaching $752.7 million, demonstrating strong system utilization.
  • 4The da Vinci Hysterectomy (dVH) became the highest volume procedure, surpassing da Vinci Prostatectomy (dVP), with significant growth in both cancer and benign applications.
  • 5Research and Development expenses increased by 22% to $116 million, reflecting continued investment in product innovation and new procedure development.
  • 6The company ended the year with a strong liquidity position, holding $1.61 billion in cash, cash equivalents, and investments.
  • 7The newly launched da Vinci Si Surgical System was well-received, accounting for 84% of systems sold in 2010.

Frequently Asked Questions

The primary driver of Intuitive Surgical's revenue growth is the increasing adoption and utilization of the da Vinci Surgical System across a widening range of surgical procedures. This adoption leads to both capital equipment sales and recurring revenue from instruments, accessories, and service contracts.

Intuitive Surgical generates revenue through two main streams: product revenue (from the sale of da Vinci Surgical Systems, instruments, and accessories) and service revenue (from system servicing, customer training, and related support). Recurring revenue from instruments, accessories, and service is a significant and growing portion of their total revenue.

The da Vinci Hysterectomy (dVH) has become Intuitive Surgical's highest volume procedure, surpassing the da Vinci Prostatectomy (dVP). This indicates strong market acceptance and utilization in gynecology, contributing significantly to both instrument/accessory sales and overall procedure growth.

Intuitive Surgical's strategy for future growth involves continued investment in research and development to introduce new products and enhance existing ones, expanding the range of surgical procedures performed with their systems, increasing market penetration in existing procedures, and entering new geographical markets. The focus remains on demonstrating the 'patient value' (efficacy/invasiveness) of da Vinci surgery.