01—Abstract
Summary
Summary of the 10-K filed February 1, 2011. Cited figures are marked; the original filing is the authoritative source.
Intuitive Surgical, Inc. (ISRG) reported robust growth for the fiscal year ended December 31, 2010, with total revenue increasing by 34% to $1.41 billiona.
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 millionb 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.
02—Key points
Key Highlights
- Total revenue grew 34% year-over-year to $1.41 billion, driven by strong demand for da Vinci Surgical Systems.
- 441 da Vinci Surgical Systems were sold in 2010, an increase from 338 in 2009, expanding the installed base to 1,752 systems globally.
- Recurring revenue (instruments, accessories, and service) accounted for 53% of total revenue, reaching $752.7 million, demonstrating strong system utilization.
- The da Vinci Hysterectomy (dVH) became the highest volume procedure, surpassing da Vinci Prostatectomy (dVP), with significant growth in both cancer and benign applications.
- Research and Development expenses increased by 22% to $116 million, reflecting continued investment in product innovation and new procedure development.
- The company ended the year with a strong liquidity position, holding $1.61 billion in cash, cash equivalents, and investments.
- The newly launched da Vinci Si Surgical System was well-received, accounting for 84% of systems sold in 2010.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Intuitive Surgical kept $0.27.
- Revenue$1.41B100.0%
- Cost of revenue−$383.0M27.1%
- Gross profit$1.03B72.9%
- Operating costs−$474.8M33.6%
- Operating income$555.2M39.3%
- Interest, other & tax−$173.4M12.3%
- Net income$381.8M27.0%
Where FY2010 revenue went
$1.41B- Cost of revenue: $383.0M, 27% of revenue
- Net income: $381.8M, 27% of revenue
- SG&A: $358.8M, 25% of revenue
- Interest, other & tax: $173.4M, 12% of revenue
- R&D: $116.0M, 8.2% of revenue
Kept 27% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 1, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $1.41B$1.05B | +34.3% |
| Cost of Revenue | $383.00M$301.10M | +27.2% |
| Gross Profit | $1.03B$751.10M | +37.1% |
| R&D Expenses | $116.00M$95.10M | +22.0% |
| SG&A Expenses | $358.80M$278.60M | +28.8% |
| Operating Expenses | $474.80M$373.70M | +27.1% |
| Operating Income | $555.20M$377.40M | +47.1% |
| Net Income | $381.80M$232.60M | +64.1% |
| EPS (Basic) | $1.08$0.67 | +60.5% |
| EPS (Diluted) | $1.05$0.66 | +59.7% |
| Shares Outstanding (Basic) | 352.80M344.70M | +2.3% |
| Shares Outstanding (Diluted) | 362.70M352.80M | +2.8% |
05—Questions
Frequently Asked Questions
What is the primary driver of Intuitive Surgical's revenue growth?
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.
How does Intuitive Surgical generate revenue?
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.
What is the significance of the da Vinci Hysterectomy (dVH) procedure for the company?
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.
What is the company's strategy for future 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.
06—Continue