01—Abstract
Summary
Summary of the 10-K filed February 3, 2014. Cited figures are marked; the original filing is the authoritative source.
Intuitive Surgical, Inc. (ISRG) presented its 2013 annual report, highlighting continued revenue growth driven by a significant increase in da Vinci surgical procedures, particularly in general surgery and gynecology in the U.S., and urology internationally.
While total revenue saw a modest 4% increase to $2.27 billiona, the company experienced a notable 16% rise in procedures performed to approximately 523,000, underscoring the growing adoption of its robotic surgical systems. However, the company faced headwinds in 2013, including a decrease in U.S. da Vinci Prostatectomy (dVP) procedures due to changes in screening recommendations and treatment patterns, and a slowdown in U.S. benign gynecology procedures attributed to factors like negative media reports and payer trends.
System revenue declined by 11%, reflecting longer sales cycles and pressures from healthcare reform and economic uncertainty on hospital capital spending. Despite these challenges, the company maintained a strong financial position with $2.75 billionb in cash, cash equivalents, and investments, and continued its focus on research and development to expand product offerings and clinical applications.
02—Key points
Key Highlights
- Total revenue grew 4% to $2.27 billion in 2013, driven by a 16% increase in da Vinci procedures to 523,000.
- Instruments and accessories revenue increased by 14%, indicating strong utilization of existing systems.
- Recurring revenue (instruments, accessories, and service) represented 63% of total revenue, demonstrating a robust service-based component to the business.
- U.S. system sales decreased by 11% due to longer sales cycles and hospital capital spending uncertainties.
- U.S. Prostatectomy (dVP) procedures saw a 6% decline, impacting overall procedure growth.
- U.S. benign gynecology procedures experienced slower growth, attributed to market saturation and external factors.
- The company held $2.75 billion in cash, cash equivalents, and investments, providing significant financial flexibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Intuitive Surgical kept $0.30.
- Revenue$2.27B100.0%
- Cost of revenue−$670.9M29.6%
- Gross profit$1.59B70.4%
- Operating costs−$741.7M32.7%
- Operating income$852.5M37.6%
- Interest, other & tax−$181.5M8.0%
- Net income$671.0M29.6%
Where FY2013 revenue went
$2.27B- Net income: $671.0M, 30% of revenue
- Cost of revenue: $670.9M, 30% of revenue
- SG&A: $574.0M, 25% of revenue
- R&D: $167.7M, 7.4% of revenue
- Interest, other & tax: $181.5M, 8.0% of revenue
Kept 30% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 3, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.27B$2.18B | +4.0% |
| Cost of Revenue | $670.90M$608.50M | +10.3% |
| Gross Profit | $1.59B$1.57B | +1.5% |
| R&D Expenses | $167.70M$170.00M | −1.4% |
| SG&A Expenses | $574.00M$522.20M | +9.9% |
| Operating Expenses | $741.70M$692.20M | +7.2% |
| Operating Income | $852.50M$878.10M | −2.9% |
| Net Income | $671.00M$656.60M | +2.2% |
| EPS (Basic) | $1.90$1.83 | +3.8% |
| EPS (Diluted) | $1.86$1.78 | +4.7% |
| Shares Outstanding (Basic) | 352.80M358.20M | −1.5% |
| Shares Outstanding (Diluted) | 360.90M369.90M | −2.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Intuitive Surgical's revenue growth in 2013?
Revenue growth in 2013 was primarily driven by the increasing adoption of da Vinci Surgical Systems, leading to a 16% rise in the total number of procedures performed globally. Growth was particularly strong in U.S. general surgery and gynecology procedures, as well as international urology procedures.
What challenges did Intuitive Surgical face in 2013?
The company faced challenges including a decline in U.S. prostatectomy procedures, a slowdown in U.S. benign gynecology procedure growth due to market factors and negative media, and a decrease in U.S. system sales stemming from longer capital sales cycles and uncertainties around healthcare reform impacting hospital spending.
How significant is the recurring revenue component of Intuitive Surgical's business?
Recurring revenue, which includes sales of instruments, accessories, and service contracts, is a substantial and growing part of Intuitive Surgical's business. In 2013, it represented 63% of total revenue, highlighting the company's success in generating ongoing revenue from its installed base of surgical systems.
What is the company's financial health and liquidity position?
Intuitive Surgical maintained a strong financial position, ending 2013 with $2.75 billion in cash, cash equivalents, and investments. This provides the company with significant financial flexibility to fund its operations, research and development, and strategic initiatives.
06—Continue