10-KPeriod: FY2013

INTUITIVE SURGICAL INC Annual Report, Year Ended Dec 31, 2013

Filed February 3, 2014For Securities:ISRG

Summary

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 billion, 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 billion in cash, cash equivalents, and investments, and continued its focus on research and development to expand product offerings and clinical applications.

Financial Highlights

48 data points
Beta

Revenue

$2.27B

70.4% Gross Margin

Net Income

$671.00M

29.6% Net Margin

EPS (Diluted)

$1.86

Total Assets

$3.95B

Cash & Equivalents

$782.10M

Free Cash Flow

$880.00M

Financial Statements
Beta
Revenue$2.27B
Cost of Revenue$670.90M
Gross Profit$1.59B
R&D Expenses$167.70M
SG&A Expenses$574.00M
Operating Expenses$741.70M
Operating Income$852.50M
Net Income$671.00M
EPS (Basic)$1.90
EPS (Diluted)$1.86
Shares Outstanding (Basic)352.80M
Shares Outstanding (Diluted)360.90M

Key Highlights

  • 1Total revenue grew 4% to $2.27 billion in 2013, driven by a 16% increase in da Vinci procedures to 523,000.
  • 2Instruments and accessories revenue increased by 14%, indicating strong utilization of existing systems.
  • 3Recurring revenue (instruments, accessories, and service) represented 63% of total revenue, demonstrating a robust service-based component to the business.
  • 4U.S. system sales decreased by 11% due to longer sales cycles and hospital capital spending uncertainties.
  • 5U.S. Prostatectomy (dVP) procedures saw a 6% decline, impacting overall procedure growth.
  • 6U.S. benign gynecology procedures experienced slower growth, attributed to market saturation and external factors.
  • 7The company held $2.75 billion in cash, cash equivalents, and investments, providing significant financial flexibility.

Frequently Asked Questions

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.

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.

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.

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.