01—Abstract
Summary
Summary of the 10-K filed February 2, 2016. Cited figures are marked; the original filing is the authoritative source.
Intuitive Surgical, Inc. (ISRG) reported strong performance for the fiscal year ending December 31, 2015, with total revenue increasing 12% year-over-year to $2.4 billiona.
This growth was driven by a 14% increase in system revenue and an 11% increase in recurring revenue, the latter representing a consistent 70% of total revenue. The company saw a 14% rise in da Vinci procedures performed globally, reaching approximately 652,000, indicating broad adoption across surgical specialties. Investments in research and development increased by 11% to $197.4 millionb, highlighting the company's commitment to innovation and future product enhancements.
Financially, ISRG maintained a robust balance sheet with $3.3 billionc in cash, cash equivalents, and investments, a significant increase from the prior year. The company also continued its stock repurchase program, demonstrating confidence in its financial position and commitment to shareholder returns. Despite some product liability charges and ongoing litigation, the core business demonstrated resilience and growth, positioning Intuitive Surgical favorably within the minimally invasive surgery market.
02—Key points
Key Highlights
- Total revenue grew 12% to $2.4 billion in 2015.
- da Vinci procedures increased by 14% globally, reaching approximately 652,000.
- Recurring revenue (instruments, accessories, and service) represented a stable 70% of total revenue, totaling $1.7 billion.
- System revenue increased by 14% to $721.9 million with 492 systems shipped.
- Research and development expenses rose 11% to $197.4 million, signaling continued investment in innovation.
- The company maintained a strong liquidity position with $3.3 billion in cash, cash equivalents, and investments.
- Intuitive Surgical continued its stock repurchase program, with $816.3 million remaining authorization as of December 31, 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Intuitive Surgical kept $0.25.
- Revenue$2.38B100.0%
- Cost of revenue−$806.5M33.8%
- Gross profit$1.58B66.2%
- Operating costs−$837.9M35.1%
- Operating income$740.0M31.0%
- Interest, other & tax−$151.2M6.3%
- Net income$588.8M24.7%
Where FY2015 revenue went
$2.38B- Cost of revenue: $806.5M, 34% of revenue
- SG&A: $640.5M, 27% of revenue
- Net income: $588.8M, 25% of revenue
- R&D: $197.4M, 8.3% of revenue
- Interest, other & tax: $151.2M, 6.3% of revenue
Kept 25% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 2, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $2.38B$2.13B | +11.9% |
| Cost of Revenue | $806.50M$717.90M | +12.3% |
| Gross Profit | $1.58B$1.41B | +11.6% |
| R&D Expenses | $197.40M$178.00M | +10.9% |
| SG&A Expenses | $640.50M$691.00M | −7.3% |
| Operating Expenses | $837.90M$869.00M | −3.6% |
| Operating Income | $740.00M$544.80M | +35.8% |
| Net Income | $588.80M$418.80M | +40.6% |
| EPS (Basic) | $1.76$1.26 | +39.8% |
| EPS (Diluted) | $1.73$1.23 | +39.9% |
| Shares Outstanding (Basic) | 333.90M332.10M | +0.5% |
| Shares Outstanding (Diluted) | 341.10M339.30M | +0.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of Intuitive Surgical's revenue growth in 2015?
Intuitive Surgical's revenue growth in 2015 was driven by a combination of increased system revenue and recurring revenue. This growth was underpinned by a 14% increase in the number of da Vinci procedures performed globally, indicating broader adoption of their robotic surgical systems.
How has the company's installed base of da Vinci Surgical Systems evolved?
As of December 31, 2015, Intuitive Surgical had an installed base of approximately 3,597 da Vinci Surgical Systems, an increase from 3,266 systems at the end of 2014. This growing installed base is crucial for driving recurring revenue from instruments, accessories, and service contracts.
What is the significance of 'recurring revenue' for Intuitive Surgical?
Recurring revenue, which includes sales of instruments, accessories, and service contracts, is a significant and stable revenue stream for Intuitive Surgical. In 2015, it constituted 70% of total revenue ($1.7 billion), demonstrating the ongoing usage of their systems and the stickiness of their business model.
What are the key areas of surgical specialties the company focuses on?
Intuitive Surgical primarily focuses on five surgical specialties: gynecologic surgery, urologic surgery, general surgery, cardiothoracic surgery, and head and neck surgery. Key procedures highlighted include prostatectomy, hysterectomy, hernia repair, colorectal procedures, and mitral valve repair.
How did the company address product liability claims mentioned in the report?
The company recorded pre-tax charges of $13.8 million in 2015 and $82.4 million in 2014 to reflect the estimated costs of settling a number of product liability claims. These claims primarily related to alleged complications from specific instrument types. The company believes da Vinci Surgery is safe and effective and provides appropriate training, but acknowledges the ongoing litigation and potential financial impact.
06—Continue