10-KPeriod: FY2015

INTUITIVE SURGICAL INC Annual Report, Year Ended Dec 31, 2015

Filed February 2, 2016For Securities:ISRG

Summary

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 billion. 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 million, highlighting the company's commitment to innovation and future product enhancements. Financially, ISRG maintained a robust balance sheet with $3.3 billion 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.

Financial Highlights

48 data points
Beta

Revenue

$2.38B

66.2% Gross Margin

Net Income

$588.80M

24.7% Net Margin

EPS (Diluted)

$1.73

Total Assets

$4.91B

Cash & Equivalents

$714.60M

Free Cash Flow

$806.20M

Financial Statements
Beta
Revenue$2.38B
Cost of Revenue$806.50M
Gross Profit$1.58B
R&D Expenses$197.40M
SG&A Expenses$640.50M
Operating Expenses$837.90M
Operating Income$740.00M
Net Income$588.80M
EPS (Basic)$1.76
EPS (Diluted)$1.73
Shares Outstanding (Basic)333.90M
Shares Outstanding (Diluted)341.10M

Key Highlights

  • 1Total revenue grew 12% to $2.4 billion in 2015.
  • 2da Vinci procedures increased by 14% globally, reaching approximately 652,000.
  • 3Recurring revenue (instruments, accessories, and service) represented a stable 70% of total revenue, totaling $1.7 billion.
  • 4System revenue increased by 14% to $721.9 million with 492 systems shipped.
  • 5Research and development expenses rose 11% to $197.4 million, signaling continued investment in innovation.
  • 6The company maintained a strong liquidity position with $3.3 billion in cash, cash equivalents, and investments.
  • 7Intuitive Surgical continued its stock repurchase program, with $816.3 million remaining authorization as of December 31, 2015.

Frequently Asked Questions

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.

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.

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.

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.

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.