01—Abstract
Summary
Summary of the 10-K filed February 4, 2019. Cited figures are marked; the original filing is the authoritative source.
Intuitive Surgical Inc. (ISRG) reported strong performance in its 2018 10-K filing, with total revenue reaching $3.7 billiona, a 19% increase year-over-year.
This growth was primarily driven by a 20%b increase in instrument and accessory revenue, fueled by an 18% rise in da Vinci procedures performed globally, and a 21% increase in systems revenue. The company expanded its installed base of da Vinci Surgical Systems to approximately 4,986 units. Despite a slight decrease in gross profit margin to 69.9% due to lower service margins, overall operating income saw a healthy 13% increase.
The company also reported a significant increase in cash, cash equivalents, and investments, reaching $4.8 billionc, indicating a strong liquidity position. ISRG continues to invest heavily in research and development, signaling a commitment to future innovation and growth in the minimally invasive surgery market. The company's strategy focuses on increasing patient, surgeon, and hospital value by offering advanced robotic-assisted surgical solutions.
They are expanding their product portfolio with new systems like the da Vinci SP Surgical System and new instruments such as the SureForm staplers, while also navigating regulatory landscapes and competitive pressures. Key growth drivers include the expansion of da Vinci procedures in general surgery, particularly hernia repair and colorectal procedures, as well as continued strength in urology and gynecology, both domestically and internationally. The company's direct sales model in key markets, coupled with a growing installed base and recurring revenue from instruments, accessories, and services, positions it for sustained growth.
02—Key points
Key Highlights
- Total revenue grew 19% to $3.7 billion in 2018, driven by increased procedure volume and system sales.
- The installed base of da Vinci Surgical Systems grew 13% to 4,986 units by year-end 2018.
- Instrument and accessory revenue, a key recurring revenue stream, increased by 20% to $2.0 billion.
- Global da Vinci procedures increased by 18% to approximately 1,037,000 in 2018.
- The company ended the year with a strong liquidity position, with $4.8 billion in cash, cash equivalents, and investments.
- Research and development expenses increased by 27% to $418.1 million, underscoring investment in future innovation.
- New product introductions, including the da Vinci SP Surgical System and SureForm staplers, aim to expand market reach and capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Intuitive Surgical kept $0.30.
- Revenue$3.72B100.0%
- Cost of revenue−$1.12B30.1%
- Gross profit$2.60B69.9%
- Operating costs−$1.40B37.7%
- Operating income$1.20B32.2%
- Interest, other & tax−$71.5M1.9%
- Net income$1.13B30.3%
Where FY2018 revenue went
$3.72B- Net income: $1.13B, 30% of revenue
- Cost of revenue: $1.12B, 30% of revenue
- SG&A: $986.6M, 26% of revenue
- R&D: $418.1M, 11% of revenue
- Interest, other & tax: $71.5M, 1.9% of revenue
Kept 30% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 4, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $3.72B$3.13B | +19.0% |
| Cost of Revenue | $1.12B$934.80M | +19.8% |
| Gross Profit | $2.60B$2.20B | +18.3% |
| R&D Expenses | $418.10M$328.60M | +27.2% |
| SG&A Expenses | $986.60M$810.50M | +21.7% |
| Operating Expenses | $1.40B$1.14B | +23.3% |
| Operating Income | $1.20B$1.06B | +12.8% |
| Net Income | $1.13B$670.90M | +68.1% |
| EPS (Basic) | $3.31$2.00 | +65.1% |
| EPS (Diluted) | $3.16$1.92 | +64.5% |
| Shares Outstanding (Basic) | 341.10M335.10M | +1.8% |
| Shares Outstanding (Diluted) | 356.40M348.90M | +2.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Intuitive Surgical's revenue growth in 2018?
Revenue growth was primarily driven by a 20% increase in instrument and accessory revenue, fueled by an 18% rise in da Vinci procedures performed globally. Additionally, systems revenue increased by 21%, and service revenue grew by 11% due to the expanding installed base of da Vinci Surgical Systems.
How is Intuitive Surgical expanding its product offerings and market reach?
The company is investing in new product development and introductions, including the da Vinci SP Surgical System designed for single-port procedures, and new instruments like the SureForm staplers. They are also focused on expanding procedure adoption in key specialties like general surgery, urology, and gynecology, both in the U.S. and internationally.
What is the company's financial health and liquidity position as of December 31, 2018?
Intuitive Surgical maintained a strong financial position, with total revenue of $3.7 billion and operating income of $1.2 billion. The company reported $4.8 billion in cash, cash equivalents, and investments, indicating robust liquidity to fund operations and future growth initiatives.
What are the key growth areas for Intuitive Surgical?
Key growth areas include expanding the utilization of da Vinci procedures, particularly in general surgery (like hernia repair and colorectal procedures), and continuing to drive adoption in urology and gynecology. Internationally, the company sees significant opportunity for growth as it expands its direct operations and secures regulatory approvals and reimbursements.
06—Continue