01—Abstract
Summary
Summary of the 10-K filed February 7, 2020. Cited figures are marked; the original filing is the authoritative source.
Intuitive Surgical, Inc. (ISRG) demonstrated strong growth in its 2019 fiscal year, with total revenue increasing by 20% to $4.5 billiona, driven by a 23% increase in instrument and accessory revenue and a 19% increase in systems revenue.
The company shipped 1,119 da Vinci Surgical Systems, a 21%b increase year-over-year, and expanded its installed base to 5,582 systems. Procedures performed globally increased by 18% to approximately 1.23 million. The company continues to invest heavily in research and development, with a 33% increase in R&D expenses, focusing on expanding its product offerings and improving existing technologies.
The introduction of new products like the Ion endoluminal system for diagnostic procedures and continued rollout of the da Vinci SP surgical system highlight the company's commitment to innovation. Despite a slight decrease in gross profit margin to 69.4% primarily due to increased amortization expenses from acquisitions, the company maintained robust profitability with operating income growing by 15% to $1.4 billionc.
02—Key points
Key Highlights
- Total revenue grew 20% to $4.5 billion in 2019.
- Global da Vinci procedures increased by 18% to 1.23 million in 2019.
- Instrument and accessory revenue, a key recurring revenue stream, grew 23% to $2.4 billion.
- System shipments increased by 21% to 1,119 units, expanding the installed base to 5,582 systems.
- Research and Development expenses increased by 33%, reflecting continued investment in innovation.
- The company began commercial sales of its new Ion endoluminal system for diagnostic procedures.
- Operating income grew 15% to $1.4 billion, demonstrating strong profitability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Intuitive Surgical kept $0.31.
- Revenue$4.48B100.0%
- Cost of revenue−$1.37B30.6%
- Gross profit$3.11B69.4%
- Operating costs−$1.74B38.8%
- Operating income$1.37B30.7%
- Interest, other & tax$4.8M0.1%
- Net income$1.38B30.8%
Where FY2019 revenue went
$4.48B- Operating income: $1.37B, 31% of revenue
- Cost of revenue: $1.37B, 31% of revenue
- SG&A: $1.18B, 26% of revenue
- R&D: $557.3M, 12% of revenue
Kept 31% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 7, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $4.48B$3.72B | +20.3% |
| Cost of Revenue | $1.37B$1.12B | +22.2% |
| Gross Profit | $3.11B$2.60B | +19.4% |
| R&D Expenses | $557.30M$418.10M | +33.3% |
| SG&A Expenses | $1.18B$986.60M | +19.4% |
| Operating Expenses | $1.74B$1.40B | +23.6% |
| Operating Income | $1.37B$1.20B | +14.6% |
| Net Income | $1.38B$1.13B | +22.3% |
| EPS (Basic) | $3.98$3.31 | +20.4% |
| EPS (Diluted) | $3.85$3.16 | +21.7% |
| Shares Outstanding (Basic) | 346.20M341.10M | +1.5% |
| Shares Outstanding (Diluted) | 358.40M356.40M | +0.6% |
05—Questions
Frequently Asked Questions
What was Intuitive Surgical's primary revenue driver in 2019?
Intuitive Surgical's primary revenue drivers were product revenue, which increased by 22% to $3.8 billion, and service revenue, which increased by 14% to $724 million. Within product revenue, instrument and accessory sales were particularly strong, increasing by 23% to $2.4 billion, indicating robust procedure adoption and recurring revenue generation.
How is the company expanding its product portfolio beyond surgical systems?
Intuitive Surgical is expanding its offerings into diagnostic procedures with the introduction of its Ion endoluminal system, which received FDA clearance in February 2019 for minimally invasive lung biopsies. The company also made strategic acquisitions to bolster its manufacturing capabilities, such as the acquisition of Schölly Fiberoptic's endoscope business.
What is the company's strategy for international markets?
Intuitive Surgical is actively investing in its international markets, with OUS revenue accounting for 30% of total revenue in 2019. The company is building out direct sales organizations in key regions like China, India, and Taiwan, aiming to increase OUS procedure volumes and revenue as a greater proportion of its overall business in the long term.
What are the key risks for Intuitive Surgical moving forward, as outlined in the filing?
Key risks include market acceptance of robotic-assisted surgery, competition from other medical device companies, potential disruptions in manufacturing or supply chains due to sole/single-source suppliers, changes in healthcare legislation and reimbursement policies, and the inherent uncertainties of international operations, including regulatory approvals and currency fluctuations.
06—Continue