10-QPeriod: Q1 FY2013

INTUITIVE SURGICAL INC Quarterly Report for Q1 Ended Mar 31, 2013

Filed April 19, 2013For Securities:ISRG

Summary

Intuitive Surgical Inc. (ISRG) reported strong financial performance for the first quarter of 2013, with total revenue increasing 23% year-over-year to $611.4 million. This growth was primarily driven by a 23% increase in recurring revenue, which now constitutes 58% of total revenue, and a 24% rise in system revenue due to higher unit sales and average selling prices. The company continues to expand its installed base of da Vinci Surgical Systems, reaching 2,710 units globally. Profitability also saw significant improvement, with operating income up 30% to $251.2 million. While the company faces ongoing legal proceedings and some market challenges, such as declining U.S. prostatectomy procedures and economic pressures in Europe, its robust revenue growth and increasing recurring revenue streams indicate a positive trajectory. Investors should note the company's active share repurchase program, with $1.2 billion remaining authorization, and its continued investment in research and development.

Financial Highlights

45 data points
Beta

Revenue

$611.40M

71.0% Gross Margin

Net Income

$188.90M

30.9% Net Margin

EPS (Diluted)

$0.51

Total Assets

$4.24B

Cash & Equivalents

$427.50M

Free Cash Flow

$258.00M

Financial Statements
Beta
Revenue$611.40M
Cost of Revenue$177.10M
Gross Profit$434.30M
R&D Expenses$41.60M
SG&A Expenses$141.50M
Operating Expenses$183.10M
Operating Income$251.20M
Net Income$188.90M
EPS (Basic)$0.52
EPS (Diluted)$0.51
Shares Outstanding (Basic)362.70M
Shares Outstanding (Diluted)372.60M

Key Highlights

  • 1Total revenue grew 23% to $611.4 million in Q1 2013, up from $495.2 million in Q1 2012.
  • 2Recurring revenue increased 23% to $355.5 million, representing 58% of total revenue, highlighting the strength of the company's installed base.
  • 3System revenue rose 24% to $255.9 million, with 164 da Vinci Surgical Systems sold, up from 140 in the prior year period.
  • 4Operating income increased by 30% to $251.2 million, demonstrating improved operational efficiency.
  • 5The installed base of da Vinci Surgical Systems reached 2,710 units globally as of March 31, 2013.
  • 6The company repurchased approximately $145.7 million of its common stock in Q1 2013 and had $1.2 billion remaining under its authorized share repurchase program.
  • 7Despite an 11% decline in U.S. prostatectomy procedures, overall da Vinci procedures grew 18% year-over-year.

Frequently Asked Questions

Intuitive Surgical designs, manufactures, and markets the da Vinci Surgical System, along with related instruments and accessories. Their revenue model is diversified, generating significant income from both the initial capital sales of the da Vinci Surgical Systems and recurring revenue from the sale of disposable instruments, accessories, and ongoing system service contracts.

In the first quarter of 2013, Intuitive Surgical reported a 23% increase in total revenue, reaching $611.4 million, compared to $495.2 million in the same period of 2012. This growth was driven by increases in both system revenue (up 24%) and recurring revenue from instruments, accessories, and services (up 23%).

Yes, Intuitive Surgical is involved in several legal proceedings, including a pending appeal in a purported shareholder class action lawsuit and approximately 26 individual product liability lawsuits. While the company believes it has meritorious defenses and does not expect a material adverse effect, the outcome of these litigations is uncertain and could result in significant legal costs.

Overall da Vinci procedure volume saw an 18% increase in the first quarter of 2013 compared to the same period in 2012. This growth was primarily driven by general surgery and gynecology procedures in the U.S. and international urology procedures. However, U.S. prostatectomy procedures (dVP) experienced an 11% decline, attributed to factors like reduced PSA testing and a shift towards non-surgical disease management.