10-QPeriod: Q2 FY2020

INTUITIVE SURGICAL INC Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 23, 2020For Securities:ISRG

Summary

Intuitive Surgical Inc. (ISRG) reported its second quarter 2020 financial results, significantly impacted by the COVID-19 pandemic. Total revenue for the quarter decreased by 22% year-over-year to $852.1 million. This decline was primarily driven by a 19% reduction in da Vinci procedures performed, leading to lower revenue from instruments, accessories, systems, and services. The company implemented a Customer Relief Program, which included service fee credits, payment deferrals, and extended payment terms, impacting service revenue by $59 million in the second quarter. Despite the challenges, the installed base of da Vinci Surgical Systems grew by 9% year-over-year to approximately 5,764 systems. The company maintained a strong liquidity position with $6.1 billion in cash, cash equivalents, and investments as of June 30, 2020.

Financial Highlights

47 data points
Beta

Revenue

$852.10M

59.0% Gross Margin

Net Income

$68.00M

8.0% Net Margin

EPS (Diluted)

$0.57

Total Assets

$10.10B

Cash & Equivalents

$2.05B

Free Cash Flow

$229.90M

Financial Statements
Beta
Revenue$852.10M
Cost of Revenue$349.20M
Gross Profit$502.90M
R&D Expenses$143.20M
SG&A Expenses$279.10M
Operating Expenses$422.30M
Operating Income$80.60M
Net Income$68.00M
EPS (Basic)$0.58
EPS (Diluted)$0.57
Shares Outstanding (Basic)350.40M
Shares Outstanding (Diluted)359.10M

Key Highlights

  • 1Total revenue for Q2 2020 decreased 22% to $852.1 million, primarily due to the impact of COVID-19 on surgical procedures.
  • 2da Vinci procedures declined 19% to approximately 243,000 in Q2 2020 compared to the prior year.
  • 3Systems revenue saw a 24% decrease to $261 million, with total system shipments down 35% year-over-year to 178 units.
  • 4Service revenue decreased 26% to $130 million, significantly impacted by $59 million in service fee credits provided under the Customer Relief Program.
  • 5Gross profit margin decreased to 59.0% from 69.1% in the prior year's quarter, influenced by lower volumes and increased costs.
  • 6The da Vinci Surgical System installed base increased by 9% to approximately 5,764 systems as of June 30, 2020.
  • 7The company ended the quarter with $6.1 billion in cash, cash equivalents, and investments, demonstrating a strong liquidity position.

Frequently Asked Questions

The COVID-19 pandemic significantly impacted results, leading to a 22% decrease in total revenue driven by a 19% drop in da Vinci procedures. This reduction in procedures affected revenue from instruments, accessories, systems, and services, as hospitals deferred elective surgeries and diverted resources to COVID-19 care.

The Customer Relief Program was implemented to provide financial assistance to customers. It included service fee credits, payment deferrals, and extended payment terms. In the second quarter of 2020, the service fee credits alone resulted in a $59 million decrease in service revenue.

The company anticipates continued uncertainty regarding procedure volumes and system placements due to the ongoing impact of COVID-19. While there was a recovery in U.S. procedures in May and June, a resurgence of cases led to further deferrals of elective procedures. System placements are expected to lag procedure volume recovery. The company cannot reliably estimate the impact beyond the third quarter of 2020.

Intuitive Surgical maintains a strong liquidity position with $6.1 billion in cash, cash equivalents, and investments as of June 30, 2020. While expecting reduced cash flow from operations due to lower revenues and extended payment terms, the company believes its current resources are sufficient to meet liquidity requirements for the foreseeable future.