10-QPeriod: Q3 FY2021

INTUITIVE SURGICAL INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 20, 2021For Securities:ISRG

Summary

Intuitive Surgical Inc. (ISRG) reported strong performance for the third quarter and the first nine months of 2021, demonstrating significant recovery and growth post-pandemic. Total revenue saw a substantial increase of 30% year-over-year for the third quarter, reaching $1.4 billion, driven by robust growth across all segments: systems, instruments & accessories, and services. This growth was underpinned by a 72% surge in da Vinci Surgical System shipments and a 20% rise in procedures performed globally. The company also noted a 32% increase in total revenue for the first nine months of 2021 compared to the same period in 2020. Despite ongoing supply chain challenges, particularly in semiconductors, and the resurgence of COVID-19 cases impacting procedure volumes late in the quarter, Intuitive Surgical maintained healthy profitability. Operating income grew by 64% year-over-year for Q3. The company ended the quarter with a strong liquidity position, holding $8.22 billion in cash, cash equivalents, and investments, indicating a solid financial foundation to navigate future challenges and invest in growth opportunities.

Financial Highlights

47 data points
Beta

Revenue

$1.40B

69.2% Gross Margin

Net Income

$380.50M

27.1% Net Margin

EPS (Diluted)

$1.04

Total Assets

$12.93B

Cash & Equivalents

$1.36B

Free Cash Flow

$501.40M

Financial Statements
Beta
Revenue$1.40B
Cost of Revenue$431.90M
Gross Profit$971.40M
R&D Expenses$165.50M
SG&A Expenses$363.30M
Operating Expenses$528.80M
Operating Income$442.60M
Net Income$380.50M
EPS (Basic)$1.07
EPS (Diluted)$1.04
Shares Outstanding (Basic)356.80M
Shares Outstanding (Diluted)366.80M

Key Highlights

  • 1Total revenue increased 30% year-over-year to $1.40 billion for Q3 2021, and 37% for the first nine months to $4.16 billion.
  • 2Da Vinci Surgical System shipments surged 72% year-over-year to 336 units in Q3 2021, contributing to a 55% increase in systems revenue.
  • 3Procedure volume grew 20% year-over-year to approximately 395,000 in Q3 2021, indicating a strong recovery and increased adoption of robotic-assisted surgery.
  • 4Instruments and accessories revenue increased 20% year-over-year to $755 million in Q3 2021, driven by higher procedure volume.
  • 5Operating income saw a significant increase of 64% year-over-year to $443 million in Q3 2021, reflecting improved operational leverage.
  • 6The company maintained a strong balance sheet with $8.22 billion in cash, cash equivalents, and investments as of September 30, 2021.
  • 7Despite a resurgence of COVID-19 cases late in Q3 impacting procedure growth, the company navigated supply chain challenges and ended the period on a positive financial note.

Frequently Asked Questions

The COVID-19 pandemic continued to impact Intuitive Surgical's performance in Q3 2021. While overall revenue and system shipments showed strong year-over-year growth, the resurgence of COVID-19 cases late in the quarter led to a decrease in procedure volumes compared to earlier in the quarter. The company noted regional variations in the impact, with some areas experiencing slower growth due to rising infection rates and hospital resource constraints.

Systems revenue increased significantly by 55% year-over-year in Q3 2021, primarily driven by a 72% increase in da Vinci Surgical System shipments. This surge in shipments is attributed to a recovery from the COVID-19 disruptions experienced in Q3 2020, increased customer validation of da Vinci surgery's value proposition, and customers upgrading from older models to the newer fourth-generation systems.

Yes, the company continues to face supply chain challenges, particularly with obtaining sufficient semiconductor and other component materials. This is due to constrained global supply and increased demand. While these shortages have not materially impacted the company's ability to deliver products to date, they are causing inflationary cost pressures and pose a risk to meeting future product demand if they persist.

Intuitive Surgical maintained a strong liquidity position, with $8.22 billion in cash, cash equivalents, and investments as of September 30, 2021. This represents an increase from December 31, 2020, primarily due to cash generated from operations and proceeds from stock option exercises and employee stock purchases.