Why is the GAAP EPS of $1.69 higher than the non-GAAP EPS of $1.60?

GAAP results include two one-time Swiss tax benefits totaling about $0.45 per diluted share ($0.19 from re-measuring Swiss deferred tax assets and $0.26 from receipt of certain tax assets). These are excluded from non-GAAP net income. The GAAP figure also benefits from a $0.06 discrete tax benefit and excess share-based compensation tax benefits, which are likewise excluded from non-GAAP. Non-GAAP results are lower mainly because they exclude these tax benefits, and they add back share-based compensation, which is a recurring cost. Investors should weigh the non-GAAP figure as the better view of core operating performance.

What drove the revenue growth in the quarter?

Growth came from both procedure volume and placements. Worldwide da Vinci procedures rose about 21%, which drove instruments and accessories revenue up 22%, with higher pricing also contributing and customer buying patterns acting as a partial offset. Systems revenue rose 6% to $480 million on 415 placements, of which 201 were under operating leases, including 109 usage-based leases. Service revenue grew 16% to $304 million, consistent with a larger installed base.

How did operating expenses change, and what was the Intuitive Foundation contribution?

Total operating expenses rose to $827 million from $738 million a year earlier. SG&A increased to $567 million from $494 million, and that increase includes a $40 million contribution to the Intuitive Foundation. Research and development spending increased modestly to $260 million from $244 million. Non-GAAP income from operations still rose 17%, indicating that revenue growth outpaced the increase in costs.

Does the release provide guidance for 2024?

No. The press release reports only Q4 and full-year 2023 results, the installed base, and the SP CE mark. It contains no revenue, procedure, or earnings guidance for 2024. The company said the fourth quarter did not reflect significant COVID-19 disruptions, though it noted that COVID-19 could affect procedure volumes in the future. Forward-looking statements also flag risks such as hospital capital spending, macroeconomic conditions, supply chain constraints, and tariffs.

ISRG 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 23, 2024. Cited figures are marked; the original filing is the authoritative source.

Intuitive Surgical reported strong fourth-quarter 2023 results, with revenue of $1.93 billion^a, up 17% from $1.66 billion a year earlier.

Growth was led by worldwide da Vinci procedure volume, which rose about 21%, and by a higher installed base. Instruments and accessories revenue grew 22% to $1.14 billion^b, supported by procedure growth and higher pricing, partly offset by customer buying patterns. Systems revenue rose to $480 million from $451 million on 415 placements, compared with 369 a year earlier.

Service revenue increased to $304 million^c from $263 million. The da Vinci installed base reached 8,606 systems, up 14%. Full-year 2023 revenue was $7.12 billion, up from $6.22 billion in 2022.

Profitability is harder to read than the top line. GAAP net income attributable to Intuitive was $606 million^d, or $1.69 per diluted share, versus $325 million, or $0.91, a year earlier. That figure includes roughly $0.45 per share of one-time Swiss tax benefits and a $0.09 per share net charge from a $40 million contribution to the Intuitive Foundation.

Excluding these and other non-GAAP items, net income was $574 million, or $1.60 per diluted share, up about 30% from $1.23. Non-GAAP operating income rose to $621 million from $530 million. Operating expenses rose sharply, with SG&A reaching $567 million, which includes the Foundation contribution.

Cash, cash equivalents, and investments ended the quarter at $7.34 billion, down $177 million on capital expenditures. The release contains no forward guidance, and the company said the quarter had no significant COVID-19 disruption. In January 2024 it also received CE mark certification for the da Vinci SP system, with a measured European rollout planned for 2024.

02—Key points

Key Highlights

Q4 2023 revenue rose 17% year over year to $1.93 billion, and full-year 2023 revenue reached $7.12 billion.
Worldwide da Vinci procedures grew about 21%, with instruments and accessories revenue up 22% to $1.14 billion.
The company placed 415 da Vinci systems in Q4 2023 versus 369 a year earlier, lifting the installed base 14% to 8,606 systems.
Non-GAAP EPS was $1.60 versus $1.23 (up about 30%); GAAP EPS was $1.69 versus $0.91, boosted by about $0.45 of one-time Swiss tax benefits.
GAAP operating income rose to $450 million from $373 million, while non-GAAP operating income rose to $621 million from $530 million, despite a $40 million Foundation contribution.
Cash, cash equivalents, and investments were $7.34 billion at year-end, down $177 million in the quarter mainly due to capital expenditures.
The da Vinci SP system received CE mark certification in January 2024, with a measured commercial rollout in select European countries planned for 2024.

03—Questions

Frequently Asked Questions

Why is the GAAP EPS of $1.69 higher than the non-GAAP EPS of $1.60?
GAAP results include two one-time Swiss tax benefits totaling about $0.45 per diluted share ($0.19 from re-measuring Swiss deferred tax assets and $0.26 from receipt of certain tax assets). These are excluded from non-GAAP net income. The GAAP figure also benefits from a $0.06 discrete tax benefit and excess share-based compensation tax benefits, which are likewise excluded from non-GAAP. Non-GAAP results are lower mainly because they exclude these tax benefits, and they add back share-based compensation, which is a recurring cost. Investors should weigh the non-GAAP figure as the better view of core operating performance.
What drove the revenue growth in the quarter?
Growth came from both procedure volume and placements. Worldwide da Vinci procedures rose about 21%, which drove instruments and accessories revenue up 22%, with higher pricing also contributing and customer buying patterns acting as a partial offset. Systems revenue rose 6% to $480 million on 415 placements, of which 201 were under operating leases, including 109 usage-based leases. Service revenue grew 16% to $304 million, consistent with a larger installed base.
How did operating expenses change, and what was the Intuitive Foundation contribution?
Total operating expenses rose to $827 million from $738 million a year earlier. SG&A increased to $567 million from $494 million, and that increase includes a $40 million contribution to the Intuitive Foundation. Research and development spending increased modestly to $260 million from $244 million. Non-GAAP income from operations still rose 17%, indicating that revenue growth outpaced the increase in costs.
Does the release provide guidance for 2024?
No. The press release reports only Q4 and full-year 2023 results, the installed base, and the SP CE mark. It contains no revenue, procedure, or earnings guidance for 2024. The company said the fourth quarter did not reflect significant COVID-19 disruptions, though it noted that COVID-19 could affect procedure volumes in the future. Forward-looking statements also flag risks such as hospital capital spending, macroeconomic conditions, supply chain constraints, and tariffs.

04—Continue

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