Intuitive Surgical, Inc. (NASDAQ:ISRG), a global technology leader
in robotic-assisted, minimally invasive surgery, today announced
financial results for the quarter ended June 30, 2017.
Q2 Highlights
- Worldwide da Vinci procedures grew approximately 16% compared
with the second quarter of 2016, driven primarily by growth in U.S.
general surgery procedures and worldwide urologic procedures.
- The Company shipped 166 da Vinci Surgical Systems compared with
130 in the second quarter of 2016.
- The Company launched a new da Vinci model, the da Vinci X,
which provides surgeons and hospitals with access to some of the
most advanced robotic-assisted surgery technology at a lower
price.
- Second quarter 2017 revenue of $756 million grew approximately
13% compared with $670 million for the second quarter of 2016.
- Second quarter 2017 GAAP net income was $222 million, or $5.77
per diluted share, compared with $185 million, or $4.71 per diluted
share, for the second quarter of 2016.
- Second quarter 2017 non-GAAP* net income was $228 million, or
$5.95 per diluted share, compared with $220 million, or $5.62 per
diluted share, for the second quarter of 2016.
Q2 Financial Summary
Gross profits, income from operations, net
income, and net income per share are reported on a GAAP and
non-GAAP* basis. The non-GAAP* measures are described below and are
reconciled to the corresponding GAAP measures at the end of this
release.
Second quarter 2017 revenue was $756
million, an increase of approximately 13% compared
with $670 million in the second quarter of 2016.
Higher second quarter revenue was driven by growth in recurring
instrument, accessory, and service revenue, and higher systems
revenue.
Second quarter 2017 instrument and accessory
revenue increased by approximately 17% to $398 million, compared
with $339 million for the second quarter of 2016,
primarily driven by approximately 16% growth in da Vinci procedure
volume. Second quarter 2017 service revenue increased by
approximately 11% to $142 million, compared with $128 million for
the first quarter of 2016.
Second quarter 2017 systems revenue increased by
approximately 7% to $216 million, compared with $203 million for
the second quarter of 2016. Intuitive Surgical shipped 166 da Vinci
Surgical Systems in the second quarter of 2017, compared with 130
in the second quarter of 2016. A total of 27 of
the second quarter 2017 da Vinci Surgical
Systems were shipped under operating lease arrangements, compared
with 15 during the second quarter of 2016.
Second quarter 2017 income from operations
increased to $258 million, compared with $245 million in the second
quarter of 2016. Second quarter 2017 non-GAAP* income from
operations increased to $313 million, compared with $297 million in
the second quarter of 2016.
Second quarter 2017 GAAP net income was $222
million, or $5.77 per diluted share, compared with $185 million, or
$4.71 per diluted share, for the second quarter of 2016. Second
quarter 2017 GAAP net income benefited from the adoption of a new
accounting standard in first quarter of 2017, which required that
$30.6 million, or $0.80 per share, of excess tax benefits related
to employee share-based compensation awards be recorded as a
component of income tax expense.
Second quarter 2017 non-GAAP* net income was
$228 million, or $5.95 per diluted share, compared with $220
million, or $5.62 per diluted share, for the second quarter of
2016. Non-GAAP* net income excludes the excess tax benefits
mentioned above, as well as litigation benefits, share-based
compensation expense and intangible asset charges.
Intuitive Surgical ended the second quarter of
2017 with $3.4 billion in cash, cash equivalents, and investments,
an increase of $277 million during the quarter, primarily driven by
cash generated from operations and employee stock option
exercises.
Commenting on the announcement, Dr. Gary
Guthart, President and CEO of Intuitive Surgical, said, “We are
pleased with our second quarter financial results, procedure
growth, and da Vinci System placements. During the quarter we
expanded our systems’ product line, while offering hospitals
increasing economic flexibility to establish or expand their
robotics programs.”
Additional supplemental financial and procedure
information has been posted to the Investor Relations section of
the Intuitive website at:
http://phx.corporate-ir.net/phoenix.zhtml?c=122359&p=irol-IRHome.
Webcast and Conference Call
InformationIntuitive Surgical will hold a teleconference
at 1:30 p.m. PDT today to discuss the second quarter 2017 financial
results. The call is being webcast by NASDAQ OMX and can be
accessed at Intuitive Surgical’s website at
https://www.intuitivesurgical.com/ or by dialing (800) 230-1085 or
(612) 234-9960.
About Intuitive Surgical,
Inc.Intuitive Surgical, Inc. (Nasdaq:ISRG),
headquartered in Sunnyvale, California, is a global technology
leader in robotic-assisted, minimally invasive
surgery. Intuitive Surgical develops, manufactures and
markets robotic technologies designed to improve clinical outcomes
and help patients return more quickly to active and productive
lives. The Company's mission is to extend the benefits of minimally
invasive surgery to the broadest possible base of
patients. Intuitive Surgical - Taking surgery beyond the
limits of the human hand™.
About the da Vinci Surgical
System
The da Vinci Surgical System is a surgical
platform designed to enable complex surgery using a minimally
invasive approach. The da Vinci Surgical System consists of an
ergonomic surgeon console or consoles, a patient-side cart with
three or four interactive arms, a high-performance vision system
and proprietary EndoWrist instruments. Powered by state-of-the-art
technology, the da Vinci Surgical System is designed to scale,
filter, and seamlessly translate the surgeon’s hand movements into
more precise movements of the EndoWrist instruments. The net result
is an intuitive interface with improved surgical capabilities. By
providing surgeons with superior visualization, enhanced dexterity,
greater precision, and ergonomic comfort, the da Vinci Surgical
System makes it possible for skilled surgeons to perform more
minimally invasive procedures involving complex dissection or
reconstruction. Surgeons, hospitals, and patients benefit from a
large community of users and the Company’s robotic-assisted
surgical ecosystem, beginning with the robotic platforms, and also
including the broad instrument product line, imaging solutions,
training programs and technology, clinical validation, field
clinical support, field technical support, and program
optimization. For more information about clinical evidence related
to da Vinci Surgery, please visit
www.intuitivesurgical.com/company/clinical-evidence/.
da Vinci® and EndoWrist® are trademarks of
Intuitive Surgical, Inc.
Forward-Looking Statements
This press release contains forward-looking
statements, including statements regarding providing surgeons and
hospitals with access to some of the most advanced robotic-assisted
surgery technology at a lower price and offering hospitals
increasing economic flexibility to establish or expand their
robotics programs. These forward-looking statements are
necessarily estimates reflecting the best judgment of our
management and involve a number of risks and uncertainties that
could cause actual results to differ materially from those
suggested by the forward-looking statements. These forward-looking
statements should, therefore, be considered in light of various
important factors, including, but not limited to, the following:
the impact of global and regional economic and credit market
conditions on healthcare spending; healthcare reform legislation in
the United States and its impact on hospital spending,
reimbursement and fees levied on certain medical device revenues;
changes in hospital admissions and actions by payers to limit or
manage surgical procedures; the timing and success of product
development and market acceptance of developed products; the
results of any collaborations, in-licensing arrangements, joint
ventures, strategic alliances or partnerships; procedure counts;
regulatory approvals, clearances and restrictions or any dispute
that may occur with any regulatory body; guidelines and
recommendations in the healthcare and patient communities;
intellectual property positions and litigation; competition in the
medical device industry and in the specific markets of surgery in
which we operate; unanticipated manufacturing disruptions or the
inability to meet demand for products; the results of legal
proceedings to which we are or may become a party; product
liability and other litigation claims; adverse publicity regarding
the Company and the safety of our products and adequacy of
training; our ability to expand into foreign markets; and other
risk factors under the heading “Risk Factors” in our report on Form
10-K for the year ended December 31, 2016, as updated by our other
filings with the Securities and Exchange Commission. Statements
using words such as “estimates,” “projects,” “believes,”
“anticipates,” “plans,” “expects,” “intends,” “may,” “will,”
“could,” “should,” “would,” “targeted” and similar words and
expressions are intended to identify forward-looking statements.
You are cautioned not to place undue reliance on these forward
looking statements, which speak only as of the date of this press
release. We undertake no obligation to publicly update or release
any revisions to these forward-looking statements, except as
required by law.
*About Non-GAAP Financial
Measures
To supplement our consolidated financial
statements, which are prepared and presented in accordance with
accounting principles generally accepted in the United States
(“GAAP”), we use the following non-GAAP financial measures:
non-GAAP gross profit, non-GAAP income from operations, non-GAAP
net income, and non-GAAP net income per diluted share (“EPS”). The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP.
We use these non-GAAP financial measures for
financial and operational decision-making and as a means to
evaluate period-to-period comparisons. We believe that these
non-GAAP financial measures provide meaningful supplemental
information regarding our performance and liquidity by excluding
items such as intangible asset charges, share-based compensation
(“SBC”) expenses, and other special items. Intangible asset charges
consist of non-cash charges such as the amortization of intangible
assets and also non-recurring in-process R&D charges. Other
non-cash charges include SBC expenses. We believe that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing our performance and when planning,
forecasting, and analyzing future periods. These non-GAAP financial
measures also facilitate management’s internal comparisons to our
historical performance and liquidity. We believe these
non-GAAP financial measures are useful to investors because (1)
they allow for greater transparency with respect to key metrics
used by management in its financial and operational decision-making
and (2) they are used by our institutional investors and the
analyst community to help them analyze the performance of our
business.
Non-GAAP gross profit. We define non-GAAP gross
profit as gross profit excluding intangible asset charges, expenses
related to SBC, and litigation charges.
Non-GAAP income from operations. We define
non-GAAP income from operations as income from operations excluding
intangible asset charges, expenses related to SBC, and litigation
charges and recoveries.
Non-GAAP net income and EPS. We define non-GAAP
net income as net income excluding intangible asset charges,
expenses related to SBC, and litigation charges and recoveries, net
of the related tax effects; and the excess tax benefits or
deficiencies associated with share-based compensation arrangements.
Other tax adjustments represent tax effects determined by applying
a calculated non-GAAP effective tax rate, which is commonly
referred to as the with-and-without method. Without excluding these
tax effects, investors would only see the gross effect that these
non-GAAP adjustments had on our operating results. We define
non-GAAP EPS as non-GAAP net income divided by the weighted average
outstanding shares, on a fully-diluted basis.
There are a number of limitations related to the
use of non-GAAP measures versus measures calculated in accordance
with GAAP. Non-GAAP gross profit, non-GAAP income from operations,
non-GAAP net income, and non-GAAP EPS exclude intangible asset
charges and SBC, which are primarily recurring expenses. SBC has
been and will continue to be for the foreseeable future a
significant recurring expense in our business. In addition, the
components of the costs that we exclude in our calculation of
non-GAAP net income and non-GAAP EPS may differ from the components
that our peer companies exclude when they report their results of
operations. Management addresses these limitations by providing
specific information regarding the GAAP amounts excluded from
non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net
income and non-GAAP EPS together with net income and EPS calculated
in accordance with GAAP.
|
|
|
|
INTUITIVE SURGICAL, INC. |
UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS OF
INCOME |
(IN MILLIONS, EXCEPT PER SHARE
DATA) |
|
|
|
Three months ended |
In millions (except per
share data) |
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
Revenue: |
|
|
|
|
|
Instruments and accessories |
$ |
397.8 |
|
$ |
380.8 |
|
$ |
339.3 |
Systems |
216.4 |
|
153.2 |
|
202.7 |
Services |
142.0 |
|
140.2 |
|
128.1 |
Total
revenue |
756.2 |
|
674.2 |
|
670.1 |
Cost of revenue: |
|
|
|
|
|
Product |
184.3 |
|
163.8 |
|
165.8 |
Service |
44.0 |
|
44.3 |
|
33.4 |
Total
cost of revenue |
228.3 |
|
208.1 |
|
199.2 |
Gross
profit |
527.9 |
|
466.1 |
|
470.9 |
Operating
expenses: |
|
|
|
|
|
Selling,
general and administrative |
185.8 |
|
201.1 |
|
170.8 |
Research
and development |
84.6 |
|
73.5 |
|
54.7 |
Total
operating expenses |
270.4 |
|
274.6 |
|
225.5 |
Income from
operations |
257.5 |
|
191.5 |
|
245.4 |
Interest and other
income, net |
10.1 |
|
8.7 |
|
8.0 |
Income before
taxes |
267.6 |
|
200.2 |
|
253.4 |
Income tax expense
(1) |
46.1 |
|
20.4 |
|
68.9 |
Net income |
$ |
221.5 |
|
$ |
179.8 |
|
$ |
184.5 |
Net income per
share: |
|
|
|
|
|
Basic |
$ |
5.99 |
|
$ |
4.82 |
|
$ |
4.82 |
Diluted (2) |
$ |
5.77 |
|
$ |
4.67 |
|
$ |
4.71 |
Shares used in
computing net income per share: |
|
|
|
|
|
Basic |
37.0 |
|
37.3 |
|
38.3 |
Diluted |
38.4 |
|
38.5 |
|
39.2 |
|
|
|
|
|
|
(1) Income tax expense
includes the effect of the following items: |
|
|
|
|
|
Excess
tax benefits related to share-based compensation arrangements* |
$ |
30.6 |
|
$ |
32.6 |
|
$ |
— |
|
|
|
|
|
|
(2) Diluted net income
per share includes the effect of the following items: |
|
|
|
|
|
Excess
tax benefits related to share-based compensation arrangements* |
$ |
0.80 |
|
$ |
0.85 |
|
$ |
— |
(*) In the first quarter of 2017, the Company adopted
Accounting Standards Update No. 2016-09, Improvements to
Employee Share-Based Payment Accounting, which requires that all
excess tax benefits and tax deficiencies related share-based
compensation arrangements be recognized as income tax benefit or
expense, instead of in stockholders' equity as previous guidance
required. |
|
|
INTUITIVE SURGICAL, INC. |
UNAUDITED SIX MONTHS ENDED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
(IN MILLIONS, EXCEPT PER SHARE
DATA) |
|
|
|
Six months ended |
|
June 30, |
In millions (except per
share data) |
2017 |
|
2016 |
Revenue: |
|
|
|
Instruments and accessories |
$ |
778.6 |
|
$ |
661.4 |
Systems |
369.6 |
|
350.6 |
Services |
282.2 |
|
252.6 |
Total
revenue |
1,430.4 |
|
1,264.6 |
Cost of revenue: |
|
|
|
Product |
348.1 |
|
317.4 |
Service |
88.3 |
|
71.3 |
Total
cost of revenue |
436.4 |
|
388.7 |
Gross
profit |
994.0 |
|
875.9 |
Operating
expenses: |
|
|
|
Selling,
general and administrative |
386.9 |
|
343.6 |
Research
and development |
158.1 |
|
107.9 |
Total
operating expenses |
545.0 |
|
451.5 |
Income from
operations |
449.0 |
|
424.4 |
Interest and other
income, net |
18.8 |
|
13.5 |
Income before
taxes |
467.8 |
|
437.9 |
Income tax expense
(1) |
66.5 |
|
117.0 |
Net income |
$ |
401.3 |
|
$ |
320.9 |
Net income per
share: |
|
|
|
Basic |
$ |
10.79 |
|
$ |
8.44 |
Diluted (2) |
$ |
10.42 |
|
$ |
8.25 |
Shares used in
computing net income per share: |
|
|
|
Basic |
37.2 |
|
38.0 |
Diluted |
38.5 |
|
38.9 |
|
|
|
|
(1) Income tax expense
includes the effect of the following items: |
|
|
|
Excess
tax benefits related to share-based compensation arrangements* |
$ |
63.2 |
|
$ |
— |
(2) Diluted net income
per share includes the effect of the following items: |
|
|
|
Excess
tax benefits related to share-based compensation arrangements* |
$ |
1.64 |
|
$ |
— |
(*) In the
first quarter of 2017, the Company adopted Accounting Standards
Update No. 2016-09, Improvements to Employee Share-Based
Payment Accounting, which requires that all excess tax benefits and
tax deficiencies related share-based compensation arrangements be
recognized as income tax benefit or expense, instead of in
stockholders' equity as previous guidance required. |
|
INTUITIVE SURGICAL, INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(IN MILLIONS) |
|
In millions |
June 30, 2017 |
|
December 31, 2016 |
Cash, cash equivalents
and investments |
$ |
3,423.3 |
|
$ |
4,837.9 |
Accounts receivable,
net |
481.1 |
|
430.2 |
Inventory |
214.2 |
|
182.3 |
Property, plant and
equipment, net |
540.1 |
|
458.4 |
Goodwill |
201.1 |
|
201.1 |
Deferred tax
assets |
115.1 |
|
150.9 |
Other assets |
275.9 |
|
226.1 |
Total
assets |
$ |
5,250.8 |
|
$ |
6,486.9 |
|
|
|
|
Accounts payable and
other accrued liabilities |
$ |
430.5 |
|
$ |
459.2 |
Deferred revenue |
298.0 |
|
249.9 |
Total liabilities |
728.5 |
|
709.1 |
Stockholders’
equity |
4,522.3 |
|
5,777.8 |
Total
liabilities and stockholders’ equity |
$ |
5,250.8 |
|
$ |
6,486.9 |
|
|
|
|
|
|
|
INTUITIVE SURGICAL, INC. |
UNAUDITED RECONCILIATION OF GAAP FINANCIAL
MEASURES TO NON-GAAP FINANCIAL MEASURES |
(IN MILLIONS, EXCEPT PER SHARE
DATA) |
|
|
|
Three months ended |
|
Six months ended |
In millions (except per
share data) |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
GAAP gross
profit |
|
$ |
527.9 |
|
|
$ |
466.1 |
|
|
$ |
470.9 |
|
|
$ |
994.0 |
|
|
$ |
875.9 |
|
Share-based
compensation expense |
|
10.1 |
|
|
9.9 |
|
|
9.1 |
|
|
20.0 |
|
|
17.8 |
|
Intangible asset
charges |
|
1.5 |
|
|
1.7 |
|
|
2.1 |
|
|
3.2 |
|
|
4.3 |
|
Litigation charges |
|
— |
|
|
7.8 |
|
|
— |
|
|
7.8 |
|
|
— |
|
Non-GAAP gross
profit |
|
$ |
539.5 |
|
|
$ |
485.5 |
|
|
$ |
482.1 |
|
|
$ |
1,025.0 |
|
|
$ |
898.0 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income
from operations |
|
$ |
257.5 |
|
|
$ |
191.5 |
|
|
$ |
245.4 |
|
|
$ |
449.0 |
|
|
$ |
424.4 |
|
Share-based
compensation expense |
|
50.4 |
|
|
47.4 |
|
|
42.7 |
|
|
97.8 |
|
|
85.5 |
|
Intangible asset
charges |
|
9.1 |
|
|
3.7 |
|
|
4.6 |
|
|
12.8 |
|
|
9.7 |
|
Litigation charges
(recoveries) |
|
(4.5 |
) |
|
21.3 |
|
|
4.4 |
|
|
16.8 |
|
|
6.6 |
|
Non-GAAP income
from operations |
|
$ |
312.5 |
|
|
$ |
263.9 |
|
|
$ |
297.1 |
|
|
$ |
576.4 |
|
|
$ |
526.2 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income |
|
$ |
221.5 |
|
|
$ |
179.8 |
|
|
$ |
184.5 |
|
|
$ |
401.3 |
|
|
$ |
320.9 |
|
Share-based
compensation expense |
|
50.4 |
|
|
47.4 |
|
|
42.7 |
|
|
97.8 |
|
|
85.5 |
|
Intangible asset
charges |
|
9.1 |
|
|
3.7 |
|
|
4.6 |
|
|
12.8 |
|
|
9.7 |
|
Litigation charges
(recoveries) |
|
(4.5 |
) |
|
21.3 |
|
|
4.4 |
|
|
16.8 |
|
|
6.6 |
|
Tax adjustments -
excess tax benefits (1) |
|
(30.6 |
) |
|
(32.6 |
) |
|
— |
|
|
(63.2 |
) |
|
— |
|
Tax adjustments -
other |
|
(17.5 |
) |
|
(23.6 |
) |
|
(15.8 |
) |
|
(41.1 |
) |
|
(32.0 |
) |
Non-GAAP net
income |
|
$ |
228.4 |
|
|
$ |
196.0 |
|
|
$ |
220.4 |
|
|
$ |
424.4 |
|
|
$ |
390.7 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
per share - diluted |
|
$ |
5.77 |
|
|
$ |
4.67 |
|
|
$ |
4.71 |
|
|
$ |
10.42 |
|
|
$ |
8.25 |
|
Share-based
compensation expense |
|
1.31 |
|
|
1.23 |
|
|
1.09 |
|
|
2.54 |
|
|
2.20 |
|
Intangible asset
charges |
|
0.24 |
|
|
0.10 |
|
|
0.12 |
|
|
0.33 |
|
|
0.25 |
|
Litigation charges
(recoveries) |
|
(0.12 |
) |
|
0.55 |
|
|
0.11 |
|
|
0.44 |
|
|
0.17 |
|
Tax adjustments -
excess tax benefits (1) |
|
(0.80 |
) |
|
(0.85 |
) |
|
— |
|
|
(1.64 |
) |
|
— |
|
Tax adjustments -
other |
|
(0.45 |
) |
|
(0.61 |
) |
|
(0.41 |
) |
|
(1.07 |
) |
|
(0.83 |
) |
Non-GAAP net
income per share - diluted |
|
$ |
5.95 |
|
|
$ |
5.09 |
|
|
$ |
5.62 |
|
|
$ |
11.02 |
|
|
$ |
10.04 |
|
|
(1) In the
first quarter of 2017, the Company adopted Accounting Standards
Update No. 2016-09, Improvements to Employee Share-Based
Payment Accounting, which requires that all excess tax benefits and
tax deficiencies related share-based compensation arrangements be
recognized as income tax benefit or expense, instead of in
stockholders' equity as previous guidance required. |
Contact:
Investor Relations
(408) 523-2161
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