Intuitive (the “Company”) (Nasdaq: ISRG), a global technology
leader in minimally invasive care and the pioneer of
robotic-assisted surgery, today announced financial results for the
quarter ended March 31, 2020. Procedure volume and systems
placements in the quarter are consistent with the preliminary
results disclosed in the Company's press release on April 8, 2020.
Q1 Highlights
- Worldwide da Vinci procedures grew approximately 10% compared
with the first quarter of 2019, driven primarily by growth in U.S.
general surgery procedures and worldwide urologic procedures.
- The Company shipped 237 da Vinci Surgical Systems, an increase
of 1% compared with 235 in the first quarter of 2019.
- The Company grew its da Vinci Surgical System installed base to
5,669 systems as of March 31, 2020, an increase of 11%
compared with 5,114 as of the end of the first quarter of
2019.
- First quarter 2020 revenue of $1,100 million grew 13% compared
with $974 million in the first quarter of 2019.
- First quarter 2020 GAAP net income was $314 million, or $2.62
per diluted share, compared with $307 million, or $2.56 per
diluted share, in the first quarter of 2019.
- First quarter 2020 non-GAAP* net income was $323 million, or
$2.69 per diluted share, compared with $312 million, or $2.61 per
diluted share, in the first quarter of 2019.
- In February 2020, the Company acquired Orpheus Medical Ltd. and
its wholly owned subsidiaries (“Orpheus Medical”) to deepen and
expand its integrated informatics platform. Orpheus Medical
provides hospitals with information technology connectivity, as
well as expertise in processing and archiving surgical videos.
Q1 Financial Summary
Gross profit, income from operations, net
income, net income per diluted share, and diluted shares 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.
First quarter 2020 revenue was $1,100
million, an increase of 13% compared with $974 million in
the first quarter of 2019. Higher first quarter
revenue was driven by increased procedures and systems placements
as well as higher service and operating lease revenue.
First quarter 2020 instruments and accessories
revenue increased by 12% to $618 million, compared with $552
million in the first quarter of 2019, primarily driven by
approximately 10% growth in da Vinci procedure volume.
First quarter 2020 systems revenue increased by
14% to $283 million, compared with $248 million in the first
quarter of 2019. The Company shipped 237 da Vinci Surgical Systems
in the first quarter of 2020, compared with 235 in the first
quarter of 2019. The first quarter 2020 system shipments included
77 systems shipped under operating lease and usage-based
arrangements, compared with 78 in the first quarter of
2019.
First quarter 2020 GAAP income from operations
increased to $283 million, compared with $252 million in the first
quarter of 2019. First quarter 2020 GAAP income from operations
included intangible asset charges of $13 million, compared with $30
million in the first quarter of 2019, and share-based compensation
expense of $91 million, compared with $76 million in the first
quarter of 2019. First quarter 2020 non-GAAP* income from
operations increased to $384 million, compared with $362 million in
the first quarter of 2019.
First quarter 2020 GAAP net income was $314
million, or $2.62 per diluted share, compared with
$307 million, or $2.56 per diluted share, in the first quarter
of 2019. First quarter 2020 GAAP net income included excess tax
benefits of $65 million, or $0.55 per share, compared with $73
million, or $0.61 per share, in the first quarter of 2019.
First quarter 2020 non-GAAP* net income was $323
million, or $2.69 per diluted share, compared with $312 million, or
$2.61 per diluted share, in the first quarter of 2019.
The Company ended the first quarter of 2020 with
$5.9 billion in cash, cash equivalents, and investments, an
increase of $51 million during the quarter, primarily driven by
cash generated from operations.
Impact of COVID-19 Pandemic
For the first two and a half months of the first
quarter of 2020, procedure performance was trending at the higher
end of our expectations. However, as noted in the Company's April 8
press release, the Company experienced a significant decline in
procedure volume and postponements of system placements in the
latter half of March in the U.S. and Western Europe, as healthcare
systems in those areas diverted resources to meet the increasing
demands of managing COVID-19. The Company has experienced and
believes that the impact of the COVID-19 pandemic on the Company's
business differs by geography. Due to the uncertain scope and
duration of the pandemic, and uncertain timing of global recovery
and economic normalization, we cannot, at this time, reliably
estimate the future impact on our operations and financial
results.
“In response to COVID-19, Intuitive's priorities are the health
and safety of those we serve, including care teams, their patients,
our employees, our communities, and our suppliers," said Intuitive
CEO Gary Guthart. “While we cannot predict the depth or duration of
the disruption caused by the pandemic, we remain committed to our
mission and the long-term need to improve patient outcomes.”
Additional supplemental financial and procedure
information has been posted to the Investor Relations section of
the Intuitive website at https://isrg.gcs-web.com/.
Webcast and Conference Call
Information
Intuitive will hold a teleconference at 1:30
p.m. PDT today to discuss the first quarter 2020 financial results.
The call will be webcast by Nasdaq OMX and can be accessed on
Intuitive’s website at www.intuitive.com or by dialing (877)
226-8163 using the access code 8991765.
About Intuitive
Intuitive (Nasdaq: ISRG), headquartered in
Sunnyvale, California, is a global technology leader in minimally
invasive care and the pioneer of robotic-assisted surgery. At
Intuitive, we believe that minimally invasive care is
life-enhancing care. Through ingenuity and intelligent technology,
we expand the potential of physicians to heal without
constraints.
Intuitive brings more than two decades of
leadership in robotic-assisted surgical technology and solutions to
its offerings and develops, manufactures, and markets the
da Vinci Surgical System and the Ion endoluminal
system.
Da Vinci® and IonTM are trademarks or registered
trademarks of Intuitive Surgical, Inc.
For more information, please visit the Company’s
website at www.intuitive.com.
Forward-Looking Statements
This press release contains forward-looking
statements. These forward-looking statements are necessarily
estimates reflecting the best judgment of the Company's 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
include, but are not limited to, statements related to the
potential impacts of the COVID-19 pandemic on our business,
financial condition and results of operations, the strength of our
long-term fundamentals, the potential decline of procedure volume,
our acquisitions, expected new product introductions, procedures
and procedure adoption, future results of operations, future
financial position, our ability to increase our revenues, the
anticipated mix of our revenues between product and service
revenues, our financing plans and future capital requirements,
anticipated costs of revenue, anticipated expenses, our potential
tax assets or liabilities, the effect of recent accounting
pronouncements, our investments, anticipated cash flows, our
ability to finance operations from cash flows and similar matters,
and statements based on current expectations, estimates, forecasts,
and projections about the economies and markets in which we operate
and our beliefs and assumptions regarding these economies and
markets. These forward-looking statements should, therefore, be
considered in light of various important factors, including, but
not limited to, the following: the ability of the Company to obtain
accurate procedure volume in the midst of the COVID-19 pandemic,
the risk that the COVID-19 pandemic could lead to further material
delays and cancellations of procedures, curtailed or delayed
capital spending by hospitals and disruption to our supply chain,
closures of our facilities, delays in surgeon training, delays in
gathering clinical evidence, or diversion of management and other
resources to respond to the COVID-19 pandemic; the evaluation of
the risks of robotic-assisted surgery in the presence of infectious
diseases, the impact of global and regional economic and credit
market conditions on healthcare spending; the risk that the
COVID-19 pandemic disrupts local economies and causes economies in
our key markets to enter prolonged recessions; healthcare reform
legislation in the U.S. 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, including the joint
venture with Shanghai Fosun Pharmaceutical (Group) Co., Ltd.; the
Company's completion of and ability to successfully integrate the
acquisitions, including Schölly Fiberoptic's robotic endoscope
business and Orpheus Medical; 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 the
Company operates; risks associated with our operations outside of
the United States; unanticipated manufacturing disruptions or the
inability to meet demand for products; the Company's reliance on
sole and single source suppliers; disruptions in operations from
medical epidemics or pandemics, such as COVID-19, and other natural
or manmade disasters or catastrophic events; the results of legal
proceedings to which the Company is or may become a party; product
liability and other litigation claims; adverse publicity regarding
us and the safety of the Company's products and adequacy of
training; the Company's ability to expand into foreign markets; the
impact of changes to tax legislation, guidance, and
interpretations; changes in tariffs, trade barriers, and regulatory
requirements; and other risk factors identified under the heading
“Risk Factors” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2019, as updated by the Company’s 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. The Company undertakes 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 its consolidated financial
statements, which are prepared and presented in accordance with
accounting principles generally accepted in the United States
(“GAAP”), the Company uses the following non-GAAP financial
measures: non-GAAP gross profit, non-GAAP income from operations,
non-GAAP net income, non-GAAP net income per diluted share (“EPS”),
and non-GAAP diluted shares. 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.
The Company uses these non-GAAP financial
measures for financial and operational decision-making and as a
means to evaluate period-to-period comparisons. The Company
believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its 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, as well as in-process R&D charges. The
Company believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing its
performance and when planning, forecasting, and analyzing future
periods. These non-GAAP financial measures also facilitate
management’s internal comparisons to its historical performance and
liquidity. The Company believes 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
institutional investors and the analyst community to help them
analyze the performance of the Company’s business.
Non-GAAP gross profit. The Company defines
non-GAAP gross profit as gross profit, excluding intangible asset
charges, expenses related to SBC, and litigation charges and
recoveries.
Non-GAAP income from operations. The Company
defines non-GAAP income from operations as income from operations,
excluding intangible asset charges, certain acquisition-related
items for the re-measurement of contingent consideration, expenses
related to SBC, and litigation charges and recoveries.
Non-GAAP net income and EPS. The Company defines
non-GAAP net income as net income (loss), excluding intangible
asset charges, non-cash impairment charges and recoveries, certain
acquisition-related items for the re-measurement of contingent
consideration, expenses related to SBC, litigation charges and
recoveries, adjustments attributable to noncontrolling interest in
joint venture, net of the related tax effects, and tax adjustments,
including the excess tax benefits or deficiencies associated with
SBC arrangements, the one-time impact of the enactment of the 2019
Swiss tax reform, and the net tax effects related to intra-entity
transfers of non-inventory assets. The Company excludes the
one-time impact of the enactment of the 2019 Swiss tax reform,
because it is discrete in nature, and excludes the excess tax
benefits or deficiencies associated with SBC arrangements as well
as the tax effects associated with non-cash amortization of
deferred tax assets related to intra-entity non-inventory
transfers, because the Company does not believe these items
correlate with the on-going results of its core operations. The tax
effects of the non-GAAP items are 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 the Company’s operating results. The
Company’s calculated non-GAAP effective tax rate is generally
higher than its GAAP effective tax rate. The Company defines
non-GAAP EPS as non-GAAP net income divided by non-GAAP diluted
shares, which are calculated as GAAP weighted average outstanding
shares plus dilutive potential shares outstanding during the
period.
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 items such as
intangible asset charges, re-measurement of contingent
consideration, SBC, excess tax benefits or deficiencies associated
with SBC arrangements, and non-cash amortization of deferred tax
assets related to intra-entity transfer of non-inventory assets,
which are primarily recurring items. SBC has been, and will
continue to be for the foreseeable future, a significant recurring
expense in the Company’s business. In addition, the components of
the costs that the Company excludes in its calculation of non-GAAP
net income and non-GAAP EPS may differ from the components that its
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 (loss) and net
income (loss) per share calculated in accordance with GAAP.
|
Three months ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
2020 |
|
2019 |
|
2019 |
Revenue: |
|
|
|
|
|
Instruments and accessories |
$ |
617.5 |
|
|
|
$ |
671.2 |
|
|
|
$ |
552.3 |
|
|
Systems |
283.3 |
|
|
|
416.2 |
|
|
|
247.5 |
|
|
Services |
198.7 |
|
|
|
190.3 |
|
|
|
173.9 |
|
|
Total revenue |
1,099.5 |
|
|
|
1,277.7 |
|
|
|
973.7 |
|
|
Cost of revenue: |
|
|
|
|
|
Product |
296.7 |
|
|
|
312.0 |
|
|
|
246.4 |
|
|
Service |
64.6 |
|
|
|
69.7 |
|
|
|
57.7 |
|
|
Total cost of revenue |
361.3 |
|
|
|
381.7 |
|
|
|
304.1 |
|
|
Gross profit |
738.2 |
|
|
|
896.0 |
|
|
|
669.6 |
|
|
Operating expenses: |
|
|
|
|
|
Selling, general and administrative |
308.1 |
|
|
|
341.8 |
|
|
|
273.4 |
|
|
Research and development |
147.1 |
|
|
|
156.6 |
|
|
|
144.0 |
|
|
Total operating expenses |
455.2 |
|
|
|
498.4 |
|
|
|
417.4 |
|
|
Income from operations
(1) |
283.0 |
|
|
|
397.6 |
|
|
|
252.2 |
|
|
Interest and other income,
net |
25.1 |
|
|
|
34.1 |
|
|
|
27.5 |
|
|
Income before taxes |
308.1 |
|
|
|
431.7 |
|
|
|
279.7 |
|
|
Income tax expense (benefit)
(2) |
(8.1 |
) |
|
|
69.0 |
|
|
|
(24.3 |
) |
|
Net income |
316.2 |
|
|
|
362.7 |
|
|
|
304.0 |
|
|
Less: net income (loss) attributable to noncontrolling interest in
joint venture |
2.7 |
|
|
|
5.0 |
|
|
|
(2.5 |
) |
|
Net income attributable to
Intuitive Surgical, Inc. |
$ |
313.5 |
|
|
|
$ |
357.7 |
|
|
|
$ |
306.5 |
|
|
Net income per share
attributable to Intuitive Surgical, Inc.: |
|
|
|
|
|
Basic |
$ |
2.69 |
|
|
|
$ |
3.09 |
|
|
|
$ |
2.67 |
|
|
Diluted (3) |
$ |
2.62 |
|
|
|
$ |
2.99 |
|
|
|
$ |
2.56 |
|
|
Weighted average
shares outstanding: |
|
|
|
|
|
Basic |
116.4 |
|
|
|
115.8 |
|
|
|
115.0 |
|
|
Diluted |
119.8 |
|
|
|
119.7 |
|
|
|
119.6 |
|
|
|
|
|
|
|
|
(1) Income from operations
includes the effect of the following item: |
|
|
|
|
|
Intangible asset charges |
$ |
13.3 |
|
|
|
$ |
15.7 |
|
|
|
$ |
30.2 |
|
|
(2) Income tax expense
(benefit) includes the effect of the following item: |
|
|
|
|
|
Excess tax benefits related to share-based compensation
arrangements |
$ |
(65.4 |
) |
|
|
$ |
(33.7 |
) |
|
|
$ |
(72.7 |
) |
|
(3) Diluted net income per
share includes the effect of the following items: |
|
|
|
|
|
Intangible asset charges, net of tax |
$ |
(0.10 |
) |
|
|
$ |
(0.11 |
) |
|
|
$ |
(0.21 |
) |
|
Excess tax benefits related to share-based compensation
arrangements |
$ |
0.55 |
|
|
|
$ |
0.28 |
|
|
|
$ |
0.61 |
|
|
|
March 31, |
|
December 31, |
|
2020 |
|
2019 |
Cash, cash equivalents, and investments |
$ |
5,896.1 |
|
|
$ |
5,845.2 |
|
Accounts receivable, net |
527.6 |
|
|
645.2 |
|
Inventory |
620.3 |
|
|
595.5 |
|
Property, plant, and
equipment, net |
1,369.2 |
|
|
1,272.9 |
|
Goodwill |
335.0 |
|
|
307.2 |
|
Deferred tax assets |
364.7 |
|
|
425.6 |
|
Other assets |
778.2 |
|
|
641.6 |
|
Total assets |
$ |
9,891.1 |
|
|
$ |
9,733.2 |
|
|
|
|
|
Accounts payable and other
accrued liabilities |
$ |
994.4 |
|
|
$ |
1,083.3 |
|
Deferred revenue |
366.2 |
|
|
365.2 |
|
Total liabilities |
1,360.6 |
|
|
1,448.5 |
|
Stockholders’ equity |
8,530.5 |
|
|
8,284.7 |
|
Total liabilities and stockholders’ equity |
$ |
9,891.1 |
|
|
$ |
9,733.2 |
|
|
|
Three months ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2020 |
|
2019 |
|
2019 |
GAAP gross profit |
|
$ |
738.2 |
|
|
|
$ |
896.0 |
|
|
|
$ |
669.6 |
|
|
Share-based compensation
expense |
|
18.0 |
|
|
|
17.1 |
|
|
|
15.1 |
|
|
Intangible asset charges |
|
9.7 |
|
|
|
9.5 |
|
|
|
8.2 |
|
|
Non-GAAP gross
profit |
|
$ |
765.9 |
|
|
|
$ |
922.6 |
|
|
|
$ |
692.9 |
|
|
|
|
|
|
|
|
|
GAAP income from
operations |
|
$ |
283.0 |
|
|
|
$ |
397.6 |
|
|
|
$ |
252.2 |
|
|
Share-based compensation
expense |
|
90.6 |
|
|
|
89.2 |
|
|
|
76.1 |
|
|
Intangible asset charges |
|
13.3 |
|
|
|
15.7 |
|
|
|
30.2 |
|
|
Litigation recoveries |
|
(1.2 |
) |
|
|
— |
|
|
|
— |
|
|
Acquisition-related items |
|
(1.4 |
) |
|
|
3.1 |
|
|
|
3.0 |
|
|
Non-GAAP income from
operations |
|
$ |
384.3 |
|
|
|
$ |
505.6 |
|
|
|
$ |
361.5 |
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to Intuitive Surgical, Inc. |
|
$ |
313.5 |
|
|
|
$ |
357.7 |
|
|
|
$ |
306.5 |
|
|
Share-based compensation
expense |
|
90.6 |
|
|
|
89.2 |
|
|
|
76.1 |
|
|
Intangible asset charges |
|
13.3 |
|
|
|
15.7 |
|
|
|
30.2 |
|
|
Litigation recoveries |
|
(1.2 |
) |
|
|
— |
|
|
|
— |
|
|
Impairment charges |
|
— |
|
|
|
— |
|
|
|
1.5 |
|
|
Acquisition-related items |
|
(1.4 |
) |
|
|
3.1 |
|
|
|
3.0 |
|
|
Tax adjustments (1) |
|
(90.0 |
) |
|
|
(44.9 |
) |
|
|
(101.5 |
) |
|
Adjustments attributable to
noncontrolling interest in joint venture |
|
(2.0 |
) |
|
|
(3.8 |
) |
|
|
(3.8 |
) |
|
Non-GAAP net income
attributable to Intuitive Surgical, Inc. |
|
$ |
322.8 |
|
|
|
$ |
417.0 |
|
|
|
$ |
312.0 |
|
|
|
|
|
|
|
|
|
GAAP net income per
share attributable to Intuitive Surgical, Inc. -
diluted |
|
$ |
2.62 |
|
|
|
$ |
2.99 |
|
|
|
$ |
2.56 |
|
|
Share-based compensation
expense |
|
0.76 |
|
|
|
0.75 |
|
|
|
0.64 |
|
|
Intangible asset charges |
|
0.11 |
|
|
|
0.13 |
|
|
|
0.25 |
|
|
Litigation recoveries |
|
(0.01 |
) |
|
|
— |
|
|
|
— |
|
|
Impairment charges |
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
Acquisition-related items |
|
(0.01 |
) |
|
|
0.02 |
|
|
|
0.03 |
|
|
Tax adjustments (1) |
|
(0.76 |
) |
|
|
(0.38 |
) |
|
|
(0.85 |
) |
|
Adjustments attributable to
noncontrolling interest in joint venture |
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
Non-GAAP net income
per share attributable to Intuitive Surgical, Inc. -
diluted |
|
$ |
2.69 |
|
|
|
$ |
3.48 |
|
|
|
$ |
2.61 |
|
|
|
|
|
|
|
|
|
(1) For the three
months ended March 31, 2020, tax adjustments included: (a) excess
tax benefits associated with share-based compensation arrangements
of $(65.4) million, or $(0.55) per diluted share; (b) tax impact
related to intra-entity transfers of non-inventory assets of $11.3
million, or $0.09 per diluted share; and (c) other tax adjustments
effects determined by applying a calculated non-GAAP effective tax
rate of $(35.9) million, or $(0.30) per diluted share. |
Contact: Investor Relations (408) 523-2161
Intuitive Surgical (NASDAQ:ISRG)
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Intuitive Surgical (NASDAQ:ISRG)
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From Apr 2023 to Apr 2024