) reported first quarter earnings per share of $3.50, surpassing
the Zacks Consensus Estimate of $3.15, while beating the
corresponding year-ago earnings per share of $2.59. Profit
increased 37.8% year over year to $143.5 million.
The stock moved up 5.95% to $577.99 in after hours trading on
Intuitive Surgical reported sales of $495.2 million for the
first quarter, up 28% year over year. Revenues beat the Zacks
Consensus Estimate of $466 million. Recurring revenues moved up 31%
year over year and constituted 58% of sales.
On a segment-wise basis, the company reported revenues from
instruments and accessories of $208 million, up 32% year over year,
in the first quarter. The growth was driven by a 29% year-over-year
increase in da Vinci surgical procedures. The uptick in procedure
count mainly emanated from overseas urologic cases as well as
domestic gynecologic procedures and general surgery
Revenues from sales of systems were $207 million, up 24% year
over year. The increase in systems revenue was due to higher sales
of 140 da Vinci Systems compared with 120 systems in the year-ago
quarter. Service revenue was $81 million, up 27% year over year,
primarily due to rise in the installed base of da Vinci Surgical
Intuitive Surgical recorded gross margin of 72% in the reported
quarter, approximately flat with the year-ago quarter. The company
reported operating expenses of about $162.6 million in the quarter,
up 24.6% year over year. Of the two components, selling, general
and administrative expense increased 25.3% while research and
development expenditure was up 22.3%.
Operating income amounted to $193.3 million, or about 39% of
revenue, in the reported quarter compared with $148.3 million, or
38% of revenue, in the prior-year quarter.
Intuitive Surgical exited the first quarter with cash, cash
equivalents and investments of $2,371 million, up 69.9% year over
year. It remains a zero debt company.
Intuitive Surgical revised its forecast for procedure growth to
a higher range of 25% to 27% (from 24% to 26% earlier) for fiscal
2012. Revenues are forecast to grow in a band of 19% to 21% (from
17% to 19% previously). Operating income continues to be projected
at about 39% to 40% of net sales.
We expect a number of procedures that are currently completed
either in an open surgical manner or with laparoscopy to be
eventually replaced by da Vinci surgery, as robotic surgery becomes
the standard of care in many instances. The company enjoys a
virtual monopoly in robotic surgery with little competition.
Intuitive's recurring revenue stream continues to be robust and
provides a shield against cyclicality of revenues, arising from the
sale of discretionary capital equipment to hospitals. However, we
believe that until the global economy fully recovers, the stock may
come under pressure as investors ponder whether lingering macro
economic uncertainty weakens hospitals' commitment to buy high-cost
The pace of adoption of robotic surgery may therefore be lumpy
and growth in usage requires acceptance from patients and training
to medical practitioners. Intuitive competes with
) in certain niches.
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