) reported fourth quarter and 2012 earnings per share of $4.25
and $15.98, respectively, beating the Zacks Consensus Estimates
of $4.03 and $14.84, respectively, while surpassing the
corresponding year-ago results of $3.75 and $12.32.
Net income was $174.9 million (or $4.25 per share), up 15.7%
year over year.
Intuitive Surgical reported revenues of $609.3 million and
$2,178.8 million for the fourth quarter and 2012, respectively,
up 22.6% and 24% year over year. The results beat the Zacks
Consensus Estimates of $584 million and $2,154 million,
On a segment basis, the company reported revenues from
instruments and accessories of $253.8 million, up 29% year over
year, in the fourth quarter. The growth was driven by a 25%
year-over-year increase in da Vinci surgical procedures. Growth
in gynecology and general surgery procedures was partially offset
by a decline in prostatectomy procedures in the U.S.
Revenues from sales of systems were $264.9 million, up 18%
year over year. The increase in systems revenue was due to higher
sales of 175 da Vinci Systems compared with 152 systems in the
year-ago quarter. Service revenue was $90.6 million, up 20% year
over year, primarily due to growth in the installed base of da
Vinci Surgical systems.
Intuitive Surgical enjoyed a gross margin of 71.9% in the
reported quarter, down from 73.1% the year-ago quarter. The
company reported operating expenses of $189.8 million in the
quarter, up about 16.2% year over year. The increase was due to
growth in selling, general and administrative expense (up 21.4%)
while research and development expenditure was almost flat.
Operating income was $248.1 million, or about 41% of sales, in
the reported quarter compared with $199.5 million, or 40.0% of
sales, in the prior-year quarter.
Intuitive Surgical exited 2012 with cash, cash equivalents and
investments of $2,920.5 million, up 34.5% year over year. It
remains a zero debt company.
Intuitive Surgical expects procedure count to increase by 20%
to 23% for 2013 propelled by general surgery and gynecology
procedures in the domestic market and overseas prostatectomy
procedures. The company expects revenues to grow in the range of
16% to 19% for 2013 with higher sales in the fourth quarter than
in the first quarter. Operating income is expected in a band of
38% to 39% of sales for 2013.
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
Intuitive Surgical'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
recovers, the stock may come under pressure as investors ponder
whether lingering macro economic uncertainty weakens hospitals'
commitment to buy high-cost robotic systems.
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.
Our rating factors in the attractive growth prospects of the
company, given da Vinci system's leading status as an enabler of
robotic minimally invasive surgery. The installed base of the
company continues to grow as hospitals feel compelled to upgrade
Intuitive Surgical currently carries a Zacks Rank #2 (Buy).
Cantel Medical Corp.
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