By Dow Jones Business News, October 17, 2013, 06:12:00 PM EDT
--Intuitive Surgical reports first year-over-year quarterly sales decline in its history
--Company says it continues to suffer from negative perceptions of robotic surgery and depressed hospital spending
--Shares fall roughly 7% to $372 after hours
(Updated throughout to add details and company comment.)
By Joseph Walker
Struggling robotic surgery company Intuitive Surgical Inc. ( ISRG ) turned in another disappointing performance in the
third quarter, reporting the first year-over-year decline in quarterly sales in its history.
Earnings fell 14% as the company continued to suffer from customers' concerns about the safety and cost-effectiveness
of its da Vinci robots, and also from fewer gynecological procedures and from lower spending by hospitals in reaction to
implementation of the new health-care law, the company said.
"We continued to see significant pressure on our U.S. business," said Chief Executive Gary Guthart. "There are also
lingering, unfounded concerns about the benefit of da Vinci surgery."
In all, third-quarter revenue fell 7%, driven primarily by a roughly 32% decline in system sales of the da Vinci
robots, the high-priced machines that allow surgeons to conduct procedures remotely from a computer console. Services
and instruments revenue, however, grew from the prior year as a result of an increase in the number of procedures
performed on the machines the company has already sold.
The magnitude of Intuitive Surgical's sales decline exceeded analysts' already lowered expectations, who had forecast
total sales of $526 million, compared to the $499 million that the company actually generated.
Shares of Intuitive Surgical fell 7.3% to $370.00 in after-hours trading. The company spent $694 million on share
repurchases at an average price of $398.87 during the quarter. Through the close, the stock is down 19% this year.
After lowering its full-year guidance after the second quarter, the company said it now expects 2013 sales growth in
the lower half of its previous guidance of flat to 7% growth. Intuitive Surgical also lowered the high end of its
guidance for procedure growth to a range of 16% to 17%, down from a range of 15% to 18% previously.
Intuitive Surgical markets the da Vinci machines to surgeons and hospitals as a way to help perform minimally invasive
procedures with fewer errors and faster patient recoveries. But the company has faced some criticism over the machines'
cost, which run in the $1 million range, and safety.
The company reported a profit of $157 million and earnings of $3.99 per share, better than the $3.40 forecast by
Total procedures grew 16% from a year earlier, compared with growth of 22% reported a year earlier. Intuitive Surgical
sold 101 da Vinci machines in the third quarter, down from 155 in the year-earlier period.
--Tess Stynes contributed to this article.
Write to Joseph Walker at firstname.lastname@example.org
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