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Intuitive Surgical (ISRG) Beats on Q1 Earnings & Revenues


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Intuitive Surgical, Inc. ISRG reported first-quarter 2018 adjusted earnings of $2.44 per share, which beat the Zacks Consensus Estimate by 22.6%. Earnings also improved 42.7% on year-over-year basis.

Revenues totaled $848 million, up 24.7% from the prior-year quarter. Revenues also surpassed the Zacks Consensus Estimate by 10.6%.

The solid performance was backed by higher worldwide da Vinci procedures led by growth in U.S. general surgery procedures and global urologic procedures. Per management, revenues also gained from around a 2.5% drop in dollar.

Meanwhile, in the last three months, the stock has gained 0.5% against the industry 's decline of 7.2%.

Segment Details

Instruments & Accessories

Revenues came in at $460.3 million, which reflects a year-over-year increase of 20.9%. Per management, 15% growth in da Vinci procedure volume primarily drove the upside.

In Japan, 12 da Vinci procedures within the specialties of general surgery, gynecology, and cardiothoracic surgery were granted a national reimbursement status.

Intuitive Surgical, Inc. Price, Consensus and EPS Surprise

Intuitive Surgical, Inc. Price, Consensus and EPS Surprise | Intuitive Surgical, Inc. Quote

Systems

In the reported quarter, system revenues increased 45.8% year over year to $234.5 million. Notably, 185 da Vinci Surgical systems were shipped by the company, up 39.1% year over year.

In the quarter under review, shipments included 43 systems under operating lease arrangements, compared with 21 in the year-ago quarter.

Services

Services revenues came in at $152.7, up 10.7% from a year ago.

International Sales Up

Outside the United States, revenues totaled $275 million, up 49% on a year-over-year basis and 11% sequentially. The upside can be attributed to an increase in systems revenue of 55 million and higher instruments and accessories revenues of 30 million.

OUS procedures grew 18% year over year, with 73 system placements in the reported quarter, compared with 56 in the year-ago quarter. The first quarter of 2018 placements include 45 in Europe and 9 in Japan.

Margins

Gross margin was 71.6%, down 40 basis points (bps) year over year.
In the first quarter of 2018, operating income increased 30.1% on a year-over year basis to $346 million.

Financial Condition

The company ended the first quarter with $4.1 billion in cash, cash equivalents and investments, reflecting an increase of $222 million in the quarter, primarily driven by cash generated from operations.

The company has not repurchased any share in the quarter and has approximately $718 million remaining under its board's buyback authorization.

Outlook

The company has not issued any guidance.

However, management feels that U.S. revenues might experience a low single-digit decline because of lackluster performance in the gynecology and benign hysterectomy market.

Management also feels that margins will fluctuate due to a mix of newer products of systems and accessory revenues.

Our Take

Intuitive Surgical ended the first quarter of 2018 on a solid note. The company's flagship da Vinci procedures recorded solid growth and holds promise for the quarters ahead as well. The company also saw expansion outside the United States, which is encouraging.

However, the company expects U.S. sales to decline in the quarters ahead, which raises concern.

Zacks Ranks & Key Picks

Intuitive Surgical carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space are Bio-Rad Laboratories BIO , Myriad Genetics Inc. MYGN and Abiomed, Inc. ABMD .

Bio-Rad Laboratories sports a Zacks Rank #1 (Strong Buy). It has long-term expected earnings growth rate of 15%. You can see  the complete list of today's Zacks #1 Rank stocks here .

Myriad Genetics has long-term expected earnings growth rate of 10%. The stock carries a Zacks Rank #2 (Buy).

Abiomed has long-term expected earnings growth rate of 31.5%. The stock carries a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: ISRG , ABMD , BIO , MYGN



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