Intuitive Surgical, Inc. (NASDAQ:ISRG) is likely to be one of the rare positive surprises for earnings data this quarter, beating on the top and bottom lines. But it is also an example of strong execution in an increasingly difficult context. The coronavirus has hit hard here because no one wants to be anywhere near a hospital right now unless they absolutely have to be. And procedures that aren’t emergencies are going to be put off until the ICU base of the developed world isn’t overrun with COVID-19 cases. But this will eventually translate into a pent-up demand driver for the company.
Worldwide, the company saw its da Vinci procedures grow at around 10% yr/yr, 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% yr/yr. The Company grew its da Vinci Surgical System installed base to 5,669 systems as of March 31, 2020, an increase of 11% yr/yr.
"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."
On a worldwide basis, weekly procedures performed exiting Q1 were approximately 50% lower than the run rate through mid-March. The key here was the co was doing well prior to the COVID impact. We were well aware that medical procedures had been delayed, so this is no surprise. The big takeaway is twofold: the structural trend favoring robotics in medicine is undamaged, and we will surely see the stock price along the thesis that we are storing up a pent-up demand for procedures that will eventually lead to a boom for ISRG in a post-pandemic reality, whenever that is.
Intuitive Surgical, Inc. (NASDAQ:ISRG) bills itself as a company that designs, manufactures, and markets da Vinci surgical systems, and related instruments and accessories in the United States and internationally.
The company's da Vinci Surgical System include surgeon's consoles, patient-side carts, 3-D vision systems, da Vinci skills simulators, da Vinci Xi integrated table motions, and Firefly fluorescence imaging products that enable surgeons to perform various surgical procedures, including gynecologic, urologic, general, cardiothoracic, and head and neck surgical procedures. It also manufactures EndoWrist instruments, such as forceps, scissors, electrocautery tools, scalpels, and other surgical tools, which incorporate wrist joints for natural dexterity for various surgical procedures.
In addition, the company offers EndoWrist Stapler, a wristed stapling instrument for resection, transection, and creation of anastomoses; and EndoWrist One Vessel Sealers that are wristed single-use instruments for bipolar coagulation and mechanical transection of vessels up to 7mm in diameter and tissue bundles that fit in the jaws of the instrument.
Additionally, the company sells various accessories comprising sterile drapes for ensuring sterile field during surgery; and vision products that include replacement 3D stereo endoscopes, camera heads, light guides, and other items that facilitate use of the da Vinci Surgical System, as well as Ion endoluminal system for biopsies.
If you're long this stock, then you're liking how the stock has responded to the announcement. ISRG shares have been moving higher over the past week overall, pushing about 4% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 29% in that time on strong overall action.
Our ISRG Earnings Summary:
-
Intuitive Surgical beats by $0.15, beats on revs
-
Reports Q1 (Mar) earnings of $2.69 per share, excluding non-recurring items, $0.15 better than the S&P Capital IQ Consensus of $2.54; revenues rose 12.9% year/year to $1.1 bln vs the $1.01 bln S&P Capital IQ Consensus.
-
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.
-
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."
Our ISRG Research and Conference Call Notes:
-
Beginning in mid-March, co says it saw significant declines in procedure volume in the U.S. and Western Europe.
-
On a worldwide basis, weekly procedures performed exiting Q1 were approximately 50% lower than the run rate through mid-March.
-
In the U.S., weekly procedures exiting the quarter were approximately 65% below the run rate through mid-March.
-
Outside of the United States, weekly procedures exiting the quarter were approximately 25% below the run rate through mid-March. The lower OUS decline primarily reflects procedure volume recoveries in China, offset by broad declines in Western Europe.
-
In Q1, procedures in Japan were less affected by COVID-19. Growth in Japan procedures continued at a growth rate over 40%.
-
Due to the uncertain scope and duration of the COVID-19 pandemic, and uncertain timing of global recovery and economic normalization, co withdrew its financial and procedure guidance on April 8, and these Q1 procedure results aren't necessarily indicative of any forward-looking trend.
