Intuitive Surgical, Inc. (NASDAQ:ISRG), the industry leader in
robotic-assisted surgery, today announced financial results for the
quarter ended September 30, 2016.
Q3 Highlights
- Worldwide da Vinci procedures grew approximately 14% compared
with the third quarter of 2015 driven primarily by growth in U.S.
general surgery procedures and worldwide urologic procedures.
- The Company shipped 134 da Vinci Surgical Systems compared with
117 in the third quarter of 2015.
- Third quarter 2016 revenue of $683 million grew approximately
16% compared with $590 million for the third quarter of 2015.
- Third quarter 2016 GAAP net income was $211 million, or $5.31
per diluted share, compared with $167 million, or $4.40 per diluted
share, for the third quarter of 2015.
- Third quarter 2016 non-GAAP* net income was $246 million, or
$6.19 per diluted share, compared with $199 million, or $5.24 per
diluted share, for the third quarter of 2015. Included in third
quarter 2016 and 2015 net income per diluted share is $0.40 and
$0.77, respectively, of benefits from certain income tax
items.
- The Company announced a joint venture with Shanghai Fosun
Pharmaceutical (Group) Co., Ltd. to research, develop, manufacture
and sell innovative, robotic-assisted catheter-based medical
devices, which will initially pursue products targeting early
diagnosis and cost-effective treatment of lung cancer.
Q3 Financial Summary
Gross profits, income from operations, net
income, and net income per share are reported on a GAAP and
non-GAAP* basis. The non-GAAP* measures are described below and are
reconciled to the corresponding GAAP measures at the end of this
release.
Third quarter 2016 revenue was $683
million, an increase of approximately 16% compared
with $590 million in the third quarter of 2015.
Higher third quarter revenue was driven by growth in recurring
instrument, accessory, and service revenue, and higher systems
revenue.
Third quarter 2016 instrument and accessory
revenue increased by approximately 17% to $348 million, compared
with $298 million for the third quarter of 2015,
primarily driven by approximately 14% growth in da Vinci procedure
volume. Third quarter 2016 service revenue increased by
approximately 10% to $130 million, compared with $117 million for
the third quarter of 2015.
Third quarter 2016 systems revenue increased by
approximately 18% to $205 million, compared with $174 million for
the third quarter of 2015. Intuitive Surgical shipped 134 da Vinci
Surgical Systems in the third quarter of 2016, compared with 117 in
the third quarter of 2015.
Third quarter 2016 income from operations
increased to $256 million, compared with $190 million in the third
quarter of 2015. Third quarter 2016 non-GAAP* income from
operations increased to $308 million, compared with $240 million in
the third quarter of 2015. Third quarter 2016 GAAP and non-GAAP*
income from operations benefited from a $7 million refund of
previously paid Medical Device Excise Tax, reflected as a reduction
to third quarter 2016 cost of revenue.
Third quarter 2016 GAAP net income was $211
million, or $5.31 per diluted share, compared with $167 million, or
$4.40 per diluted share, for the third quarter of 2015. Third
quarter 2016 non-GAAP* net income was $246 million, or $6.19 per
diluted share, compared with $199 million, or $5.24 per diluted
share, for the third quarter of 2015. Third quarter 2016 GAAP and
non-GAAP* net income benefited from a $7 million pre-tax refund of
previously paid Medical Device Excise Tax and $16 million, or $0.40
per share, relating to certain tax benefits. Third quarter 2015
GAAP and non-GAAP* net income benefited from $29 million, or $0.77
per share, relating to certain tax benefits.
Intuitive Surgical ended the third quarter of
2016 with $4.6 billion in cash, cash equivalents, and investments,
an increase of $336 million during the quarter, primarily driven by
cash generated from operations and proceeds from common stock
issued.
Commenting on the announcement, Dr. Gary
Guthart, President and CEO of Intuitive Surgical, said, “While we
are pleased with our third quarter operating results, we remain
focused on helping our customers build effective robotic surgery
programs by understanding their needs and delivering the right
products and services.”
Additional supplemental financial and procedure
information has been posted to the Investor Relations section of
the Intuitive website at:
http://phx.corporate-ir.net/phoenix.zhtml?c=122359&p=irol-IRHome.
Webcast and Conference Call
InformationIntuitive Surgical will hold a teleconference
at 1:30 p.m. PDT today to discuss the third quarter 2016 financial
results. The call is being webcast by NASDAQ OMX and can be
accessed at Intuitive Surgical’s website at
http://www.intuitivesurgical.com/ or by dialing (800) 230-1074 or
(612) 234-9960.
About Intuitive Surgical,
Inc.Intuitive Surgical, Inc. (NASDAQ:ISRG), headquartered
in Sunnyvale, Calif., is the industry leader in robotic-assisted,
minimally invasive surgery. Intuitive Surgical develops,
manufactures, and markets the da Vinci Surgical System.
About the da Vinci Surgical
System
The da Vinci Surgical System is a surgical
platform designed to enable complex surgery using a minimally
invasive approach. The da Vinci Surgical System consists of an
ergonomic surgeon console or consoles, a patient-side cart with
three or four interactive arms, a high-performance vision system
and proprietary EndoWrist instruments. Powered by state-of-the-art
technology, the da Vinci Surgical System is designed to scale,
filter, and seamlessly translate the surgeon’s hand movements into
more precise movements of the EndoWrist instruments. The net result
is an intuitive interface with improved surgical capabilities. By
providing surgeons with superior visualization, enhanced dexterity,
greater precision, and ergonomic comfort, the da Vinci Surgical
System makes it possible for skilled surgeons to perform more
minimally invasive procedures involving complex dissection or
reconstruction. Surgeons, hospitals, and patients benefit from a
large community of users and the Company’s robotic-assisted
surgical ecosystem, beginning with the robotic platforms, and also
including the broad instrument product line, imaging solutions,
training programs and technology, clinical validation, field
clinical support, field technical support, and program
optimization. For more information about clinical evidence related
to da Vinci Surgery, please visit
http://www.intuitivesurgical.com/company/clinical-evidence/
da Vinci® and EndoWrist® are trademarks of
Intuitive Surgical, Inc.
Forward-Looking Statements
This press release contains forward-looking
statements, including statements regarding joint venture activities
and helping customers build effective robotic surgery
programs. These forward-looking statements are necessarily
estimates reflecting the best judgment of our management and
involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the
forward-looking statements. These forward-looking statements
should, therefore, be considered in light of various important
factors, including, but not limited to, the following: the impact
of global and regional economic and credit market conditions on
healthcare spending; healthcare reform legislation in the United
States and its impact on hospital spending, reimbursement and fees
levied on certain medical device revenues; changes in hospital
admissions and actions by payers to limit or manage surgical
procedures; the timing and success of product development and
market acceptance of developed products; the results of any
collaborations, in-licensing arrangements, joint ventures,
strategic alliances or partnerships; procedure counts; regulatory
approvals, clearances and restrictions or any dispute that may
occur with any regulatory body; guidelines and recommendations in
the healthcare and patient communities; intellectual property
positions and litigation; competition in the medical device
industry and in the specific markets of surgery in which we
operate; unanticipated manufacturing disruptions or the inability
to meet demand for products; the results of legal proceedings to
which we are or may become a party; product liability and other
litigation claims; adverse publicity regarding the Company and the
safety of our products and adequacy of training; our ability to
expand into foreign markets; and other risk factors under the
heading “Risk Factors” in our report on Form 10-K for the year
ended December 31, 2015, as updated by our other filings with the
Securities and Exchange Commission. Statements using words such as
“estimates,” “projects,” “believes,” “anticipates,” “plans,”
“expects,” “intends,” “may,” “will,” “could,” “should,” “would,”
“targeted” and similar words and expressions are intended to
identify forward-looking statements. You are cautioned not to place
undue reliance on these forward looking statements, which speak
only as of the date of this press release. We undertake no
obligation to publicly update or release any revisions to these
forward-looking statements, except as required by law.
*About Non-GAAP Financial
Measures
To supplement our consolidated financial
statements, which are prepared and presented in accordance with
accounting principles generally accepted in the United States
(“GAAP”), we use the following non-GAAP financial
measures: non-GAAP gross profit, non-GAAP income from
operations, non-GAAP net income, and non-GAAP net income per
diluted share (“EPS”). The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP.
We use these non-GAAP financial measures for
financial and operational decision-making and as a means to
evaluate period-to-period comparisons. We believe that these
non-GAAP financial measures provide meaningful supplemental
information regarding our performance and liquidity by excluding
non-cash charges, such as amortization of intangible assets and
share-based compensation (“SBC”) expenses, and other special
items. We believe that both management and investors benefit
from referring to these non-GAAP financial measures in assessing
our performance and when planning, forecasting, and analyzing
future periods. These non-GAAP financial measures also
facilitate management’s internal comparisons to our historical
performance and liquidity. We believe these non-GAAP
financial measures are useful to investors because (1) they allow
for greater transparency with respect to key metrics used by
management in its financial and operational decision-making and (2)
they are used by our institutional investors and the analyst
community to help them analyze the performance of our business.
Non-GAAP gross profit. We define non-GAAP gross
profit as gross profit excluding the amortization of intangible
assets and expenses related to SBC.
Non-GAAP income from operations. We define
non-GAAP income from operations as income from operations excluding
the amortization of intangible assets, expenses related to SBC, and
litigation charges and recoveries.
Non-GAAP net income and EPS. We define non-GAAP
net income as net income excluding the amortization of intangible
assets, expenses related to SBC, and litigation charges and
recoveries, net of the related tax effects. The tax effects are
determined by applying a calculated non-GAAP effective tax rate,
which is commonly referred to as the with-and-without method.
Without excluding these tax effects, investors would only see the
gross effect that these non-GAAP adjustments had on our operating
results. We define non-GAAP EPS as non-GAAP net income divided by
the weighted average outstanding shares, on a fully-diluted
basis.
There are a number of limitations related to the
use of non-GAAP measures versus measures calculated in accordance
with GAAP. Non-GAAP gross profit, non-GAAP income from operations,
non-GAAP net income, and non-GAAP EPS exclude amortization of
intangible assets and SBC, which are recurring expenses. SBC has
been and will continue to be for the foreseeable future a
significant recurring expense in our business. In addition, the
components of the costs that we exclude in our calculation of
non-GAAP net income and non-GAAP EPS may differ from the components
that our peer companies exclude when they report their results of
operations. Management addresses these limitations by providing
specific information regarding the GAAP amounts excluded from
non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net
income and non-GAAP EPS together with net income and EPS calculated
in accordance with GAAP.
INTUITIVE SURGICAL, INC. |
UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS OF
INCOME |
(IN MILLIONS, EXCEPT PER SHARE
DATA) |
|
|
Three months ended |
In millions (except per
share data) |
September 30, 2016 |
|
June 30, 2016 |
|
September 30, 2015 |
Revenue: |
|
|
|
|
|
Instruments and accessories |
$ |
348.1 |
|
|
$ |
339.3 |
|
|
$ |
298.1 |
|
Systems |
205.1 |
|
|
202.7 |
|
|
174.2 |
|
Services |
129.7 |
|
|
128.1 |
|
|
117.4 |
|
Total revenue |
682.9 |
|
|
670.1 |
|
|
589.7 |
|
Cost of revenue: |
|
|
|
|
|
Product |
158.4 |
|
|
165.8 |
|
155.3 |
|
Service |
37.5 |
|
|
33.4 |
|
38.6 |
|
Total cost of revenue (1) |
195.9 |
|
|
199.2 |
|
193.9 |
|
Gross profit |
487.0 |
|
|
470.9 |
|
395.8 |
|
Operating
expenses: |
|
|
|
|
|
Selling, general and
administrative |
168.0 |
|
|
170.8 |
|
|
154.9 |
|
Research and development |
62.6 |
|
|
54.7 |
|
|
51.0 |
|
Total operating expenses |
230.6 |
|
|
225.5 |
|
|
205.9 |
|
Income from
operations |
256.4 |
|
245.4 |
|
189.9 |
|
Interest and other
income, net |
10.4 |
|
|
8.0 |
|
|
3.7 |
|
Income before
taxes |
266.8 |
|
253.4 |
|
193.6 |
|
Income tax expense
(2) |
55.8 |
|
|
68.9 |
|
|
26.3 |
|
Net income |
$ |
211.0 |
|
|
$ |
184.5 |
|
|
$ |
167.3 |
|
Net income per
share: |
|
|
|
|
|
Basic |
$ |
5.45 |
|
|
$ |
4.82 |
|
|
$ |
4.49 |
|
Diluted (2) |
$ |
5.31 |
|
|
$ |
4.71 |
|
|
$ |
4.40 |
|
Shares used in
computing net income per share: |
|
|
|
|
|
Basic |
38.7 |
|
|
38.3 |
|
|
37.3 |
|
Diluted |
39.7 |
|
|
39.2 |
|
|
38.0 |
|
|
|
|
|
|
|
(1) Includes pre-tax
medical device excise tax refund benefit as follows: |
|
|
|
|
|
Total cost of revenue |
$ |
7.1 |
|
|
$ |
— |
|
|
$ |
— |
|
(2) Includes certain
one-time tax benefits as follows: |
|
|
|
|
|
Income tax expense |
$ |
15.8 |
|
|
$ |
— |
|
|
$ |
29.3 |
|
Diluted net income per share |
$ |
0.40 |
|
|
$ |
— |
|
|
$ |
0.77 |
|
INTUITIVE SURGICAL, INC. |
UNAUDITED NINE MONTHS ENDED CONSOLIDATED
STATEMENTS OF INCOME |
(IN MILLIONS, EXCEPT PER SHARE
DATA) |
|
|
Nine months ended |
|
September 30, |
In millions (except per
share data) |
2016 |
|
2015 |
Revenue: |
|
|
|
Instruments and accessories |
$ |
1,009.5 |
|
|
$ |
872.1 |
|
Systems |
555.7 |
|
|
491.2 |
|
Services |
382.3 |
|
|
344.6 |
|
Total
revenue |
1,947.5 |
|
|
1,707.9 |
|
Cost of revenue: |
|
|
|
Product |
475.8 |
|
|
468.9 |
|
Service |
108.8 |
|
|
119.9 |
|
Total
cost of revenue (1) |
584.6 |
|
|
588.8 |
|
Gross
profit |
1,362.9 |
|
|
1,119.1 |
|
Operating
expenses: |
|
|
|
Selling,
general and administrative |
511.6 |
|
|
480.2 |
|
Research
and development |
170.5 |
|
|
144.8 |
|
Total
operating expenses |
682.1 |
|
|
625.0 |
|
Income from
operations |
680.8 |
|
|
494.1 |
|
Interest and other
income, net |
23.9 |
|
|
12.6 |
|
Income before
taxes |
704.7 |
|
|
506.7 |
|
Income tax expense
(2) |
172.8 |
|
|
107.9 |
|
Net income |
$ |
531.9 |
|
|
$ |
398.8 |
|
Net income per
share: |
|
|
|
Basic |
$ |
13.92 |
|
|
$ |
10.78 |
|
Diluted (2) |
$ |
13.57 |
|
|
$ |
10.55 |
|
Shares used in
computing net income per share: |
|
|
|
Basic |
38.2 |
|
|
37.0 |
|
Diluted |
39.2 |
|
|
37.8 |
|
|
|
|
|
(1) Includes pre-tax
medical device excise tax refund benefit as follows: |
|
|
|
Total cost of revenue |
$ |
7.1 |
|
|
$ |
— |
|
(2) Includes certain
one-time tax benefits as follows: |
|
|
|
Income tax expense |
$ |
15.8 |
|
|
$ |
37.1 |
|
Diluted net income per share |
$ |
0.40 |
|
|
$ |
0.98 |
|
INTUITIVE SURGICAL, INC. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(IN MILLIONS) |
|
In millions |
September 30, 2016 |
|
December 31, 2015 |
Cash, cash equivalents
and investments |
$ |
4,561.3 |
|
|
$ |
3,347.8 |
|
Accounts receivable,
net |
432.0 |
|
|
394.3 |
|
Inventory |
183.5 |
|
|
167.9 |
|
Property, plant and
equipment, net |
447.3 |
|
|
432.1 |
|
Goodwill |
201.1 |
|
|
201.1 |
|
Deferred tax
assets |
133.1 |
|
|
167.8 |
|
Other assets |
216.4 |
|
|
196.3 |
|
Total assets |
$ |
6,174.7 |
|
|
$ |
4,907.3 |
|
|
|
|
|
Accounts payable and
other accrued liabilities |
$ |
396.8 |
|
|
$ |
357.7 |
|
Deferred revenue |
236.1 |
|
|
230.1 |
|
Total liabilities |
632.9 |
|
|
587.8 |
|
Stockholders’
equity |
5,541.8 |
|
|
4,319.5 |
|
Total liabilities and stockholders’
equity |
$ |
6,174.7 |
|
|
$ |
4,907.3 |
|
INTUITIVE SURGICAL, INC. |
UNAUDITED RECONCILIATION OF GAAP FINANCIAL
MEASURES TO NON-GAAP FINANCIAL |
MEASURES |
(IN MILLIONS, EXCEPT PER SHARE
DATA) |
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
In millions (except per
share data) |
|
September 30, 2016 |
|
June 30, 2016 |
|
September 30, 2015 |
|
September 30, 2016 |
|
September 30, 2015 |
GAAP gross
profit |
|
$ |
487.0 |
|
|
$ |
470.9 |
|
|
$ |
395.8 |
|
|
$ |
1,362.9 |
|
|
$ |
1,119.1 |
|
Share-based
compensation expense |
|
10.2 |
|
|
9.1 |
|
|
9.4 |
|
|
28.0 |
|
|
26.7 |
|
Amortization of
intangible assets |
|
1.8 |
|
|
2.1 |
|
|
3.2 |
|
|
6.1 |
|
|
9.8 |
|
Non-GAAP gross
profit |
|
$ |
499.0 |
|
|
$ |
482.1 |
|
|
$ |
408.4 |
|
|
$ |
1,397.0 |
|
|
$ |
1,155.6 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income
from operations |
|
$ |
256.4 |
|
|
$ |
245.4 |
|
|
$ |
189.9 |
|
|
$ |
680.8 |
|
|
$ |
494.1 |
|
Share-based
compensation expense |
|
46.9 |
|
|
42.7 |
|
|
44.2 |
|
|
132.4 |
|
|
126.6 |
|
Amortization of
intangible assets |
|
4.3 |
|
|
4.6 |
|
|
6.2 |
|
|
14.0 |
|
|
18.6 |
|
Litigation charges |
|
— |
|
|
4.4 |
|
|
— |
|
|
6.6 |
|
|
13.8 |
|
Non-GAAP income
from operations |
|
$ |
307.6 |
|
|
$ |
297.1 |
|
|
$ |
240.3 |
|
|
$ |
833.8 |
|
|
$ |
653.1 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income |
|
$ |
211.0 |
|
|
$ |
184.5 |
|
|
$ |
167.3 |
|
|
$ |
531.9 |
|
|
$ |
398.8 |
|
Share-based
compensation expense |
|
46.9 |
|
|
42.7 |
|
|
44.2 |
|
|
132.4 |
|
|
126.6 |
|
Amortization of
intangible assets |
|
4.3 |
|
|
4.6 |
|
|
6.2 |
|
|
14.0 |
|
|
18.6 |
|
Litigation charges |
|
— |
|
|
4.4 |
|
|
— |
|
|
6.6 |
|
|
13.8 |
|
Tax adjustments |
|
(16.5 |
) |
|
(15.8 |
) |
|
(18.5 |
) |
|
(48.5 |
) |
|
(51.2 |
) |
Non-GAAP net
income |
|
$ |
245.7 |
|
|
$ |
220.4 |
|
|
$ |
199.2 |
|
|
$ |
636.4 |
|
|
$ |
506.6 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
per share - diluted |
|
$ |
5.31 |
|
|
$ |
4.71 |
|
|
$ |
4.40 |
|
|
$ |
13.57 |
|
|
$ |
10.55 |
|
Share-based
compensation expense |
|
1.18 |
|
|
1.09 |
|
|
1.16 |
|
|
3.38 |
|
|
3.35 |
|
Amortization of
intangible assets |
|
0.11 |
|
|
0.12 |
|
|
0.16 |
|
|
0.36 |
|
|
0.49 |
|
Litigation charges |
|
— |
|
|
0.11 |
|
|
— |
|
|
0.17 |
|
|
0.37 |
|
Tax adjustments |
|
(0.41 |
) |
|
(0.41 |
) |
|
(0.48 |
) |
|
(1.25 |
) |
|
(1.36 |
) |
Non-GAAP net
income per share - diluted |
|
$ |
6.19 |
|
|
$ |
5.62 |
|
|
$ |
5.24 |
|
|
$ |
16.23 |
|
|
$ |
13.40 |
|
Contact: Investor Relations
(408) 523-2161
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