daVinci System Sales Stall in US, But Procedure Volumes Grow 16%

Robotic surgery system maker Intuitive Surgical, Inc., has for the time being put its troubles behind it with the release of preliminary unaudited financial results that suggest 2013 sales were up 4% compared with 2012.

Background

The Company expects revenue for the year ended December 31, 2013 to total approximately $2,265 million, up approximately 4% compared to full year 2012 revenue of $2,179 million. Having said which, the most recent quarter does not paint quite such a rosy picture, with expected revenue for Q4 2013 of approximately $576 million, down approximately 5% from $609 million for the equivalent period a year ago

So what’s underlying the figures? Well, according to the preliminary unaudited results, which are prior to the completion of review and audit procedures and therefore subject to adjustment, it looks like procedure growth is healthy, while system sales are less so. Q4 2013 instruments and accessories revenue is expected to increase approximately 6% to approximately $268 million from $254 million during the fourth quarter of 2012 with full year 2013 instruments and accessories revenue expected to increase approximately 14% to approximately $1,033 million. The company is saying this growth was driven by da Vinci procedure growth, with approximately 523,000 surgical procedures performed with the da Vinci® Surgical System, up 16% compared to approximately 450,000 procedures performed in 2012.

The growth in overall 2013 procedure volume was driven by the growth in U.S. general surgery procedures, U.S. gynecologic procedures, and urology procedures outside of the U.S. da Vinci® procedures increased approximately 12% for the fourth quarter of 2013 compared to the fourth quarter of 2012.

So healthy growth, driven by increasing procedure numbers was partially offset by a reduction in stocking orders related to a decline in system sales.  How bad is that, really? Intuitive sold 138 da Vinci Surgical Systems during the fourth quarter of 2013, compared with 175 systems during the fourth quarter of 2012. The Company sold 546 da Vinci Surgical Systems during 2013, compared with 620 systems during 2012. Is that a sign of market saturation? Almost certainly not. It’s more likely to be, as the company points out, a response to what they call “moderating” procedure growth in benign gynecology, combined with changing hospital capital spending priorities associated with the implementation of the Affordable Care Act. To reinforce the point Intuitive points to increasing international system sales, especially in Japan.

So read of all that what you will, but it seems likely that a decline in system sales in any given period could indeed be a reflection of short term changes of landscape. What’s mighty reassuring for Intuitive and its investors is the continued upward trend in procedure numbers, especially given the wave of negative publicity regarding outcomes among other issues.

Source: Intuitive Surgical, Inc., Globe Newswire

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