Preliminary second quarter figures from surgical robotics company Intuitive Surgical, Inc. are some way off the company’s predictions. Q2 projections included sales of over $620M, which would have been a 16%+ ramp, but actual sales came in at $575M, only a 7% increase over prior year.
A sales increase from Q2 2012 sales of $537M to Q2 2013’s $575M might sound healthy enough, but for a company that as recently as one quarter ago was signalling expectations as high as almost $640M it’s a relative disaster and is prompting questions about the suitability of expensive robotic surgical systems in a time when healthcare costs are under the spotlight.
Indeed the company itself is blaming economic factors, suggesting system purchases were being deferred as it tried to explain a drop in US system sales from 124 a year ago to just 90 last quarter. Global system sales were down from 150 to 143, the international figures having increased to somewhat offset the US decline.
So what’s going on?
Well, it’s not as though growth is non-existent. The company’s press release says da Vinci® procedures increased approximately 18% for the quarter, which seems to come from a mixed bag of strong general surgery procedure growth and slower growth in benign gynecologic procedures. The company attributes the gyne slowdown to a number of factors, not least reduced hospital admissions and a trend by payers towards encouraging conservative management and treatment in outpatient settings.
Naturally enough, a reduction in system sales is very likely to have an associated reduction in instrument and accessory sales as stocking order bundles don’t happen. So, while instruments and accessories revenue is looking like an 18% increase, this again could have been higher.
While Intuitive has not had it all its own way in recent times, with some commentators questioning the healthcare economics related to its daVinci system, it is far too early to suggest that this single set of top line data is suggestive of a slowdown in uptake. It ‘s equally true though that an investment-averse global healthcare environment will not be helping embed a capital intensive change to the way procedures are performed, unless the results back up the argument.
Gary Guthart, President and CEO of Intuitive Surgical, said, “While we are disappointed in our performance this quarter, particularly with respect to our capital sales in the U.S., overall procedure performance was solid in a difficult environment. We remain confident in the value that our products and services bring to patients, hospitals and the healthcare system.”
Source: Intuitive Surgical, Inc., Globe Newswire