Intuitive Announces First Quarter Earnings
da Vinciprocedures 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.
- First quarter 2020 revenue of
$1,100 milliongrew 13% compared with $974 millionin the first quarter of 2019.
- First quarter 2020 GAAP net income was
$314 million, or $2.62per diluted share, compared with $307 million, or $2.56per diluted share, in the first quarter of 2019.
- First quarter 2020 non-GAAP* net income was
$323 million, or $2.69per diluted share, compared with $312 million, or $2.61per diluted share, in the first quarter of 2019.
February 2020, the Company acquired Orpheus Medical Ltd.and its wholly owned subsidiaries (“Orpheus Medical”) to deepen and expand its integrated informatics platform. Orpheus Medical provides hospitals with information technology connectivity, as well as expertise in processing and archiving surgical videos.
Q1 Financial Summary
Gross profit, income from operations, net income, net income per diluted share, and diluted shares 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.
First quarter 2020 revenue was $1,100 million, an increase of 13% compared with $974 million in the first quarter of 2019. Higher first quarter revenue was driven by increased procedures and systems placements as well as higher service and operating lease revenue.
First quarter 2020 instruments and accessories revenue increased by 12% to
First quarter 2020 systems revenue increased by 14% to
First quarter 2020 GAAP income from operations increased to
First quarter 2020 GAAP net income was
First quarter 2020 non-GAAP* net income was
The Company ended the first quarter of 2020 with
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
“In response to COVID-19, Intuitive's priorities are the health and safety of those we serve, including care teams, their patients, our employees, our communities, and our suppliers," said Intuitive CEO
Additional supplemental financial and procedure information has been posted to the Investor Relations section of the Intuitive website at https://isrg.gcs-web.com/.
Webcast and Conference Call Information
Intuitive will hold a teleconference at
Intuitive (Nasdaq: ISRG), headquartered in
Intuitive brings more than two decades of leadership in robotic-assisted surgical technology and solutions to its offerings and develops, manufactures, and markets the da Vinci Surgical System and the Ion endoluminal system.
For more information, please visit the Company’s website at www.intuitive.com.
This press release contains forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of the Company's 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 include, but are not limited to, statements related to the potential impacts of the COVID-19 pandemic on our business, financial condition and results of operations, the strength of our long-term fundamentals, the potential decline of procedure volume, our acquisitions, expected new product introductions, procedures and procedure adoption, future results of operations, future financial position, our ability to increase our revenues, the anticipated mix of our revenues between product and service revenues, our financing plans and future capital requirements, anticipated costs of revenue, anticipated expenses, our potential tax assets or liabilities, the effect of recent accounting pronouncements, our investments, anticipated cash flows, our ability to finance operations from cash flows and similar matters, and statements based on current expectations, estimates, forecasts, and projections about the economies and markets in which we operate and our beliefs and assumptions regarding these economies and markets. These forward-looking statements should, therefore, be considered in light of various important factors, including, but not limited to, the following: the ability of the Company to obtain accurate procedure volume in the midst of the COVID-19 pandemic, the risk that the COVID-19 pandemic could lead to further material delays and cancellations of procedures, curtailed or delayed capital spending by hospitals and disruption to our supply chain, closures of our facilities, delays in surgeon training, delays in gathering clinical evidence, or diversion of management and other resources to respond to the COVID-19 pandemic; the evaluation of the risks of robotic-assisted surgery in the presence of infectious diseases, the impact of global and regional economic and credit market conditions on healthcare spending; the risk that the COVID-19 pandemic disrupts local economies and causes economies in our key markets to enter prolonged recessions; healthcare reform legislation in the
*About Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in
The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding items such as intangible asset charges, share-based compensation (“SBC”) expenses, and other special items. Intangible asset charges consist of non-cash charges, such as the amortization of intangible assets, as well as in-process R&D charges. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to its historical performance and liquidity. The Company believes 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 institutional investors and the analyst community to help them analyze the performance of the Company’s business.
Non-GAAP gross profit. The Company defines non-GAAP gross profit as gross profit, excluding intangible asset charges, expenses related to SBC, and litigation charges and recoveries.
Non-GAAP income from operations. The Company defines non-GAAP income from operations as income from operations, excluding intangible asset charges, certain acquisition-related items for the re-measurement of contingent consideration, expenses related to SBC, and litigation charges and recoveries.
Non-GAAP net income and EPS. The Company defines non-GAAP net income as net income (loss), excluding intangible asset charges, non-cash impairment charges and recoveries, certain acquisition-related items for the re-measurement of contingent consideration, expenses related to SBC, litigation charges and recoveries, adjustments attributable to noncontrolling interest in joint venture, net of the related tax effects, and tax adjustments, including the excess tax benefits or deficiencies associated with SBC arrangements, the one-time impact of the enactment of the 2019 Swiss tax reform, and the net tax effects related to intra-entity transfers of non-inventory assets. The Company excludes the one-time impact of the enactment of the 2019 Swiss tax reform, because it is discrete in nature, and excludes the excess tax benefits or deficiencies associated with SBC arrangements as well as the tax effects associated with non-cash amortization of deferred tax assets related to intra-entity non-inventory transfers, because the Company does not believe these items correlate with the on-going results of its core operations. The tax effects of the non-GAAP items 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 the Company’s operating results. The Company’s calculated non-GAAP effective tax rate is generally higher than its GAAP effective tax rate. The Company defines non-GAAP EPS as non-GAAP net income divided by non-GAAP diluted shares, which are calculated as GAAP weighted average outstanding shares plus dilutive potential shares outstanding during the period.
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 items such as intangible asset charges, re-measurement of contingent consideration, SBC, excess tax benefits or deficiencies associated with SBC arrangements, and non-cash amortization of deferred tax assets related to intra-entity transfer of non-inventory assets, which are primarily recurring items. SBC has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business. In addition, the components of the costs that the Company excludes in its calculation of non-GAAP net income and non-GAAP EPS may differ from the components that its 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 (loss) and net income (loss) per share calculated in accordance with GAAP.
|Three months ended|
|Instruments and accessories||$||617.5||$||671.2||$||552.3|
|Cost of revenue:|
|Total cost of revenue||361.3||381.7||304.1|
|Selling, general and administrative||308.1||341.8||273.4|
|Research and development||147.1||156.6||144.0|
|Total operating expenses||455.2||498.4||417.4|
|Income from operations (1)||283.0||397.6||252.2|
|Interest and other income, net||25.1||34.1||27.5|
|Income before taxes||308.1||431.7||279.7|
|Income tax expense (benefit) (2)||(8.1||)||69.0||(24.3||)|
|Less: net income (loss) attributable to noncontrolling interest in joint venture||2.7||5.0||(2.5||)|
|Net income attributable to
|Net income per share attributable to
|Weighted average shares outstanding:|
|(1) Income from operations includes the effect of the following item:|
|Intangible asset charges||$||13.3||$||15.7||$||30.2|
|(2) Income tax expense (benefit) includes the effect of the following item:|
|Excess tax benefits related to share-based compensation arrangements||$||(65.4||)||$||(33.7||)||$||(72.7||)|
|(3) Diluted net income per share includes the effect of the following items:|
|Intangible asset charges, net of tax||$||(0.10||)||$||(0.11||)||$||(0.21||)|
|Excess tax benefits related to share-based compensation arrangements||$||0.55||$||0.28||$||0.61|
|Cash, cash equivalents, and investments||$||5,896.1||$||5,845.2|
|Accounts receivable, net||527.6||645.2|
|Property, plant, and equipment, net||1,369.2||1,272.9|
|Deferred tax assets||364.7||425.6|
|Accounts payable and other accrued liabilities||$||994.4||$||1,083.3|
|Total liabilities and stockholders’ equity||$||9,891.1||$||9,733.2|
|Three months ended|
|GAAP gross profit||$||738.2||$||896.0||$||669.6|
|Share-based compensation expense||18.0||17.1||15.1|
|Intangible asset charges||9.7||9.5||8.2|
|Non-GAAP gross profit||$||765.9||$||922.6||$||692.9|
|GAAP income from operations||$||283.0||$||397.6||$||252.2|
|Share-based compensation expense||90.6||89.2||76.1|
|Intangible asset charges||13.3||15.7||30.2|
|Non-GAAP income from operations||$||384.3||$||505.6||$||361.5|
|GAAP net income attributable to
|Share-based compensation expense||90.6||89.2||76.1|
|Intangible asset charges||13.3||15.7||30.2|
|Tax adjustments (1)||(90.0||)||(44.9||)||(101.5||)|
|Adjustments attributable to noncontrolling interest in joint venture||(2.0||)||(3.8||)||(3.8||)|
|Non-GAAP net income attributable to
|GAAP net income per share attributable to
|Share-based compensation expense||0.76||0.75||0.64|
|Intangible asset charges||0.11||0.13||0.25|
|Tax adjustments (1)||(0.76||)||(0.38||)||(0.85||)|
|Adjustments attributable to noncontrolling interest in joint venture||(0.02||)||(0.03||)||(0.03||)|
|Non-GAAP net income per share attributable to
|(1) For the three months ended
Contact: Investor Relations
Source: Intuitive Surgical, Inc.