Intuitive Surgical shares lose 6% in after-hours trading after the company releases its 2nd quarter earnings report, which beat Wall Street expectations but demonstrated softness in prostatectomy procedures.
Despite 26% growth in sales and 32% growth in profits, ISRG shares lost 5.7% by the end of the company's conference call, trading after-hours at $513.40 as of about 5:25 p.m.
Strategy vice president Aleks Cukic attributed declines in prostatectomy procedures to a growing emphasis on "watchful waiting" as an alternative to surgery or other active treatment options for treating prostate cancer.
He added that the market may be affected by the decline in clinical use of the prostate-specific antigen test, a commonly used prostate cancer screening tool which a a U.S. Preventative Services Task Force recently advised against.
"Many people have a blind faith in early detection of cancer and subsequent aggressive medical intervention whenever cancer is found," American Cancer Society chief medical officer Dr. Otis Brawley wrote in an accompanying commentary on the panel's decision. "There is little appreciation of the harms that screening and medical interventions can cause."
The company seemed optimistic about what they described as a gradual decline in prostatectomies, and may have good reason. A survey of primary care docs released earlier this year reported that most said they were unlikely to curtail their use of the PSA test based on the USPSTF recommendation.
"We've seen in the past, over time, as men are moved into active surveillance - and those come in waves having to do with the amount of publicity that gets - people will come out of active surveillance," president and CEO Gary Guthart said.
About a third of patients stay in active surveillance, a third see enough progression in their cancer to require more active treatment and the final third drop out because of the inconvenience of frequent testing to monitor their disease, Guthart added.
The drop in prostatectomies, which wasn't quantified in the latest earnings report, was more than made up for with growth in gynecological and general procedures with the da Vinci robot-assisted surgery system.
Overall procedures grew 26% and the company sold 150 da Vinci systems during the quarter. Instrument and accessory sales rose 30%, representing more than half of the company's revenue.
The device maker reported $536 million in sales during the 3 months ended June 30, a 26% increase from sales of $425.7 million during the same time last year.
Profits jumped an impressive 32% to $154.9 million, or $3.75 per diluted share, compared with $117.4 million, or $2.91 per share, during the same quarter in 2011. That beat Wall Street's expectations of $3.56 per share by 19¢.
Intuitive Surgical further increased its 2012 guidance, previously at 19-21%, to growth of 20-23% above 2011 revenue, which topped $1.75 billion.
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