Shares of ISRG fell more than 3% to $337.17 apiece by the afternoon today — the day after Intuitive released results. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was up slightly.
Analysts suggested the decline could be due to a new potential — but probably transient — headwind for bariatric surgery procedure volumes: the new popular weight loss drug Wegovy and its off-label cousin Ozempic.
The Sunnyvale, California-based surgical robotics leader posted profits of $420.8 million. That equals $1.18 per share on sales of $1.76 billion for the three months ended June 30, 2023.
Intuitive recorded a 36.7% bottom-line gain on sales growth of 15.4%.
Adjusted to exclude one-time items, earnings per share totaled $1.42. That landed 9¢ ahead of expectations on Wall Street where analysts projected $1.74 billion in revenue.
Worldwide da Vinci surgical robot procedures grew by 22%, Intuitive noted. This, along with an increase in the system’s installed base, drove the second-quarter revenue beat.
However, Intuitive officials acknowledged to analysts yesterday evening that the growth rate of robot-assisted bariatric surgeries slowed in the U.S. in Q2.
“Some customers have indicated that they are seeing increased patient interest in weight loss drugs. It is too early to conclude if the slowing growth is a temporary pause as patients evaluate these new drug therapies or if it is a trend that continues,” said CFO Jamie Samath.
The company also said that its second-quarter results reflected no significant disruptions from COVID-19. Resurgences of the virus in 2022 produced an adverse impact on da Vinci procedure volumes at the time.
“Our core business was lifted by positive surgical trends and continued interest in robotic-assisted surgery compared with other surgical approaches,” said Gary Guthart, Intuitive CEO. “We continue to focus on supporting our customers’ adoption, pursuing expanded indications, delivering excellence in quality and supply, and increasing productivity as we scale our business.”
Intuitive did not share its financial outlook for 2023.
Analysts counter Wall Street’s reaction to the results from Intuitive
BTIG analysts Ryan Zimmerman, Sam Durno and Iseult McMahon wrote in a report that, despite the knee-jerk reaction that sent Intuitive shares down, “we think ISRG’s results were good.”
The analysts noted that Intuitive faces “a few threats.” However, they view those threats as transient to broader robotic adoption. The analysts cited patients holding off on bariatric surgery to try new weight loss drugs. This may depress near-term surgery volumes, they wrote. However, with high dropout rates, side effects and ongoing costs, the analysts feel patients should revert back to surgery over time.
Additionally, they wrote that government quotas for robotic systems in China came in larger than expected, supporting growing demand. Local competition and pricing pressure offset this, though. The analysts still feel Intuitive can capture a fair share as it sets up production of its Xi system in that geography.
“All in all, we see little change to ISRG’s longer-term thesis and believe ISRG is poised for increasing top-line growth on the back of an improving procedural environment supporting increased leverage,” the analysts said.
This story originally ran on July 20, 2023. Updated July 21 with next-day stock price and additional insights.
