Shares of ISRG dropped 8% to $251 in after-hours trading today when Intuitive released the results. (Update: The stock was down about 3% Friday morning, trading around $264.)
MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was down slightly on the day.
The Sunnyvale, California-based surgical robotics leader posted profits of $416 million, or $1.16 per share for the three months ended Sept. 30, 2023. That was a 28% bottom-line gain compared to Q3 2022.
The company reported sales of $1.74 billion, up 12% from the same quarter last year. Intuitive attributed the gains to growth in da Vinci surgical robot procedures and an increase in the installed base of systems.
Adjusted earnings per share were $1.46, which was 5¢ better than expected on Wall Street, where analysts were looking for adjusted earnings per share of $1.41 on $1.77 billion in revenue.
Worldwide da Vinci procedures grew by 19%, Intuitive said. Intuitive placed 312 da Vinci systems in the quarter, up from 305 the same quarter last year.
“We are pleased by our customers’ continued adoption of da Vinci surgery and their acceptance and use of our Ion and SP platforms,” Intuitive CEO Gary Guthart said in a news release. “We continue to focus on supporting their needs through the pursuit of expanded indications, delivering excellence in quality and supply, and increasing our productivity.”
Intuitive’s stock also dropped when it reported financial results last quarter, despite beating analysts’ expectations on sales and profit.
In both cases, it could be due to investors’ continued concerns about the impact of GLP-1 weight loss drugs on patients who would be potential candidates for Intuitive bariatric procedures. CEO Gary Guthart and Chief Medical Officer Dr. Myriam Curet shared their thoughts on that today — read more here.
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Analysts downplay revenue miss
William Blair analysts Brandon Vazquez and Justin Lin characterized the Q3 results as “solid,” citing better-than-expected results in procedures, system placements, margins, and earnings per share.
“Despite worsening headwinds from bariatric surgery and China anti-corruption, procedure growth came in slightly ahead of expectations at 19% and management raised the low end of procedure guidance, which we believe should give confidence in its ability to meet expectations through these noisy events,” the analysts said in a note to investors.
Medical Design & Outsourcing: How surgical robotics leader Intuitive is growing in China
“By our math, the miss was driven by system sales, and more specifically, a higher mix of operating leases in the U.S. and lower-than-expected [average selling prices] on outright system purchases,” the William Blair analysts said. “We view both as noise rather than any fundamental issues.”
A team of Truist analysts led by Richard Newitter similarly downplayed the revenue miss, saying that while it might be tough to digest for a high-multiple stock, the revenue shortfal was due to a higher percentage of operating leases on the system line.
“This is a tradeoff of timing, not economic value, and one that investors should be willing to take all day long,” they said in their note to subscribers.
This story was originally published on Oct. 19, 2023, and updated on Oct. 20 with next-day stock activity.
