Intuitive Surgical (NSDQ:ISRG) lost some Wall Street favor last night after posting dim preliminary results for its 1st quarter of 2014.
ISRG stock closed at $489.84 last night, down 1.5% on the day. Shares sank another 10% in after-hours trading, going for $440.50 as of about 7:10 p.m.
It was a rough day for Intuitive, which was also the subject of a harsh editorial yesterday lambasting the launch of its next-generation da Vinci Xi robot-assisted surgery system. The company released its Q1 prelims late in the day, reporting a 24% decrease in revenues year-over-year.
Intuitive said it expects to report about $465 million in sales for the 1st quarter, compared with $611 million during the same period last year.
The company also notched a 59% decline in sales of its da Vinci systems, driven by slowing demand in the U.S. System revenues amounted to $106 million for 87 systems, compared with $256 million for 164 systems in Q1 2013.
"Factors that lead to the lower U.S. systems shipments include lower procedure volumes, changing hospital capital-spending priorities associated with the implementation of the Affordable Care Act and the impact that anticipation of a new system may have had on customer capital-spending decisions," according to a press release.
Intuitive also attributed the lower revenues in part to a $26 million deferral for the planned "trade-out program" for customers who want to upgrade from older da Vinci Si systems to the new Xi, which Intuitive launched after receiving FDA clearance early this month. Excluding the impact of the trade-out deferral, revenue would have declined only 20%, according to the release.
The company also recorded a $67 million pre-tax charge associated with "a number of product liability claims" over its recalled surgical scissors and a related tip cover. Intuitive in 2012 pulled early models of monopolar curved scissor tip covers and in 2013 recalled certain versions of the scissors themselves.
"After an extended mediation process with legal counsel for many of the claimants, the company has determined that in light of the costs and risks of litigation, settlement of certain claims is appropriate," Intuitive said. "The company’s estimate of the anticipated cost of these claims is based on negotiations with opposing counsel covering approximately 3,000 claims presented to the company beginning in October 2012."
Preliminary Q1 instruments and accessories sales are expected to come in 2% lower than last year, amounting to about $255 million. Total procedure volume is expected to increase, despite sinking U.S. demand for gynecologic procedures, the company said. Service revenues are slated to come in at an 11% increase to $104 million.
Intuitive is slated to release its full 1st-quarter results April 22.
