Intuitive Surgical Inc. (NSDQ:ISRG) crushed year-ago comparisons and blew through analyst expectations for the quarter, posting a $89 million profit during the three months ended June 30 on $351 million in revenues.
But in the “What have you done for me lately?” category, shares of the Sunnyvale, Calif.-based maker of robotic surgical tools were taking a pounding in after-market trading July 21 — falling nearly 8 percent at one point — after Intuitive executives didn’t raise their revenue forecast as much as Wall Street had hoped.
During a conference call to discuss the latest quarterly results, company officials boosted expected growth this year by another 3 percent, to a range between $1.34 billion to $1.37 billion. Unfortunately for the firm and its longer-term shareholders, analysts were expecting Intuitive to generate at least $1.39 billion in sales this year and the $20 million difference in expectations was more than enough to send traders into the Big Pout.
The forecast shortfall overshadowed what otherwise should be considered a stellar quarter at Intuitive. The $2.19-a-share profit topped year-ago earnings by 35 percent and beat the $2.04 consensus analyst view by more than 7 percent. The company also obliterated top-line comparisons and estimates, rising $90 million — or 34 percent — from the $261 million in sales reported in the June 2009 quarter and brushing past the Street’s predictions by nearly 5 percent.
Revenue growth was roughly even between sales of Intuitive’s da Vinci surgical systems and sales of da Vinci instruments and accessories. The system consists of a surgeon-operated console, a high-performance vision system and a patient-side cart containing devices able to carry out the surgery. The surgeon controls instrument motion through small incisions from the console, with those micro-motions closely matching — or intuitively, as the company claims — the surgeon’s natural hand movements.
Increasingly, surgeons and surgical departments seem to agree. System sales rose $42 million to $168 million during the second quarter, with the company selling 108 units, up from the 76 units sold during the same period of 2009. Sales of replacement EndoWrist instruments and other accessory products reached $128 million, or $32 million more than the $96 million reported last year. The company attributed the jump to a 36 percent increase in the number of procedures year-over-year, paced by growth of da Vinci-aided hysterectomies.
Recurring revenues — which also include service contracts generating between $100,000 to $180,000 per unit annually — are expected to command a larger slice of Intuitive’s revenue stream as its market matures. Second-quarter service revenues rose by $14 million, or 34 percent, to $55 million, and when coupled with instrument sales comprised 43 percent of Intuitive’s revenues during the quarter.
The combined segments produced 53 percent of revenues during 2009.