Intuitive cuts sales, surgery forecasts, hit by FDA warning
(Reuters) - Intuitive Surgical Inc (ISRG.O) shares fell 11 percent after the company slashed its 2013 sales forecast due to disappointing demand for its da Vinci surgical robots and procedures, and said U.S. regulators had issued a warning letter after an inspection of its facilities in June.
The company said it now expects 2013 revenue to be between flat and 7 percent higher. Three months ago, the company had predicted revenue growth at the higher end of its initial full-year forecast of 16 to 19 percent.
Intuitive Surgical last week pre-announced that full-year earnings growth would be well below Wall Street forecasts. Analysts said Thursday's actual forecast was below the already diminished expectations of some investors.
The company, in a conference call with analysts late on Thursday, also said it now expects the number of procedures using its surgical robots to grow by 15 percent to 18 percent this year. That is below its forecast in April at the lower end of its initial view of 20 percent to 23 percent growth.
The robots are used for a variety of surgeries, especially procedures to remove prostates and to treat benign hysterectomies.
The company, which earlier this year reported a slowdown in the growth of hysterectomy procedures, said the trend had worsened largely because of resistance by insurers to reimburse for such procedures and because of costly insurance deductibles.
Intuitive Surgical, which until the first quarter had been accustomed for several years to ever-surging demand for its robots and procedures, said business was also being hurt by "negative press." That was a reference to recent media reports questioning the cost effectiveness of the costly robotic procedures.
The company said it had received a warning from the U.S. Food and Drug Administration after the agency's visit last month to its facilities. The FDA is requesting additional insight into procedures by which product recalls are classified, as well as more information on design elements relating to "a particular product," the company said.
Rick Wise, an analyst with Stifel, Nicolaus & Co, said it is unclear how big an overhang the warning letter may be on the company, or what product's design raised FDA concern.
"When you get an FDA warning letter, it's something you have to take very seriously," Wise said, but added he was confident the company will quickly address the FDA concerns.
Company shares were trading at $372.85 after hours, from their closing price at $421.47 on the Nasdaq.
(Reporting by Ransdell Pierson; editing by; Andrew Hay)