By Ransdell Pierson
July 18 Intuitive Surgical Inc 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
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
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.