By Bill Berkrot
Oct 17 Intuitive Surgical Inc on
Thursday reported lower third-quarter profit as sales of its
high-priced da Vinci surgical robots declined sharply, and it
said full-year revenue growth was likely to come in at the lower
half of its already slashed forecast range.
Intuitive shares fell nearly 8 percent after the results and
updated forecasts were announced. They had already fallen about
20 percent since July, when the company dramatically cut its
full year revenue growth forecast and warned that 2013 profit
would be below Wall Street estimates.
Intuitive cut its revenue growth forecast to flat to 7
percent in July and now appears to see the upper half of that
range as out of reach. It narrowed its full-year procedure
growth forecast range to 16 percent to 17 percent from 15
percent to 18 percent.
Earlier in the year the company had been looking for revenue
growth at the higher end of a 16 percent to 19 percent forecast
and had expected procedure growth of 20 percent to 23 percent.
Intuitive, which had been accustomed to double-digit revenue
growth and steadily rising da Vinci sales in past years, saw its
recent woes continue through the third quarter.
"Our third-quarter results were impacted by the same
pressures we faced in the first half of the year - namely,
moderating growth in benign gynecology, combined with changing
hospital capital spending priorities," Intuitive Surgical Chief
Executive Gary Guthart said in a statement.
The business has also been hit by media reports questioning
the cost effectiveness of using the robots for certain
procedures and push back from insurance payors.
"The growth darling is no more," declared Morningstar
analyst Alex Morozov. "Everybody has loved this company for so
long primarily because the growth was seemingly just so easily
achievable for them."
Morozov said the company may be a victim of its own past
success. "What we are seeing here is a market that is
oversaturated with (da Vinci) systems," he said.
The company sold 101 da Vinci surgical units in the quarter
at a cost of about $1.5 million each, down from 155 sold in the
year-ago quarter and 143 in the second quarter of this year.
Sixty five da Vinci systems were sold in the United States
in the quarter, down from 114 a year earlier.
"The procedure growth is still there, the robots are still
being utilized. Once we realize that the company's growth is not
going to be driven by systems sales going forward, but more by
procedures and instruments, I think folks' expectations will be
reset," Morozov said.
Procedures using the da Vinci robots rose 16 percent in the
quarter, driven by general surgery and gynecologic surgeries in
the United States.
Hysterectomies are now the single largest procedure being
performed using da Vinci robots, the company said, supplanting
prostate surgeries that had once been the backbone of the
business. Many patients with slowly progressing prostate cancer
are now being advised to take a watch and wait approach rather
than opting for surgery.
Intuitive said net profit fell to $157 million, or $3.99 per
share, from $183 million, or $4.46 per share, a year ago.
That exceeded analysts' severely diminished average expectations
of $3.40 per share, according to Thomson Reuters I/B/E/S.
Revenue for the quarter fell 7 percent to $499 million,
missing Wall Street estimates of $526 million.
Intuitive shares fell to $368 in extended trading from a
Nasdaq close at $399.13.