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Intuitive Surgical (ISRG) Beats on Q3 Earnings & Revenues

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Intuitive Surgical (ISRG) Beats on Q3 Earnings & Revenues

Strong performance in the Instruments & Accessories and Systems segments drive Intuitive Surgical's (ISRG) top line in Q3.

Intuitive Surgical, Inc ISRG reported adjusted earnings of $2.83 per share in the third quarter of 2018, which beat the Zacks Consensus Estimate of $2.65. Adjusted earnings improved 1.8% year over year.

Revenues totaled $920.9 million, up 14% from the prior-year quarter. The figure also surpassed the Zacks Consensus Estimate of $918.6 million. The upside was backed by higher worldwide da Vinci procedures led by growth in U.S. general surgery procedures and global urologic procedures.

The stock has a Zacks Racks #2 (Buy).

Intuitive Surgical, Inc. Price and Consensus


Intuitive Surgical, Inc. Price and Consensus | Intuitive Surgical, Inc. Quote

Segment Details

Instruments & Accessories

Revenues in the segment came in at $486.3 million, which reflects year-over-year increase of 21.2%. The uptick in instrument accessory revenues was primarily driven by procedure growth and favorable customer buying pattern.


In the reported quarter, System revenues increased 4.8% year over year to $274.6 million. Notably, 231 da Vinci Surgical systems were shipped by the company compared with 169 in the third quarter of 2017.

In the quarter under review, shipments included 58 systems under operating lease arrangements compared with 20 in the year-ago quarter.


Services revenues came in at $160, up 2.7% from the year-ago quarter.

International Sales Up

Outside the United States, revenues totaled $244 million, up 15% on a year-over-year basis. The upside can be attributed to an increase in instruments and accessories revenues of $30 million.

Outside of the United States, Intuitive Surgical placed 75 systems in the reported quarter compared with 62 in the third quarter of 2017. This included 30 into Europe and 30 into Japan. X systems comprised 36 of the 75 systems placed in the third quarter.


Gross profit in the reported quarter was $642.3 million, up 13.1% year over year. As a percentage of revenues, gross margin contracted 63 basis points (bps) to 69.7% in the quarter. The downside primarily indicates lower system ASPs and unfavorable revenue mix.


For 2018, Intuitive Surgical continues to expect adjusted gross profit margin in the range of 70.5-71.5% compared with the previous guidance of 70-71.5% of net revenues.

Intuitive Surgical expects operating expense growth between 15.5% and 17% compared with the previously guided range of 16% and 18%.

Management at Intuitive Surgical expects non-cash stock compensation expenses between $255 million and $260 million compared with the previous guidance of $245 million and $255 million.

Intuitive Surgical forecasts 2018 procedure growth in the range of 17-18%, up from the previous band of 14.5-16.5%.

Wrapping Up

Intuitive Surgical ended the third quarter on a favorable note, beating the Zacks Consensus Estimate for both the counts. The flagship minimally invasive da Vinci procedures also recorded solid growth.

A suite of regulatory approvals for the Vessel Sealer Extend, the da Vinci SP Surgical System, and the Sure Form 60 buoys optimism. In August, the company submitted a premarket notification to the FDA for the Ion endoluminal system, a robotic platform to navigate through very small lung airways to reach peripheral nodules for biopsies.

Solid growth in prostatectomy procedure volumes in the broader prostate surgery market is a positive. Management is also optimistic about the company’s recent collaboration with InTouch Health.

On the flipside, the company expects outside U.S. sales to be a bit lumpy in the quarters ahead. These markets are in early stages of adoption. Intense competition in niche space as well as long sale and purchase order cycles of da Vinci unit has been currently plaguing the company.

Want More From the MedTech Industry?

A few other top-ranked stocks in the MedTech space are Inogen, Inc. INGN, Baxter International Inc. BAX and Edwards Lifesciences Corporation EW.

Inogen is expected to release third-quarter fiscal 2018 results on Nov 6. The Zacks Consensus Estimate is pegged at 52 cents for the quarter’s adjusted EPS and at $91.1 million for revenues. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for the period’s adjusted EPS is 74 cents and for revenues, $2.79 billion. The stock carries a Zacks Rank #2.

Edwards Lifesciences is slated to release third-quarter 2018 results on Oct 23. The Zacks Consensus Estimate for adjusted EPS is $1.02 for the to-be-reported quarter and $925 million for the top line. The stock carries a Zacks Rank #2.

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