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Intuitive Surgical (ISRG - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.60, which beat the Zacks Consensus Estimate of $1.47 by 8.8%. The bottom line improved 30% year over year.
GAAP EPS in the quarter was $1.69, up 85.7% from the year-ago quarter’s level. The significant increase in GAAP EPS was due to the inclusion of certain income tax benefits worth $67 million and the receipt of certain tax assets worth $92 million in GAAP net income.
Revenue Details
This currently Zacks Rank #3 (Hold) company reported revenues of $1.93 billion, up 17% from the prior-year quarter’s recorded number. Growth in the da Vinci procedure volume contributed to the improvement and gain from systems placement. On a constant currency (cc) basis, revenues were up 17% year over year. The top line also beat the Zacks Consensus Estimate by 3.2%.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Revenues from this segment totaled $1.14 billion, indicating a year-over-year improvement of 21.6%. This can be attributed to the da Vinci procedure’s 21% volume growth. The sales growth reflects an improvement in the da Vinci procedure volume and higher pricing.
Systems
This segment’s revenues totaled $480.2 million, up 15.6% year over year. Intuitive Surgical shipped 415 da Vinci Surgical Systems compared with 369 in the prior-year quarter. The company placed 209 systems in the United States compared with 181 in the year-ago period.
Services
Revenues from this segment amounted to $304.4 million, up 3.9% from the year-ago quarter’s level.
Margins
Adjusted gross profit was $1.31 billion, up 16.1% year over year. As a percentage of revenues, the gross margin was 68%, down approximately 20 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $567.1 million, up 14.7% year over year.
Research and development expenses totaled $260.1 million, up 4.3% on a year-over-year basis.
Adjusted operating income totaled $621 million, up 17.2% year over year. The figure was higher than our estimates of $617 million. As a percentage of revenues, the operating margin was 35.8%, up approximately 20 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the fourth quarter with cash, cash equivalents and investments of $7.34 billion compared with $7.52 billion in the previous quarter.
Total assets increased to $15.4 billion from $14.7 billion in the prior quarter.
Wrapping Up
ISRG ended the fourth quarter on a positive note, wherein earnings and revenues beat their respective estimates. The top line improved year over year. Revenues were primarily driven by continued growth in the company’s da Vinci procedure volume. Intuitive Surgical has also been raising the pricing of procedures to fight inflationary pressure that also aided sales growth.
The company’s da Vinci system placement was also higher year over year, which should continue to boost procedure volume growth. However, a higher proportion of system placements under operating lease arrangements hurt system sales. Although these arrangements for da Vinci systems are hurting upfront payments, they should lead to higher recurring revenues as customers pay over the course of the contract.
Meanwhile, the absence of any significant disruptions from COVID-19 during the fourth quarter seems promising, which may accelerate procedure growth going forward.
Although gross margin contracted, operating margin improved during the fourth quarter.
Shares of Intuitive Surgical have risen 43.4% in the past year compared with the industry’s 1.3% growth. The S&P 500 Index has gained 21.6% during the same time frame.
MASI has an estimated growth rate of 0.8% for 2024. MASI’s earnings beat estimates in three of the trailing four quarters and missed the same in one, delivering a negative average surprise of 0.87%. Masimo sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s shares have lost 26.5% in the past year against the industry’s 2.5% growth.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 14% for fiscal 2025. MCK’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.87%.
McKesson’s shares have risen 29% in the past year compared with the industry’s 10.3% growth.
Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated growth rate of 19.2% for fiscal 2024. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.67%.
Cardinal Health’s shares have rallied 37.8% in the past year compared with the industry’s 10.3% growth.
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Intuitive Surgical (ISRG) Q4 Earnings Beat, Procedures Robust
Intuitive Surgical (ISRG - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.60, which beat the Zacks Consensus Estimate of $1.47 by 8.8%. The bottom line improved 30% year over year.
GAAP EPS in the quarter was $1.69, up 85.7% from the year-ago quarter’s level. The significant increase in GAAP EPS was due to the inclusion of certain income tax benefits worth $67 million and the receipt of certain tax assets worth $92 million in GAAP net income.
Revenue Details
This currently Zacks Rank #3 (Hold) company reported revenues of $1.93 billion, up 17% from the prior-year quarter’s recorded number. Growth in the da Vinci procedure volume contributed to the improvement and gain from systems placement. On a constant currency (cc) basis, revenues were up 17% year over year. The top line also beat the Zacks Consensus Estimate by 3.2%.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.14 billion, indicating a year-over-year improvement of 21.6%. This can be attributed to the da Vinci procedure’s 21% volume growth. The sales growth reflects an improvement in the da Vinci procedure volume and higher pricing.
Systems
This segment’s revenues totaled $480.2 million, up 15.6% year over year. Intuitive Surgical shipped 415 da Vinci Surgical Systems compared with 369 in the prior-year quarter. The company placed 209 systems in the United States compared with 181 in the year-ago period.
Services
Revenues from this segment amounted to $304.4 million, up 3.9% from the year-ago quarter’s level.
Margins
Adjusted gross profit was $1.31 billion, up 16.1% year over year. As a percentage of revenues, the gross margin was 68%, down approximately 20 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $567.1 million, up 14.7% year over year.
Research and development expenses totaled $260.1 million, up 4.3% on a year-over-year basis.
Adjusted operating income totaled $621 million, up 17.2% year over year. The figure was higher than our estimates of $617 million. As a percentage of revenues, the operating margin was 35.8%, up approximately 20 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the fourth quarter with cash, cash equivalents and investments of $7.34 billion compared with $7.52 billion in the previous quarter.
Total assets increased to $15.4 billion from $14.7 billion in the prior quarter.
Wrapping Up
ISRG ended the fourth quarter on a positive note, wherein earnings and revenues beat their respective estimates. The top line improved year over year. Revenues were primarily driven by continued growth in the company’s da Vinci procedure volume. Intuitive Surgical has also been raising the pricing of procedures to fight inflationary pressure that also aided sales growth.
The company’s da Vinci system placement was also higher year over year, which should continue to boost procedure volume growth. However, a higher proportion of system placements under operating lease arrangements hurt system sales. Although these arrangements for da Vinci systems are hurting upfront payments, they should lead to higher recurring revenues as customers pay over the course of the contract.
Meanwhile, the absence of any significant disruptions from COVID-19 during the fourth quarter seems promising, which may accelerate procedure growth going forward.
Although gross margin contracted, operating margin improved during the fourth quarter.
Shares of Intuitive Surgical have risen 43.4% in the past year compared with the industry’s 1.3% growth. The S&P 500 Index has gained 21.6% during the same time frame.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the broader medical space are Masimo (MASI - Free Report) , McKesson (MCK - Free Report) and Cardinal Health (CAH - Free Report) .
MASI has an estimated growth rate of 0.8% for 2024. MASI’s earnings beat estimates in three of the trailing four quarters and missed the same in one, delivering a negative average surprise of 0.87%. Masimo sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s shares have lost 26.5% in the past year against the industry’s 2.5% growth.
McKesson, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 14% for fiscal 2025. MCK’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.87%.
McKesson’s shares have risen 29% in the past year compared with the industry’s 10.3% growth.
Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated growth rate of 19.2% for fiscal 2024. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.67%.
Cardinal Health’s shares have rallied 37.8% in the past year compared with the industry’s 10.3% growth.