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Intuitive Surgical (ISRG - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of $1.50, which beat the Zacks Consensus Estimate of $1.40 by 7.1%. The bottom line improved 22% year over year.
GAAP EPS in the quarter was $1.51, up 51% from the year-ago quarter’s level. The significant increase in GAAP EPS was due to the inclusion of certain income tax benefits worth $111 million in GAAP net income compared with $23 million in the year-ago period.
Revenue Details
This Zacks Rank #3 (Hold) company reported revenues of $1.89 billion, up 11% from the prior-year quarter’s recorded number. A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. On a constant currency (cc) basis, revenues were up 12% year over year. The top line also beat the Zacks Consensus Estimate by 1.6%.
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.16 billion, indicating a year-over-year improvement of 18%. This can be attributed to the da Vinci procedure’s 16% volume growth. The sales growth also reflects 90% growth in Ion procedures. The segment’s revenue growth was also aided by higher pricing for procedures. However, unfavorable customer buying patterns partially offset the growth.
Systems
This segment’s revenues totaled $418 million, down 2.1% year over year. Intuitive Surgical shipped 313 da Vinci Surgical Systems compared with 312 in the prior-year quarter. The company placed 148 systems in the United States compared with 141 in the year-ago period. During the first quarter, ISRG placed eight of its latest da Vinci 5 systems, which received FDA approval in March.
Services
Revenues from this segment amounted to $313.5 million, up 10.7% from the year-ago quarter’s level.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Adjusted gross profit was $1.28 billion, up 12.1% year over year. As a percentage of revenues, the gross margin was 67.6%, up approximately 40 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $491.5 million, up 2.3% year over year.
Research and development expenses totaled $284.5 million, up 16.2% on a year-over-year basis.
Adjusted operating income totaled $630 million, up 17.8% year over year. The figure was higher than our estimate of $617 million. As a percentage of revenues, the operating margin was 33.3%, up approximately 180 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the first quarter with cash, cash equivalents and investments of $7.32 billion compared with $7.34 billion in the previous quarter.
Total assets increased to $15.83 billion from $15.44 billion in the prior quarter.
Wrapping Up
ISRG ended the first quarter on a positive note, wherein both 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, coupled with strong Ion procedure growth. Intuitive Surgical has also been increasing 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. Meanwhile, the recent launch of da Vinci 5 systems is likely to boost system placement in 2024.
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.
Improving gross and operating margins during the first quarter buoy optimism.
Shares of Intuitive Surgical have risen 28.6% year to date against the industry’s 1% decline. The S&P 500 Index has gained 21.7% during the same time frame.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the broader medical space areDaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have risen 54.7% in the past year compared with the industry’s 12.4% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
Cardinal Health’s shares have risen 34.5% in the past year compared with the industry’s 4.5% growth.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 42.1% in the past year against the industry’s 2.2% decline.
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Intuitive Surgical (ISRG) Q1 Earnings Beat, Procedures Robust
Intuitive Surgical (ISRG - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of $1.50, which beat the Zacks Consensus Estimate of $1.40 by 7.1%. The bottom line improved 22% year over year.
GAAP EPS in the quarter was $1.51, up 51% from the year-ago quarter’s level. The significant increase in GAAP EPS was due to the inclusion of certain income tax benefits worth $111 million in GAAP net income compared with $23 million in the year-ago period.
Revenue Details
This Zacks Rank #3 (Hold) company reported revenues of $1.89 billion, up 11% from the prior-year quarter’s recorded number. A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. On a constant currency (cc) basis, revenues were up 12% year over year. The top line also beat the Zacks Consensus Estimate by 1.6%.
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.16 billion, indicating a year-over-year improvement of 18%. This can be attributed to the da Vinci procedure’s 16% volume growth. The sales growth also reflects 90% growth in Ion procedures. The segment’s revenue growth was also aided by higher pricing for procedures. However, unfavorable customer buying patterns partially offset the growth.
Systems
This segment’s revenues totaled $418 million, down 2.1% year over year. Intuitive Surgical shipped 313 da Vinci Surgical Systems compared with 312 in the prior-year quarter. The company placed 148 systems in the United States compared with 141 in the year-ago period. During the first quarter, ISRG placed eight of its latest da Vinci 5 systems, which received FDA approval in March.
Services
Revenues from this segment amounted to $313.5 million, up 10.7% from the year-ago quarter’s level.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote
Margins
Adjusted gross profit was $1.28 billion, up 12.1% year over year. As a percentage of revenues, the gross margin was 67.6%, up approximately 40 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $491.5 million, up 2.3% year over year.
Research and development expenses totaled $284.5 million, up 16.2% on a year-over-year basis.
Adjusted operating income totaled $630 million, up 17.8% year over year. The figure was higher than our estimate of $617 million. As a percentage of revenues, the operating margin was 33.3%, up approximately 180 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the first quarter with cash, cash equivalents and investments of $7.32 billion compared with $7.34 billion in the previous quarter.
Total assets increased to $15.83 billion from $15.44 billion in the prior quarter.
Wrapping Up
ISRG ended the first quarter on a positive note, wherein both 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, coupled with strong Ion procedure growth. Intuitive Surgical has also been increasing 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. Meanwhile, the recent launch of da Vinci 5 systems is likely to boost system placement in 2024.
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.
Improving gross and operating margins during the first quarter buoy optimism.
Shares of Intuitive Surgical have risen 28.6% year to date against the industry’s 1% decline. The S&P 500 Index has gained 21.7% during the same time frame.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the broader medical space areDaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have risen 54.7% in the past year compared with the industry’s 12.4% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
Cardinal Health’s shares have risen 34.5% in the past year compared with the industry’s 4.5% growth.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 42.1% in the past year against the industry’s 2.2% decline.