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Intuitive Surgical (ISRG - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of $1.84, which beat the Zacks Consensus Estimate of $1.65 by 11.5%. The bottom line improved 26% year over year.
GAAP EPS in the quarter was $1.56, up 34.5% from the year-ago quarter’s level.
Revenue Details
This Zacks Rank #3 (Hold) company reported revenues of $2.04 billion, up 17% from the prior-year quarter’s recorded number, reportedly as well as at constant currency (cc). A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. The top line also beat the Zacks Consensus Estimate by 1.2%.
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.26 billion, indicating a year-over-year improvement of 18%. This can be attributed to the da Vinci procedure’s 18% volume growth. The sales growth also reflects 73% growth in Ion procedures. The top-line improvement was also aided by higher pricing for systems. However, revenues per procedure declined due to a lower mix of bariatrics procedures and a higher mix of procedures in markets served by distributors, partially offsetting the growth.
Systems
This segment’s revenues totaled $445 million, up 17.4% year over year. Intuitive Surgical shipped 341 da Vinci Surgical Systems compared with 379 in the prior-year quarter. The company placed 219 systems in the United States compared with 159 in the year-ago period. During the third quarter, ISRG placed 110 of its latest da Vinci 5 systems, which received FDA approval in March.
Services
Revenues from this segment amounted to $328.9 million, up 3.7% from the year-ago quarter’s level.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Adjusted gross profit was $1.41 billion, up 17.3% year over year. As a percentage of revenues, the gross margin was 69.1%, up approximately 30 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $510.6 million, up 13% year over year.
Research and development expenses totaled $286 million, up 14.7% on a year-over-year basis.
Adjusted operating income totaled $754.9 million, up 21% year over year. As a percentage of revenues, the operating margin was 37%, up approximately 120 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the third quarter with cash, cash equivalents and investments of $8.31 billion compared with $7.68 billion in the previous quarter.
Total assets increased to $17.74 billion from $16.65 billion a year ago.
Wrapping Up
ISRG ended the third quarter on a strong note, wherein both earnings and revenues beat their respective estimates. This has likely driven the 6.1% gain during after-hours trading on Oct. 17. 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 launch of da Vinci 5 systems is bringing in additional system placement. ISRG received approval for da Vinci 5 in Korea earlier this month. During the third quarter, the company received FDA clearance for 8 millimeter SureForm 30 stapler. These developments should continue to drive the top line going forward.
However, a higher proportion of system placements under operating lease arrangements hurt system sales. Although the arrangements for da Vinci systems are affecting upfront payments, these should lead to higher recurring revenues as customers pay over the course of the contract.
Improving gross and operating margins during the third quarter buoy optimism.
Shares of Intuitive Surgical have risen 40.4% year to date against the industry’s 6.2% decline. The S&P 500 Index has gained 22.6% during the same time frame.
Globus Medical has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.
AngioDynamics has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Avanos has an estimated growth rate of 31.2% for 2025. AVNS’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.
Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.
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Intuitive Surgical Q3 Earnings Beat, Procedures Robust
Intuitive Surgical (ISRG - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of $1.84, which beat the Zacks Consensus Estimate of $1.65 by 11.5%. The bottom line improved 26% year over year.
GAAP EPS in the quarter was $1.56, up 34.5% from the year-ago quarter’s level.
Revenue Details
This Zacks Rank #3 (Hold) company reported revenues of $2.04 billion, up 17% from the prior-year quarter’s recorded number, reportedly as well as at constant currency (cc). A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. The top line also beat the Zacks Consensus Estimate by 1.2%.
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.26 billion, indicating a year-over-year improvement of 18%. This can be attributed to the da Vinci procedure’s 18% volume growth. The sales growth also reflects 73% growth in Ion procedures. The top-line improvement was also aided by higher pricing for systems. However, revenues per procedure declined due to a lower mix of bariatrics procedures and a higher mix of procedures in markets served by distributors, partially offsetting the growth.
Systems
This segment’s revenues totaled $445 million, up 17.4% year over year. Intuitive Surgical shipped 341 da Vinci Surgical Systems compared with 379 in the prior-year quarter. The company placed 219 systems in the United States compared with 159 in the year-ago period. During the third quarter, ISRG placed 110 of its latest da Vinci 5 systems, which received FDA approval in March.
Services
Revenues from this segment amounted to $328.9 million, up 3.7% 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 $1.41 billion, up 17.3% year over year. As a percentage of revenues, the gross margin was 69.1%, up approximately 30 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $510.6 million, up 13% year over year.
Research and development expenses totaled $286 million, up 14.7% on a year-over-year basis.
Adjusted operating income totaled $754.9 million, up 21% year over year. As a percentage of revenues, the operating margin was 37%, up approximately 120 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the third quarter with cash, cash equivalents and investments of $8.31 billion compared with $7.68 billion in the previous quarter.
Total assets increased to $17.74 billion from $16.65 billion a year ago.
Wrapping Up
ISRG ended the third quarter on a strong note, wherein both earnings and revenues beat their respective estimates. This has likely driven the 6.1% gain during after-hours trading on Oct. 17. 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 launch of da Vinci 5 systems is bringing in additional system placement. ISRG received approval for da Vinci 5 in Korea earlier this month. During the third quarter, the company received FDA clearance for 8 millimeter SureForm 30 stapler. These developments should continue to drive the top line going forward.
However, a higher proportion of system placements under operating lease arrangements hurt system sales. Although the arrangements for da Vinci systems are affecting upfront payments, these should lead to higher recurring revenues as customers pay over the course of the contract.
Improving gross and operating margins during the third quarter buoy optimism.
Shares of Intuitive Surgical have risen 40.4% year to date against the industry’s 6.2% decline. The S&P 500 Index has gained 22.6% during the same time frame.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same medical industry are Globus Medical (GMED - Free Report) , AngioDynamics (ANGO - Free Report) and Avanos Medical (AVNS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Globus Medical has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 38.7% year to date compared with the industry’s 6.1% growth.
AngioDynamics has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 19.2% year to date against the industry’s 6.1% growth.
Avanos has an estimated growth rate of 31.2% for 2025. AVNS’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 5.7%.
Avanos’ shares have risen 5.3% year to date compared with the industry’s 5.1% growth.