Will ISRG’s Procedure Growth Continue in 2Q17?
Procedure growth trends
In 1Q17, Intuitive Surgical (ISRG) registered revenue of around $674 million. Approximately 75% of the company’s revenue continues to come from consumables sales and service contracts, driven primarily by procedure growth. The new system sales constituted around 25% of the total revenues.
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In 1Q17, procedure growth was reported to be around 18% with around 14% growth in the United States and ~28% outside the United States. The procedure growth continues to be strong, driven primarily by US general surgery and international procedures including urology procedures, kidney repairs, and gynecology. Europe, Korea, and China contributed strongly to the international procedure growth.
Procedure growth expectations in 2Q17
Procedure growth outside the United States is expected to be slower in 2Q17 as compared to that in 2Q16, as there were fewer operating days, which will particularly impact Europe sales. Also, China and Japan sales are expected to witness a decline in contribution to the company’s total sales in 2Q17 and going forward until the new system placements by the company in China and the procedure reimbursement approvals in Japan.
As seen in 1Q17, the system ASP (average selling price) is expected to trend lower in 2Q17 as well as in the rest of 2017 due to a more diversified product mix with expansion across cost-sensitive markets. With a focus on low-cost markets, the company recently launched da Vinci X. For more on this, read ISRG Expands across Low-Cost Markets with Da Vinci X Launch.
Investors interested in Intuitive Surgical can consider the Vanguard Total Stock Market ETF (VTI), which holds ~0.14% of its total holdings in ISRG. Some of the other major medical device companies that comprise VTI’s total holdings include Medtronic (MDT), Abbott Laboratories (ABT), and Thermo Fisher Scientific (TMO).
Next, let’s take a look at how ISRG returns value to its shareholders.