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Analyzing Intuitive Surgical’s 2Q17 Results

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Revenue estimates

On July 20, 2017, Intuitive Surgical (ISRG) released its 2Q17 earnings results. The company revenues and earnings beat analysts’ estimates. The stock price rose ~0.5% on the day.

Intuitive Surgical reported revenues of $756.2 million in 2Q17. The revenue results exceeded analysts’ estimates of $723.8 million, as you can see in the above graph. The revenues represent growth of ~13% YoY (year-over-year). The growth was primarily driven by recurring revenues generated from selling instruments, accessories, and services. The company also registered higher system revenues in the quarter.

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Procedure volume growth

The procedure volume in 2Q17 rose ~16%, which also caused the recurring revenue stream to expand. Revenues from instruments and accessories rose ~17% during the quarter, while systems revenue rose ~7%. In 2Q17, 166 da Vinci surgical systems were shipped—compared to 130 in 2Q16.

The procedure volume growth continued to be driven primarily by growth in US general surgery and urologic procedures around the world.

Earnings and margins

In 2Q17, Intuitive Surgical registered diluted adjusted EPS (earnings per share) of $5.95—compared to $5.62 reported in 2Q16. During the quarter, its net income was ~$228 million, which represented growth of ~3.6% YoY.

Peers Abbott Laboratories (ABT), Medtronic (MDT), and Stryker (SYK) reported revenues of ~$6.6 billion, $7.4 billion, and $3 billion, respectively, in their recently reported quarters.

Notably, investors can gain diversified exposure to Intuitive Surgical by investing in the Vanguard Total Stock Market ETF (VTI). Intuitive Surgical accounts for ~0.15% of VTI’s total holdings.

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