Why Intuitive Surgical’s Da Vinci System Placements Looks Lumpy outside the US



Systems sales in 3Q17

In 3Q17, Intuitive Surgical (ISRG) registered system sales of ~$237 million, or ~15% higher on a YoY (year-over-year) basis. Higher system placements drove systems sales growth in 3Q17, but this was partially offset by a lower ASP (average selling price) and higher operating lease placements.

However, when compared to 2Q17, the company reported a higher ASP (average selling price) and lower operating lease placements. Systems revenues in 3Q17 rose ~9% sequentially, excluding the deferred revenues recognized in 3Q17, which amounted to $21.3 million.

Around 75% of new systems sales were contributed by the company’s Da Vinci Xi systems. The recently launched Da Vinci X made up ~10% of total new systems sales. The Da Vinci Si contributed the remainder of sales in 3Q17.

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Systems placements outside the US in 3Q17

Outside the US, Intuitive saw $213 million in total sales, representing ~13% YoY growth, excluding deferred revenues of $5 million. International systems sales came in at ~$85 million.

Intuitive Surgical placed 62 systems outside the US in 3Q17, compared with 49 system placements in 3Q16 and 63 placements in 2Q17. Four of the systems were placed under operating leases, compared with one in 3Q16 and five in 2Q17.

Europe is the largest market outside the US for new Da Vinci systems placements, followed by Japan, India, Mexico, and China. But systems sales outside the US have been lumpy because these new markets are in the early stages of robotics surgery systems adoption, some of which face regulatory constraints amid seasonal markets. The absence of new quotas for additional system placements and additional procedure reimbursements in Japan continue to affect ISRG’s systems sales in these countries.

Players that could pose a risk to ISRG’s leading market position include Medtronic (MDT), Johnson & Johnson (JNJ), and Google (GOOG), each of which is preparing to enter the robotics surgery market over the next few years.

Investors interested in exposure to the growth prospects of Intuitive Surgical while diversifying company-specific risks can invest in the iShares S&P 500 Growth ETF (IVW). IVW holds ~0.34% of its total portfolio holdings in ISRG stock.

Next, we’ll discuss the trends in Intuitive Surgical’s average system selling price.


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