Intuitive Surgical’s Da Vinci Procedure Could Boost 2017 Results



ISRG’s procedure growth estimates

According to Intuitive Surgical’s (ISRG) preliminary 4Q17 and 2017 results posted by the company on January 10, 2018, it expects to post da Vinci procedure growth of 17% in 4Q17 and 16% for fiscal 2017 on a YoY (year-over-year) basis. About 877,000 procedures are estimated to be performed with da Vinci surgical systems around the world in fiscal 2017. The US general surgery and global urologic procedure growths continue to be the major drivers behind the da Vinci procedure growth.

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During Intuitive Surgical’s 3Q17 earnings results, the company increased its fiscal 2017 procedure volume growth outlook from 14%–15% to 15%–16%. In 3Q17, procedure growth was reported to be 15%, whereas international procedures registered nearly double the growth rate than procedure growth in the United States.

In fiscal 2017, Intuitive Surgical expects its instruments and accessories revenue, which forms its recurring revenue stream, to be $1.6 billion, representing a YoY rise of 17%. These sales are primarily driven by growth in da Vinci procedures.

For their latest fiscal years, Intuitive Surgical’s peers Stryker (SYK), Accuray (ARAY), and Varian Medical Systems (VAR) are expected to have sales growth of ~9.2%, ~3.3%, and ~3.8%, respectively. Investors looking for a diversified exposure to ISRG can invest in the Vanguard Total Stock Market ETF (VTI), which holds 0.23% of its total portfolio in ISRG stock.

Major drivers and the road ahead

Intuitive Surgical’s continuous efforts to introduce innovative products into the market that offer higher value to its customers have led to an increase in the company’s procedure volumes. The company has been ramping up its R&D (research and development) investments every year. In 2016, it reported a YoY increase of 21% in its R&D expenditure. It announced its plan to spend an additional $80 million for operating expenses in 2017 due to the impending launches of the da Vinci Sp and the da Vinci X and a number of strategic investments focused on its commercial execution plans. The company has also been focused on expanding its European and Asian businesses. It recently received reimbursement approval for 12 new da Vinci procedures in Japan. It’s poised for further growth since it has been executing well on its growth plans for 2017 and is expected to register robust growth going forward.


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