Innovative robotic surgical-system developer Intuitive Surgical (NASDAQ: ISRG ) reported less-than-stellar first-quarter results after the closing bell this evening, highlighting what has been a difficult sales environment for higher-priced medical equipment with the rollout of the Affordable Care Act.
For the quarter, Intuitive Surgical delivered $464.7 million in revenue, in line with its previously guided estimate from two weeks ago, and down 24% from the $611.4 million it recorded in the year-ago period.
The main culprit pushing sales lower were weaker system sales. Its da Vinci surgical systems cost upwards of $1.5 million, so a boost or reduction in sales can have a material impact on Intuitive's top-line results. During the quarter Intuitive Surgical sold just 87 systems compared to 164 in the same period last year. The end result was a reduction in systems revenue to $106 million from $256 million, and a service revenue dip of 10%, to $104 million. Completing the disappointment was a tamer 2% drop in accessories-and-instrument revenue to $255 million for the quarter.
Intuitive Surgical placed the blame in systems revenue weakness squarely on lower procedure growth, but this was also the first time we saw the company mention hospitals' capital-spending priorities directly as they relate to the Affordable Care Act as a reason why sales were down.
Adjusted profits for the quarter sank 77%, to just $44 million, or $1.13 per share, compared to the $189 million, or $4.56 per share, in reported in the year-ago quarter. As noted in its press release, it also dealt with a 70 basis point higher income-tax rate during the quarter relative to last year.
Intuitive Surgical declined to provide any revenue or EPS guidance moving forward.