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What's on Tap When Intuitive Surgical Reports Earnings Next Week?

By Danny Vena – Apr 11, 2019 at 8:15AM

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A couple of notable developments since the last earnings report should be of interest to investors.

Intuitive Surgical (ISRG 2.77%) is one of a handful of companies scheduled to kick off earnings season next week, and expectations are high for the robotic surgery specialist. The stock is already up 22% so far in 2019, easily surpassing the 15% gains of the S&P 500.

The maker of the minimally invasive da Vinci Surgical System will once again be making its case with investors, as Intuitive Surgical is scheduled to report its first-quarter results after the market closes on Thursday, April 18. Let's recap the company's fourth-quarter results and dive into some recent developments to see what investors can expect when Intuitive Surgical reports earnings.

Two surgeons sitting at consoles in an operating room, with nurses in attendance conducting robotic surgery.

Image source: Intuitive Surgical.

Q4 recap

In the fourth quarter, Intuitive reported revenue of $1.05 billion, up 17% year over year, and earnings per share (EPS) of $2.96, up 14%. The EPS figure was skewed downward by a $25 million contribution to launch the Intuitive Foundation, which CEO Gary Guthart said in the company's Q4 conference call will support clinical and technology research and philanthropy in the communities Intuitive serves. Excluding the one-time charge, EPS would have clocked in at $3.12, representing a much healthier 20% growth rate.

Intuitive saw strength in each of its operating segments. Sales of instruments and accessories increased 18% year over year, system sales climbed 20%, and services revenue grew by 11%.

It wasn't just financial metrics that shined. The number of procedures completed using Intuitive's robotic surgical systems grew by 19% year over year, far exceeding the 13% the company guided for at the midpoint of its range.

Recent events

A lot has happened since the robotic surgery pioneer reported earnings in January.

In mid-February, the U.S. Food and Drug Administration (FDA) cleared the Ion flexible catheter system to perform biopsies in the peripheral lung. Lung cancer is the leading cause of cancer deaths worldwide, but it is often difficult to diagnose, because it's tough to access suspicious -- and potentially cancerous -- lesions or nodules deep in the lung. The Ion system use an ultra-thin catheter with an articulating joint that can rotate 180 degrees in any direction, as well as a flexible biopsy needle. This allows physicians to navigate through small airways to reach suspect areas and collect a sample for testing. This could eventually be a big moneymaker for Intuitive Surgical, and shipments will kick off in the second quarter of 2019. 

The da Vinci SP single-port surgical system made its debut back in May 2018, but Intuitive Surgical continues to seek and gain approval for additional procedures. Last month, the FDA cleared the single-port approach for lateral oropharyngectomy procedures (commonly referred to as radical tonsillectomy) and tongue base resection. The SP system -- with three, multijointed, wristed instruments and a fully wristed 3D HD camera -- helps surgeons access narrow and difficult-to-reach areas of the body via a single incision, which results in less blood loss and faster healing. 

While neither of these developments will add meaningfully to Intuitive's results in the current quarter, it does help illustrate the bright future ahead.

What the coming quarter could hold

Intuitive Surgical doesn't want to play the Wall Street earnings game and therefore doesn't provide guidance. In the absence of specific guidelines from the company, investors can look to analyst forecasts, but should be wary of falling into their short-term thinking.

Analysts' consensus estimates are calling for revenue of $975.96 million, up 15% year over year, and earnings per share of $2.71, and increase of about 18%.

Intuitive Surgical has been a consistently strong performer for investors, and the recent approvals by the FDA show the company isn't taking its foot off the gas. We'll have more specific details when Intuitive reports earnings on Thursday, April 18.

Danny Vena owns shares of Intuitive Surgical. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool has a disclosure policy.

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