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Here's Why Investors Loved Intuitive Surgical's Q1 Results

By Keith Speights - Apr 21, 2021 at 5:04AM

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The easing of COVID-19 concerns is boosting the robotic surgical systems leader's fortunes.

Shares of Intuitive Surgical (ISRG 0.32%) have spent most of 2021 in negative territory. That didn't change until just this week. The good news, though, is that the robotic surgical systems pioneer is picking up momentum.

Intuitive Surgical reported its first-quarter results after the market closed Tuesday. Those results were good enough to cause the healthcare stock to jump close to 4% in after-hours trading. Here are the highlights from the company's Q1 update.

Surgeons using the da Vinci robotic surgical system.

Image source: Intuitive Surgical.

By the numbers

Intuitive Surgical announced revenue in the first quarter of $1.29 billion. This reflected an 18% increase from revenue of $1.1 billion generated in the prior-year period. The consensus Wall Street estimate was for revenue of $1.11 billion. 

The company reported net income in the first quarter of $426 million, or $3.51 per share, based on generally accepted accounting principles (GAAP). In the same quarter in 2020, Intuitive posted GAAP earnings of $314 million, or $2.62 per share.

Intuitive Surgical's bottom-line improvement on a non-GAAP basis was also impressive. The company reported non-GAAP net income of $427 million, or $3.52 per share, compared to $323 million, or $2.69 per share, in the prior-year period. This result handily beat the average analysts' earnings estimate of $2.63 per share.

Behind the numbers

There was one key underlying theme behind Intuitive Surgical's solid Q1 performance: recovery from the impact of COVID-19. CEO Gary Guthart said, "We are pleased with this quarter's performance. Our performance reflects customers choosing Intuitive as COVID eases."

The company shipped 298 da Vinci robotic surgical systems in Q1, up from 237 systems in the prior-year period. Of those Q1 shipments, 127 were under operating lease and usage-based arrangements. These higher shipment numbers drove systems revenue 30% higher year over year to $369 million.

Intuitive Surgical continued to make most of its money from recurring revenue sources. Instruments and accessories revenue in the first quarter jumped 14% to $706 million, thanks primarily to 16% growth in da Vinci procedures. Services revenue was basically flat year over year -- $217.5 million in the first quarter of 2021 compared to $215.4 million in the prior-year period. 

The company kept spending under control. Intuitive Surgical's operating expenses in Q1 totaled $485.8 million. This amount was only 1.2% higher year over year.

Looking ahead

The primary thing to watch with Intuitive Surgical going forward is the continuation of its recovery from the pandemic. Increased availability of vaccines could help boost the company's system placements and procedure volumes.

Investors should also keep their eyes on how Intuitive Surgical performs in Asia. The company's growth story in the region is still just beginning.

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