Intuitive Surgical (ISRG 0.51%) is a high-growth healthcare company that dominates the field of surgical robotics. It has a robust track record of generating strong share price and balance sheet returns, and 2021 has been no exception. In this segment of Backstage Pass, recorded on Oct. 19, Fool analyst Clay Bruning dives into Intuitive Surgical's third-quarter earnings report. Fool contributor Brian Withers is also in the clip.
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Brian Withers: Moving on, we got Intuitive Surgical which also released today. Clay is coming on to talk about how the quarter went for them. Clay, you are up.
Clay Bruning: Let me share my screen here. Like you said, Intuitive Surgical reported. They're probably just starting the call here, but wanted to go over some of the things that stood out to me in terms of the press release. Just kicking it off. They have $1.4 billion in sales in the quarter, which was a product of total procedures increasing 20% year-over-year.
It's worth noting they did mention they did have a little bit of a slowdown because of COVID resurgence, which I would have to imagine it's Delta variant related. That a 20% increase in procedures was below their fiscal year guidance of, I believe about 25%.
Clearly, I don't know if it's material but it seems like a material hit in procedures because of the resurgence of COVID and the Delta variant there. That $1.4 billion in sales was actually a decline quarter-over-quarter. In the second quarter of 2021 they had about $1.45 billion in sales. Clearly, COVID and the Delta variant did have an impact on procedures. Funneling down to some of their underlying segments, their instrument and accessory revenues also jumped 20% year-over-year which is in line with that procedure growth.
Nothing unexpected there outside of lower procedures is going to be lower use of the instruments and accessories for viewers that aren't aware, their instrument or accessories are there knives and other accessories that they use for their system. They have these robotic assisted surgery systems and they have all these accessories that essentially act as recurring revenue for their business.
Typically, these instruments will have a life of, I think it's 10-18 surgeries. Once those 10-18 surgeries have been performed, the company has to buy more and that goes on for the foreseeable future. In terms of their actual systems, they shipped 336 systems in the quarter which was a 72% jump year-over-year.
Albeit that's coming off a low base from the third quarter of 2020. That was really impacted by COVID, but it did increase quarter-over-quarter which is encouraging.
Even though procedure volume was slowing down a little bit quarter-over-quarter, they are still selling an increasing amount of systems on an ongoing basis, which should in theory lead to accelerated growth in the coming quarters as these systems are installed and they start actually operating on some patients.
