Intuitive Surgical's (NASDAQ:ISRG) fourth-quarter earnings report on Thursday isn't likely to offer many surprises on the top line of the profit-loss statement. The maker of robot surgical systems released preliminary numbers for revenue and procedures performed in the fourth quarter last week ahead of the JP Morgan Healthcare Conference. While the numbers were technically preliminary, they're not likely to change much in the final report.
Revenue rose 5% year over year in the fourth quarter to approximately $605 million. System placements, which drive instrument sales, have rebounded nicely since the first-quarter crash:
The company's new robot, the da Vinci Xi, launched in the second quarter and quickly became the most popular model sold in the U.S. The system made up more than 70% of Intuitive devices sold in the second quarter, and that grew to more than 80% of all U.S. sales in the fourth quarter. Europe has also warmed up to the new machine, with more than 75% of systems placed in the fourth quarter being the Xi model.
The Xi allows doctors to perform surgeries that weren't possible on older Intuitive models. More procedures mean increases in instrument sales. Fourth-quarter revenue from instrument and accessory sales were up 5% year over year, to $281 million, or about 46% of total revenue.
The number of procedures performed in 2014 was up 9% year over year, and Intuitive Surgical is guiding for 7% to 10% growth for 2015. With U.S. urology procedures already mature and growth in U.S. gynecology procedures coming to a halt, the overall growth in procedures is being driven by general surgery procedures. It's a large category, and the two largest subgroups, upper gastrointestinal and lower gastrointestinal, both saw large growth in 2014.
The rest of the growth came from foreign procedures, which rose 20% year over year. With procedure registration lagging the U.S., expect international growth -- mostly in Europe and Japan -- to remain a driver of procedures in years to come.
A reason to still pay attention
While Intuitive Surgical has already offered significant amounts of information about fourth-quarter sales and procedures, it held back the bottom-line earnings number, so we'll have to wait for the release to know how much the company actually made.
We may also get more information on some new accessories for the Xi, including a stapler and a new table that can be rotated to allow gravity to help provide traction for the surgeon.
Investors should also pay attention to management's comments on its next machine, the da Vinci Sp, which is a single port machine allowing all the instruments to go into a single site on a patient's body or even through a natural orifice like the mouth or vagina. The machine is scheduled to begin customer testing this year; it could enable Intuitive Surgical to expand into new procedures or allow for faster recovery times for procedures currently performed using its other machines.