3 Things to Watch as Intuitive Surgical, Inc. Reports on Tuesday

Intuitive Surgical's new Xi robot allows for more mobility in operations. Image source: Intuitive Surgical.

Intuitive Surgical (ISRG -1.69%), the company behind the daVinci surgical robotic system, is set to report earnings this Tuesday after the market closes. After having weathered a tough two-year stretch starting in 2012 -- which saw a 40% plunge in shares -- the company has reassured investors as of late that its platform will be a force for years to come.

Heading into the report, let's highlight three things that investors should keep their eyes on.

Over the short term: just the numbers
Although we don't encourage investors to take the short view when it comes to their stocks, it's worth looking at what Wall Street is expecting the company to report. If Intuitive's shares make outsized moves after earnings are announced, it's likely that it has something to do with how the company fared versus these projections.

Source: E*Trade.

If the company hits the targets Wall Street is expecting, it would represent earnings growth of 7% and revenue growth of 12%. It's important to note that Intuitive's management stopped providing revenue and earnings guidance, so there probably won't be any material news coming out about the fiscal-year estimates.

Progress with the Xi
Intuitive's most recent daVinci iteration is the Xi. This new machine represents an important innovation, as it can be used in far more procedures than earlier Si machines -- mostly due to increased mobility from the four pivoting surgical arms.

Last year was the first that the Xi was available for purchase. During the second quarter of 2014, 50 of the systems were sold. Investors should hope that this number increases markedly, as 75 were shipped during the first quarter of 2015, and Intuitive recently was granted permission to start selling the device in Japan.

Beyond absolute numbers, investors should keep a watchful eye over the company's net margins. The Xi has lower margins than the previous Si model, which basically means that it's more expensive to make. CEO Gary Guthart has stated that margins from the Xi should improve as operational and supply chain efficiencies start to factor in.

Growth in procedures
There is perhaps no metric more important for long-term investors than procedure growth. If the daVinci is going to be a mainstay in hospitals for decades to come, doctors need to continue to tinker with the machine and find new ways for it to lead to more favorable patient outcomes.

Management is calling for overall procedure growth of 8-11% for the full fiscal year, with the company having notched 13% growth during the first quarter.

Of all the different types of surgery, none has been more important as of late than "U.S. General Surgery." This basically includes everything that's not a gynecological, urological, or prostate operation. Growth in general surgery has been booming over the past three years. In 2011, there were 15,000 such operations. That grew to 107,000 last year -- a growth rate of over 90% per year!

Management doesn't break out growth in different types of procedures until the end of the year. However, by listening to the company's conference call, we should be able to get a pretty good idea for the strength of Intuitive's general surgery procedures. Investors should pay particularly close attention to growth from hernia operations, which management has spent a lot of time talking about on conference calls for almost a year now.

By keeping an eye on these three metrics -- Wall Street expectations, Xi sales and margins, and growth in overall and general surgery procedures -- investors should be able to gauge what direction Intuitive is headed for the foreseeable future.