What's happening: Shares in the medical device maker Intuitive Surgical (NASDAQ:ISRG) are soaring 10% higher today after reporting better than expected sales and non-GAAP adjusted earnings per share of $586.1 million and $4.57, respectively.
Why it's happening: Investors worrying that device sales would slow were undeniably relieved to learn that Intuitive Surgical sold 118 of its Da Vinci surgical robot systems in the second quarter, a figure that outpaced the 96 devices it sold in the second quarter of 2014 and handily eclipsed the 99 devices it sold in the first quarter of 2015.
The resulting 22% increase in device revenue from a year ago drove Intuitive Surgical's total sales up 14% from last year, which was ahead of the 12% growth Wall Street was anticipating. Sales from instruments and accessories and service revenue also grew, increasing by 13% and 6% year-over-year, respectively.
Importantly, Intuitive Surgical kept a lid on costs last quarter, so leveraging additional sales growth against expenses led to profit-friendly margin expansion, too.
Spending on SG&A increased by 1.3% year over year in the second quarter, and that led to margins expanding to 65.9% from 63.3% in the first quarter. Thanks to that margin upside, non-GAAP EPS surged 28.5% higher in the past year.
The unquestionably strong quarter was supported in part by surgeons' increasing use of previously installed Da Vinci systems.
Intuitive Surgical came into 2015 expecting full-year procedure growth of between 7% and 10%, but strong first quarter procedure growth of 13% led the company to increase its full year forecast in April to between 8% and 11%. In the second quarter, procedure volume grew by 14%, once again prompting management to up its full year forecast -- this time to a range of between 11% and 13%.
Because device sales are growing strongly and the use of installed systems is leading to greater instrument and services revenue, it wouldn't be too surprising if Intuitive Surgical's top- and bottom-line momentum continues to support its shares in the coming quarters, too.