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Intuitive Surgical (ISRG - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $1.78, which beat the Zacks Consensus Estimate of $1.53 by 16.3%. The bottom line improved 25.4% year over year.
GAAP EPS in the quarter was $1.46, up 23.7% from the year-ago quarter’s level.
Revenue Details
This Zacks Rank #2 (Buy) company reported revenues of $2.01 billion, up 14% from the prior-year quarter’s recorded number. A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. On a constant currency (cc) basis, revenues were up 15% year over year. The top line also beat the Zacks Consensus Estimate by 2%.
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.24 billion, indicating a year-over-year improvement of 16%. This can be attributed to the da Vinci procedure’s 17% volume growth. The sales growth also reflects 82% growth in Ion procedures. The top-line improvement was also aided by higher pricing for procedures. However, unfavorable customer buying patterns partially offset the growth.
Systems
This segment’s revenues totaled $448 million, up 14% year over year. Intuitive Surgical shipped 341 da Vinci Surgical Systems compared with 331 in the prior-year quarter. The company placed 149 systems in the United States compared with 157 in the year-ago period. During the second quarter, ISRG placed 70 of its latest da Vinci 5 systems, which received FDA approval in March.
Services
Revenues from this segment amounted to $630.8 million, up 10.6% from the year-ago quarter’s level.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Adjusted gross profit was $14.1 billion, up 16.9% year over year. As a percentage of revenues, the gross margin was 70%, up approximately 150 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $525.3 million, up 13.1% year over year.
Research and development expenses totaled $280.1 million, up 14.6% on a year-over-year basis.
Adjusted operating income totaled $754.1 million, up 22% year over year. The figure was higher than our estimate of $617 million. As a percentage of revenues, the operating margin was 37.5%, up approximately 230 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the second quarter with cash, cash equivalents and investments of $7.68 billion compared with $7.32 billion in the previous quarter.
Total assets increased to $16.65 billion from $15.83 billion in the prior quarter.
Wrapping Up
ISRG ended the second quarter on a strong note, wherein both earnings and revenues beat their respective estimates. This has likely driven the 6.7% gain during after-hours trading on Jun 18. The top line improved year over year. Revenues were primarily driven by continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. Intuitive Surgical has also been increasing the pricing of procedures to fight inflationary pressure that also aided sales growth.
The company’s da Vinci system placement was also higher year over year, which should continue to boost procedure volume growth. Meanwhile, the launch of da Vinci 5 systems is bringing in additonal system placement.
However, a higher proportion of system placements under operating lease arrangements hurt system sales. Although the arrangements for da Vinci systems are affecting upfront payments, these should lead to higher recurring revenues as customers pay over the course of the contract.
Improving gross and operating margins during the second quarter buoy optimism.
Shares of Intuitive Surgical have risen 31.8% year to date compared with the industry’s 5.2% gain. The S&P 500 Index has gained 16.1% during the same time frame.
GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 10.8%. Its shares have risen 35% year to date compared with the industry’s 5.2% growth.
Hologic, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 7.4%. HOLX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.9%.
Hologic’s shares have risen 8.7% year to date compared with the industry’s 5.2% growth.
Masimo, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 9.3% for 2025. MASI’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 4.7%.
Masimo’s shares have lost 8.3% year to date against the industry’s 5.2% growth.
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Intuitive Surgical (ISRG) Q2 Earnings Beat, Procedures Robust
Intuitive Surgical (ISRG - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $1.78, which beat the Zacks Consensus Estimate of $1.53 by 16.3%. The bottom line improved 25.4% year over year.
GAAP EPS in the quarter was $1.46, up 23.7% from the year-ago quarter’s level.
Revenue Details
This Zacks Rank #2 (Buy) company reported revenues of $2.01 billion, up 14% from the prior-year quarter’s recorded number. A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. On a constant currency (cc) basis, revenues were up 15% year over year. The top line also beat the Zacks Consensus Estimate by 2%.
Segmental Details
Instruments & Accessories
Revenues from this segment totaled $1.24 billion, indicating a year-over-year improvement of 16%. This can be attributed to the da Vinci procedure’s 17% volume growth. The sales growth also reflects 82% growth in Ion procedures. The top-line improvement was also aided by higher pricing for procedures. However, unfavorable customer buying patterns partially offset the growth.
Systems
This segment’s revenues totaled $448 million, up 14% year over year. Intuitive Surgical shipped 341 da Vinci Surgical Systems compared with 331 in the prior-year quarter. The company placed 149 systems in the United States compared with 157 in the year-ago period. During the second quarter, ISRG placed 70 of its latest da Vinci 5 systems, which received FDA approval in March.
Services
Revenues from this segment amounted to $630.8 million, up 10.6% from the year-ago quarter’s level.
Intuitive Surgical, Inc. Price, Consensus and EPS Surprise
Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote
Margins
Adjusted gross profit was $14.1 billion, up 16.9% year over year. As a percentage of revenues, the gross margin was 70%, up approximately 150 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $525.3 million, up 13.1% year over year.
Research and development expenses totaled $280.1 million, up 14.6% on a year-over-year basis.
Adjusted operating income totaled $754.1 million, up 22% year over year. The figure was higher than our estimate of $617 million. As a percentage of revenues, the operating margin was 37.5%, up approximately 230 bps from the prior-year quarter’s figure.
Financial Position
Intuitive Surgical exited the second quarter with cash, cash equivalents and investments of $7.68 billion compared with $7.32 billion in the previous quarter.
Total assets increased to $16.65 billion from $15.83 billion in the prior quarter.
Wrapping Up
ISRG ended the second quarter on a strong note, wherein both earnings and revenues beat their respective estimates. This has likely driven the 6.7% gain during after-hours trading on Jun 18. The top line improved year over year. Revenues were primarily driven by continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. Intuitive Surgical has also been increasing the pricing of procedures to fight inflationary pressure that also aided sales growth.
The company’s da Vinci system placement was also higher year over year, which should continue to boost procedure volume growth. Meanwhile, the launch of da Vinci 5 systems is bringing in additonal system placement.
However, a higher proportion of system placements under operating lease arrangements hurt system sales. Although the arrangements for da Vinci systems are affecting upfront payments, these should lead to higher recurring revenues as customers pay over the course of the contract.
Improving gross and operating margins during the second quarter buoy optimism.
Shares of Intuitive Surgical have risen 31.8% year to date compared with the industry’s 5.2% gain. The S&P 500 Index has gained 16.1% during the same time frame.
Image Source: Zacks Investment Research
Key Picks
Some other top-ranked stocks from the same medical industry areGlobus Medical (GMED - Free Report) , Hologic (HOLX - Free Report) and Masimo (MASI - Free Report) .
Globus Medical, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 10.8%. Its shares have risen 35% year to date compared with the industry’s 5.2% growth.
Hologic, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 7.4%. HOLX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 4.9%.
Hologic’s shares have risen 8.7% year to date compared with the industry’s 5.2% growth.
Masimo, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 9.3% for 2025. MASI’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 4.7%.
Masimo’s shares have lost 8.3% year to date against the industry’s 5.2% growth.