Intuitive Surgical (ISRG) Q1 Prelim. EPS Falls Short

Intuitive Surgical, Inc. (Nasdaq: ISRG), the industry leader in robotic-assisted surgery, today announced financial results for the quarter ended March 31, 2015.

Q1 Highlights

• Worldwide da Vinci procedures grew approximately 13% over the first quarter of 2014, driven primarily by growth in U.S. general surgery procedures and worldwide urologic procedures.
• The Company shipped 99 da Vinci Surgical Systems, compared to 87 in the first quarter of 2014.
• Non-GAAP* revenue of $532 million for the quarter grew approximately 9% compared with $490 million for the first quarter of 2014. Excluding the unfavorable effect of foreign currency changes, revenue increased 11%.
• First quarter 2015 non-GAAP* net income was $135 million, or $3.57 per diluted share, compared with $139 million, or $3.54 per diluted share, for the first quarter of 2014.

(Street sees Q1 EPS of $3.87 on revenue of $535.57 million)

• In March 2015 the Company received MHLW clearance to sell the da Vinci Xi Surgical System in Japan. In April 2015 the Company received CE Mark status to sell itsEndoWrist® Stapler for the Si and Xi Surgical Systems in European markets.

Q1 Financial Summary

Revenue, gross profits, income from operations, net income, and net income per share are reported on a GAAP and non-GAAP basis. The non-GAAP measures are described below and are reconciled to the corresponding GAAP measures at the end of this release.

Revenue in the first quarter of 2015 was $532 million, an increase of approximately 15% compared with $465 million in the first quarter of 2014. First quarter 2015 non-GAAP revenue was equal to GAAP revenue and increased by approximately 9%, compared with $490 million in the first quarter of 2014. First quarter 2014 non-GAAP revenue included $26 million of net revenue associated with da Vinci XiSystem trade-out offers.

First quarter 2015 instrument and accessory revenue increased by approximately 9% to $277 million, compared with $255 million for the first quarter of 2014. Non-GAAP instrument and accessory revenue was equal to GAAP instrument and accessory revenue and increased by approximately 8%, compared with $257 million in the first quarter of 2014. First quarter 2014 non-GAAP instrument and accessory revenue included $2 million of net revenue associated with da Vinci Xi System trade-out offers.

First quarter 2015 systems revenue increased by approximately 33% to $141 million, compared with $106 million for the first quarter of 2014. Non-GAAP systems revenue was equal to GAAP systems revenue and increased by approximately 9%, compared with $130 million in the first quarter of 2014. First quarter 2014 non-GAAP systems revenue included $24 million of net revenue associated with da Vinci Xi System trade-out offers. Intuitive Surgical shipped 99 da Vinci Surgical Systems in the first quarter of 2015, compared with 87 in the same period last year.

First quarter 2015 service revenue increased by approximately 10% to $114 million, compared with $104 million for the first quarter of 2014. GAAP and non-GAAP service revenue were the same in both quarters.

First quarter 2015 income from operations increased to $130 million, compared with $57 million in the first quarter of 2014. First quarter 2015 non-GAAP income from operations decreased to $185 million, compared with $189 million in the first quarter of 2014.

First quarter 2015 GAAP net income was $97 million, or $2.57 per diluted share, compared with $44 million, or $1.13 per diluted share, for the first quarter of 2014. First quarter 2015 non-GAAP net income was $135 million, or $3.57 per diluted share, compared with $139 million, or $3.54 per diluted share, for the first quarter of 2014.

Intuitive Surgical ended the first quarter of 2015 with $2.7 billion in cash, cash equivalents, and investments, an increase of $170 million during the quarter, primarily driven by cash generated from operations.

Commenting on the announcement, Dr. Gary Guthart, President and CEO of Intuitive Surgical, said, "We are pleased with our procedure performance in the quarter and we remain focused on improving the efficiency and costs of our operations for our newly launched products."

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