Intuitive Surgical Announces Third Quarter Earnings

Intuitive Surgical Announces Third Quarter Earnings

SUNNYVALE, Calif., Oct. 17, 2013 (GLOBE NEWSWIRE) -- Intuitive Surgical, Inc.
(Nasdaq:ISRG), the industry leader in robotic-assisted surgery, today reported
third quarter of 2013 revenue of $499 million, down approximately 7% compared
with $538 million for the third quarter of 2012.

Third quarter of 2013 instruments and accessories revenue increased 10% to
$239 million from $218 million in the third quarter of 2012. The growth in
instruments and accessories revenue is the result of growth in da Vinci^®
surgical procedures. da Vinci surgical procedures grew approximately 16% in
the third quarter of 2013 compared to the third quarter of 2012, driven
primarily by growth in general surgery, U.S. gynecology and international
urology procedures.

Third quarter of 2013 systems revenue was $159 million, a decrease of 32%,
compared with $232 million during the third quarter of 2012. During the third
quarter of 2013, Intuitive Surgical sold 101 da Vinci Surgical Systems
compared with sales of 155 systems during the same period last year. System
sales were down in the third quarter of 2013 primarily as a result of
moderating growth in benign gynecology, combined with changing hospital
capital spending priorities associated with the implementation of the
Affordable Care Act.

Third quarter of 2013 service revenue increased 15% to $101 million from $88
million during the third quarter of 2012, reflecting growth in the installed
base of da Vinci Surgical Systems.

Third quarter of 2013 operating income decreased to $174 million from $211
million in the third quarter of 2012. Operating results for the third quarter
of 2013 included $50 million of non-cash stock-based compensation expense
compared with $47 million for the third quarter of 2012.

Intuitive Surgical's income tax rate for the third quarter of 2013 was 12%
compared with 15% for the third quarter of 2012. Income tax expense for the
third quarter of 2013 and the third quarter of 2012 included discrete tax
benefits of $26 million and $35 million, respectively, associated with the
expiration of the statutes of limitations in multiple jurisdictions.

Third quarter of 2013 net income was $157 million, or $3.99 per diluted share,
compared with $183 million, or $4.46 per diluted share, for the third quarter
of 2012.

Intuitive Surgical ended the third quarter of 2013 with $2.5 billion in cash,
cash equivalents and investments, reflecting a decrease of $495 million during
the quarter. $694 million in cash was used to repurchase approximately 1.74
million shares of Intuitive Surgical's common stock in the third quarter of
2013 at an average price of $398.87 per share.

Commenting on the announcement, Dr. Gary Guthart, President and CEO of
Intuitive Surgical, said, "Our third quarter results were impacted by the same
pressures we faced in the first half of the year - namely, moderating growth
in benign gynecology, combined with changing hospital capital spending
priorities associated with the implementation of the Affordable Care Act. We
remain confident in the long-term opportunity to fundamentally improve surgery
using our technologies. We are focused on educating our community on the
safety, efficacy and cost-effectiveness of our products, expanding our
capabilities for general surgery, extending the benefits of minimally invasive
surgery using da Vinci in gynecology and urology worldwide, and continuing our
launch of new products to serve our customers and their patients."

Intuitive Surgical will discuss these results at a conference call today at
1:30 pm PDT. The dial-in numbers for the call are (800) 230-1092 for
participants located in the United States and (612) 288-0337 for participants
located outside the United States. The host is Dr. Gary Guthart. To access
financial information that will be discussed on the call, please visit
Intuitive Surgical's website at www.intuitivesurgical.com.

About Intuitive Surgical, Inc.

Intuitive Surgical, Inc. (Nasdaq:ISRG), headquartered in Sunnyvale, Calif., is
the global leader in robotic-assisted, minimally invasive surgery. Intuitive
Surgical develops, manufactures and markets the da Vinci Surgical System.
Intuitive Surgical's mission is to extend the benefits of minimally invasive
surgery to those patients who can and should benefit from it.

About the da Vinci Surgical System

The da Vinci Surgical System is a surgical platform designed to enable complex
surgery using a minimally invasive approach. The da Vinci Surgical System
consists of an ergonomic surgeon console or consoles, a patient-side cart with
three or four interactive arms, a high-performance vision system and
proprietary EndoWrist^® instruments. Powered by state-of-the-art technology,
the da Vinci Surgical System is designed to scale, filter and seamlessly
translate the surgeon's hand movements into more precise movements of the
EndoWrist instruments. The net result is an intuitive interface with improved
surgical capabilities. By providing surgeons with superior visualization,
enhanced dexterity, greater precision and ergonomic comfort, the da Vinci
Surgical System makes it possible for skilled surgeons to perform more
minimally invasive procedures involving complex dissection or reconstruction.
For more information about clinical evidence related to da Vinci Surgery,
please visit www.intuitivesurgical.com/company/clinical-evidence/

da Vinci^® and EndoWrist^® are trademarks of Intuitive Surgical, Inc.

This press release contains forward-looking statements. These forward-looking
statements are necessarily estimates reflecting the best judgment of our
management and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the
forward-looking statements. These forward-looking statements should,
therefore, be considered in light of various important factors, including the
following: the impact of global and regional economic and credit market
conditions on health care spending; the possibility of another shutdown of the
U.S. federal government and market impact if Congress fails to reach further
agreement regarding the budget and debt ceiling; health care reform
legislation in the United States and its impact on hospital spending,
reimbursement and fees which will be levied on certain medical device
revenues; decreases in hospital admissions and actions by payers to limit or
manage surgical procedures; timing and success of product development and
market acceptance of developed products; procedure counts; regulatory
approvals, clearances and restrictions; guidelines and recommendations in the
health care and patient communities; intellectual property positions and
litigation; competition in the medical device industry and in the specific
markets of surgery in which we operate; unanticipated manufacturing
disruptions or the inability to meet demand for products; the results of legal
proceedings to which we are or may become a party; product liability and other
litigation claims; adverse publicity regarding the Company and the safety of
our products and adequacy of training; our ability to expand into foreign
markets; and other risk factors under the heading "Risk Factors" in our report
on Form 10-K for the year ended December 31, 2012, as updated from time to
time by our quarterly reports on Form 10-Q and our other filings with the
Securities and Exchange Commission. Statements concerning forecasts, revenue
growth, procedure growth, future financial results and statements using Words
such as "estimates," "projects," "believes," "anticipates," "plans,"
"expects," "intends," "may," "will," "could," "should," "would," "targeted"
and similar words and expressions are intended to identify forward-looking
statements. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release. We undertake no obligation to publicly update or release any
revisions to these forward-looking statements, except as required by law.




INTUITIVE SURGICAL, INC.
UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)

                                                         
                          Three months ended
                          September30, 2013 June30, 2013 September30, 2012
Revenue:                                                  
Instruments and            $ 239.1            $ 264.5       $ 218.0
accessories
Systems                    158.5              215.9         232.0
Services                   101.4              98.1          87.8
Total revenue              499.0              578.5         537.8
Cost of revenue:                                          
Product                    112.0              140.9         119.3
Service                    30.3               32.4          28.4
Total cost of revenue (1)  142.3              173.3         147.7
Gross profit               356.7              405.2         390.1
Operating expenses:                                       
Selling, general, and      139.3              145.5         129.0
administrative
Research and development   43.2               41.2          49.7
Total operating expenses   182.5              186.7         178.7
(1)
Income from operations (2) 174.2              218.5         211.4
Interest and other income, 3.9                4.3           4.3
net
Income before taxes        178.1              222.8         215.7
Income tax expense         21.3               63.7          32.4
Net income                 $ 156.8            $ 159.1       $ 183.3
Net income per share:                                     
Basic                      $ 4.06             $ 3.99        $ 4.59
Diluted                    $ 3.99             $ 3.90        $ 4.46
Shares used in computing                                  
net income per share:
Basic                      38.6               39.9          39.9
Diluted                    39.3               40.8          41.1
(1) Includes share-based
compensation expense as                                   
follows:
Total cost of revenue      $ 8.8              $ 7.1         $ 8.4
Total operating expenses   $ 41.6             $ 31.6        $ 38.9
(2) Includes amortization
of purchased intangibles                                  
as follows:
Income from operations     $ 5.3              $ 5.7         $ 5.4




INTUITIVE SURGICAL, INC.
UNAUDITED NINE MONTHS ENDED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
                                                             
                                              Nine months ended September 30,
                                              2013            2012
Revenue:                                                      
Instruments and accessories                    $ 764.7         $ 649.5
Systems                                        630.3           668.0
Services                                       293.9           252.0
Total revenue                                  1,688.9         1,569.5
Cost of revenue:                                              
Product                                        399.2           353.9
Service                                        93.5            83.2
Total cost of revenue (1)                      492.7           437.1
Gross profit                                   1,196.2         1,132.4
Operating expenses:                                           
Selling, general, and administrative           426.3           374.1
Research and development                       126.0           128.3
Total operating expenses (1)                   552.3           502.4
Income from operations (2)                     643.9           630.0
Interest and other income, net                 12.5            12.1
Income before taxes                            656.4           642.1
Income tax expense                             151.6           160.4
Net income                                     $ 504.8         $ 481.7
Net income per share:                                         
Basic                                          $ 12.75         $ 12.10
Diluted                                        $ 12.46         $ 11.72
Shares used in computing net income per share:                
Basic                                          39.6            39.8
Diluted                                        40.5            41.1
(1) Includes share-based compensation expense                 
as follows:
Total cost of revenue                          $ 22.7          $ 20.2
Total operating expenses                       $ 104.6         $ 94.8
(2) Includes amortization of purchased                        
intangibles as follows:
Income from operations                         $ 16.6          $ 17.2




INTUITIVE SURGICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
                                                           
                                         September30, 2013 December31, 2012
Cash, cash equivalents and investments    $ 2,532.3          $ 2,920.5
Accounts receivable, net                  280.6              370.3
Inventories                               200.1              121.5
Property, plant and equipment, net        294.2              241.8
Goodwill                                  137.4              138.1
Deferred tax assets                       131.5              96.3
Other assets                              121.3              170.7
Total assets                              $ 3,697.4          $ 4,059.2
Accounts payable and other accrued        $ 239.3            $ 292.7
liabilities
Deferred revenue                          193.8              186.4
Total liabilities                         433.1              479.1
Stockholders' equity                      3,264.3            3,580.1
Total liabilities and stockholders'       $ 3,697.4          $ 4,059.2
equity

CONTACT: Investor Relations
         (408) 523-2161
 
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