Intuitive Surgical Issues Preliminary First Quarter Results
SUNNYVALE, Calif., April 8, 2014 (GLOBE NEWSWIRE) -- Intuitive Surgical, Inc.
(Nasdaq:ISRG), the industry leader in robotic-assisted surgery, today issued
the following announcement in advance of the April 22, 2014 release of its
first quarter 2014 financial results.
The Company anticipates revenue for the first quarter of 2014 to be
approximately $465 million, down 24% compared with $611 million for the first
quarter of 2013. Revenue reflects a $26 million deferral associated with a
customer trade-out program for the newly launched da Vinci Xi^TM Surgical
System. Excluding the impact of the trade-out program, revenue would have been
$491 million, a decrease of 20% compared with the prior year.
The Company also announced a pre-tax charge of $67 million to reflect
estimated costs of settling a number of product liability legal claims against
the Company. The claims are related to alleged complications from surgeries
performed with certain versions of Monopolar Curved Scissors (MCS) instruments
that were the subject of a recall in 2013 and with a first-generation MCS tip
cover that was the subject of a market withdrawal in 2012. These estimated
settlement amounts apply to tolled legal claims, the earliest of which were
initiated in October of 2012.
"Intuitive remains focused on our goal of developing advanced technology that
enables surgeons to improve patient outcomes and reduce the associated costs
of care," said Intuitive CEO Gary Guthart. "Our recently released da Vinci Xi
system is another step in pursuit of our mission."
Revenue for the first quarter of 2014 is anticipated to be approximately $465
million, down 24% compared with $611 million for the first quarter of 2013.
First quarter 2014 revenue will be net of approximately $26 million of revenue
deferrals associated with offers made to customers to trade in their recently
purchased da Vinci Si^® Surgical Systems for our recently announced da Vinci
Xi Surgical System. The da Vinci Xi offers a number of new features including
an overhead instrument arm architecture designed to facilitate anatomical
access from virtually any position; a digital endoscope architecture that
creates a simpler, more compact design with improved vision definition and
clarity, and an ability to attach the endoscope to any arm, providing
flexibility for visualizing the surgical site.
The trade-in program also provides our customers the opportunity to exchange
certain recently purchased da Vinci instruments and accessories for da Vinci
Xi ^ instrument and accessories. The deferrals reduced first quarter 2014
system revenue by approximately $24 million as well as instrument and
accessory revenue by $2 million. The Company expects to recognize all $26
million of the revenue deferrals within 2014. The preliminary unaudited
results are prior to the completion of certain review procedures and,
therefore, subject to adjustment.
Preliminary first quarter 2014 instruments and accessories revenue is expected
to decline approximately 2% to approximately $255 million compared with $261
million. This is driven by a reduction in stocking orders related to a decline
in system sales and by the revenue deferral described above. Those declines
are partially offset by instrument and accessory sales associated with
approximately 7% higher procedure volume, which primarily reflects growth in
U.S. general surgery procedures and urologic procedures outside the United
States. Procedure volume grew despite a low, single-digit decline in U.S.
Preliminary first quarter 2014 da Vinci Surgical Systems revenue is expected
to decrease approximately 59% to approximately $106 million compared with $256
million during the first quarter of 2013. Lower systems revenue is due
primarily to lower system sales in the U.S. and the revenue deferral described
above. There were 87 systems shipped in the first quarter of 2014, including
45 in the United States and 42 outside the United States, compared with 164
during the first quarter of 2013, including 115 in the United States and 49
outside the United States. Factors that lead to the lower U.S. systems
shipments include lower procedure volumes, changing hospital capital-spending
priorities associated with the implementation of the Affordable Care Act and
the impact that anticipation of a new system may have had on customer
Preliminary first quarter 2014 service revenue is expected to increase
approximately 11% to approximately $104 million compared with $94 million
during the first quarter of 2013.
Intuitive announces a pre-tax charge of $67 million against its first quarter
2014 earnings, reflecting our estimate of the anticipated cost of settling a
number of legal claims against the Company. The vast majority of these claims
are related to alleged complications from surgeries performed with certain
versions of MCS instruments that were the subject of a recall in 2013 and with
a first-generation MCS tip cover that was the subject of a market withdrawal
in 2012. After an extended mediation process with legal counsel for many of
the claimants, the Company has determined that in light of the costs and risks
of litigation, settlement of certain claims is appropriate. The Company's
estimate of the anticipated cost of these claims is based on negotiations with
opposing counsel covering approximately 3,000 claims presented to the Company
beginning in October 2012. Surgeries referenced in the claims cover the period
2004 to 2013 during which approximately 1.7 million procedures were performed
with the da Vinci in the United States. It is possible for these claimants, as
well as those claimants who have not participated in negotiations, to pursue
greater amounts in mediation or in a court of law.It also is possible that
more claims will be filed by individuals who allege they suffered injury after
undergoing surgery in which the da Vinci SurgicalSystem was used. The Company
does not currently know how many individuals will ultimately file lawsuits or
how many additional individuals will decide to pursue claims against the
Company. The Company also is unable at this time to reasonably estimate the
financial impact of such lawsuits or additional claims.
The Company's public reporting of these claims takes place through FDA's MAUDE
database.Because claims often are sent to the Company with insufficient
medical detail to assess the claim, the process for obtaining and
investigating the associated medical records is laborious.These claims
continue to be reported into MAUDE through individual MDR reports and
alternative summary reports as appropriate.
Intuitive is scheduled to report its first quarter 2014 results in a
conference call on April 22, 2014, at which point the Company will discuss the
first quarter 2014 financial results in more detail. Dial-in and webcast
access information for both of these events also are available in the Investor
Relations section of the Intuitive Surgical website.
About Intuitive Surgical, Inc.
Intuitive Surgical, Inc. (Nasdaq:ISRG), headquartered in Sunnyvale,
California, 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
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, including statements
regarding the Company's preliminary unaudited financial results and procedure
counts for the first quarter 2014. 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: completion of the
Company's final quarter review procedures and the final adjustments and other
developments that may arise in the course of these review procedures; the
impact of global and regional economic and credit market conditions on health
care spending; 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, 2013, 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 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.
CONTACT: Intuitive Surgical, Inc.
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