Intuitive Surgical Inc. said in a preliminary report that first-quarter revenue declined about 24 percent amid a sharp drop in sales of its robotic surgery system. The shares fell.
Intuitive shipped 87 robots in the first quarter compared with 164 a year earlier, the Sunnyvale, California-based company said in a statement released in advance of their earnings report. Intuitive also took a pretax charge of $67 million to reflect estimated costs of settling product liability claims mostly related to alleged complications from surgeries performed with certain robotic scissors or tip covers that have been taken off the market, the statement said.
The company’s shares declined 6.8 percent to $456.64 at the close in New York. The stock dropped 22 percent last year after questions were raised about the safety of its da Vinci robot and Intuitive’s marketing and sales practices.
The company said in January it expected to sell fewer robots in 2014 than the 546 sold last year. On April 1, Intuitive announced that U.S. regulators cleared a new version of the robot, the first major upgrade in five years.
First-quarter revenue fell to about $465 million from $611 million a year earlier, Intuitive said. The revenue reflects a $26 million deferral associated with a customer trade-out program for the new robot.
The da Vinci system is used for a variety of procedures including prostate surgery and hysterectomies. To use the robot, doctors sit at a console operating the device from a control panel. The company said the upgraded version will sell for $1.85 million, which is about the same price as the old robotic system when add-on features were included.
Intuitive said its estimate of the anticipated legal cost from the settlements “is based on negotiations with opposing counsel covering approximately 3,000 claims.” It’s possible for the claimants “to pursue greater amounts in mediation or in a court of law,” the company said in the statement.
Intuitive is scheduled to announce full first-quarter earnings on April 22.