Intuitive Surgical (ISRG) – Earnings Snapshot – April 20, 2024
ISRG makes robotic surgical systems to assist surgeons. It trains hospitals on the hardware itself, offers powerful data analytics on key performance indicators (like outcomes), and routinely allows for less invasive surgery overall. It dominates within this niche. Its largest revenue driver is the “da Vinci” system with “Ion” being its newer, faster growth hardware. It just got its latest da Vinci 5 system cleared, which unlocks many more minimally invasive procedures for usage.
Results:
- Beat revenue estimates by 1.1%.
- Beat EBIT estimates by 7.5%.
- Beat $1.42 EPS estimates by $0.08.
- Beat gross profit margin (GPM) estimates by 20 bps. Please note that mix shift to its Ion and new da Vinci hardware is a large gross margin drag. ISRG remains fully convinced that GPM will reach 70% in the future.
Source: Brad Freeman – SEC Filings, Company Presentations, and Company Press Releases
Balance Sheet:
- $7.3B in cash & equivalents.
- $1.3B in inventory & no debt.
- Diluted shares +1.3% Y/Y; basic shares +0.9% Y/Y.
Annual Guidance & Valuation:
ISRG raised its annual procedure growth guidance from 13%-16% to 14%-17%. It reiterated GPM guidance of 67.5% and 13% Y/Y operating expense (OpEx) growth. More volume without more cost should lead to upward earnings revisions.
ISRG trades for 57x 2024 earnings and 63x 2024 free cash flow. Earnings are set to rise by 9.7% Y/Y with FCF expected to rise by 183% Y/Y following two consecutive years of deeply negative growth.
