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Intuitive Surgical Inc. Q3 Earnings Propel Stock 6% to End October

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Intuitive Surgical Inc. (ISRG) stock is up over 6% since the company released their Q3 2017 earnings report two weeks ago. The company's stock is up 7.27% in the trailing 30-day period and nearly 21% in the past 90-day period.

The company's October surge is attributed to their third-quarter earnings.

Intuitive Surgical offers minimally invasive surgery options via robotic-assisted technology. The company posts that da Vinci procedures rose 15% worldwide year-over-year, with a main rise in procedures in the United States. The country's aging population has propelled the company's procedures, with general surgery and urologic procedures mentioned specifically.

The company's da Vinci Surgical Systems shipped 169 units versus 134 units during the same period a year prior.

Revenue in the third quarter rose to $806 million, up 18% compared to the third quarter in 2016 when the company posted $683 million in revenue. The company's revenue also includes a $21 million deferred inclusion from a customer trade-out program.

GAAP net income was $2.55 per diluted share, or $298 million, up from $1.77 per diluted share and $211 million in Q3 2016. Non-GAAP income was $2.77 per diluted share, or $324 million.

Instrument and accessory revenue rose to $401 million on the quarter, up 15% year-over-year. Service revenue on the quarter rose 13% to $147 million. System revenue was $258 million, up 26% compared to the same period a year prior.

Income from operations was $279 million, up from $256 million in the third-quarter of 2016.

Intuitive Surgical ends the quarter with $379 million more in cash, equivalents and investments. The company ended the quarter with a $3.8 billion cash pile.

Robotic-assisted surgery is reported as costing more for patients. The surgery may not be better, according to the Wall Street Journal. Robot-assisted surgery is used for minimally invasive procedures, including surgery to help patients suffering with incontinence.

The outcome of robot-assisted technology will have a major impact on the company in the future.

Intuitive Surgical Inc.'s average selling price in the third-quarter fell to $1.47 million per Da Vinci system. The price, down from $1.53 million a year prior, is up from $1.46 million in the second-quarter of 2017. The price excludes deferred revenue, lease buyouts and operating leases.

Increased sales in cost-sensitive markets is a key reason for the company's average sales price declining for their signature product.

Hospitals and surgeons are reluctant to spend the $1.53 million upfront cost for the system following reports that patient outcome may not be improved using robotic-assistance. The company also launched a program that allows customers to purchase multiple units at a lower price. The move increased sales from larger buyers while lowering the average sales price of units.

The company's focus on expansion into cost-conscious markets will lead to the da Vinci System's average sales price per unit dropping further in the coming quarters. The company has also introduced a cheaper model, the da Vinci System X, which is the low-cost model of the da Vinci System XI.

The X's introduction is expected to increase sales despite lowering the company's average sales price per unit.


This article was written by Adam Monson for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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