Intuitive Surgical, the market leader in robotic surgery, reported double-digit sales growth and a 26% increase in da Vinci procedures in the first quarter as hospital backlogs eased.
The company had 312 da Vinci system placements in the period, about the same number as a year earlier. While Intuitive hasn’t accelerated growth, it has boosted its install base. With 12% more systems in place than the year-earlier quarter, Intuitive posted growth across multiple measures, CEO Gary Guthart told investors on a conference call on Tuesday.
“Use of our products grew strongly in the first quarter versus a year ago, helped by positive surgical trends and strong execution by our team,” he said. “New capital installs were likewise strong as customers built their da Vinci and Ion system capacity to meet demand. Some manufacturing and supply challenges this quarter negatively impacted our product margins. This is an opportunity for sharper execution going forward.”
Analysts Brandon Vazquez and Justin Lin at William Blair noted positive signs in hospital demand for robotics in the quarter.
“We believe first-quarter demand reinforces robotics as a priority for hospitals that should support momentum, especially as utilization growth (up 13% in the quarter) drives incremental system demand needed to support volume growth,” they wrote in a research note on Wednesday morning.
BTIG analyst Ryan Zimmerman singled out Intuitive for its industry-leading position.
“We like the long-term potential of robotic surgery. We see ISRG as the clear leader in the space with a growing ecosystem around its robotic systems and strong operating leverage in outer years,” Zimmerman wrote in a note on Wednesday morning. “We think the challenging and growing economic concerns are likely to weigh on system sales in the near to medium term but see strong procedure demand as an underlying barometer of [Intuitive’s] value to hospitals.”
Shares of Intuitive rose 13%, or $34.01, to $303.29 in early trading on Wednesday.
Intuitive CFO Jamie Samath pointed out the reduction of the backlog built up in recent years as one of the drivers for the 26% jump in da Vinci procedures.
“We think there is some backlog effect from patients generally returning to more normalized healthcare routines, given the effect of the pandemic over several years. Included within that is diagnostic pipelines. We see the last year or so of diagnostic pipelines being above pre-COVID levels,” Samath said on the call.
The CFO also named “strength in the U.S. in general surgery, particularly benign general surgery” as another growth driver, adding that Intuitive has made “some market share gains” in that area and that the “non-urology side of our procedure categories are growing nicely” overseas.
In addition, Samath said staffing improved relative to the fourth quarter.
“It's not where it was pre-COVID, but I think that's allowed for some incremental procedures to be performed,” he said.
Intuitive raised its full-year procedure growth range to 18% to 21%, up from 12% to 16% under its prior forecast. The low-end “assumes continued choppiness with COVID hospitalizations” and “a moderation in procedures from elevated levels experienced in January and February this year,” Brian King, head of investor relations, said on the call.