- Intuitive Surgical said Tuesday that procedures performed with its da Vinci robotic system fell 19% worldwide in the second quarter from a year ago, reflecting a volume recovery in May and June after a sharp, pandemic-driven downturn in April.
- Still, procedure volumes could retreat below second-quarter levels going forward in places where COVID-19 cases are rising, such as the U.S., the company warned. "We expect the recovery tail of surgery will be a long one, likely to last many quarters," CEO Gary Guthart said on Intuitive's earnings call Tuesday.
- The robotic surgery giant said it is taking steps to reduce costs for customers to treat patients with da Vinci with the launch of extended-use instruments and planned price cuts on certain other instruments in the fourth quarter, along with more flexible financing.
Intuitive is weathering the one-two punch of delayed elective procedures and constrained capital equipment spending as hospitals remain focused on their response to the pandemic.
The company installed 178 new da Vinci systems in the quarter — below the 273 robots it shipped a year ago, but more than management had expected coming into the quarter, Guthart said on the call. That included 52 systems under operating lease and usage-based deals, down from 88 a year earlier.
Stifel called the second-quarter performance encouraging, with both procedure volume and system placements better than feared. Revenue and earnings, while down, exceeded consensus expectations, the analysts said in a report to clients.
Intuitive reported second-quarter revenue declined 22% year over year to $852 million. Net income was $68 million, or 57 cents a share, down from $318 million, or $2.67 a share, in the prior-year period.
Patients delayed elective procedures across all surgical categories, but gynecology saw the greatest overall decline, with urology and thoracic procedures more resilient, Guthart said.
Procedure growth and interest in placing new da Vinci robots are varying significantly based on regional COVID-19 conditions. Hospitals with adequate staffing, supplies of personal protective equipment and physical resources saw procedure rates recover to more than 90% of pre-pandemic levels, the CEO said.
In the U.S., da Vinci surgery volumes swung up but then fell back again as COVID-19 surged in parts of the country in the last weeks of the quarter. Procedures began the quarter at about 30% of pre-pandemic levels, but by mid-June rebounded to near volumes seen early in the first quarter, before the spread of the virus.
The company projects volumes will decline in July as hospitals in states such as Texas, Florida and California again divert resources to treat COVID-19. And with system utilization down 27% year over year, hospitals have excess capacity that they will likely look to fill before purchasing additional systems, the company cautioned.
To help boost system utilization, Intuitive Tuesday unveiled an extended-use program to begin in the fourth quarter featuring more durable versions of a range of the company's higher-volume instruments for da Vinci surgeries, including its X and Xi instruments. The instruments can be used 12 to 18 times, compared to 10 uses for current instruments. While the initiative will lower costs for customers, it will also reduce the company's revenue per procedure.
"We think [Intuitive] is taking an opportunity to (a) build incremental goodwill when hospitals are feeling economic constraints, and (b) get in front of price compression that will eventually occur if/when competition enters the marketplace," SVB Leerink analysts wrote in a note to investors Wednesday.