Intuitive Surgical Announces First Quarter Earnings
Q1 Highlights
- Worldwide da
Vinci procedures grew nearly 18% compared with the first quarter of 2016, driven primarily by growth in U.S. general surgery procedures and worldwide urologic procedures. - The Company shipped 133 da
Vinci Surgical Systems compared with 110 in the first quarter of 2016. - First quarter 2017 revenue of
$674 million grew approximately 13% compared with$595 million for the first quarter of 2016. - First quarter 2017 GAAP net income was
$180 million , or$4.67 per diluted share, compared with$136 million , or$3.54 per diluted share, for the first quarter of 2016. - First quarter 2017 non-GAAP* net income was
$196 million , or$5.09 per diluted share, compared with$170 million , or$4.42 per diluted share, for the first quarter of 2016.
Q1 Financial Summary
Gross profits, income from operations, net income, and net income per share are reported on a GAAP and non-GAAP* basis. The non-GAAP* measures are described below and are reconciled to the corresponding GAAP measures at the end of this release.
First quarter 2017 revenue was $674 million, an increase of approximately 13% compared with $595 million in the first quarter of 2016. Higher first quarter revenue was driven by growth in recurring instrument, accessory, and service revenue, and higher systems revenue.
First quarter 2017 revenue excludes
First quarter 2017 instrument and accessory revenue increased by approximately 18% to
First quarter 2017 systems revenue increased by approximately 4% to
First quarter 2017 income from operations increased to
First quarter 2017 GAAP net income was
First quarter 2017 non-GAAP* net income was
Commenting on the announcement, Dr.
Additional supplemental financial and procedure information has been posted to the Investor Relations section of the Intuitive website at: http://phx.corporate-ir.net/phoenix.zhtml?c=122359&p=irol-IRHome.
Webcast and Conference Call Information
About
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Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the planned customer trade-out program, products expected to be launched in the future and trends in key global markets and our U.S. general surgery business. These forward-looking statements are necessarily estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including, but not limited to, the following: the impact of global and regional economic and credit market conditions on healthcare spending; healthcare reform legislation in
*About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding non-cash charges, such as amortization of intangible assets and share-based compensation (“SBC”) expenses, and other special items. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity. We believe these non-GAAP financial measures are useful to investors because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the performance of our business.
Non-GAAP gross profit. We define non-GAAP gross profit as gross profit excluding the amortization of intangible assets, expenses related to SBC, and litigation charges.
Non-GAAP income from operations. We define non-GAAP income from operations as income from operations excluding the amortization of intangible assets, expenses related to SBC, and litigation charges.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding the amortization of intangible assets, expenses related to SBC, and litigation charges, net of the related tax effects; and the excess tax benefits or deficiencies associated with share-based compensation arrangements. The tax effects are determined by applying a calculated non-GAAP effective tax rate, which is commonly referred to as the with-and-without method. Without excluding these tax effects, investors would only see the gross effect that these non-GAAP adjustments had on our operating results. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis.
There are a number of limitations related to the use of non-GAAP measures versus measures calculated in accordance with GAAP. Non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income, and non-GAAP EPS exclude amortization of intangible assets and SBC, which are recurring expenses. SBC has been and will continue to be for the foreseeable future a significant recurring expense in our business. In addition, the components of the costs that we exclude in our calculation of non-GAAP net income and non-GAAP EPS may differ from the components that our peer companies exclude when they report their results of operations. Management addresses these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
| INTUITIVE SURGICAL, INC. | |||||||||||
| UNAUDITED QUARTERLY CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
| (IN MILLIONS, EXCEPT PER SHARE DATA) | |||||||||||
| Three months ended | |||||||||||
| In millions (except per share data) | March 31, 2017 |
December 31, 2016 |
March 31, 2016 |
||||||||
| Revenue: | |||||||||||
| Instruments and accessories | $ | 380.8 | $ | 386.3 | $ | 322.1 | |||||
| Systems | 153.2 | 235.9 | 147.9 | ||||||||
| Services | 140.2 | 134.7 | 124.5 | ||||||||
| Total revenue | 674.2 | 756.9 | 594.5 | ||||||||
| Cost of revenue: | |||||||||||
| Product | 163.8 | 187.5 | 151.6 | ||||||||
| Service | 44.3 | 42.2 | 37.9 | ||||||||
| Total cost of revenue | 208.1 | 229.7 | 189.5 | ||||||||
| Gross profit | 466.1 | 527.2 | 405.0 | ||||||||
| Operating expenses: | |||||||||||
| Selling, general and administrative | 201.1 | 193.7 | 172.8 | ||||||||
| Research and development | 73.5 | 69.1 | 53.2 | ||||||||
| Total operating expenses | 274.6 | 262.8 | 226.0 | ||||||||
| Income from operations | 191.5 | 264.4 | 179.0 | ||||||||
| Interest and other income, net | 8.7 | 11.7 | 5.5 | ||||||||
| Income before taxes | 200.2 | 276.1 | 184.5 | ||||||||
| Income tax expense (1) | 20.4 | 72.1 | 48.1 | ||||||||
| Net income | $ | 179.8 | $ | 204.0 | $ | 136.4 | |||||
| Net income per share: | |||||||||||
| Basic | $ | 4.82 | $ | 5.26 | $ | 3.62 | |||||
| Diluted (2) | $ | 4.67 | $ | 5.13 | $ | 3.54 | |||||
| Shares used in computing net income per share: | |||||||||||
| Basic | 37.3 | 38.8 | 37.7 | ||||||||
| Diluted | 38.5 | 39.8 | 38.5 | ||||||||
| (1) Income tax expense includes the effect of the following items: | |||||||||||
| Excess tax benefits related to share-based compensation arrangements* | $ | 32.6 | $ | — | $ | — | |||||
| (2) Diluted net income per share the effect of the following items: | |||||||||||
| Excess tax benefits related to share-based compensation arrangements* | $ | 0.85 | $ | — | $ | — | |||||
| (*) In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies related share-based compensation arrangements be recognized as income tax benefit or expense, instead of in stockholders' equity as previous guidance required. | |||||||||||
| INTUITIVE SURGICAL, INC. | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (IN MILLIONS) | ||||||||
| In millions | March 31, 2017 |
December 31, 2016 |
||||||
| Cash, cash equivalents and investments | $ | 3,146.8 | $ | 4,837.9 | ||||
| Accounts receivable, net | 412.9 | 430.2 | ||||||
| Inventory | 213.5 | 182.3 | ||||||
| Property, plant and equipment, net | 497.4 | 458.4 | ||||||
| Goodwill | 201.1 | 201.1 | ||||||
| Deferred tax assets | 119.6 | 150.9 | ||||||
| Other assets | 216.7 | 226.1 | ||||||
| Total assets | $ | 4,808.0 | $ | 6,486.9 | ||||
| Accounts payable and other accrued liabilities | $ | 393.9 | $ | 459.2 | ||||
| Deferred revenue | 286.6 | 249.9 | ||||||
| Total liabilities | 680.5 | 709.1 | ||||||
| Stockholders’ equity | 4,127.5 | 5,777.8 | ||||||
| Total liabilities and stockholders’ equity | $ | 4,808.0 | $ | 6,486.9 | ||||
| INTUITIVE SURGICAL, INC. | ||||||||||||
| UNAUDITED RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES | ||||||||||||
| (IN MILLIONS, EXCEPT PER SHARE DATA) | ||||||||||||
| Three months ended | ||||||||||||
| In millions (except per share data) | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
| GAAP gross profit | $ | 466.1 | $ | 527.2 | $ | 405.0 | ||||||
| Share-based compensation expense | 9.9 | 9.6 | 8.7 | |||||||||
| Amortization of intangible assets | 1.7 | 1.7 | 2.2 | |||||||||
| Litigation charges | 7.8 | — | — | |||||||||
| Non-GAAP gross profit | $ | 485.5 | $ | 538.5 | $ | 415.9 | ||||||
| GAAP income from operations | $ | 191.5 | $ | 264.4 | $ | 179.0 | ||||||
| Share-based compensation expense | 47.4 | 45.6 | 42.8 | |||||||||
| Amortization of intangible assets | 3.7 | 4.2 | 5.1 | |||||||||
| Litigation charges | 21.3 | 5.5 | 2.2 | |||||||||
| Non-GAAP income from operations | $ | 263.9 | $ | 319.7 | $ | 229.1 | ||||||
| GAAP net income | $ | 179.8 | $ | 204.0 | $ | 136.4 | ||||||
| Share-based compensation expense | 47.4 | 45.6 | 42.8 | |||||||||
| Amortization of intangible assets | 3.7 | 4.2 | 5.1 | |||||||||
| Litigation charges | 21.3 | 5.5 | 2.2 | |||||||||
| Tax adjustments - excess tax benefits (1) | (32.6 | ) | — | — | ||||||||
| Tax adjustments - other | (23.6 | ) | (17.0 | ) | (16.2 | ) | ||||||
| Non-GAAP net income | $ | 196.0 | $ | 242.3 | $ | 170.3 | ||||||
| GAAP net income per share - diluted | $ | 4.67 | $ | 5.13 | $ | 3.54 | ||||||
| Share-based compensation expense | 1.23 | 1.15 | 1.11 | |||||||||
| Amortization of intangible assets | 0.10 | 0.11 | 0.13 | |||||||||
| Litigation charges | 0.55 | 0.14 | 0.06 | |||||||||
| Tax adjustments - excess tax benefits (1) | (0.85 | ) | — | — | ||||||||
| Tax adjustments - other | (0.61 | ) | (0.44 | ) | (0.42 | ) | ||||||
| Non-GAAP net income per share - diluted | $ | 5.09 | $ | 6.09 | $ | 4.42 | ||||||
| (1) In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies related share-based compensation arrangements be recognized as income tax benefit or expense, instead of in stockholders' equity as previous guidance required. | ||||||||||||
Contact: Investor Relations (408) 523-2161