It wasn't exactly the
analyst-thrashingresults that we've come to expect from
the purveyor of surgical robots, but it was still a pretty
solid quarter for
Intuitive Surgical (Nasdaq: ISRG).
The company sold 86 da Vinci surgical systems during the
quarter. That's not as good as the 91 it sold in the third
quarter last year, but at least Intuitive Surgical is having
an easier time
selling to hospitalsthan
Boston Scientific (NYSE: BSX) is.
Of those systems, 20 of them were trade-ins to a newer
model. Although the upgrades don't add to the installed base,
which has reached 1308 machines worldwide, they're likely to
increase the number of procedures done at the hospital,
because Intuitive Surgical finds that the newer machines have
a higher usage rate. Not surprising: Put a new machine into
any business, and you'll probably see usage increase.
Everyone likes a new toy, docs included.
Speaking of procedures, they rose by a whopping 49% year
over year. As I said
last quarter, that's really the key number as it drives
instrument and accessory sales, which were 32% higher than
the year-ago quarter. The difference has to do with surgeons
being able to use fewer instruments as they become more
familiar with the procedures. Still, recurring revenue,
including servicing the machines, exceeded the revenue from
sales of da Vinci machines, and it'll be a driving force for
sales in future quarters as hospitals' capital spending
increases.
Perhaps the most impressive thing about Intuitive Surgical
is the amount of cash it throws off each quarter. Cash and
short-term investments topped $1 billion this quarter, even
after the well timed $150 million
buybackearlier this year. That's no
Apple (Nasdaq: AAPL)
level of cash, but it's still reasonable for investors to
expect that it to be returned to them in the form of
additional buybacks or maybe a special dividend, as companies
as diverse as
TransDigm (NYSE: TDG),
Microsoft (Nasdaq: MSFT),
K-Swiss (Nasdaq: KSWS) have done.
While some would argue that's a good way to
destroy a company, Intuitive Surgical doesn't have much
other choice. A lack of competition means that any
acquisition would divert it away from its core, which may not
be in investors' best interest.
This article was originally published as
Slicing and Dicing Intuitive Surgical's Quarteron
Fool.com
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