Intuitive's sales plunge as da Vinci concerns persist

Intuitive Surgical's da Vinci surgical system--Courtesy of Intuitive

Citing lower procedure volumes, changing hospital spending priorities and the Affordable Care Act, robotic-assisted surgery company Intuitive Surgical ($ISRG) anticipates its first quarter revenue will take a 24% hit from 2013, from $611 million to $465 million.

A decreased in sales of its flagship da Vinci Surgical System is the main culprit. There were 87 systems shipped in Q1 of 2014 compared to 164 during Q1 of 2013, and the product's anticipated revenues fell from $256 million to $106 million. Sales of systems outside of the U.S. fell from 49 to 42.

Interestingly enough, the average selling price declined from about $1.6 million to $1.2 million. That could be due to the recent debut of the upgraded da Vinci Xi Surgical System. The company said a deferral program allowing customers to trade in recently purchased da Vinci instruments and accessories for their upgraded counterparts reduced quarterly revenue by $26 million.

In addition, Intuitive announced an earnings charge of $67 million to account for legal settlements related to its now-recalled Monopolar Curved Scissors. The settlement does not preclude the claimants from pursuing greater amounts, and it's possible more claims will be filed in the future, Intuitive said. The company added that it cannot estimate the future financial impact of such actions.

Over the past year, Intuitive has been plagued by concerns about the safety of da Vinci-guided procedures, and it issued a recall of more than 1,300 systems in November 2013.

The number of gynecology procedures has been declining recently and are responsible for almost half of all da Vinci procedures, according to Reuters. Safety and cost effectiveness concerns are holding back sales of the da Vinci as well. It's revenue declined by nearly half since the previous quarter.

Analysts will likely have lots of tough questions for the company during its April 22 earnings call. Intuitive's share price fell nearly 7% on Wednesday morning.

- see the release
- here's the Reuters story

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