Intuitive tanks as da Vinci sales sputter

Intuitive Surgical's U.S. da Vinci sales dropped 27% in the second quarter.--Courtesy of Intuitive Surgical

Intuitive Surgical ($ISRG) is expecting softer second-quarter sales figures for its signature robotic surgery system than previously thought, leading spooked investors to drag its shares down 15% overnight.

In preliminary results, da Vinci sales slid 6% in Q2, down to $215 million from $229 million in the same period last year. The device's U.S. sales tanked 27%, negating growth in Europe and Japan, and Intuitive blames the slumping domestic demand on an increase in economic pressure on hospitals and declining rates of benign gynecologic procedures.

Overall, Intuitive's revenue increased 7% to $575 million in the preliminary results, and net income grew 3% to $160 million. In the first quarter, Intuitive raked in $611 million in revenue and $189 million profits.

Intuitive closed at about $500 a share Monday evening, before the revenue announcement, and declined 15% overnight, trading at $425.10 pre-market Tuesday morning.

"While we are disappointed in our performance this quarter, particularly with respect to our capital sales in the U.S., overall procedure performance was solid in a difficult environment," CEO Gary Guthart said in a statement. "We remain confident in the value that our products and services bring to patients, hospitals and the healthcare system."

It was indeed a difficult environment, as hospitals defer purchases of high-dollar instruments and payers encourage more cost-efficient procedures for patients, but Intuitive's one-night fall on the Street shows that investors may lack faith that this is a blip and not a trend.

In March, the American College of Obstetricians and Gynecologists questioned da Vinci's benefits compared to standard hysterectomy procedures, pointing to a Journal of the American Medical Association study that found da Vinci to add about $2,200 onto the cost of surgery without making a marked difference on patient outcomes.

The robot's sizable sales slide in the U.S. could well be the first sign of a reversing trend for Intuitive, which has reaped billions in revenue over the past few years as hospitals angle to woo patients with the latest medical technology. Now, as questions about da Vinci's safety and efficacy move through courtrooms and FDA hallways, the company's best days may have passed.

- read the results