Intuitive expects Q1 2014 revenue to be approximately $465 million, down 24 percent from $611 million Q1 2013. Intuitive says its took a $26 million hit on existing clients who used its trade-in program to upgrade from recently purchased da Vinci instruments and accessories to new da Vinci Xi products. Without the impact of the trade-out program, revenue would have been $491 million, still a sharp decrease of 20 percent.
Revenue from older da Vinci systems fell nearly 59 percent in Q1 2014 to about $106 million from $256 million during Q1 2013, Intuitive says. It sold 87 systems in the quarter, compared to 164 during the same period one year ago. Sales in the United States fell to 45 from 115, which Intuitive attributes to lower procedural volumes, the Affordable Care Act, and expectations of the new da Vinci Xi system.
“Intuitive remains focused on our goal of developing advanced technology that enables surgeons to improve patient outcomes and reduce the associated costs of care,” Intuitive CEO Gary Guthart says in a statement. “Our recently released da Vinci Xi system is another step in pursuit of our mission.”
Intuitive is scheduled to report its first quarter 2014 results in a conference call on April 22, 2014.
Ongoing Legal Issues
Intuitive says it also has a $67 million pre-tax charge to reflect estimated costs of settling a number of legal claims, reflecting an on-going concern with its surgical robots.
Intuitive had experienced double-digit revenue growth and rising da Vinci sales in past years, but that all changed in Nov. 2013 when it issued a warning that its da Vinci Si surgical robot may momentarily stall during procedures and endanger patients.
Could a little preventive care save robotic surgery from unnecessary legal scrutiny? A recent paper, “Robotic Surgery & The Law in the USA,” examines medical malpractice standards in the USA, including problems with current legal system and recommendations for paving the way for future legal regulations. Read the paper (pdf)
The FDA deemed this a Class II recall, meaning the device could cause ?temporary or medically reversible? health problems, with a remote potential for serious complications.
Between January 2000 and August 2012, thousands of mishaps were reported to the FDA involving the da Vinci robot, according to The New York Times. ?In the vast majority of cases, the patient was not harmed, but among the reports were 174 injuries and 71 deaths related to da Vinci surgery,” according to a study published in the Journal for Healthcare Quality.
Northland Capital Markets analyst Suraj Kalia tells Reuters its unclear how Intuitive can regain the growth it had when the da Vinci system first launched. “Based on our assessment, there exists at least a 40 to 50 percent unused capacity in Da Vinci systems installed the United States; and even higher outside the U.S.,” he tells Reuters, adding that the new da Vinci Xi version on the market will only stratify an already saturated market.
Reuters, however, says other analysts say the da Vinci Xi system will open up Intuitive to new markets. “Going forward growth is to come from new markets like general surgery,” Jefferies & Co analyst Imron Zafar tells Reuters.
“Based on our assessment, there exists at least a 40 to 50 percent unused capacity in Da Vinci systems installed the United States; and even higher outside the U.S.,” he said, saying the freshest version on the market would serve to only stratify an already saturated market.