Intuitive Surgical Earnings: Procedures Growth Remains Robust

Intuitive Surgical ISRG delivered another quarter of material procedures growth, allowing it to raise its procedures guidance modestly. We are raising our fair value estimate to $230 to account for a healthy 2023. The company’s wide moat is intact.

On the heels of cautious commentary last quarter about the unmaintainable pace of procedures, Intuitive still delivered another 20%-plus procedures growth. The U.S. maintained the torrid pace, up 19% in second-quarter 2023. Demand was strong across all procedures, but low-acuity/high-volume (cholecystectomy, hernia, and hysterectomy outside the U.S.) procedures continued to perform exceptionally well. The only slowdown appears to be in bariatrics where recent drug introductions have led to a slower uptake of surgeries. System utilization was up 9% year over year, relative to roughly 5% growth normally. We estimate that robotic surgeries gained market share relative to other approaches in benign surgeries in the quarter.

Growth in system placements was strong outside the U.S. The U.S. placements, which continue to be affected by low trade-in volumes, were also above our expectations, but future systems growth is coming from outside the U.S.—with 174 units placed in the quarter, international system placements now exceed those in the U.S. Ion also is enjoying strong adoption in the U.S., with 58 placements in the quarter.