Intuitive Surgical (ISRG, Financial), a pioneer in robotic surgical equipment, has reported impressive Q1 earnings, with a notable 16% year-over-year increase in global da Vinci procedures. However, the anticipation for system placements in the coming year is tempered by certain challenges.
The excitement around the FDA-approved da Vinci 5 system is palpable, with eight units already placed by the end of Q1. Yet, supply limitations are hindering ISRG's ability to satisfy the burgeoning demand. Initially, the da Vinci 5 is exclusively available to a select group of U.S. customers involved in its development phase and those with established robotic surgical programs.
This exclusivity has led other interested buyers to postpone their purchases until the da Vinci 5 becomes widely available. This situation is reflected in the modest year-over-year increase in da Vinci system placements, totaling 313. ISRG has also indicated that system placements might experience fluctuations throughout the year due to the slow rollout of the da Vinci 5.
Additionally, the rapid rise of weight-loss medications, such as Eli Lilly's (LLY, Financial) Zepbound and Novo Nordisk's (NVO, Financial) Wegovy, poses a new challenge for ISRG, with bariatric procedures remaining stagnant in Q1 and showing a slowdown from the second half of 2023.
On a brighter note, the anticipated resolution of supply constraints for the da Vinci 5 promises a significant boost in system placement growth, thanks to technological advancements like Force Feedback technology. However, this improvement is expected to fully materialize by FY25, causing some immediate disappointment among investors.
ISRG's lung biopsy robot, Ion, has seen a remarkable 90% increase in procedures in Q1, contributing to the company's decision to raise its FY24 procedure growth guidance to 14-17% from the previously forecasted 13-16%. Despite facing tougher year-over-year comparisons and the unwinding of COVID-19 patient treatment backlogs, ISRG is not currently dealing with COVID-related disruptions in China.
In summary, ISRG has delivered strong Q1 results with an uptick in da Vinci procedure growth. However, the cautious launch of the da Vinci 5 system could temporarily restrain system growth this year. Looking ahead, the da Vinci 5 is poised to become a major growth catalyst as healthcare providers transition to this advanced model.
