Intuitive Surgical Posts Q4 Beat, Shares Down on Lowering Profit Margin Guide

Intuitive Surgical (ISRG), a global leader in minimally invasive care and the pioneer of robotic-assisted surgery, announced its financial results for the quarter ended December 31, 2024, on Thursday, January 23, 2025. The company reported a strong quarter, with revenue and earnings per share (EPS) beating analyst estimates. However, shares of Intuitive Surgical were down in extended trading, likely due to the company's lowering of its profit margin guide.

Q4 Highlights and Financial Summary

* Worldwide da Vinci procedures grew approximately 18% compared with the fourth quarter of 2023.
* The Company placed 493 da Vinci surgical systems, compared with 415 in the fourth quarter of 2023, including 174 da Vinci 5 systems.
* The Company grew its da Vinci surgical system installed base to 9,902 systems as of December 31, 2024, an increase of 15% compared with 8,606 as of December 31, 2023.
* Fourth quarter 2024 revenue of $2.41 billion increased 25% compared with $1.93 billion in the fourth quarter of 2023.
* Fourth quarter 2024 GAAP net income attributable to Intuitive was $686 million, or $1.88 per diluted share, compared with $606 million, or $1.69 per diluted share, in the fourth quarter of 2023.
* Fourth quarter 2024 non-GAAP* net income attributable to Intuitive was $805 million, or $2.21 per diluted share, compared with $574 million, or $1.60 per diluted share, in the fourth quarter of 2023.
* Fourth quarter 2024 expenses included a $45 million contribution to the Intuitive Foundation, compared with a $40 million contribution to the Intuitive Foundation in the fourth quarter of 2023.

Lowering Profit Margin Guide

Intuitive Surgical's lowering of its profit margin guide likely contributed to the decline in its share price. The company's guidance for the full year 2025 is expected to be in the range of 13% to 16% for worldwide da Vinci procedures, compared with the previous guidance of 17% to 20%. This adjustment may indicate a decrease in profitability or a change in the company's financial outlook, which could impact investor sentiment.

Potential Reasons Behind the Adjustment

The reasons behind the adjustment in the profit margin guide could be:

1. Changes in cost structure: The company may have experienced an increase in costs, such as research and development expenses, marketing expenses, or operational costs, which could lower the profit margin.
2. Changes in revenue mix: A shift in the company's revenue mix, such as a decrease in high-margin products or services, could also impact the profit margin.
3. Market conditions: Changes in market conditions, such as increased competition or a slowdown in demand for the company's products, could affect the company's profitability and profit margin.
4. Strategic decisions: The company may have made strategic decisions, such as investing in new products or markets, which could temporarily lower the profit margin in the short term.

Investor Sentiment and Valuation Impact

Investors may react negatively to a lowering of the profit margin guide, as it could indicate a decrease in the company's earnings potential and, consequently, a lower valuation. However, it is essential to consider the context and the reasons behind the adjustment before making any conclusions about the company's long-term prospects.

Intuitive Surgical's strong Q4 results, driven by solid procedure growth and capital placements, demonstrate the company's ability to execute its long-term growth strategy. The lowering of the profit margin guide may be a temporary setback, but the company's fundamentals remain strong, and its long-term growth prospects appear intact.