Intuitive Surgical cuts 2013 revenue forecast over robot systems concerns

18 July 2013 (Last Updated July 18th, 2013 18:30)

Intuitive Surgical has cut its 2013 revenue forecast amid concerns about its da Vinci surgical robot systems and issuance of a warning letter by the US FDA.

Intuitive Surgical has cut its 2013 revenue forecast amid concerns about its da Vinci surgical robot systems and issuance of a warning letter by the US FDA.

The firm now expects annual revenues to grow between 0% and 7%, down from its earlier forecast range of 16% to 19%, and sales in procedures to be around 15% to 18%, reduced from the previous range of 20% to 23%.

During a conference call to discuss second quarter earnings, Intuitive Surgical CEO Gary Guthart said the company was issued a warning letter on 17 July.

Guthart also told analysts that a defect in the robot's surgical scissors, along with adverse publicity and general opposition from health insurers in giving approval to hysterectomies, had negatively impacted the sales growth of the da Vinci procedure, reported the Wall Street Journal.

Sales growth in the procedures is vital to the firm's overall sales strategy.

According to Intuitive Surgical, the FDA had urged the firm to take additional steps to resolve two issues and it would work with the agency to address and settle them.

Used in more than 1,300 hospitals, Intuitive's robotic surgery system has featured in court cases on charges of negligence, reported Bloomberg.

"Despite these concerns, the company has been able to post a net income of $159.1m in the second quarter of fiscal 2013."

Following reports of deaths of at least 70 patients since 2009, the US regulatory agency has been stringently inspecting the surgery cases that use robots.

According to a May report, FDA inspections in April and May found that the company in certain cases had neither sufficiently reported corrections in the surgical device nor the adverse impacts on patients.

In May, the firm had informed hospitals that it would rectify the potential defect in scissors.

Despite these concerns, the company has been able to post a net income of $159.1m in the second quarter of fiscal 2013, compared with $154.9m in the same period of last year.

Total revenues in this year's Q2 quarter was $578.5m, up by 8% from $536.5m in the prior-year quarter.

da Vinci surgical procedures increased by 18% from last year's corresponding quarter, especially due to growth in gynecology, general surgery procedures in the US, and urology procedures in the international markets.

Sales from instruments surged by 18% to $265m due to growth in da Vinci surgical procedures and the introduction of new products.

However, revenues in systems fell by 6% to $216m as sales of da Vinci Surgical Systems decreased to 143 from last year quarter's 150 units. Despite this, service revenues grew 8% to $98m.