Intuitive Surgical, Inc.(NASDAQ: ISRG) stock lost over 2.3% in the pre-market session on Jan 26th, 2018 on concerns over their bottom line. The group incurred a GAAP net loss of $39 million or $0.35 per share for the fourth quarter 2017, including the impacts of the US Tax Act against the GAAP net income of $204 million or $1.71 per share in the fourth quarter of 2016.
The pro forma gross margin reached 72.3% against the 71.1% for the fourth quarter of 2016 and 71.8% for the third quarter of 2017. Higher proportion of systems revenue was offset the lower manufacturing cost. The group expects the potential margins to be hurt based on the mix of their newer products, the mixed subsystems in instrument and accessory revenue system ASPs and their ability to further cut product costs, and improve manufacturing efficiency. Pro forma operating expenses enhanced 19% against the fourth quarter 2016 due to investments in da Vinci SP, catheter-based robotics, imaging in advanced instrumentation and expansion of OUS markets.
On the other side, the group’s Global procedure growth was strong at over 17% in the fourth quarter of 2017 and 16% for the full year of 2017. Rising usage of da Vinci in general surgery in the United States, ongoing growth in neurology in Europe and Japan coupled with multispecialty growth in Korea and China drove the top line. Their General surgery growth was driven by hernia repair and colon section, while mature procedures in the United States especially across the discectomy which outperformed their expectations on the back of the macro trends in the prostate cancer market.
The group expanded their da Vinci system offering this year with the launch of the da Vinci X surgical system. The Reception to the 2x has been positive, catalyzing interest in robotics programs in price sensitive markets. Net of trade ins and retirements, their da Vinci install base grew 13% during 2017 as compared to 2016 from 3,919 to 4,409. The U.S. capital placements stood out in the year and the fourth quarter was mainly boosted by growth in general surgery. The European placement performance in the fourth quarter was solid while, placements in the fourth quarter in Japan were also strong.