Intuitive Surgical expects Q1 revenue to be $465 million
Revenue reflects a $26 million deferral associated with a customer trade-out program for the newly launched da Vinci XiTM Surgical System. Excluding the impact of the trade-out program, revenue would have been $491 million, a decrease of 20% compared with the prior year.
The Company also announced a pre-tax charge of $67 million to reflect estimated costs of settling a number of product liability legal claims against the company.
The claims are related to alleged complications from surgeries performed with certain versions of Monopolar Curved Scissors (MCS) instruments that were the subject of a recall in 2013 and with a first-generation MCS tip cover that was the subject of a market withdrawal in 2012. These estimated settlement amounts apply to tolled legal claims, the earliest of which were initiated in October of 2012.
Revenue for the first quarter of 2014 is anticipated to be approximately $465 million, down 24% compared with $611 million for the first quarter of 2013.
First quarter 2014 revenue will be net of approximately $26 million of revenue deferrals associated with offers made to customers to trade in their recently purchased da Vinci Si Surgical Systems for company's recently announced da Vinci Xi Surgical System.
The trade-in program also provides our customers the opportunity to exchange certain recently purchased da Vinci instruments and accessories for da Vinci Xi instrument and accessories. The deferrals reduced first quarter 2014 system revenue by approximately $24 million as well as instrument and accessory revenue by $2 million. The Company expects to recognize all $26 million of the revenue deferrals within 2014. The preliminary unaudited results are prior to the completion of certain review procedures and, therefore, subject to adjustment.
Preliminary first quarter 2014 instruments and accessories revenue is expected to decline approximately 2% to approximately $255 million compared with $261 million. This is driven by a reduction in stocking orders related to a decline in system sales and by the revenue deferral described above.
Those declines are partially offset by instrument and accessory sales associated with approximately 7% higher procedure volume, which primarily reflects growth in U.S. general surgery procedures and urologic procedures outside the United States. Procedure volume grew despite a low, single-digit decline in U.S. gynecologic procedures.
Preliminary first quarter 2014 da Vinci Surgical Systems revenue is expected to decrease approximately 59% to approximately $106 million compared with $256 million during the first quarter of 2013. Lower systems revenue is due primarily to lower system sales in the U.S. and the revenue deferral described above.
There were 87 systems shipped in the first quarter of 2014, including 45 in the United States and 42 outside the United States, compared with 164 during the first quarter of 2013, including 115 in the United States and 49 outside the United States.
Factors that lead to the lower U.S. systems shipments include lower procedure volumes, changing hospital capital-spending priorities associated with the implementation of the Affordable Care Act and the impact that anticipation of a new system may have had on customer capital-spending decisions.
Preliminary first quarter 2014 service revenue is expected to increase approximately 11% to approximately $104 million compared with $94 million during the first quarter of 2013.
Intuitive announces a pre-tax charge of $67 million against its first quarter 2014 earnings, reflecting company's estimate of the anticipated cost of settling a number of legal claims against the company. ■