Exhibit 99.1
FOR IMMEDIATE RELEASE | Contacts: | Ben Gong | 408-523-2175 | |||
Sarah Norton | 408-523-2161 |
INTUITIVE SURGICAL ANNOUNCES $112.6 MILLION FOURTH QUARTER REVENUE, UP 56%
SUNNYVALE, CALIF. February 1, 2007 – Intuitive Surgical, Inc. (NASDAQ: ISRG), the industry leader in surgical robotics, today reported fourth quarter 2006 revenue of $112.6 million, increasing 56% from $72.1 million for the fourth quarter of 2005. Higher revenue was driven by increasedda Vinci® Surgical System sales and continued growth in recurring revenue.
Fourth quarter 2006 instrument and accessory revenue increased 62% to $33.3 million from $20.6 million during the fourth quarter of 2005. Fourth quarter 2006 system revenue increased 53% to $63.0 million from $41.3 million during the fourth quarter of 2005. Fourth quarter 2006 service and training revenue increased 60% to $16.3 million from $10.2 million during the fourth quarter of 2005.
Revenue for the year ended December 31, 2006 totaled $372.7 million, increasing 64% from $227.3 million for the year ended December 31, 2005.
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||
Revenue ($ Millions) | 2006 | 2005 | Increase | 2006 | 2005 | Increase | ||||||||||||
Instruments/Accessories | $ | 33.3 | $ | 20.6 | $ | 12.7 | $ | 111.7 | $ | 67.8 | $ | 43.9 | ||||||
Systems | 63.0 | 41.3 | 21.7 | 205.9 | 124.6 | 81.3 | ||||||||||||
Service/Training | 16.3 | 10.2 | 6.1 | 55.1 | 34.9 | 20.2 | ||||||||||||
$ | 112.6 | $ | 72.1 | $ | 40.5 | $ | 372.7 | $ | 227.3 | $ | 145.4 | |||||||
Fourth quarter 2006 operating income was $35.4 million compared with $23.5 million for the fourth quarter of 2005. Operating results for the fourth quarter of 2006 included $6.8 million of stock compensation expense in accordance with the Financial Accounting Standards Board SFAS 123R. Excluding the $6.8 million of non-cash stock compensation expense, fourth quarter 2006 operating income was $42.2 million, up 80% compared with the fourth quarter of 2005.
Fourth quarter 2006 net income, including non-cash stock compensation expense, was $23.6 million, or $0.62 per diluted share. Excluding the impact of stock compensation expenses, fourth quarter 2006 net income was $28.1 million, or $0.73 per diluted share. Fourth quarter 2005 net income of $49.5 million included a tax benefit of $22.2 million associated with the recognition of deferred tax assets.
Net income for the year ended December 31, 2006, including non-cash stock compensation expense, was $72.0 million, or $1.89 per diluted share. Excluding the impact of stock compensation expenses, net income for the twelve months ended December 31, 2006 was $88.3 million, or $2.32 per diluted share.
Fourth quarter 2006 earnings before interest, taxes, depreciation, amortization, and non-cash stock compensation expenses (EBITDA) was $45.1 million, up 78% compared to $25.3 million for the fourth quarter 2005. EBITDA for the twelve months ended December 31, 2006 was $142.4 million, up 89% compared to $75.5 million for the twelve months ended December 31, 2005.
Intuitive ended the fourth quarter of 2006 with cash, cash equivalents and investments of $330.3 million, up $38.0 million from the end of the previous quarter and up $127.6 million from fiscal year 2005.
Commenting on the announcement, Lonnie Smith, Chairman and CEO of Intuitive Surgical, said, “We are pleased with our fourth quarter revenue and earnings growth. Our financial results reflect the ongoing adoption of robotic surgery, driven by patients seeking out superior surgical outcomes enabled by theda Vinci® Surgical System.”
The Company will also announce these results at a conference call today at 1:30 pm PDT. The dial-in numbers for the call are 877-909-3508 for participants located in the U.S. and 517-645-6051 for participants located outside the U.S. The passcode is ISRG and the meeting leader is Mr. Lonnie Smith. To access financial information that will be discussed on the call, please visit Intuitive Surgical’s website atwww.intuitivesurgical.com.
About Intuitive’s Products:
Theda Vinci® Surgical System consists of a surgeon’s viewing and control console having an integrated, high-performance InSite® 3-D vision system, a patient-side cart consisting of three or four robotic arms that position and precisely maneuver endoscopic instruments and an endoscope, and a variety of articulating EndoWrist® Instruments. By integrating computer-enhanced technology with surgeons’ technical skills, Intuitive believes that its system enables surgeons to perform better surgery in a manner never before experienced. Theda Vinci® Surgical System seamlessly and directly translates the surgeon’s natural hand, wrist and finger movements on instrument controls at the surgeon’s console outside the patient’s body into corresponding micro-movements of the instrument tips positioned inside the patient through small puncture incisions, or ports.
TheAesop® Endoscope Positioner is a voice-activated robotic arm that automates the critical task of endoscope positioning, providing the surgeon with direct control over a smooth, precise and stable view of the internal surgical field.
TheHermes® Control Center is a centralized system designed to voice control a series of networked “smart” medical devices.
Intuitive®,da Vinci®,da Vinci®S™,InSite®,EndoWrist®, Hermes®, and Aesop® are trademarks or registered trademarks of Intuitive Surgical, Inc.
About non-GAAP Financial Measures:
To supplement our consolidated financial statements presented in accordance with GAAP, Intuitive has presented the following information defined as non-GAAP financial information by the SEC: non-GAAP (pro forma) statements of operations and EBITDA. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Unaudited Reconciliation of GAAP to non-GAAP Consolidated Statements of Operations” and “Unaudited Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) Reconciliation” included in this press release.
Intuitive’s management believe that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance and liquidity by excluding certain expenses that may not be indicative of core operating results. Intuitive believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Intuitive’s performance and when planning, forecasting and analyzing future periods.
Intuitive has computed its non-GAAP financial measures using the same consistent method from quarter to quarter. The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
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This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of our management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including the following: timing and success of product development and market acceptance of developed products; regulatory approvals, clearances and restrictions; guidelines and recommendations in the health care and patient communities; intellectual property positions and litigation; competition in the medical device industry and in the specific markets of surgery in
which Intuitive Surgical operates; and unanticipated manufacturing disruptions; delays in regulatory approvals of new manufacturing facilities or the inability to meet demand for products. Words such as “estimate”, “project”, “plan”, “intend”, “expect”, “anticipate”, “believe” and similar expressions are intended to identify forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
INTUITIVE SURGICAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||
Revenue: | ||||||||||||||
Products | $ | 96,287 | $ | 61,919 | $ | 317,599 | $ | 192,417 | ||||||
Services | 16,280 | 10,176 | 55,083 | 34,921 | ||||||||||
Total revenue | 112,567 | 72,095 | 372,682 | 227,338 | ||||||||||
Cost of revenue: | ||||||||||||||
Products | 29,161 | 18,785 | 97,615 | 58,357 | ||||||||||
Services | 8,461 | 4,748 | 27,231 | 15,412 | ||||||||||
Total cost of revenue | 37,622 | 23,533 | 124,846 | 73,769 | ||||||||||
Gross profit | 74,945 | 48,562 | 247,836 | 153,569 | ||||||||||
Operating costs and expenses: | ||||||||||||||
Selling, general and administrative | 31,050 | 20,784 | 110,703 | 67,443 | ||||||||||
Research and development | 8,448 | 4,268 | 29,778 | 17,354 | ||||||||||
Total operating costs and expenses | 39,498 | 25,052 | 140,481 | 84,797 | ||||||||||
Income from operations | 35,447 | 23,510 | 107,355 | 68,772 | ||||||||||
Interest and other income, net | 4,181 | 1,928 | 12,783 | 5,035 | ||||||||||
Income before income taxes | 39,628 | 25,438 | 120,138 | 73,807 | ||||||||||
Income tax expense (benefit) | 15,987 | (24,087 | ) * | 48,094 | (20,327 | ) * | ||||||||
Net income | $ | 23,641 | $ | 49,525 | $ | 72,044 | $ | 94,134 | ||||||
Net income per common share: | ||||||||||||||
Basic | $ | 0.64 | $ | 1.38 | $ | 1.96 | $ | 2.68 | ||||||
Diluted | $ | 0.62 | $ | 1.31 | $ | 1.89 | $ | 2.51 | ||||||
Shares used in computing basic and diluted net income per common share: | ||||||||||||||
Basic | 37,009 | 35,819 | 36,737 | 35,070 | ||||||||||
Diluted | 38,241 | 37,675 | 38,093 | 37,488 | ||||||||||
* | Includes a one-time deferred tax benefit of $22.2 million related to the reversal of the tax asset valuation allowances. |
INTUITIVE SURGICAL, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF
OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three months ended December 31, 2006 | Three months ended December 31, 2005 | |||||||||||||||
GAAP | 123R Impact | Pro Forma | As Reported | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 96,287 | $ | — | $ | 96,287 | $ | 61,919 | ||||||||
Services | 16,280 | — | 16,280 | 10,176 | ||||||||||||
Total revenue | 112,567 | — | 112,567 | 72,095 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 29,161 | (629 | ) | 28,532 | 18,785 | |||||||||||
Services | 8,461 | (399 | ) | 8,062 | 4,748 | |||||||||||
Total cost of revenue | 37,622 | (1,028 | ) | 36,594 | 23,533 | |||||||||||
Gross profit | 74,945 | 1,028 | 75,973 | 48,562 | ||||||||||||
% total revenue | 66.6 | % | 0.9 | % | 67.5 | % | 67.4 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
Selling, general, and administrative | 31,050 | (4,315 | ) | 26,735 | 20,784 | |||||||||||
Research and development | 8,448 | (1,441 | ) | 7,007 | 4,268 | |||||||||||
Total operating costs and expenses | 39,498 | (5,756 | ) | 33,742 | 25,052 | |||||||||||
Income from operations | 35,447 | 6,784 | 42,231 | 23,510 | ||||||||||||
% total revenue | 31.5 | % | 6.0 | % | 37.5 | % | 32.6 | % | ||||||||
Interest and other income, net | 4,181 | — | 4,181 | 1,928 | ||||||||||||
Income before income taxes | 39,628 | 6,784 | 46,412 | 25,438 | ||||||||||||
Income tax expense (benefit) | 15,987 | 2,345 | 18,332 | (24,087 | ) * | |||||||||||
Net income | $ | 23,641 | $ | 4,439 | $ | 28,080 | $ | 49,525 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.64 | $ | 0.12 | $ | 0.76 | $ | 1.38 | ||||||||
Diluted | $ | 0.62 | $ | 0.11 | $ | 0.73 | $ | 1.31 | ||||||||
Shares used in computing basic and diluted net income per common share: | ||||||||||||||||
Basic | 37,009 | 37,009 | 35,819 | |||||||||||||
Diluted | 38,241 | 38,241 | 37,675 | |||||||||||||
* | Includes a one-time deferred tax benefit of $22.2 million related to the reversal of the tax asset valuation allowances. |
INTUITIVE SURGICAL, INC.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Year ended December | ||||||||||||||||
Year ended December 31, 2006 | 31, 2005 | |||||||||||||||
GAAP | 123R Impact | Pro Forma | As Reported | |||||||||||||
Revenue: | ||||||||||||||||
Products | $ | 317,599 | $ | — | $ | 317,599 | $ | 192,417 | ||||||||
Services | 55,083 | — | 55,083 | 34,921 | ||||||||||||
Total revenue | 372,682 | — | 372,682 | 227,338 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Products | 97,615 | (2,417 | ) | 95,198 | 58,357 | |||||||||||
Services | 27,231 | (1,452 | ) | 25,779 | 15,412 | |||||||||||
Total cost of revenue | 124,846 | (3,869 | ) | 120,977 | 73,769 | |||||||||||
Gross profit | 247,836 | 3,869 | 251,705 | 153,569 | ||||||||||||
% total revenue | 66.5 | % | 1.0 | % | 67.5 | % | 67.6 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
Selling, general, and administrative | 110,703 | (16,037 | ) | 94,666 | 67,443 | |||||||||||
Research and development | 29,778 | (5,354 | ) | 24,424 | 17,354 | |||||||||||
Total operating costs and expenses | 140,481 | (21,391 | ) | 119,090 | 84,797 | |||||||||||
Income from operations | 107,355 | 25,260 | 132,615 | 68,772 | ||||||||||||
% total revenue | 28.8 | % | 6.8 | % | 35.6 | % | 30.3 | % | ||||||||
Interest and other income, net | 12,783 | — | 12,783 | 5,035 | ||||||||||||
Income before income taxes | 120,138 | 25,260 | 145,398 | 73,807 | ||||||||||||
Income tax expense (benefit) | 48,094 | 8,962 | 57,056 | (20,327 | )* | |||||||||||
Net income | $ | 72,044 | $ | 16,298 | $ | 88,342 | $ | 94,134 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 1.96 | $ | 0.44 | $ | 2.40 | $ | 2.68 | ||||||||
Diluted | $ | 1.89 | $ | 0.43 | $ | 2.32 | $ | 2.51 | ||||||||
Shares used in computing basic and diluted net income per common share: | ||||||||||||||||
Basic | 36,737 | 36,737 | 35,070 | |||||||||||||
Diluted | 38,093 | 38,093 | 37,488 | |||||||||||||
* | Includes a one-time deferred tax benefit of $22.2 million related to the reversal of the tax asset valuation allowances. |
INTUITIVE SURGICAL, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
12/31/06 | 12/31/05 | |||||
Cash, cash equivalents, and investments | $ | 330,296 | $ | 202,739 | ||
Accounts receivable, net | 94,680 | 52,849 | ||||
Inventory | 24,295 | 15,170 | ||||
Property and equipment, net | 59,939 | 52,225 | ||||
Goodwill | 118,240 | 124,638 | ||||
Deferred tax assets | 31,677 | 40,758 | ||||
Other assets | 12,663 | 13,208 | ||||
Total assets | $ | 671,790 | $ | 501,587 | ||
Accounts payable and other accrued liabilities | $ | 44,700 | $ | 33,485 | ||
Deferred revenue | 37,385 | 25,511 | ||||
Total liabilities | 82,085 | 58,996 | ||||
Stockholders’ equity | 589,705 | 442,591 | ||||
Total liabilities and stockholders’ equity | $ | 671,790 | $ | 501,587 | ||
INTUITIVE SURGICAL, INC.
UNAUDITED CONSOLIDATED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND
AMORTIZATION (EBITDA) RECONCILIATION
(IN THOUSANDS)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net income | $ | 23,641 | $ | 49,525 | $ | 72,044 | $ | 94,133 | ||||||||
Interest and other income, net | (4,181 | ) | (1,928 | ) | (12,783 | ) | (5,035 | ) | ||||||||
Income tax expense (benefit) | 15,987 | (24,087 | ) | 48,094 | (20,327 | ) | ||||||||||
Depreciation and amortization | 2,831 | 1,791 | 9,773 | 6,727 | ||||||||||||
SFAS 123R stock compensation expense | 6,784 | — | 25,260 | — | ||||||||||||
EBITDA | $ | 45,062 | $ | 25,301 | $ | 142,388 | $ | 75,498 | ||||||||