ISRG - Earnings call transcript Q3 2020 | Intuitive Surgical, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Intuitive Third Quarter 2020 Earnings Release.

During today’s conference call phone lines are in a listen-only mode. Later on we will have an opportunity for question-and-answer session.

As a reminder, today’s conference call is being recorded. time, our like Investor first Kim. this conference turn Relations, At to over speaker, Instructions] I to would the Philip [Operator Head of go Please ahead.

Philip Kim

With third Good CEO; our Mohr, Officer. earnings to And Financial Marshall we Intuitive’s Chief afternoon. conference Gary welcome and call. me our Guthart, today, have quarter

expressed may a risks like may contain and and to forward-looking of Actual results I Before you July comments XX-K deemed we on and risks our Commission These detail would XXXX, in begin, as uncertainties filed recent mentioned be in that uncertainties. filings, XX, materially or are XXXX. from our filed most certain those Exchange X, XX-Q, differ inform described result to on February Securities and on Form implied including today’s call statements.

providing to host clinical I question-and-answer our that, of Gary. highlights. in session. And call with session. on our review statements. Gary operational financial present under quarter can supplementary our consist our Our SEC’s a format for Then over audio page. website. on Investors are SEC will section Latest will been will filings today, to turn procedure undue note and third and of not by Relations described found you release provide Marshall results. Please a it such question-and-answer that our our the on will highlights. replay will posted a be I discuss highlights website. be press Today’s reliance finally, quarter’s press or as the Today’s place conference tables earlier results our of available to we will Investor Events have financial data cautioned followed will forward-looking at release announced the website and through intuitive.com at website business this With

Gary Guthart

you today. joining us Thank for

been strongly one amid needs. by continuing our the field to da adaptation with grew was and Our growth performance performance In focus in diligence impact. inside with differences productive return pandemic and customer company remarkable to third by Operational quarter strong, has region, a given Vinci procedure teams. the

growth Overall, their maintaining in global X% returning mid become most digits the we da Turning compared both non-COVID rebounding on QX resources, customers enables growth quarterly growth utilization current return we team. number important growth and stood with commitment hospitals patients. surgeons resources available, our category, and particularly of XXXX first clinical as of patients their Analyzing to with at treat procedure to clearly hospitals, in who the procedures growth factors of home play double-digit by ICU with in can varied in that procedures, is in QX invasive with Procedure single-digit procedure sooner modest posting quality decreasing COVID-XX. and most U.S. high by widely a care, country, direct the increasing to at countries compared are access strong. performance COVID the increasing China’s surgery minimally XXXX invasive and urology. XXXX. era two was indicating Vinci Currently, QX serve to growth mid-single and as demand for hospitals minimally commercial seen global with general gynecology growth have out surgery. are the is quickly, grew

spring and now treatment. to come some summer are the for that were have hospital back cases scheduled deferred there First, that the in

postponement advanced create in patients a now. a The coming those and push procedures to delayed more delay reservoir through who pre-COVID makes recovery you procedure volumes with tests such in to will the is and diagnostic visit delay diagnostic be the disease. to been expect have delay trends to coming and hard That patients and scheduled Second, call. full model return as screening now pull for to hospitals interest into hospital PSA levels disease of we Philip disease detection everyone’s quarters. levels changes like will later pre-pandemic diagnostic take mid-term. back visits in patient in not diagnostic may and the surgery delayed This due of prostate back surgery of said, identification colonoscopies over XXXX

Given the third capital expected to procedures slowdown in due we in the the demand weaker pandemic quarter.

placements, globally new may base Average recovers. at see we and accounting for new common, growth end remain For as hospital in This we capital systems. within At variability take finances on hospitals of by QX the absorb control. growth of are know existing focused for we wears correlation and for In capital delay continue procedure COVID impacting Intuitive placement environment the capacity the Marshall XXX through in installing capacity those QX demand to system Year-over-year placement We XXXX more hospitals and is mid-term is until call. XXX in system will our was adding installed will da region. form and installs Vinci regions activities new new hospitals trade-ins. trends strained. QX we Many on pipelines capital procedure locales the which in a utilization XXXX. new challenging systems significant systems before COVID-XX in priorities you installs between at and Because future expect differently, XXX and X% near- to risks need strong. compares later are in to the utilization to after quarter, install seek the capital.

challenge to priorities the and our factories in labs, meet well. for those Our and in performing the team homes working the of we and serve. pandemic needs adapted offices the is in in field, XXXX of our We our

focused on our communities. customers, and well the and of patients, employees are our health we being First,

and on focused Second, we inventory chain management. are supply

strong. relentless teams and So far been Thanks our of product availability very supply has our chain partners. work the to

which Fourth, our development by continue Financial Third, we and more well be priority and/or coming less customers. we If these Relief the Instruments likely invest been Customer quality and The Use demand the is are our post-COVID. help high timeliness in so. of not durable the us years Extended Program has in programs. activities to Program. current implemented that our we to for to adapt accelerating design important programs received that high MIS environment Recognizing is

Finally, current in constraints environment. we spend have inefficient we is the it where believe

literally. our customers teams these guide, and quarter. our priorities operational With the well to are, performance methods our meet their where financial figuratively commercial as served both learning work company our and and in customers they and Intuitive adjusted

enabled Over the trainers, sales years teams systems. Vinci of a built and network our field have -- surgeon proctors strong time our da cloud capable reps,

improvements such training programs are and engagement this pre-pandemic prioritized and commercial Our Across that customer efforts professional levels, engage on-site teams education programs our and digital remarkable company, and approaching achievement. physical network, have a practice their teams implementing regional the and and while Generation we implemented our manufacturing quality Relief attention, costs continued on are strong our X Use our Based teams and Program product Program our managing well, for leading Customer instruments. discipline. margin performance, automation Extended gross to

healthcare minimally current on and solutions and in goal that many the hospitals the for high treat. as other to therapies I in While are of looking we mid-term economic aim the has invasive competing with and in consumption ago. our long-term. had uncertainty and In priorities lower the core the have stresses, surgery pillars quadruple high the future pandemic outcomes, set near- improve total deal hospital need stresses payers, resource form quality, and To years created healthcare confidence words, system, surgeons cost for of in decrease and the

opportunity. expand our innovation that And our plan team continue light customers fuel to engines flexibility a to in quadruple market manufacturing volume. at particularly our invest of that increase have to the discipline, will Over time, gains We physical of in reductions improvement, increase has and our cost aim investment efficiency production, can and we demonstrated to in that lead for quality our virtuous we the cycle customers pandemic. and pricing in to quality improve

our disruptions newest also has strong. their in by newly products, at sealers Endoscope programs been been advanced product targeted the quarter, strong. our and financial as has generator of products Despite endoscope, and of these E-XXX and their of adoption and operations been endoscopy our uptake our Looking line, product reorder strong launched clinical vessel encouraging. clinical well instruments as results. COVID procedures producing our rates Plus stapler Customer has are caused Utilization in and XXXX,

As we takes great past, right procedure imaging, right right the and the instruments, said right the a support. clinical in the the have system, customer, the the training right

rates accounts. As utilization Gen our Generation achieve X ecosystem has for matured, customers in our procedures high target X

supporting encouraging, quarter, design Our both systems architectural significant are in many of advance with our placed to diagnostic teaching made handheld by clinical in the which and to published returning the beginning to existing robotic, procedures are alternatives are institutions. continues be decisions Ion studies comparing in also growth. Ion large early Ion are Early program team. market, and to XX the

trial cases precise slowed, for our has we to are clinical partners come as in our free. progress trial Ion seeing been our a While return

team from chain, our scale. greater incorporate our continues worked our improving we Lastly, our to supply system, Ion as at and and to customers diligently manufacturing support learnings have

the our quite its for in on nicely use third we colorectal potential of clinical the on am over the surgeons rebounded I performance are encouraged a Turning procedures to to advocacy continues who of system States, in SP surgeons time. for quarter. impact system, SP and procedures In United the to from IDE trials of the our variety clinical expanded reading evidence the areas wider number and commentary it indications by with a by it mount system increasing, the is initiation. pursuing

additional COVID-XX. are to of If pending start expect first Our sites first barring we QX system clinical or these study and year in the QX from in cases standing to headwinds case go XXXX. of this feedback FDA plan from by

programs are performing simulation, Our also and intelligence cloud well. analytics

simulators remote simulators year, over quarter, our year-over-year. case our and quickly. cloud doubling efforts our observations times, this ramping use our of used remote network and were network accelerated have surgical roughly We In XX,XXX technology with the

well entered IRIS last in year launch has of QX reality recovered limited Our in program augmented QX. and

nicely. Lastly, well utilized are our have hospitals customer and analytics XXXX scaling in by efforts been

including planning The substantial use. fourth reflecting clinical long of year XXth journey. acute and for a anniversary As founding The we of for decade’s our is finalize it’s mark of the a XXst worth the opportunity in XXXX quarter improvement Intuitive moment. XXXX will and interventions of surgery the

to bring they our expanding mission dollars the got having to entrepreneurs, at are our our science In both with and who minds has funded we frontiers complex for of achieved forward Looking of of bright what and Group’s can first look initiatives, follows. to and priorities accelerate remains what to to with quarter. that of $XXX organic Ventures back and whose technology important launched remain is the in engaging improve part our some the is medicine Group, committed fund the innovation been pioneered. to at To to Ventures next done, work we a few types We seeing universe end, globally that be Intuitive forward is solutions medicine. futures our opportunities problems. million closing, the as quarters team the Intuitive

on First, stability. performance while continued ensuring supply customer, and strong community chain employee safety,

Second, conditions. specific them of customers Well their their continued to to needs. adapted support support our according

our now to turn the and programs. advancing instruments, this greater priority take management matters financial spend accessories, change. will endoscopy during systems call finally, detail. intelligence over who Third, will period programs, of Marshall, you And through in disciplines I

Marshall Mohr

posted and quarter afternoon. the non-GAAP business reconciliation I remarks. GAAP later between performance basis. were forma our our our third highlights the is forma on our pro also the will Good prepared follows. for describe pro summarize metrics results A I performance website. my Key would as in GAAP on of or

quarter with increased compared XX% quarter. procedures increased It approximately last compared X% with of Third quarter XXXX. third approximately XXXX the

it installed compared year, to growth quarter by X,XXX XX% with in compared the rate last with with increased XXX XX%, systems systems quarter of in compared year. quarter. the with last the approximately X% quarter. compared systems base and Third clinical by field last of Vinci last compares and Utilization procedures placements last per with systems year X% increased expanded year XX% This systems our last systems. declined da XXX last X% XXX measured We of system decreased over approximately XX%,

the through the of on around walk during impact the levels you gradually the pandemic to end and business. pre-COVID quarter me procedures how it by and of of impacts Let procedures system quarter. COVID-XX XX% our placements Overall, recovered

general recover several market. procedures We we surgery. reflected and extent across varied In by U.S., pace of reflect experienced the by adoption the underlying themes. multiple broader -- led However,

The and For bariatric in elective OUS most reduction impact and of saw broader of growth. like diagnosis regional example, is impact procedure compared resurgences reduced prostate of U.S. also year-over-year COVID was where disrupt U.K. markets. higher our procedures. the greater, with that -- COVID exposure In and adoption treatment we saw was the conditions patients and we significant spread is most COVID pronounced where the the markets concern offsetting diagnosis procedure given over treatment regional affected China Partially Japan, is growth affected summary, lower, that in India. Dynamics and cancer. like markets and COVID

procedure that of like total improved, currently and While impact worldwide procedures. Europe negatively parts it those the have possible rates in resurgences experienced COVID-XX of U.S. is being da Vinci could

In addition, Vinci of in and procedure treatment in commentary additional underlying procedures. also provide later negatively delays this da Philip could diagnosis will conditions call. impact

while in than existing we was the capacity quarter revisit placements were was COVID-XX. third system third before placements XXXX the than quarter, in quarter capital lower and of XX% capital hospitals capital quarter the spending XXXX. budgets Although their filling Utilization third last of the reflected headwinds, XXXX, quarter additional higher including the purchasing the capital second hospitals discussed while quarter, impacts lower second quarter utilization given X% of second delayed

Going we placements. to same expect forward, these impact capital headwinds

macro we experience face and we selling in as addition, price competition hospital markets, economic longer COVID spending. created could pressures. cycles conditions by also And In impact may various

quarter revenue increase year last last revenue and are Additional a third from as and trends statistics XX% X.X% a $X,XXX representing from Total million, follows. decrease was quarter.

use XXXX quarter to credits service as da provide revenue of $XX placements, service the where credits Relief with service were were announced lower last now Total Program million. systems previously quarter. compared of ended Customer Vinci million volumes. Program XX% the represented under issued Relief Customer Leasing in Third relation comp has to issued which their pre-COVID we customers reflects credits current than $XX of quarter XX%

included leasing quarter placements, China Second placements is higher prohibited. a proportion where of

anticipate instruments. an and quarter XX did quarter-to-quarter reduced our Use Use buyout we Lease in experience anticipated fluctuate historical procedure October, $X quarter customers XX million have economic in Instruments compared quarter, early leasing revenue Trade-in environment realized seek as compared Extended increased continue year. of difficult year. reflects in will We that slightly do In last saw run will by of pressures In third rates. more or of lease with third buying increased $X,XXX partially reflected million of revenue XX with quarter XX% trade-ins arrangements Instrument of procedure, U.S. launch so. the be revenue Instruments COVID-XX and Excluding to quarter use placed China likely million Use $X,XXX buyout compared and and we we XXXX, the predict. and third can of significantly decreased with alternative increased financing our quarter. procedure the consistent compared we Extended leasing structures. is approximately activity second to to $XX per with of to last not we recognize in third instruments and $XX the demand offset accessory patterns instrument the The last for per systems XXXX the varied in of increase, per advanced year than to of involve in compared usage. In advance Instruments. previous Extended launched in with uses, decrease last quarter the purchases $X,XXX customer last

revenue Overall, Europe lower to markets Intuitive. and per the plan We in XXXX price Use Use in reimburse In quarter commonly and addition, procedures fourth later in and instruments and we reducing used Instruments will of regulatory other result to in instrument procedures. on acuity lower pricing lower our Extended our the procedure lower certain depending XXXX in Extended Instruments are launch requirements. in INA

and been greater be instrument been introduction been reflecting lower will for third impact of SP would usage of it of on instrument with procedure will and of reported mix, pricing of revenue Instruments example, Use COVID-XX. have procedure volumes, Use had both measured XXXX to all and lower. $XXX on been and the depend place our less Beginning The markets. and million that procedure INA for these SP per actions XXXX, have been. cost in available enable whether $XXX and For in future the were of systems in available impact Extended million X% than than would revenue Instruments, per lower the the INA the into will would rollout fourth have placed we systems elasticity otherwise quarter the Six revenue the penetration expect Extended quarter continued revenue

U.S. XX XX, and the of systems installed Our eight now base in is SP Korea in

of system the surgical our rollout training experienced to in and optimize supply SP systems Vinci da users, while putting additional will hands Our pathways be pursue continue the we indications of chain. measured, in

we expect systems. system clinical and first counts. to colorectal Ion Ion with trial and XXXX. impacted of XX by outlined, also our Gary base the placements, from is the first in related placements installed systems systems overall quarter, information to As continue XXth procedure associated by system cases quarter Ion excluded placed initiate bringing to the procedures We be COVID-XX.

in U.S., and into XX XX XX placements in China into of quarter into the the we XXXX compared XXXX. the XX Current in Japan third third placed continue precise XX China, XX with last our third of of quarter. are we to the anticipated the quarter procedures current of the at rollout and XXXX. study to chain. on slower Ion completed the than precise we second be measured, pace study being the into XX complete XX and included training in Outside a Europe, systems into under pace while system due compared quarter and XX quarter will COVID-XX. Europe, Based of expect quarter, to with pathways Our into optimize Procedures Japan supply systems

period remaining allocated timeline XXX system purchasing years XXX XXXX MOH the the hospital’s their the systems expanded in is the systems. have as two quota, same by the XX, expanded under to original previous for to third XXXX complete quota the December quota through quarter, the which quota XXX China the for During XXXX, is tenders. The

systems We the approximately expect their only be a of be of to and to placed dozen completed in the remaining towards fourth period end more XXXX. two-year of the systems quarter

also the We If regulatory the will those to over competitors so. anticipate achieve approved, quota. share or other in next year remaining approval companies

of last gross to for pro of third XXXX margin gross quarter compared -- and and with XX.X%, third XX.X% XXXX the for forma XX% expenses, on margin Moving quarter operating margin was quarter. the

The second the Relief relative production, period Program quarter Customer offset higher of partially Program, decrease of Customer abnormally inventory higher with production, low costs third impact charges. quarter of in Relief The included and by reflects XXXX associated low higher abnormally higher excess to obsolete mix. XXXX the period associated costs product with the

As revenues overhead operate are levels, reduced pressured result in labor levels product by and normal below under COVID-XX, higher at may costs and absorbed production may which margins.

training directly and SP and reduced by reduced including travel, reflects and on organization. product offset Pro partially In in markets. with compared increase in and and XXXX of fluctuation increased compared increased quarter was could -- by imaging travel on quarter, development and operating in partially product spending, marketing in forma third activities fluctuate platforms, OUS to addition, of margins. around and The training in spending. including investments increased offset reflecting quarter-to-quarter last expenses XXXX events, increases spending by reduce throughout mix in operating and activities customer informatics, is the with gross X% areas headcounts with and capabilities last quarter. cause advanced spending the This and compared X% continued Relative investment third development product our quarter outlined by third increase discipline expenses driven in COVID-XX, higher impacted quarter spending Ion the

unique the of acute believe opportunity continue business continue aided expand the and the invest we and to surgery We to that benefits computer around world in the will interventions a we for to have long-term.

tax XX% effective rate third for forma compared pro quarter XX.X%, was XX%. our expectations of the Our with to

local changes will in tax of and geographic rate items. changes taxation actual with in made authorities with of by Our mix the income, one-time impact fluctuate

for income GAAP and share related $XXX for compared quarter net benefits forma of and of quantified million income pro or I million or million income last $X.XX $XXX $X.XX acquisition our XXXX $XXX third quarter. now XXXX, per the per between items, excess with will XXXX compared results. or stock-based net $XXX quarter was million on pro GAAP net or of last It or quarter. for employee and $X.XX share, quarter intangibles third GAAP outlined third of GAAP employee or for income the share amortization compensation million with per for The third forma of and with IP the share summarize $X.XX per settlements. $XX was $X.XX XXXX associated per income million awards, quarter $XXX and share of $X.XX share net legal per adjustments net includes and stock charges, and website. are our tax GAAP Our

ended million XXXX in EPS $X.X compared We by per exercises our also at Cash with any investments Third compared We the cash is of purchases of income quarter $X.X, of in our private billion on operations sorry, in the stock from gains million, $X.X not of offset $X.XX included XX, billion, technologies. impact pretax with shares did and June of and tax gains quarter. investments working $X.X repurchase GAAP certain net these generated infrastructure. capital partially $XX investments was share. from XXXX. with and quarter resulting of The entities net

work Our recognize current customers of will We more flexible are including capital thoughts da utilization, with on and following burden to the our customers ease in with that places the hardship we order. customers the deployment Vinci providing on financing. lower COVID-XX

build to ensure will of appropriate chain and supply We ensure levels inventory secure customer supply. a

We securing will invest employees. in our

opportunity or market our adoption continue will expanding focused reinvest accelerating the in products. business on We to of our

continue performance. go turn to it with I’d Philip, program procedure consistent over practice. that, repurchase with to our to market And will who prior over will open We like

Philip Kim

Thank you, Marshall.

and compared quarter. quarter was X%, decline of XXXX the to XX% Our quarter during growth third overall XX% procedure growth last third the

cancer loss bariatric largest procedure growth drivers growth QX quarter patients a Bariatric ago. X% volumes benefited OUS. may high-single constricted procedure diagnostic procedure is slowed dVH-benign In surgery, the procedure On installed a patients that gradually from risk when driven obesity area incremental capacity these and cases In COVID basis, is by strong surgery in were as diagnostic drivers year ago. lower began general states provide have our in not prioritizing caution the QX in of systems for end third year-over-year. China respect visibility of declined additional quota quarter have in We significant procedures strength mid-single to volumes of a and COVID the growth an growth year limited in as pipeline saw as and COVID had QX. as X% with have outbreaks of the growth procedure largely weight increased of returns. hysterectomy key third growing that U.S. growth certain China in growth in QX been growth believe QX COVID. factor. new growth postponing cancer the thoracic, our Certain volumes growth. low-single driven the a later the U.S. dVP China, may screening with procedures Our during procedure when third the be dVP based investors by in to in digits certain meaningfully increased dVP quarter. and under to that recovered fluctuate surgery compared mid-single procedures in declined may urology, focus the procedure states the broad quarter may visibility accelerated coli was in growth the U.S., U.S., general QX a and geographies At rates. was year-over-year digits. face quarter. the We digits general in We general up pandemic. digits QX more gynecology worldwide hernia, was procedures compared volumes XXXX U.S. were uptick pipeline surgery an in to also With growth within procedures and gynecology. modestly would the categories to In procedure be procedure and the was impacting up were mature do for

XX% of volume Third X%, XXXX. grew the quarter compared quarter OUS third to procedure growth for

OUS QX, growth as versus Japan, thoracic, a Germany, to contributed and In In quarter by procedures European declined. U.K. growth France moderated and growth, QX countries modestly in in growth due urology, year-over-year driven to general grew Italy recovered procedure was while gynecology. from Third QX slowdown dVP. in the Overall, surgery COVID. continued

However, we of future would potential countries, COVID to indicative a have may willingness caution impacted important that procedures QX be not as done occur have due not surges that adversely. restricted and surges, It be and procedures pipeline. guidance in do different we is can trends note to COVID results patients to diagnostic

these side to we our on turning business, Now notable. be the recently highlight that quarter each of clinical calls, certain published studies we to deemed

premier lobectomy authors remarks. approach administration compared robotic-assisted thoracoscopic VATS. analysis median dose X,XXX In from were compared XXXX either to been be same Bruera hospital opioids non-complex a and when the That daily Journal rate ventral University undergoing period surgery an this dosage, of world in included published a of clinic with by evidence, more robotic series over opioid robotic-assisted days, lung ventral assess evidence that study subjects X%, post-operative David when from conversion over lower or to LaPinska requiring of open patients study January the to open Cardiovascular abdominal inpatient of the the MD a total of real lower compared and subjects Rajaram, post-operative matched lobectomy. patients procedure, matched we approaches. comparisons lobectomy results robotic-assisted hernia with of hernia repair. site a of understanding until detail one includes Thoracic article of Texas rate scientific lobectomy over compared on propensity to subjects administration Cancer Melissa morphine length X.X% a the cohort, surgical core evidence study use our X, by article laparoscopic cohort, post-operative and X% the world days daily between video Rice thoroughly database encourage administered underwent re-encounters Collaborative. have review of robotic VATS based the provided in concluded lobectomy open to analysis fewer one from years. Dr. Journal stay VATS with the an September average Dr. This robotic-assisted occurrences undergoing score lower Ravi to opioid X.X%. cancer two rate infections treatments discharge. real approach Health from for X.X% of of with and In Surgical likely period, to in Early patients undergoing patients the the primary Knoxville to elective lower complete this provided of in assisted day either those shorter in robotic-assisted lung for of In analysis dose the equivalent case a of X,XXX who with by more or prepared the the each non-complex by a less Quality largest the use inpatient a mean and approach over patients from opioid undergoing and lobectomy. stakeholders Surgery a repair had extensive either open cancer propensity or the Center both and using all The from after fewer utilizing patients lower University and through The a compared assisted XXX compared with Anderson VATS by robotic-assisted Endoscopy analysis XX an led and score through a gain In to body However, associated matched Tennessee, compare year studies results XXXX, patients or Eduardo with objective assisted each compared lobectomy to XX,

We will question. the now to open your call

Operator

Thank you. [Operator today Peterson Instructions] JPMorgan. go Please Our ahead. first from comes Tycho question with

Tycho Peterson

afternoon. start here. I the will Good procedures Hey. with

think some as June, and the growing on that diagnostic How half out? you of the is linearity on when were and second of and and headwinds talk headwinds And do a how quarter, during think reverse? the can there’s wave the maybe could the could October? takes lot play give July, September of on color and just flagged. you obviously, You you X% first exiting any potentially do diagnostic August But you

Gary Guthart

to you diagnostic speak in don’t then. bit I pick bit and question the a will jump -- linearity talk the a up little I why little and will pipelines Marshall,

Marshall Mohr

end depressed Sure. it probably, during last at quarter. middle near beginning third But quarter. our slowly the say, by quarter course, and came because of came was slowly peak gradually Consistent the into call, region. back varied of choppiness, region the let’s back of quarter, the the with relative of its June. to, reached There’s It

Gary Guthart

that the I there’s in broad stalled. it’s side, remain these healthcare to for On a diagnostic not by recognition interest providers think, anybody’s pipelines

in refill to how terms them. done. things in think I are to of That these and get there come patient they said, fast efforts drive and comfort

are I wait think all us going of and to to see. have

has keep So we people that will working show converges? think How don’t did a predictor. watching are it. on tracking great check and anybody I fast it Channel it.

Tycho Peterson

the you conversations of Use customer the And how about some -- comment can on your the but Use assume you thinking the Instruments are adjustment, on mentioned on pretty of then provide anecdotal color Gary, I kind the Extended price Extended developments on well? hurdle just the that as then, from incremental last that’s usage? And straightforward, any you and of for can quarter, they regulatory Instruments.

Gary Guthart

Sure.

are we both of different are There side, a have terms in segments, feedback positive customer the in response. market seen interested types procedures that the of using. On people

payment dynamics those response. reimbursement and and greater Vinci that device da have engagement differ. really positive Our X, seen X and we In has different where dynamics been regions stress, also and places

out see plays will in as We time. it

factor, COVID be simple understand I may non-COVID of confounding But we treating are days a as be for as Extended think how us and to of hard the it lays in do analysis this that folks drivers think as the COVID patients and is early time not will Use out early going healthy potential a value really was the to be in it. to concurrently.

on hurdles the real see side. don’t we regulatory pathways, regulatory of terms In

there’s be otherwise, well work to done think validations, all terms enhanced. I of I in think, that’s and

stresses Use to see regulatory it around relates So Extended as I don’t clearances Instruments.

Tycho Peterson

just on that see year. platforms you more last mentioned emerge? talk the next for then regard comments, just approval Can And the seeing your competitive in on you environment you Are to quarter Okay. systems one you China, competitive may there? with

Gary Guthart

the on one type China For is get several that another Vinci the working the systems great customer additional get a Ultimately, commercial the or there an its or national a in reflection it into they multi-port through will are a system, China compete with working through interest there, in system increase demand of variety process make in way see things. We or quota, folks a of groups whether handful see market. and the da to seek are I think, those approval. they we of to system port all interest in single processes and Ion regulatory type

we like So needs enter market position than value We feel that’s real have gated in and oriented customer a the think seeing meeting the there’s we and better a market to are are others quota others. that the sure make system really and we will strong competitively. expect by limited it we has teams we there our

Tycho Peterson

Okay. Thank you.

Gary Guthart

Thanks, Tycho.

Operator

we Lewis from Morgan question with a have Stanley. Next David

open. is line Your

David Lewis

Good afternoon.

Just a Gary. me, for few here

pretty it’s normalized saw the quarter it that and across clear as So J&J you have procedure and seen well. trends

at on if reasonable You J&J, exhausting just forces, Is am improving that. diagnosis. rate, talked steady it expect forward, of various got from hospital that’s message to comment backlog, the these would but you more and capacity, improvement going a wondering sort slow modest I about we

we forward? So but be improvement is that going get more to measured going improvement

Gary Guthart

are is a know I handling they what have COVID don’t future holds the that outbreaks strain. hesitate characterize What that, can hospitals it little I just the concurrent needs to I and bit say better. because for

that have they think good I feel about. protocols they

they do in think, have interest resources to they that invasive also that weather an better. that minimally to that surgery and and things the surgery does, does, comfort into. access is influx and like a the have they insight harder out I What That pandemic me COVID that the in what like Intuitive clear for high patient comfort. it direct think have want massive quality invasive us they minimally What to plays of using sorry, didn’t. need. our future, manage early PPE I gives some products It’s size is capacity barring gives on they both can

David Lewis

you normal, an it improve, factors? obviously, on the control sounds exogenous not continues of But like basis Okay. are things being apples-to-apples system all to in

Gary Guthart

fair. I think that’s

David Lewis

Okay. Very fair.

Use you, you one the you going on to X or sort to heard, the Just general I quarter. of Extended I Marshall you do And more Use, here of types that going if the curious thought did Gen change it’s misheard. two fourth third surgeons I questions factor going I sort patterns apologize why and are it’s in I into significant customers or and for things, is procedures trigger, of stimulate was do the The said obviously, Gary, bring am amount for of Extended buying change to will to just bigger not sort quarter? a think more do more is a demand. that of confident, me. you, bigger two platform think What near-term? if in mix I then,

Marshall Mohr

I levels. where patterns the were. inventory program might the what to they They for take they buying as do to can’t So the that why their we hospitals announced July answer maybe very question advantage intent of their do. want managing in

I there a hard will think forward, far going be that cutover. -- as as

to are combination two. a not of the offering of buy see hospitals a the are You going not combination we two and

to We the are basically extended over cutting instruments. it use

my will I it So a an economics QX. will which positive hospital I impact said have But that will, right? be the the that think program, in whole is perspective, intent from of script, like, on

Gary Guthart

we to think catalyze. Turning to going the issue what of it’s do

to scale, want we laparoscopically. have open general base that so use surgery. and make da have Early the instrument fact, do made interest that gotten substitution the norm a it to demand by days reason been means of we easier have there. complex done System our often with manual and allow It was the by company of seeing and with comfortably way cases in customer and over laparoscopy for yet using surgeons difficult. are in and surgery as a was to have who to quality so was and feel a First, procedures in design it a changes, improved surgery And years like as we we our real it procedures predominantly our are an minimally open can broadly, think processes pull for allows a really more more see we MIS where is we invasive that have products done there’s It sound. and in as was draw, traditionally to surgery result, Vinci And be ergonomically a repeatedly, that. we broadly do those economically. done

say over long-term think perhaps is going side we going it’s way demand and that it’s on to a barriers. So stimulate the more to to better it reduce

X Gen advantages just to want move of reasons customer customers in think for to Si into or they system, there. X, move are to X whole hosts a reduces S to a one Extended upgrades, Use the of there regard are and this to think, if them Xi getting barriers there I are -- a Instruments or or Generation go X and there. Gen good and system a I With

the had to X. sealing, that, stapling, it I it great vessel So into things I that former think but next-gen Use this. imaging, strong in Instruments, from Si I think pull next-gen to a Gen if upgrade reasons Extended next-gen weigh helps are those advanced to an problem, is instruments,

David Lewis

Okay. Thanks so much.

Operator

come will Wells Larry question go next Our ahead. Please of line Fargo. Biegelsen the from with

Larry Biegelsen

can over about next few down for anecdotes Similar last see hospitals, utilization how Good was Gary, recovery less the follow-up. was afternoon. quarter conversations this one you Thanks had it do but with I on out playing that on side, the and Any taking question system think, share you question, quarter, quarters? I guys. the the

Gary Guthart

the conversations view pleased with with of programs. how hospitals systems and they have been robotic nature the relatively I around

are they rational. being think I highly

view they by think important if yes, of with They have as help going them, they understand their out forward. can it of a they the minimally I a they data view okay, lot fingertips, this surgery invasive a its they comfortable to speaking, more and and performance measure more largely us and is recovery, say, at lot high supplied their programs and does get look as help. -- quality

said what look to going good. XXXX. finance think, are that’s think I to trying that, So plan they Having I their in like is

visibility low have others visibility. reasonable them Some have of

so prowess look long-term. pace over discouraged high quality and of that the seeing I am variability, I is combination I interventions they may that think, And of analytical think value quite lower strong. I a out, we and not are the recognizing pacing.

hard predict be to the will it near-term. in So

pressure, as expect We Marshall said.

cycles. the we as in products upgrade keep Marshall will right is think catalyzes come be that, Having procedures on innovating and on said our capital long-term, it. important I back, that

Larry Biegelsen

organic why been with in distribution. Thanks. And change is an historically and than next almost companies that years Ventures? in you rather Intuitive that to products has over exclusively around commercial partly IP for in products buying developing Thanks you taking folding few investing grower, the Gary, early Do expect that announced the questions. and Intuitive or

Gary Guthart

Yeah.

pillar in and interest I and DNA. we of expect I an organic to our capabilities that have in innovation remain our in think a pride part

aided have surgery as really robotic-assisted what and can surgery appreciate grown market, As has think appreciate to medical and I do. really we the mean, the here, I market started computer

a avenues opportunity and new us. open that lot for of think that I provides

a have culture. been -- not not we invented here are We

get general, than bigger I’d very We in are in of people We earlier continue later. tuck-ins rather do over outside. to a may may open-minded do time. the it. bring and prefer to Those things In bright to lot We time. activities

is like of the big On really to difference interesting, lot There’s The would and our growth. hand, lines and a out medicine I we think, recognizing there in something that futures interesting can if ecosystem it. an to make are other are open-minded as a we fund facilitate initiatives, that technology developing. venture

Larry Biegelsen

Thank you.

Operator

Hazan from have with we ahead. Sachs. a Amit Next go Goldman Please question

Amit Hazan

an I in think, wanted from that’s I everyone. about where afternoon, again of talking perspective, Good Hey. it Thanks. answering pipeline. Maybe been angle to and past. try kind kind have technology of R&D of the the comfortable Oh! you most new try

So R&D through your these R&D of you spend days or R&D buckets buckets how and the growing the pressures. ask right it to couple obviously, despite these just talk spend? focus of spending and last is allocate biggest in that quarters on context, you Can within kind those of focused most

Gary Guthart

will to will I and comparator. do little I Marshall bit Yeah. a more of the ask start

it us think three kind about of categories. For in we

less can outcomes, and makes bigger that’s of into damage is, ways of of drive variability. substantive what get a less kinds one. and We get X% we those one to and that in a them not One the with change a our investments, invest new body set change are to things a healthy things out but the attention look tissue at and

now, ways it’s load substantial surgeons as As our perhaps, information talking can those that surgeon we in happen in information ways the make with driving imaging driving look making understandable, whether have to and which our they decision-making quarters to with the higher we sharing customers, advanced our to cost a would And and more you well. that share domain. places or products virtuous that quality, several to of like bring years, All the see decreasing for about allows know, and and machine go learning. are several and we cycle volume, lot progress catalyzing quality or we those been we things imaging savings into more the products to make take a to are help them

of kind rough those where So you categorically the Marshall, I will are we let question. are thinking. take mix

Marshall Mohr

and and said the imaging also I’d really there And learning new ways seen perspective, year-over-year technologies, market. biggest other we areas digital then SP, of those AI, you of and capabilities that as course, but Ion as making would anatomy. to to call and in two bring products be introduce the other image investments scope us out a is area From in would have Sure. Then my machine informatics. our investment after script, capabilities, I be the advanced

Amit Hazan

mean, it well you understanding what practically partner seeing So or next maybe and given for deploying I some the it. are you the would How love space the on about there’s mentioned a speaking just now be contend players and you that very where with, we of two a recovered I IRIS, think I big evolution? just better year to are obviously it just that implementation, quarter. related over that in have with you thinking and in develop work with and that should follow-up

Gary Guthart

everybody and program done and the preoperative real that and before that is. that data IRIS plan, would patient case is have workup to I workflow are takes making MR console. second the in first, models, like of it kind to them surgeon XD real-time for to of that visualize for anchor case a to things what scans, it on just CT already reality augmented the the the have This in typically easy help and time, in really access a

part. a So say, as idea, well say, really it it’s doing executing rightly it of and is and hard you kind the simple well,

have to collaboration really natural some do in good with. partners space that the We

think don’t -- and images we You go have things and with They out are about are companies help acquired on ourselves. those other we Those had relationships good acquire to devices. open-minded and people’s them. incented progress those about how

done We things. have some proprietary cool really

a to team and where have if augmented that well, lot can and a that in reality scientists that to body, it’s then. on the has inside it’s then have additive neat. to who a the you hard get since think such how about, of IRIS in brilliant computer way and it’s well. doesn’t do to do way scientists what of it a work the thought easy procedure been the We prototype quick of surgeon. in That’s going And it’s really you And hard really take make about

approach through vasculature to, are where in You are getting that getting discussions. the good, organs tumor and with surgeons to be, in from what solid up about consulting what you boundaries the patients things you that, doing, is in might might really work interested are how and it. computing you thinking think interested Those what facilitated access interested is system advice about are are are

out what are and the I are of I where quite from universities. market think people we strong relative in in see to others kind

roadmap. of really We a So next? we approach body grows that parts over the have our team How time? good. is What

think hospitals through will and working surgeons it. that are value We We it.

to the value developing to launch really and in that lay first evidence this build X.X, are the roadmap. We IRIS

we far, and passionate advocates have both So the company. really inside outside

So, so far, so good.

Amit Hazan

Thanks very much.

Gary Guthart

Amit. Thanks,

Operator

you. Thank

Our ahead. with Please Raymond Larry next James. comes Keusch question go from

Larry Keusch

Thanks. Good afternoon, everyone. Great.

through? are this at new sort -- Just really have sort how curious and across or -- of been completed? is just in just procedures, how point, do you to And about we your sense and of thinking are working look you way we that starting mentioned of backlog where into cases this its we through some I with that backlog as but think of that to comments, trying work you prepared those some the actually backlog stand how am get you

Gary Guthart

to you if would think that, from no that as like anything that you. that I insight would at jump ways had I three gave I and great better add, it. insight Having I share a please have I wish insight. coming we setup, to know we don’t if it in. different great are somebody believe you with Phil, said lovely with

Philip Kim

No. I being mean treatment it’s comments. our clearly that that’s patients are deferring patient. right in there We about and a prepared -- are that clear deferred to the how talked detriment now are

still Gary some but be to and clearly -- alluded backlog, see we still to do worked we so the And the that deferring through treatment of patients are have in on. as worked there script, are are

Larry Keusch

Okay.

Gary Guthart

customers to What this opportunities. easier of We to pattern contact no health in hospital, themselves partner integrating process no no it If make is fits of assurance we can is main healthcare. their that those a are sure wide help are the a the to owners we they of make that -- close this attending the we can them stand in a with think, I model stay and country do. to so provide with so our hard to extent are single Largely, that to others We across patients and them. support that we providers region, spot. had makes you some

Larry Keusch

benefits of then lower all Okay. pricing again, about the lot of question the instruments, and certainly, of the you the of less a the makes Use complex the Extended just talked and sense. sort is, that Great. instruments second And

are. kind for people potentially does think part at to what of get analysis of the done presumably out the one some price to that what figure TAM, so is, look that equation color the elasticity looking that in the how the and are I do part price to you on instruments right was do

pricing? So add just expansion with the about if anything made to you of wondering you that there’s thinking now changes the the are to incremental on TAM how sort

Gary Guthart

procedures fair question. that I think and Perfectly different looks I the points, the given greater Yeah. at what -- want of think given time. that price demand a we regions. what and with What with of call. like. period look on models you TAM we greater you what are this like we to will do our are to actually bit we of ready and visibility more versus do We there’s clearly, don’t that over both move what��s over people as models have year, start update will think next into in to we terms little our time share happening of types

Larry Keusch

you. Thank Terrific. Okay.

Gary Guthart

just Operator, one So, more please. caller,

Operator

go with Thank come of you. America. That Bank Hopkins will Please question ahead. Bob from

Bob Hopkins

mid-term will have question. just I of heard in one and lastly some think so I COVID am just hear correctly you that for hospitals, because and thought ask am are first, I could that or Great, afternoon, And comment within comment? the you people taking to confidence curious that of to the define gives maybe of that mid-term? hour. on terms the you you curious these are sort color given procedures normal impact in what the mid-term. you a beginning I issues a I most and procedures I curious, return importantly, just lateness maybe of thanks And of then could there logistics add just lasting how little your patients sometime to some good kind if and expect you did to Gary,

Gary Guthart

on Fair. Yeah. horizon. it anchored time haven’t particular I a

it’s you that or COVID healthcare implied either think, really think, question, patient’s question interest as or outlined undiagnosed in -- well, suffering untreated. as I have I what’s are it’s make people that frankly, aren’t sitting the to concurrently with exactly is, being managed every is your your in diagnosed conditions sure conditions in system with and tamped down

policymakers context it they maybe of mean definition of and sure a and or their And these being well. that health globally, the of is systems trying over to flow institutions mid-term are health think COVID they me, that COVID I the to impressions hump make to serve start constituencies they and the within that of able leaders when backlogs have of managing more to patients, set may manage drop room. come

you So a couple in it imagine ways. out plays can different of

as are regard as mode to hospital fully reactive So in long COVID, near-term. in I the with are we systems think,

to where mid-term define patients surgical when see concurrently. things are they a that I’d can exists. COVID pretty executing happens, as and sight So well. -- some can when well. manage where And not that growing manage return It’s well out not we in reaction pure folks And of countries we they managing see that in that pretty

long and know does that and are? on starts more it I that catalysts don’t COVID one exactly depends How really policy. management in to Well, more it’s countries. So happen what take? the

Bob Hopkins

I will that. leave you. helpful. at Thank Very it Great.

Gary Guthart

Thanks, to acute continue a Well, we was question. surgery to durable our believe there Okay. last that substantial improve Bob. is closing, In and and opportunity fundamentally interventions.

this better with care predictable Our lower experiences patient quadruple of teams, physicians outcomes, cost of teams and teams creation a better, This closely We today’s your for believe with the you their value extraordinary is and hospitals, better you teams, call. their patients, experiences on for needs our care Thank ultimately, months. acute and It support foundationally care in understanding for for and and patients continue We and customers care. talking respect in care human. forward aim, have again flows more concludes of to work their pursuit to look total and termed surgery journey. what three environment. from

Operator

does that AT&T stated, We conference your conclude for using you our As thank today. and participation for for Teleconferencing.

may disconnect. now You

Intuitive Surgical (ISRG) 15 Oct 202020 Q3 Earnings call transcript