Biotech Values

[microcapfun]

>>ISRG reported this morning.
The key number is the instrument and accessory revenue fell sequentially from 81.6 million to 79.6 million. This does not show procedure growth to me maybe I am missing something.<<

No offense, but you people are clueless with regard to Intuitive. The number of procedures during Q1 grew an astounding 60% year over year to 45,000 (180,000 annualized). That's obviously not off a low base.

There are several reasons why you don't see that growth in the sequential I&A number, most well known to anyone who is seriously following the company rather than skimming a PR or two.

1. Hospitals are drawing down their inventory reserves of instruments due to financial pressures. (How long can that go on?)

2. The procedure mix is moving from mainly prostectomies to mainly hysterectomies (and similar procedures). The latter involve fewer instruments. (I don't know why.)

3. As surgeons become more experienced, they are finding ways to carry out procedures just as well using less instruments, which they may fell some pressure to do given the cost-cutting environment in many hospitals these days.

4. Due to a system upgrade and accounting details you probably aren't interested in, $2.1M of perfectly good I&A revenue had to be deferred - as well as $18M of perfectly good systems revenue. Add in the former and I&A revenue did go up slightly from Q4, despite 1-3 above.


The key number is NOT I&A revenue, it is adoption growth, and that is 60% despite the fact that we are in a recession and many of da Vinci procedures are discretionary - or at least can be delayed (e.g. non-cancer hysterectomies).

To be redundant, the underlying business is growing at 60% ... from a large base ... during a recession.

ISRG is still drastically undervalued despite have recently increased in share price from 85 to 150+.

micro