Healthcare Business News
Intuitive Surgical's da Vinci robotic surgery system.

Sales of da Vinci robotic systems continue to fall amid lower surgical volumes

By Beth Kutscher
Posted: April 9, 2014 - 2:30 pm ET

Intuitive Surgical, the Sunnyvale, Calif., developer of the da Vinci robotic surgical system, is bracing investors for a 24% decline in revenue as fewer hospitals invest in its flagship product.

In a preview of its first-quarter results Tuesday, Intuitive said it sold only 87 da Vinci systems compared with 164 during the same period in 2013. Revenue is expected to decline 59% to $106 million, down from $256 million in the prior-year period.

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Intuitive blamed lower procedure volume and changing hospital spending priorities under healthcare reform. Some providers may have been waiting to buy the new da Vinci Xi model, which received Food and Drug Administration approval on April 1, the company also noted.

The revenue drop includes a $26 million revenue deferral attributable to a customer trade-in program that allows hospitals to exchange their older da Vinci equipment for accessories that are compatible with the da Vinci Xi system.

But even accounting for the deferral, revenue declined 20%, the company said.

Instrument and accessory sales also declined 2% overall. But some service lines did show growth, with Intuitive citing general surgery procedures in the U.S. and urologic procedures outside the country as seeing higher volume.

Separately, Intuitive said it will book a $67 million pre-tax charge related to an expected product liability settlement that will resolve claims that patients suffered complications from its monopolar curved scissors, which were recalled in 2013, and the scissors' first-generation tip covers, which were withdrawn from the market in 2012.

Sales of medical devices have been faltering as manufacturers confront the same volume pressures as the providers performing the procedures. In addition, payers are increasingly asking for comparative effectiveness data that shows the surgical procedures are more beneficial than medical management.

Intuitive also has been under fire in the past year after regulators said they were investigating an increase in incident reports associated with the product.

Company earnings are scheduled for release April 22.

Follow Beth Kutscher on Twitter: @MHbkutscher

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