Intuitive Surgical (ISRG) 22 Jul 222022 Q2 Earnings call transcript

Ladies and gentlemen, good afternoon. Thank you for standing by as today's conference assembled. Welcome to the Intuitive Surgical Quarter 2 2022 Earnings Release. At this time all lines are in a listen-only mode. Later, there will be an opportunity for your questions. a conference as being And Instructions] reminder, is today's recorded. [Operator Surgical, to time, of conference Intuitive it's this turn Investor my with Head At host, pleasure the our over Relations Mr. to King. Brian Please go ahead.

you. Thank

welcome So today, Samath, me Gary our to good have afternoon, Intuitive's quarter call. we and earnings CEO; our second Guthart, CFO. With conference Jamie and

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

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

today. us joining Thank you for

Our colorectal quarter underlying over results grew in in China, seeing procedures. urology am of strength surgery, procedures of in U.S. growth States. our headwinds in in was growth year slowed to reflect COVID and accompanied business, with by from pressure grew QX quarter by Intuitive's more with a I COVID procedure year urology OUS outside Outside market. will second XX% combination strength U.S. by lockdown led I China. our XX% COVID-driven placements indicator lockdowns diversified repair. in and encouraged significantly. reduced and growth Capital last the pressure last leading continued Procedures the procedure specific due impacted in in described strength. extending first from ago factors in in the shortly. cholecystectomy by quarter, the now XX% solid health quarter quarter demand, other while markets, procedures United Starting business hernia U.S., reflecting growth a the In from despite procedures. both the surgery Overall largest environmental which spite remains healthy. procedures growth review The beyond we and the bariatric are general lockdowns our trade-ins impacted accompanied chain supply we placements capital in of of the modestly timing and

general ago. and for starting increasing several our This recent customers several key as for strong diversifies and surgery growth result was was OUS surgery, growth solid investments resection. gynecology in the general France, quarters And Ireland, markets made adoption countries increasing Japan, In has in strong been rectal in utilization in example, of is surgery. value a years in the and growth. For experienced System and U.K. Intuitive. we in general procedure in including gynecology country

In XXXX. Vinci the quarter, capital causes to to Vinci business, in ago. see placements. for year the placed we We in relative Turning in XXX a decline QX from placements da systems the da XXX three down

da installed standardized the in generation the customers have the on our lowering four population, base United Vinci systems of As States. trade-in particularly systems, has third declined, generation

in builds, quarter chain supply at the impacting quarter continued component with challenged semiconductor orders disruption us match of timing leaving end. customer delays the Next, some to system

risk, for need and capital operating Lastly, these of efficiency procedures new we've core Capital the are pressures. seen gains incenting of high-quality before in working mix demand teams a acquiring grow of existing remain hard growth. opportunities. the function part two hospital to markets a surgery space capacity. customers spending supply healthy. system in pressure constraints equipment on of seek quarters, Incremental past capital over utilization our most and our a our is robotic-assisted to capital Component at and shelter capital The for trade-in are for the demand procedure placements more remains mature customers customer

in we growth in growth. compound side, growth markets as it customers remains for long-term rising system system X% growth as has period. the utilization increases down On levels prioritize our annual is and aligned with been health rate many slightly of system over for over past matched the to investments year was procedures the utilization utilization base the contrast, installed over their value In OUS Intuitive. them diversify. as Overall, year three-year U.S. the system utilization past System at the the past procedure rate historic of roughly

we Turning XX products and to systems, QX year. placed and last XX engines services, our new up in innovation of Ion from

maturity, seek Ion Given to growth initial procedure build demand of as capability. capital hospitals stage its

In is for our XXX(k) launch in of with a first precision surgery. thoracic eight focused three and support our endoscope, received All Siemens remain installed surgery will stapler been in small being in We and clinical has targeting and utilization has work well feedback clearance XXX cone-beam customers. capital ION our for customer lung in We the ION for With CT. U.S. improves been Early systems the with procedures. launch program. by Spin to registration along strengthening the designed outcomes general combination to in ION phase Cios now at fantastic of nicely encouraging. anatomical lung and ION ecosystem clinical replacements. our growing ION experience preparing initiated multiport excellence This early on customer integration Plus. base and received encouraging staplers we to our XX and Endoscope operational continue millimeter SureForm In our we're millimeter China, XX example, thoracic latest spaces, our in growth care,

we country. the Japan, to for launch SP necessary SP colorectal support da accessories regulatory have help as clearances expanded sites on IDE package of For Vinci And SP another the accrual. imaging accelerate an in we and work to we submitted in the number

grew spending, products again in Hub the and our quarter, installs with programs media For customer the utilization important data to are customers to experiences our with committed services our opportunity on and ensuring we're along focused are over to and our Intuitive nicely we On innovation management, because digital time. for believe increasing outstanding and we the company. tools, capture forward

some slowdown natural have da We spending of placements. in Vinci shock variable a absorbers of some decrease the our capital as result that

we planning complete company's spend We also are to projects, for we expansion. decelerating need growth some the support after infrastructure

Jamie take in I'll our over will business, the form the returned of confidence in to now the buybacks quarter. our also you to our of in in through finances who we shareholders have the greater Given future turn cash time detail.

I procedures my performance of U.S. posted an pro of and forma reflected QX remarks. in highlights will performance I our is increase between also the pro non-GAAP results procedure forma A in on XX%. of later will or our GAAP XX% our procedure a growth website. basis. our afternoon. Good and summarize OUS GAAP reconciliation prepared on of growth XX% describe

be in procedures call. second transactions of will installed due delayed The as a XXX provide in of XX in variant. to systems remaining of procedures the a systems quarter in placed the to the additional the in placements in significant XXX the We SIs the last decline the reminder There base. U.S. trade-in systems output the XXXX, transactions. primarily than quarter historical quarter included quarter the system a XXXX, quarter of in impact in QX components of certain compared as experienced and second were supply significant second second quarter XX% quarter in recovery semiconductor caused quarter. procedure we the as of commentary than Brian in trade-in to the delays of to XXX last number decline of year a in challenging the As in lower XXX were da manufacturing Vinci of reflecting that the QX chain of the and Omicron later during continues norms. systems that compared supply environment be were to later result XXXX

increasing indicated We minor That result, QX. last had a in part increased hospitals, to expected the we continued were challenges, rates, of shipped call installed July. and U.S. pressures Financial that staffing a number in higher have and that capital of place in latter quarter’s we the in experienced experienced systems would and pipeline. delays inflation, supply June As shortages. persisted interest have chain softening on softness given on

of operational IDNs consequence capital Some pressures tightening they of a they their the lowering that and investment the financial indicated as face, larger have are budgets. plans

remain We expected a of customers. requires demand our for programs, the growth our will in particular to will challenging. meet be additional leverage Vinci the financial flexible hospital while macro models da their acquisition Where impacted given U.S., we capacity, capital, conditions particularly in objectives

the of da clinical Vinci installed demand second procedure systems system is averages. line to Given in therefore rate year. the we growth quarter which And like is systems by the per field system Utilization almost sensitive markets grew placements historical closely. approximately with last procedures approximately three-year the in capital X%, system in changes year-over-year. of a monitor utilization measured XX% grew U.S. Using to X% in utilization compared QX, increased In mature compound base growth. more annual

XXXX. constant X% billion, basis XX% revenue billion and quarter of revenue $X.XX the second of It XX% year. a total last result that is a grew was revenue revenue. highlighting second $X.XX capital our X% quarter year-over-year over representing of grew increase approximately procedure On an worth QX to recurring of performance, from As currency

second included U.S., the placed into the as Outside into of XX the systems. XX second XX in the XXXX. second quarter of we system placed XXXX. Current with in environment, systems Europe, XX in China with XXX into XX core in July. lower in assistant XX approximately of statistics into associated second Japan, XXX delay base of QX transactions, trends and with a than and placements the The some revenue, quarter systems XXX are quarter systems of Additional reflecting in of compared U.S., systems Japan, and quarter the compared XX we've into and installed follows: a is XXXX, the into SI the in U.S. Europe, remaining into China, the softer decline XXX demand XXX placements trade-in

systems year XX compared competitors regulatory in under were XX% As there placements in is that also received XX% the have current which remaining XXXX. transactions available quarter represented XXXX to of trade-in for quarter, of full Globally, the to XX% the end full and for year QX XXXX, China, of local clearance.

in second XX% primarily the Europe. versus and an customers quarter have by the volume As expect as previously last the that we the of system in higher of of the of trade-ins in quarter the to customers reflected last in significantly proportion particular of lower systems we driven lease represented in QX compared the lower indicated, placements mix XXXX, number lease older XX% year. purchased, increase XXXX, be a O-U.S. field, with quarter given Leasing in generation in to compared XX%

continue under to While will we leasing placements over time. increase the will from fluctuate leases that proportion expect operating quarter-to-quarter, of

proportion by average trade-in last prices lower Xi primarily flat, $X.XX selling mix million impact million than second buyout so. quarter in per driven decrease Revenue $XX $X,XXX year-over-year the revenue volumes QX primarily lease of quarter system and revenue. was the compared continue instruments benefitted launch our XX quarter impact lease categories of compared quarter, quarter of Instrument unfavorable of procedure, combined last orders slightly lower with price extended dollar. U.S. from XXX last the were to We compared with has of Ion compared which and stocking the systems $X,XXX XXXX lower these million grew approximately the advanced of to a Ion increase accessory systems and offset last use from with quarter-to-quarter associated reflects are varied in significantly systems, the of last Europe. were quarter million program as quarter XX million XX an arrangements. of installed $XX as XX% and The and customers an and We recognized in ASPs The the of and second QX $X.XX higher system to in do benefit under base unfavorable the second stronger operating in FX buyout year. although dollar is XXXX. U.S. sequential quarter year. revenue by per stronger the reflects placements second ASP, of Ion roughly $X,XXX placed $XX Second last for the stapling revenue year. of higher Lease a procedure now likely systems quarter The in will energy

base XXX. our Second quarter Five core process placed of make XXX% compared of XXXX. of core in Ion submission MDR pursue new resulting to continue systems, in regulatory the increased procedures were a SP China efforts X,XXX Ion second to in installed the Europe approximately is progress. review and the of second in the in to an systems

procedures Second core year-over-year. XX% grew SP approximately

clinical potential is differentiation SP of areas access the of narrow for surgery. in One

transoral the the XX%. the four quarters, SP market platform markets TORS TORS in and the U.S. Growth estimate indications example, by additional surgical of be beyond procedures, based under to robotic be continue clinical last share and in to or Korea. in gated for clearances malignant SP For we on just procedures U.S. will

XX.X% cost increased P&L, the Moving margin XXXX as increased second the gross lower stronger with revenue. XX.X% of logistics forma for pro margin gross to for rest was costs, quarter. and quarter U.S. of last XX.X% a pricing was of the on Pro higher of to quarter XXXX result and the dollar, the primarily relative fixed component second forma compared

capacity manufacturing in higher increase second we increase an XX% invest operating expenses and project Pro with expenses in and of a of increased R&D-related costs infrastructure year including quarter the our second serve needs. costs, long-term the our impact operating to forma inflation. in XXXX. As headcount, higher ago, from compared reflected travel The quarter

these and the revenue for to infrastructure expect of continue plans closely will pursue Spending to more full XX% our our SP invest to effectively early procedure Ion to performance, to linked as and our business to R&D, will return of digital scale. we investments. the and efficiently we operating given forma XX% process in stages the in SG&A Pro platforms, in Given and newer ecosystem, profile and can year margin we automation QX for compared continue invest was and to ensure be XXXX.

approximately of and associated a FX, of quarter supply manufacturing last operating to net of chain As the in X%. year, compared the the second is impact reduction inefficiencies inflation with environment margin

our Our XX.X%, quarter pro tax forma effective – tax for rate rate the second was in expectations. line with

or million the primarily million of investments with our $X.XX with lines. cash in ended compared expand activities. comprised or for the website with between share increased XXXX. include XXXX I capital cash for quarter expenditures, strategic QX. are quarter gains was second reflected per net losses and pro adjustments offset pro automation $X.X employee $XXX quarter our $X.XX stock-based with footprint, $XXX and billion GAAP income operating and at on the cash outlined certain end and second and The or GAAP awards, million Capital and and share and net from XXXX, quarter manufacturing QX the investments. amortization Second We production tax of excess intangibles share net summarize compensation, of of million employee GAAP per capacity reduction forma our now was of and investments will sequential the partially $X.X for GAAP income associated billion, were $XXX benefits with of XXXX. quantified income $X.XX share to repurchases The stock on million, results. compared quarter per or by of per of in of compared expenditures $XXX investments forma $XXX primarily second net $X.XX income facilities share infrastructure

in priorities are the drive capital as invest develop technology business, we significant consistent first, remain Our and products. see follows: allocation organically of adoption given to our to the opportunities differentiated and

for technology our our external acquisitions acquire timelines growth. and/or creates development value accelerate accelerate that that to Second, or customers

we share of to and price earnings excess average with so do return discuss million to total authorization efficiently. our Concurrent of at per of it to would repurchase an $XXX Brian, release, $XXX today’s highlights to we have for of Directors and provide share cash expenditure shares to shareholders like With increase to Board who the repurchased clinical In that, million. $X.X updated outlook our Third, I turn improved over a billion. look for an X.X QX, will our XXXX.

Thank you, Jamie.

Despite XX%. procedure procedure general digits. compound annual quarter XX% with COVID-related while and surgery, cholecystectomy gynecology foregut mature in of the second and for procedure procedures second driven was colorectal, on urology XX%, also compared strength with and moderate and of quarter a to restrictions for procedures In last U.S. quarter quarter to a XXXX between which XX% three-year procedure growth basis, of The deferred compared XXXX due benefited compound Our growth quarter the also but XX% grew continued approximately the believe second had of XX%. was second XXXX quarter. hernia the the growth a were low-single XX%, U.S., China, was bariatrics, of XX% for pace procedure overall contributors. was of growth XX% strong XXXX. QX XXXX in COVID-XX. Growth procedure from compound to at of which the previously compared and by be quarter and a Outside growth On second XXXX, was annual volume the XXXX annual number last XX% XX% continue we second in growth quarter quarter to U.S., particular been second rate year-over-year, in basis, quarter. three-year growth growth second three-year

early general was growth in these in three noted, general regions by Italy, benign growth all urology. surgery non-urology and Year-over-year surgery, procedures and Germany, UK specifically and categories growth gynecology. was Europe. X procedures these in in in growth times In colorectal In in Italy, of in by and than led Procedure growth led by hysterectomy. outside growth strong higher In led was colorectal these procedures. HPV strong urology was procedure was stage Germany. surgery almost to procedure growth Turning

hysterectomy as with UK, in gynecology and surgery continued strong while continued that growth In persisted benign in to COVID experienced strong While quarter. China, hysterectomy, early-stage in below resection infections Asia, experienced colorectal remain the in in most the strong due expectations benign we rectal restrictions Japan, growth of be resection and government growth. growth, gastrectomy. procedures In and to specifically throughout general robust Japan,

continued continued Despite solid return In regional when lockdowns show to addition, began be growth reflecting recovery throughout contributing China resection colon procedures. early to COVID procedures ongoing affected June. with of second impacted that negatively to quarter. prostatectomy China, growth cities constrained reimbursed the to of many prior by of year, and procedure signs nephrectomy in to due double-digit rates which growth by run was procedure COVID. year-over-year modest experienced compared normal most the restrictions, growth, to a large adoption infections the a and Further the in quarter strength In namely newly was

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

XXX body of thoroughly included XX,XXX also approaches. Cancer real-world encounter claims between detail expenditures complete from Notably, minimally care to scientific health average total study Jin adult along group and year, and of be open disease. comparison stakeholders in we demonstrated published demonstrated analysis a Vinci the health Seattle, have Intuitive, care invasive the and outpatient the the procedure, total However, to the Young XXX Robert IBM inpatient with analysis, over understanding the regards invasive frames days Earlier open With procedure. X,XXX this patients a of payer/patient Through invasive surgical Ann in in over colectomy $X,XXX. the in utilization, for weighted subjects laparoscopic encourage and to and days Washington these of comparing for from minimally Group. underwent post benign health extensive body the the with use of condition from analyzed the emergency been expenditures group all commercial MarketScan X,XXX from to approach database, procedure minimally Joseph through and over visit and department Arbor, missed an for patients and who an an gain in XXXX length with department with treatment lower elective colectomy less approach Mercy evidence, stay patients that Institute within The patients benign the two and $X,XXX da over more Cleary Basara Doctors of care studies resource January X,XXX review years. expenditure Hospital laparoscopic invasive $X,XXX da over a XXXX the over reduction lower inverse Utilizing Vinci Lee days this associated visit to the outcomes lower translated with ranging evidence minimally savings patients across time from and an work approximately all included utilization a two-day the in Swedish health and readmitted, published likely Diez collaboration from Sarah among a Dr. St. additional this care to or Amira December with propensity fewer over visits.

approach stay approximately to $X,XXX have da had had patients conversion were The longer outpatient conversion risk of of stay, more day a visit the Vinci comparing a conversion a reduction payments when procedure. conversion expenditures had mean and who hospital were work XXXX and and to open open compared is readmission of XX% now The missed an is resource Of mean approach. minimally concluded last likely to for benign Vinci forecast our XXXX. with one an patients length rate higher for procedure. our open year to procedure in colectomy over shorter and to translated will of invasive of range year care visits. XX%. within year a to approaches, fewer health care additional with of savings observed On the length within to with category a Vinci health part full in da half Starting shorter days that health the da XX% turn X.X due less to growth hospital utilization the authors I disease, within care to financial outlook lower of for note, of likely and to procedures. stay MIS associated length a a laparoscopic the mean visit with hospital we have less Within of call, with one and open lower

forecast expect at range The are increasing XX% to staffing uncertainty pressure with end full We range This hospitalization At high now hospitals our and pandemic. the increasing remainder the to year hospital decline associated of hospitalizations XXXX for constraints procedure start XX.X%. world course the year. the reflect of the or COVID growth throughout the to impacts low reflect and the of from the of supply disruptions the significant and of continues of to range, further assumes not there at of continue similar are remainder we no around material capacity pandemic. end additional The assume significant the we what the chain range XXXX, COVID-XX-related does experienced the resurgences.

that moderated is growth pressure spending. trade-in creating system more has first so macro-related markets utilization trade-in the been by the procedure for the While installed demand are base the Capital prior in healthy, due number mature pipeline available growth in far than procedure of hospital systems in in periods, placements opportunities. SI to has softer capital capital function the of a lower a in headwinds and half U.S. XXXX mainly and been of on

the us. of increase have rate core QX of been is for opportunities declined, for and from continues XXXX of period, the system increasing. to increasing utilization to and compound first the base XX% be value XXXX XX% existing trade-in in demand customers for the installed of half to from derived procedures through While installed of pandemic procedures systems growth our QX has three-year same over installed With This XXXX. continued utilization of has annual the base a and growth healthy and

dynamics these continue expect As to we foreseeable look capital the ahead, for we future.

Turning gross last to to XX% our margin year our and forma be we profit. On XXXX within call, forecast XX.X%. gross full pro profit

pro XX% now profit to of and net refining forma estimate margin are We revenue. within gross our XX% of be

ongoing from end dollar, the to supply impact and higher Given range. U.S. we towards stronger would to of costs expect a that impact of the be the related chain input lower

Our impact to trading fluctuations in quarter-to-quarter the pro gross growth XX% actual on of largely regional operating mix, depending introductions. and will between rates operating foreign new respect and expense be call, our product forma on XX%. vary product, expenses, we profit currency With margin forecast to and last

our refining and between growth expense full expect operating pro are year our forma estimate and be We now XX% to XX%.

our We to are refining stock in between million XXXX. $XXX million range estimate $XXX for noncash compensation to expense

our income, for million which comprised We On reflects the interest range a are within of between increase million. is interest quarter’s $XX to XXXX total increase other million continued and rise also million million estimate of of refining our estimate we from mostly rates. expenditures primarily $XXX last in forecast to call, previous income, $XX and million. $XX in an $XX XXXX, capital The $XXX

to million the income to of $XXX we comments. tax, rate to now $XXX We capital refining income. in be our to XXXX continue pro to regard our million. With expenditures between XX% and estimate That prepared tax XX% forma concludes estimated for are range of be XXXX pretax

your open We now the questions. will call to

Wells Biegelsen today ahead representing [Operator Please go Instructions] Fargo. we’re Larry begin to with And going sir.

XXXX, you much think have people this time could a about, saw Gary, question. we how It XXXX? they’ve resolved. negatively supply the obviously, you constraints Good QX? better How Gary, that compared sounds to the follow-up. of taking been you in afternoon. like quantify are one recession. And start worried lot about you positioned the a Thanks if last maybe that recession impacted with And the talked could I for are I impact

Okay.

a the little us perspective bit other of a suppliers supply raw lines. time choppy perspective. happening I’ll What’s Jamie delivery quantitative a On and qualitative suppliers in fill can you giving some semiconductor side, material give constraint you is and

we When largely can to moving Jamie, around in are and to end that? that late quarter. quarter match customers very that in configurations estimates the want hard to can assemble and to you sometimes that’s add that So happened it make system QX. product bring sometimes product, it at in what

Think been the QX semiconductor to without delayed placements delivered supply the of those range about the constraints, would incremental impact that in have roughly in QX. X%-ish in components those systems terms

That that terms we continue of those fights supply. and certainly choppy, and expect, forward continues timing for QX in to fight perhaps to of be we’ll

hospital your the the question our customers on On under pressure. of question – recession, clearly, second part second are financial

end had that seen and with time. you at have communicated the QX that of at We

to the think that decade terms were strength business in expression of and the bit revenue, our terms we little in part of of surgery those that of and how a the of in percentage the relative where have we I the time of few think large a gives And of us investments better shock and gives size disciplines revenue, and I in to we us the XXXX. terms relative more revenue a XXXX, and business. make absorption predictability investments that’s to recurring recurring the Intuitive degrees centrality a in relative freedom position as base, our installed of multiple of ago,

you, duration of that a predict. with to we for pretty any customers. And am and our terms hard trends trends you size us with follow-on. well we’ve I understood are personally I describing those had We of in think many. close the contact The very to in of pressure, been

system my clinical a data luck here. in I’m Again, seems little have bit know to to We fair. systems. new development. all for going a new you requiring FDA be that’s push Yes,

data so, So you. do for going before FDA Thank you can approval? question share? yet is my system if to require new if you know clinical And what is, your

things, think I the let me two at question. Looking broaden

Looking seen a in United and in and Europe, States the globally in the have for device robotic-assisted regulatory in and we environment surgery data at particular, trend medical requirements. increasing

those of Sometimes trend there market, including sometimes Intuitive. it’s trials, other and continued, kind impacting That has are us of the are in data. all

improve get X ideas the our that’s there. You utility, that customer can hands good do out and and we existing product expect can improve that. will Gen base into we will their technologies We

investment that And have to do that, after have for I’ve the I’d countries. decade ago, result, go then the work, a and increased. everybody have rather we’ll are next on lines of into on the has time call, And without you for question do things lines of have really meaningful clinical a say answering impact, investment as work. both work for opportunities also new the clinically increased the It’s work. your systems amount that We not regulatory time it’s trough several I said generations. to will afraid customer. likely environments that if generations deeper clear relative changing in to as are, validation And do. the specifically, that And changed. of has of deeper working The to the more because the and increased. do also that before, technologic we’re the we a the the the course,

will think, extend prediction life that useful I the a and of it design. that this is products we also

more But than maybe more in we’re as really it market use there. have well. than means of longer us little that So to evidence see it’s that change to, field. it’s life probably taking in systems early costing for I well-designed And get environment the a that think to also little, used that to get starting a to longer

thank Larry. for the So question, you

you. Thank

And line next, Amit Hazan representing Sachs. of go the Goldman we’ll to

You’re open.

regionalization a question. Do good of maybe past And think the come how to the with that, it given half ask come to plan? afternoon. do about if Or or supply I you you’ve of kind more bigger that so. of expect a might in do all next out the challenges and want lends ride costs chain? maybe of change normal gone in back we plans that and just plan to you evolving the Thanks environment year? as just supply here, chain and the that’s picture through incremental domestication terms this or Maybe year that have kind and strategically to towards a

in. I’ll start. And Jamie, you can lean

pivot really than like expect it’s and our strategic They forward-looking system, teams. about to been using capital They second underlying the and on we side spectacular alternative a instruments spectacular teams been deployment. need of has that to continue chain, way our supply chain a lot chain in product, the perhaps chains and both when of the or supply have sources really at components manage company. long proactive to. relative a design and to bigger that remarkable, depends the the good about First, reserves done robotic been a have on management whether for supply a accessories in is side robustness alternatives size most about thoughtful of about the we the regional will They being ability that those robustness. have creating components of job on or And thinking that surgery proactive. number supply be and into looks to I acknowledge want operating and performance. That’s and the they saying people What

incur We prior gone we’ve work and have That been that through to done some deployment working we’ve regional the on. costs. pandemic, does as

it. about don’t you provide And thoughtful Jamie, why your We’re perspective?

time it we of the our And setting challenges, or you for terms just you certainly, might From aside big the have that over a freight long-term and potential redundant regions you we savings straightforward. regional But size and redundancy looking what at been. region. economic consider you business serve, warrant of a our does get carefully on cost planning you’re we’re relatively the the in you’re economics. businesses degree of enough grows is perspective, looking described to as that equation, analysis trading with something various some perspective when chain is redundancy in incremental strategic want of logistics that or own to capacity the current extent the long-term them of things economic the that really, And supply in where the and the capacity. in locate, That can is supply the

Thanks probably get for and the earnings you year, that. future this And components to with going on pretty maybe clear just into us, give seems it not that earnings growth. we’re to just the hit going

on R&D, terms you in year to looking year, sounds interesting of Would if of has doing earnings you but spending too? comments sir, going thinking just next that keep shareholders, about year, organically through, is comments. It Thanks. not you’re after have How some earnings this to your for this earnings think like to had you you makes focus it You a kind end become more and grow just okay you’re okay, commitment given to sense. like? gone? what up you bigger going SG&A, do growth for this how year And no that what believe is

Yes.

point. about XXXX to we’re this going So, not specific at get

You’ll with in on obviously doing our us the multiyear provide call. investments. see R&D currently and January outlook What respect to investing we’re projects is

SP. You Ion see that in our newer platforms, and

we confidence lines in are investments many We generation And because investments that the regulatory they to and fourth And invest stage. at in carefully of attractive. early are obviously ecosystem. which those multiyear at have on time the But returns and do there have in them. of we that continue we the investments returns an are Gary digital, think quite the part in look described,

long the But half, whether set. given XXXX in medtech, our that a us and have medtech you do. IT the what We XX% some you second other on I’m see retire, operating see to so And end project of be manufacturing growth to to that you’d And we we where have view, that at parts of there's in with business and about we're as our in opportunities have to at that specifically, that take I'll we time. we the infrastructure to And peer is go we relative expect We or we companies will the growth do to yet margins, will where that’s we lived support or see, or some say do processes said in that’s overall opportunities as multiyear that be growth by spending built of out look the that going grew to potholes next. forward. either we for that SG&A. over finish. about targeted look fix a – on pavement repaving R&D some respect example, is earnings speak grow thoughtful area first for some high-growth needs highly high see, to OpEx. of if our if be expect spend why to means XX% going not we’ve for growth not. you And the particularly to

see of we'll year. expense next that some So to start start into to titrate

you. Thank

Okay.

Steed Travis of Bank go line ahead. the with in America. of Next Please

a do you a on taking just Are slowdown? on CapEx, I'm overall cautious little All right. color capital seeing just Thanks I'd more love or this curious also think XXXX, for the longer being slower could for hospitals near XXXX more in we're I'm hospital the curious term if the environment? or XXXX range of duration environment. how questions. XXXX, and could quarter, you in the outcomes, like you CapEx think the where that to leases or terms slowdown ticked peak like, it's in XXXX up you XX% Gary, think

the depth of duration in to Hard pressure. hospital Yeah. predict

faced some with. about constraint I won't, Clearly, on have I the because costs will purchase, that think of materials resolve – their what inflationary flexibility have So what also and not talk quickly. pricing That's They're side. the labor the I their they're are, inputs labor they're that what will constrained and facing enormous on of they that to up. change something don't gone in pressure they

something longer forward? that. this is help that owned, With going would two expect of there in take that, assets to better hospital I condition. that. think and going they out are we to than I you certainly into says and of help about productivity are constraint do be hospitals to I'll And product as will don't first financial resolution. a in or or So capital, of new It's there quarter to them try Ion are be tools lease If that a the regard their if one productivity greater how leases them do to we'll more out one want I on to out them. toolkit still get capacity of a think out that. they'll their already a we to profitability think that SP then present. well. there's do get side new line region, Jamie, the new ask in they and and to going help to will In to light existing change Intuitive strategic branch or do be that. products build And is

tick offer preference. do from If of on acceptance an I over stage. understanding every customer in just and we on and O-U.S. is relative which we’re use split been leasing It's I based will O-U.S., up fluctuate seen leasing, program. the ticking we slowly at U.S. to customers. in earlier what our will it Yeah. between where up is quarter-to-quarter what slowly In while continue maturity that think in based you've U.S. hear time not market,

they And as so capital. and acquire an seeing acceptance leasing growing option as as understand you're

so over to And I'd expect continue climb that to time.

talk Great. weeks Thank to to longer. And few takes is other the a time you. your years I it get had and to mentioned market ago, Gary, new parts a listened question, one couple you of

bit in that XX I more years. I'd said you love to you six think think is, a on kind there. through of assumption And detail get I before now, that to years to eight of little kind kind that's went eight regulatory, about dig more strategic into general of you assume but your of and the changed a your product guess and how see cycles innovation think how the it's in at I mostly thinking moment? comment

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color. Thanks for the Great.

line representing go And of Marcus Robbie Please to the we’ll JPMorgan. ahead. go

it’s questions. a still given the pretty of your just outside are good country as of impact China, well, follow-up pathway I get about we OUS it procedure U.S., be number. like U.S. not the is reopening? hospitals, ramp Maybe networks. start, ask and there we in Great. country how lot single want feels the should about a taking in on Thanks had dictated on a China sense, geography to do capital much any Thanks. that to in the just then the How strong thinking how I’ll most think half difference comment just an of of shutdowns the comments a the given payer second is equipment. say, in them a for by a And the terms to

on you’d good bit of And based out to that color in systems of posture systems if Clearly, one. to We it’s to I of Jamie, our markets penetration the like and question, the there’s it. on by and know of call differs maturity a the I utilization don’t tried Yes. Vinci. acquisition little apply. da depth script. a the appreciate that of relative country first the Robbie, hospital additional

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comments terms of course assumed of just Of us reiterate might for the Brian as model [indiscernible]. what’s ask in impossible you what your in might that’s predict I is some to

Yes.

or the to end Over hard procedures, QX, more what’s to closer did it’s we So improvement see normal I’d say some we time, levels. I’d in China. say going to recovery really of of happen have predict probably at seen,

things our see in I procedure market think you does by that the challenges can down, we do slow volume. an are when largest China. It growth impact second they but had procedure despite have the

give what’s so the So I color variability quarter. still early really a think were there any it’s really just probably soon going much bit to and there's too and frankly, we in to still happen because

the color. for Thanks Great.

have Rick we from representing Wise ahead. question Stifel. And a Please go

drivers the were instruments. the XXXX, a of and yes, launch procedure the Again, capital Good volume in early it think part those back expanded there mean, it there little the was the many But in last end macro bit. also Xi, crisis – to was afternoon, financial was of of were decade, macro periods of slowdown the on the marked that history recovery umbrella under recovery. When recovery the uptake, obviously, guys. reflecting of I of recovery. following to I

just the and the look but the assuming occurs, that think few what’s on about recovery procedure I mean, we mix the be might macro time, system the years side the reflecting side, that I a ahead As again? this next system the back this and instrument was different years or how yes, from accelerated us to next a in and recovery or inevitably few Is about it at you talk the instruments international drivers thinking new would are that point, growth what get period? some about –

question. the Appreciate

years States part surgery I in in across and of in United countries multiple In our terms that that's has growth, intuitive great; many think and the has underlying one. been saturated don't teams, adoption fantastic. teams investments thick Gen of payback our there. response made good that of training products and X general the we out, sub-procedures numbers Two, adoption been drivers the and real rounded rounded seeing are ago really zoom we're so there's and first now, in curve in key we've room we're and of kind of capability the has been

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data capabilities, priority and, there's do has and think country lots our into our there that I our So opportunity of instruments, our over to accessories, our bringing with ecosystem, training markets time. our capabilities

that. So we've got

doing Europe think us really to I to take? And to coming those another with U.S. is that it's daVinci the Ion in are into rarely and deeper States. United it or Asia over and and – out applications. bring other Japan. incremental procedures bring market. either does will are opportunity additional will that's that to in innovations not in all. time. it great to work those to leg outstanding indications at Ion done will success bring procedures done layer over those with they it layer will daVinci have our indications that well has We're SP or I SP, are that of process customers things trying years for go think We're hard how Well, having and We We're will working time. Korea. differentiated on it over bringing many the is SP capability, as get then added time. to And out

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and one mature in In SP more terms the of of Ion; technologies things new platform. is SP like

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So I we irons that have in have we fire confidence think the in.

and your a it's fishing et and one for just is a Okay. comments And question financially reflecting bit have of there? hospitals. management, me, of And be aspect you in underway terms attention expedition terms there partnering house initiatives on quick the with but kind initiatives just about with leases, side your of one of know paying I we last data is of to? Gary. on Thank little collection in any many should of cetera, you, that anything update One

Thanks Rick.

they with international the and others data We AI training, in that not really about our ability engaged the Relative share hardcore continuing healthcare with competency opportunities them are program. really that mature starting their quite to good. been level analyze into we're system? going, at the allow On is the it's bring of make efficiency and pathway. and invest decisions workflows been we markets, our a allows facility processes. all of collect, daVinci for outcomes, their lot It the At of excitement capability, so are what spectrum to that's other fabulous. own of norms, to capacity where within baked in down national become a to basics improved where that improvement to insight use data faster looking there efficacy things terms time to high, sets more end group to the relative and We're our and our to hospital can them is researchers personalized hospitals it are routinely. there the has of that new terms compare And automating and idea; in and daVinci in are the and their

it's in of set, and day its nature another of every I will it's in the that discovery. training innovation in And I we used years, few believe one discoveries, some and So the surgery those engines a think, do. change informing set, and the

think on there's I an So sides. opportunity both

Thank you.

question, last please. one Just

right. All

Our Newitter representing of line final Truist. from question the today Richard will come

open. You’re

exploring you might expect have And I us service become say more taking Hi, last the hospitals then begin don't efficient. maybe things and streams that Can models, how you monetizing questions. just filter one – thanks sense you when and look sources are when? Can to new And Gary, as if give help alternative might those for of of any that want answer. into types to on even I that? revenue already see we to that follow-up. new to

terms the in I hospital or the – the and before, on efforts we've creating labor digital side investments in cost to some some are of of in a on said savings side them analysis, our our this financial value way through our – reduction do digital serve. them efficiency of and tools, our we are are really

more through competency people So that's get time quickly. processes having category one another category. cost is that programmatic accelerated implementation serve There's around through to and that lowers their to our

is revenue category direct third opportunity. The

of those field in working in We the all have categories. three things

is them empty. none of So

pricing in in of our of Hub opportunities terms In starting value our proposition, Intuitive those. of we and out acceptance some and to spaces in our explore training customer our augmented are reality

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be some big but near line expectation into I them reasonably what in our the that look not be savings, of tell these that to bottom terms all accretive other other the Some huge won't would cost turns term. mature they set in of are sources time of What of of I our relative you would of and pricing models is lines the because like. revenue to revenue. revenue, should that

using a programs minimally us. our pay thing our find surgery customers, then great, products. get help we do they will to is Our and to biggest way to invasive focus high-functioning, that, hospitals our If

economic them far, well us. it's worked And worked engine that so and well has for for

And just guys is traction. believe, Great. I – gaining where you mentioned TORS, SP

You've penetration. got XX%

estimated you think U.S. – of I procedures. estimated

where that users already? your of terms remind category like quantify how something their do some more TORS? And could go? Or penetration us, of Thank that big Just Can think are you where you. a is us? in of aggressive you for

Yes.

a question, surgeries per was It's in Roughly TORS. micro XX,XXX of high-value but that performed the small malignant number so On range. the segment. TAM is year

really patients, small like for relatively But a high said, value. and So surgeons I market.

it might In terms go, I'll of where let that. Gary on expand

Yes.

of I and invasive for evidence I detail they through that to exciting think, in That opportunities there we'll think surgery and you'll that see we and are to as expand, for further continue to they improve believe done that from calls was substantial a that robotically that clearances breast kinds In that it opportunity a reasonable clearances. last We'll the is us to things Korea as And to future And starts opportunity and our fundamentally other customer data as closing, question. publish. over body surgery and, and gynecology is and has incremental base. procedures oncology the the durable our think look things all those to interventions. acute in they're SP value. comes using I as extend clinical guide see have broad that where

lower patients care. better our and to care get to teams you more is three most. in identified a on environment. care, termed envision follows teams their care pursuit human. It of value patients their of future At and your back to care believe the teams, needs experiences foundationally from respect patient with and their We and and this understanding for and for of what hospitals, so Better, for ultimately, a of invasive teams is a support months. can look care that better talking and forward matters continue predictable where are acute in treated work care Our Intuitive, physicians again less what journey. and diseases earlier We creation quadruple total surgery cost for you we have experiences Thank with in extraordinary lane: quickly, better patients, customers closely outcomes, profoundly

for and conclude Event does today. and that conference you your gentlemen, Ladies Services. for the participation our using AT&T We thank

disconnect. now may You