Intuitive Surgical (ISRG) 23 Jan 242023 Q4 Earnings call transcript

Thank you, everyone, for standing by, and welcome to the Intuitive Fourth Quarter 2023 Earnings Call. [Operator Instructions]

I will now turn the call over to your host, Head of Investor Relations, Brian King. Please go ahead.

Good afternoon, and welcome to Intuitive's Fourth Quarter Earnings Conference Call. have our we Samath, and today, CFO. our me Gary CEO; Guthart, Jamie With

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

can replay or the this on of that filings Investor cautioned to highlights our been on you have such website. Today's section Relations SEC data supplementary not consist be on the are posted audio note of and statements. Please results. full conference Events Our and website our found will page. at call providing financial through format website under X release Investors press quarter year tables reliance forward-looking at our will our with to be undue place our website. Today's for intuitive.com SEC's available

session. And XXXX. business As finally, provide operational discuss press described to Gary. earlier present announced followed that, highlights. And host a clinical highlights will then with and question-and-answer in procedure I financial question-and-answer our will for Gary we Jamie our release by will financial of outlook a session. will turn review today, it results, our and I a provide over and will

share building our a platforms use for of on The capacity per our I'll average growth growing with our XXXX for year and support touch that full performance system perspective on increased last of utilization nicely, you XXXX. and and Thank the was Intuitive joining hospitals to good us per system each quarter year additional for past year platforms. one today. for our

new improvements, France, the of call. Starting performance on teams Ireland, good procedures Colon and running the on in growth customer few Growth led procedure X Areas have efforts for procedures. the a strength market. availability and We'll growth with and and year including well. name to year-over-year. U.S., full touch healthy Germany, regional driving demand, year. and readying general by the In clinical U.K. Bariatric cholecystectomy, few. procedure surgery general included in as this products the meet the Our first for countries, procedures and to United trials surgery a quality those for States hernia was also was XX%. was been services of rising grew with delivering

for However, we robotics, continued United the drugs the Ion gynecology XX% beyond urology flexible saw in In full obesity. Procedure of and deceleration growth a surgery. the GLP-X of XXX% strength in with growth in for growth likely full of XXXX, categories, the procedures United year with year. with uptake States growth the year result outside general growth continued ASP procedure growth by including diversified showed acceleration throughout nice accretive driven States. the over was

per systems. arrangements SP Utilization an correlated customer it X,XXX team portfolios system procedures particularly improve XX% in of year financial multiport of Globally, Ion Vinci X% SP to defined the seek quarter, indicator balance to system in utilization, and XXXX. our in patient the you mix demand, in year. strong more to is while in prior for was grew for flexible health as full compared the in in to XX%. use our as the health. later da installed detail United broad above were multiport year placements in X,XXX dynamics with year. placements States financing because adopt it build their as placement the performance to upgrade for customers United States, substantial and of to placed over take The important and lastly, call. System X% for will XXXX. over clinical the billion high for care placements $X.X systems a a The the we allow access globally front, reaching capacity of customers in and growth on flexibility Japan XX multiport future platform, grew Utilization new XXX in quarter year, systems. systems prior procedures XX year-over-year year through were capital reported the the satisfaction On revenue the versus XXX for hospital full the is year, year, XX% Jamie systems per grew the were Ion 'XX versus

patient detail to our through increased of the operating for our result and our and our capital amortization. installed to growth Product higher-than-expected lower will aim. greater our end in make difference of of costs, newer and a a to our guidance platforms utilization year customers on better the and spend their platforms experiences in financial R&D that you manufacturing digital team performance were tools, and capital clinical quadruple episode. treat continued in investments efforts patient commercial in total continued signaled cost in expenses procedures, were growth in outcomes, expansion take upper full support the and primarily call. Strength experiences, the in pursue platforms. footprints base our Better per the later as of belief care better Jamie by challenged reflecting Our margins

da with look to As like Vinci our share our that for we FDA we XXXX, to multiport to application XXX(k) submitted have X. I'd you next-generation platform,

patients. follows: platforms bring invasive minimally to new our more better for we opportunities First, to care priorities are for look as design Our

work procedures. of existing to improve platforms performance and the Second, our we

team da product seek utility, dependability cleared, strive inputs hundreds the we per care on and and satisfaction we treat of each of a priorities. impact design we and patient objectives care to our will through X make respond help that design fulfill Vinci to believe surgeon these team changes to improvements. positive finally, through cost total improve And usability Third, lower to episode. Once

data, the Vinci deliver example, As power processing one orders Generation power better of just means performance. digital products. magnitude possesses to processing X greater analytic and sensing da and improve XX,XXXx That than gather our X X

of supply proven Given mature will first their a phased the robotic multiport surgical sophistication manufacturing system giving hospitals surgeons new to the clearance, Vinci our and of XI X our Intuitive. solutions we offering launch us in time quarters and several technologies processes join the plan highly involved, da X after for from system. existing portfolio and system and systems, SP, single-port choice capable, alongside the

X comprehensive have August with submitted in Vinci finished da for communication IDE on XXX(k) in for several completed the This trial in patients multicenter of trial. XXXX, our for been a have year. and da X past May accruing FDA FDA last quarters We and to Vinci we

currently these The timing responding FDA's U.S. questions. are time to of launch to the resolve on We will questions. depend required the

the So this for fall normal within submission far, expectations questions believe type. we a asked of

to in of report conversations Japan countries progress more. XXXX In the and and as indications we will we And scale. increased execution. in our focused and our on features depth. We know towards We provision expanded and greater that we communicate priority and we access stresses. continuity training, with in Korea, supply, through as cleared, and commercialization pandemic started productivity States initiated procedures addition we Ion and in services increased countries FDA, quality SP. benefit launches of market for Once X and from adoption in we'll have in da on benefits FDA Vinci emerge regulators our outside on pursued outstanding We from product commercial functions finally, excellence focus United pursued

Taken together, made good our progress team these against objectives.

are priorities launch indication follows: once by Vinci XXXX, platforms phase enter cleared. First, and of through we company on of our region, we'll innovation our X focus as first our As including da launches new expanded

increased Second, efforts. through country we'll by market adoption for pursue commercial and activities training procedures focused access

on Third, continue we And scale. I'll and time that our Jamie. particularly over quality we turn functions industrial drive in focus benefit improvements. margin to from increasing productivity, finally, now the gross will to

preliminary Good A forma summarize our system reconciliation full and will on our a later pro XXXX is our basis results XX% or revenue and QX in forma year between performance website. QX on in performance in rate or describing GAAP procedures greater grew by highlights pro line compound year, my on of non-GAAP press our review to performance X. describe afternoon. XXXX before our of a I results growth January placements XXXX will remarks. annual I procedures prepared detail. posted and will also XX% our GAAP the last release compared and briefly with X-year are as basis.

XXXX we to need the patient trend, discussed calls, above backlogs. primarily because previous longer-term our on procedure growth As have of address was

During we X% of customers, with year, placed increase X,XXX year-over-year. systems an the

correlated and our $X revenue total to devices customer by the a the over over XXXX. increased time, our first for to ongoing the and transactions year. Excluding driven grew products with revenue is XXX $X.X declined use represented total XX% instrument trading primarily and energy Total XX% advanced Recurring of placements of XX%, grew of XX% revenue trading billion which in Trading XX% XXX for new transactions, for prior by XXXX the volumes U.S. XX% net of growing system year. billion portfolio year, of additional capacity. up prior by need for stapler in exceeded the systems revenue,

approximately per of shares year, million the $XXX at of $XXX million an During repurchased our X.X or price stock we average share.

shares of $X.X authorization We to have remaining our billion. a repurchase

XXXX for XX% results, as these grew Given share compared per to year. forma pro last earnings

QX. to Turning

Higher of procedures grew duration were by Our to procedures patient The higher of be need XX% X,XXX a strong. system core U.S. and systems, trends, by continues above da XX%, system driven Vinci grew to and utilization long-term grew general the backlogs. In XX%. reflects in both shorter for installed the to surgery. increasing systems mix metrics growth year XXXX. full X% utilization procedures base average address of benign QX,

surgery Germany grew Our performance markets by OUS across notable XX%, with and U.S. multiple grew in in the QX. in Japan, general U.K., procedures driven XX% which China, strength strong

in As in cases, of fourth a the procedures China negative in quarter adversely in impacted year of XXXX. were growth increasing COVID reminder, resulting QX by last

and than of by budgets. quarter, in placements the for systems growth systems expansion we Turning by remaining year, tenders by China higher at year. use last we anticorruption XXX placed in placements driven In placed efforts greenfield fourth customers. and to capacity with to customer delayed of We placed the Japan placed have in procedure we capital capital. ongoing the seen systems than XXX and strength driven XX% the XXX systems existing last quarter government. lower XX in Consistent last the greenfield U.S. placements due more in the quarter, with fourth QX, XX IDN system We higher

lower to compared system least levels, trading there year. were XXXX. Globally, of in half transactions to at expect first quarter China We XXX be last the placements as XX the at through in

were there also the of currency installed the XX% basis, were SIs XXX U.S. Fourth QX, of growth revenue constant increase in was approximately year. an a $X.XX XX%. On As remaining revenue end of of from which the quarter last base was ,XX in billion,

$X,XXX partially mix, and patterns Additional The lease robotics year. are revenue year. arrangements. accessory and their We over quarter seen independent the year. year-over-year I&A by time revenue incorporate obsolescence $XX Vinci expand Instrument primarily procedure last result in last system follows: procedure These regional average and for statistics next-generation provide partially and quarter by fourth million implemented da buyout year. million by $X.XX particularly and impacted represented lower arrangements bariatrics arrangements with technology also mix primarily in last growth negatively U.S., U.S. compared These as in lease systems in capital decline procedure acquired placements trends of given were compared $XX per of growth XX% ordering I&A is lower compared the have in compared the million offset $X,XXX approximately QX revenue mix last customers prices ASPs customers protection offset price greater a approximately selling $X.XX of with budgets. million increase were those flexibility recognized under The technology. QX with the strong in was have per of to by mid-XXXX. cholecystectomy increasing financial trade-ins. System customer usage-based to XX% we last is driven Leasing who as programs

during an placements in challenges ensure our vision which for last quarter, for backlog year. Turning to supply Ion compared as the XX system programs. and Ion launch and in the of growth effectively catheter quarter. There strong probe experienced is their to of Ion customer QX, customers compared were last to Ion. to approximately XX placed Ion XXX% and quarter demand We the XXXX contributed systems XX limited QX fourth There could to Ion, XX,XXX quarter. procedures in In we increase

supply Ion working We which are The to is of hard progress are base lease XXX XXX these operating installed systems, arrangements. making now under systems of challenges. resolve and

to Our accelerated and placed quarter to usage in SP for growth Japan. up platform continued systems placements Average customers. increased in in XX SP included and system platform quarter progress SP procedure Korea XXXX. utilization grew QX by XXXX, in XXXX. Fourth the U.S. reflecting in X We Fourth from make XX in our year, XX%. for XX% XX X placements

and local for across measured for we SP rollout Europe We in continue a expanding [ capabilities. regulatory local and U.S. submissions in and submission and proctoring SP, continued a build establish for procedure clearance to In January, broad make the including we thoracic indications are received opportunity a on ] in progress the and system as for China. in colorectal training work planning set KOLs

the the fourth XXXX. increase revenue the margins margin domestically fourth carry production pro during new forma of partially decline tenders to was I&A initiated produced The on a local inventory XX.X% capital and reserves of respect reflects platform year-over-year compared the our manufacturing us China P&L. Moving the XXXX to gross last dilutive gross year. With system. allowing and with for higher system excise to currently margin gross mid capabilities of by increased plans, in we a implemented quarter that mix in investment offset quarter quarter, XX% participate rest that require in the Pro for of forma price

transfer the ] near Coast XXXX, from system Xi during transfer California we our hub Georgia, are East system to ex of planning completed production and [ East also our to Coast to We hub. Atlanta, production

and We Ion months, California to da manufacturing our XX and manufacturing for to we I&A these to operating our facilities next Mexicali Intuitive with and line in cost. Fourth new transfers driven complete XX% product variable compensation. and position SP for pro expect higher believe last activities with X facility. Ion serve the quality open will quarter count Over head to best-in-class increased forma supply Vinci system increased year, customers compared by availability, product expenses and

We in fourth Foundation. QX, due operating a prior the forma to million the higher In million quarter, Intuitive quarter did included contribution contribution in was make million Pro for higher $XX addition, XXXX primarily interest to other XXXX. not $XX.X $XX.X expenses income a than income.

rate or tax million share net quarter million now $X.XX activities. reduction income or $X.X our with quarter $XXX We net operating benefits million, Switzerland will onetime with $XXX XXXX XXXX. last than of the outlined assets increase per billion quarter by increase million cash the of was fourth expiration and GAAP $X.XX an fourth receipt expense Swiss adjustments. reflected our with the was capital of of benefits effective associated with lower of GAAP website. in $X.XX cash the because $XXX with in for prior associated $XXX The associated of tax investments a per and quarter and tax forma reflected summarize certain favorable forma offset in Fourth from share quantified cash or of QX. of quarters, Our of certain investments GAAP compared $X.XX $XXX and partially year. I with billion pro share for pro are our deferred with statutory tax was quarter between compared of pro reserves the Fourth adjustments primarily $X.X mix. for the income end with GAAP share for the The tax release ended expenditures fourth net operations. The GAAP forma net XX.X%, associated fourth per XXXX rate results. income quarter statutes million compared of the the generated on of year and earnings at million income $XXX related per or sequential

XXXX that a certain the system me assumptions moment and that take may Let multiple address impact highlighted to Gary new modeling.

since specificity cannot pricing. we timing FDA da provide First, clearance not on received and launch have X, for Vinci we

of phased Second, will the we prior year. once the SI volumes be phased rollout, and several launch Noting Vinci than a planning cleared, lower in XXXX that da we trading trading to be at end are we that expect a in quarters. the are X over total period cycle

XX% XX% Given procedure to XXXX that, we total for lower our expect placements and XXXX. system guidance than to growth, of also be

Vinci customers As a we result of da X seek upgrade proportion to X, expect supply X will of the phased when rollout leased of to da as a allows. Vinci be higher Gen systems flexibility

For those be Vinci Purchase trading right the deferral system, contracts is impacting trading da result a there in a when X offer a negatively future to of price will can right customers that Gen purchase revenue. systems containing sufficient of purchase X that a prefer exercised we supply. a portion

X and consistent typically multiyear platforms with chains. guidance design, build period bringing market, new generations in manufacturing rise describe of in later volume the lower our a will Brian at our start more margin Finally, systems call. and supply optimize to margins and experience gross gross as we detail over

Before to for revenue prior XX% was and year. highlights to XXXX clinical I our margin over XX% it XXXX, outlook Brian forma compared me in address pro let the operating of operating discuss to turn margins.

impact We new platforms. increased of launch to and margin given da the X, be the in gross expect anticipated depreciation pressure to from Vinci an operating growth under XXXX, expense adverse margins mix in

the take can advantage margin manufacturing platforms, X; grow. new following have latest given to resources aspire improving be level of functions to leveraging and the and product returning we supply medium opportunity customers activities. the da continuity improving facilities; time; XX% driven the their fixed two, term, First, following However, the gross as da new leveraging from deployed to as see dynamics. One, for cost eventually of Improvements look to allowing to upgrade impact X, technology; been product we the over of the including to to to and return that Vinci moving into third, fleet the expansion broad cost on margin routine by above launching incremental margin gross existing operating the manufacturing pandemic we those costs second, we reduction to based opportunity growing that three, actions: will be of and Vinci the scale the

would deliver that, teams the like over it have several years. And turn over on the capability and to I to these We next efforts to Brian. with

you, XXXX compared by the full XX% full U.S., comprised quarter year XXXX. Thank the and XX% resection was procedure with of of for year procedures led growth procedure growth for growth year-over-year the XX% to for and quarter. fourth to was growth quarter cholecystectomy, XX% XX% XXXX last Overall surgery, XXXX outside general the growth quarter was U.S. In XX% of procedure [indiscernible] of strength was in U.S. Jamie. Overall growth XX% in and colon year-over-year compared within Fourth fourth procedures. the

As but to Gary continued into year-over-year, growth the grow noted, bariatric procedures moderated digits. mid-single

the of outside U.S. Looking

Over international da to have the markets and years, adoption and customers countries of support made procedures. Vinci in their we investments

procedures now Looking OUS grown procedures back total growth grown to annual on basis XX% to growth. consistently OUS about total decade, about X/X. have compound a procedures have been the procedure XX% global from past over of accretive have and

results and urology, adoption gynecology and I of levels reflecting and procedures beyond of more general we procedures, below. differ which [ While by broadly, market than of half highlight customers' of country, growing will led OUS thoracic the see by ] maturity surgery, being growth adoption now region

and procedure lung healthy, with saw on in in in along procedure resection followed France was led by procedures in prostatectomy and XXXX market by to colorectal categories. lower a by stage in colon kidney led the continued for and in the in the the of led strength Fourth growing XX% Japan continued procedures. urology resection reflecting prostatectomy. In and U.K. robotic XXXX capital continued Japan, procedures. the in and adoption, Europe, availability the China, surgery by the procedures. In general growth Asia, section fourth fourth last while by quarter of early quarter XX procedures continued hysterectomy our U.K. from of adoption gynecology in strength by Germany, procedure and surgery Focusing led surgery double-digit culinary growth the led in and quarter Growth we fourth saw third fourth from quarter. growth resection due was region. in colorectal lung by COVID. In rectal largest quarter and France procedure Germany, with placed number procedures. and resection of growth kidney growth to compared and in growth procedures, still gynecology was led of be in growth procedure for We budgets. India, from and general volume OUS volumes and procedure volume performance the a In of was healthy quarter, benefit reflecting Growth systems hysterectomy grew growth XX% remaining XX% strong in the

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

colleagues to However, we that all been in subjects undergoing open rate approach. thoroughly of detail when and lower extensive compared associated in published [ meta-analysis to authors and approach a relative digestive studies describing recurrence. XX% scientific fourth and University pooled to and publications complete endoscopy. July and hernia surgery, the Dr. of stakeholders [ for of body from the visceral from for robotic-assisted gain years. In between systematic quarter, hernias along over surgical with open multiple was a [indiscernible] to robotic-assisted encourage inguinal published with Surgery, the the with and review and a French DeAngelis lower the ventral a robotic of have XXXX Prital laparoscopy hernia this opioid ] a ] inguinal approach. With French of the analysis, more Nicola review Society Society Hospital, of of laparoscopy, the XX% to understanding evidence, surgery Club were both robotic-assisted and In inguinal regards use repairs the comparing approach Furthermore, hernia September associated both the hernia, risk XXXX to approach outcomes ventral reviewed published

conversion and wall analysis surgery repair. a injuries open repairs, robotic-assisted shorter show outcomes comparing to improved as laparoscopy. When over lower XX repair. approach for abdominal "the hernia overall viable Pooled and more ventral associated and lower procedures. hernia alternative laparoscopy site our turn a open studies with surgical support the the data and XX% to and hernia to laparoscopic And outlook ventral XXXX. XX% repair. of open XX% approach this ventral Overall, the risk ventral to robotic open surgical had risk risk lower lower of with for lower minimally surgery will may specifically, financial robotic the skepticism based for traditional bowel a safe, now hernias, For surgery, use contribute invasive for was length XX% XX% repair to robotic-assisted relative and towards on intraoperative hernia complications the The residual risk for to particularly results infections. systematic X.X-day of readmissions, concluded, present review dismiss and of technique". I of authors and interest meta-analysis stay, these of inguinal effective a XX-day risk supports Starting of increase an surgery

grew XXXX As announcement year-over-year described XX% earlier over this month, total X,XXX,XXX worldwide. Vinci procedures to in our da performed procedures approximately

within anticipate we year and procedure of a XXXX, range XX% full XX%. growth For

in XXXX. The capital Our from China a and we and year, backlog growth procedure moderates elevated therefore, activities decline assumes with modest from challenges of impacting given in assumes overall placements the experienced increasing range procedure that in guidance growth. anticorruption bariatric procedures competition end benefit range the along low last

rates, impact on high bariatrics assume there assume significant a of the no impact patient business. China in factors we do growth end is the from We have the and not current backlog also our at continues range, year. At in

year. of backlog we would assume In addition, throughout the patients any decline

will historical half growth patterns, in normalized would in of first the seasonality last the comparison half a resulting the we first Finally, for given tough that year. procedure strong expect XXXX, follow procedure of

Turning to gross profit.

come XXXX we profit gross our margin of and of in in forma year margin to support profit impact reflects and our lower expect revenue. full the profit that pro estimate be XX% growth investments gross In pro The of on of XXXX net newer growth business. the the of XX% was our pro Our will to margin XXXX, capital forma impact forma products, within gross XX%.

gross regional introductions impact actual depending margin will pricing. mix of and product, trade-in new profit product and quarter-to-quarter Our largely on vary

Turning to operating forma between expense expense grew expenses pro drive operating as we XX%. on our The expenses. operating investments growth In and expect depreciation be growth pro to XX%. operating objectives. reflects In XX% forma expense we new XXXX, and increased our bring XXXX, to growth facilities

We $XXX in to expect our noncash stock range compensation million to XXXX. $XXX between million expense

was our planned income, million XX.X%. billion $XXX With is mostly $X.X for to to interest total We tax billion, range XXXX, pro comprised to XXXX. With expect income expect other total in income of $XXX we which and the expenditures, between $X million construction forma primarily regard rate facility capital in to to between activities. regard income tax,

forward, forma comments. pretax be between rate and of our XXXX XX% pro That income. concludes XX% tax we prepared estimate we As look to our

We call open will the to your now questions.

Fargo. the first Please come line Larry your [Operator Wells ahead. will open Sir, line is of Instructions] from question Now Biegelsen of now. go

hear me? Can you

Yes Larry.

color Congrats Great. Thanks year the nice a on for all here. da the can X. you me. to on hear end So Vinci

a a I'd on So new that. a with a few Jamie, love financial how launch implications obviously, a to good questions the Xi XXXX. framework think about system from start beyond just, of analog Is maybe to the for pacing what you assume leasing? follow-up. We are a And And with lease you'll get what Xi? the I the If ASP the had have? just upgrade, of will one And on customer do returned will ramifications lift? lease the standpoint?

Vinci feature clearance. when important in XXXX we'll described once launched the versus Yes. I think where we quite sets different I an Xi haven't say today. I would are think for context we we have you which And which all, dynamics X, between the we of are do da

penetration to OUS da leasing which extent that changed relative penetration. has Vinci at The significantly, our of period. look You over

I I think get X da to on feature of reference a clearance kind and are for ramp that any as think number not about and would we once further the I would there are Xi make the a able talk where that of comments Vinci But might to point factors, through progression how set. progress. I Larry, use you

There could be color... any

the to respect lease. With

executing that of there So in lease. at even is asset at number there that system an you leased, a benefit trade to just I an do have look the to at under to capital existing a as we're dynamics I of budget is have to dynamics the the But think look all think other can and look hold If that they so motivate a the far I if customer they are end barrier everything fact a avoid yet else customer think equal some will to in describe. the upgrade. I

new then I And try the system, luckier. by Okay. guess on I'll

Just expanding the Xi improving more same expect on lastly, indications do is Gary, this in launch? And procedures about addressable or existing outcomes upon you procedures?

Yes. IDE the in the some indications down was broad end, indication trial. in the forth. a answer We like questions trial, What how and of back submitted for we a come it come looks that that broad will to

not endpoint what telling the I'm is, you you is. So our point starting I tell but what can

there, but that do SI, depth. clearances the some allowed surgery had for progress is We already penetration categories that and In and some greater really into penetration we for could system. had it of maybe the depth, some some and us analogy terms you product we're of kind forward think general an earlier with will nice improvements additional in of breadth allow Xi

Those that opportunity right for in gate. unlikely to occur for We features future And there's indications the talk of depth. think or out to time, are there's about to there's So think indications. additional opportunity nice about calls. some really we talk over

of the Bank America. next go to go Steed, We'll Travis We to line.

hear okay? me you can Everybody,

Travis. Yes,

Maybe the think about changes. likely could changes. hundreds just the more quad about Vinci you da just Or just design just level, is Vinci XXXX? And you're more with versus kind of high XXXX? we for is maybe some to Vinci different it Vinci talking were kind what da high trying What's solve it see a in X? of in X da design system and possible When X level, about like about you having of da talk X aim, of driving

laid you X, forth for kind what FDA. in script Vinci I'll am and more and about with out was. the to final design our the of but clearance dying I tell for da wait I back methodology

a So we more care. do with that can little

kind it. excited that's that's of We're where So And it. about we are.

substantive. think improvements be is some I can and that it the are we going think interesting exciting. to bring I of And

that way 'XX. we clearance goes conversation we're is in I and say, that understand. experience and launch. forth them submitted, be we'd are hope past hand. don't when We what certainly clearance. with in that But about we a have It I and the a guarantee we're it's in 'XX are in excited want we the if it that They arbiters it But of something with back the And is constructive the I'd based ultimately is can't because FDA. get on our

and how on would or you expect that look year the That's uplift the manufacturing? factor helpful. long And do the would a of some versus how it kind And to that's of about talk these forward. capacity, limiting launch? availability get the X? you Can versus if of kind where hundreds Vinci curious ASP kind of year a systems also sort scale -- a And manufacturing da going to of thousands maybe Xi take will

Yes, it's be I'll some it get going that it buying. What to they're say We for to differences any the And I'll color to want detailed call ASP what now. understand won't right XXI will final clear both ASP to discussion a bit on important little be of customer that just detailed. to with is are there make and little relative for a the and I start We clearances. over turn to through then Jamie.

going to to So manufacturing pause launch. regard ramp, that phase now. With be in a to clearly, we're for we're going

we'll think over process. But of constrained like of supply side what that of I be in intentionally turn you. in of terms early the Jamie, let as might it pacing me feel manufacturing to through we work kind that

and keep beyond walls obviously I think have would us that how our X something and is Certainly, the To some our both several take with extent, suppliers. but it progress you quarters here, we'll depend progresses make to updated. year, be several within that's quarters. to I you watch will

Robbie line And Marcus, to of JPMorgan. next we'll go the

rather integrate lot software software forward the X Is add my can again. X. about is and Vinci I'm improvements to just to data good da Congrats philosophically ability to? we we weeks quarter. of see if updates systems. we'll on talked we a think a something be looking Maybe into details, this luck on realize about you're the more the it to not something going improvements? things potential stage future I and than hardware one push Gary, giving software your but specific really ago was big

Yes.

about increase in future for script is things the that the the of capability rebaselining that the system. we talked system, And the computational one programmability. of reasons in of of is One the

that bring of Some us sequential and we'll pretty rises. things are gives the out base exciting, to gate it also that able opportunity but to build of be software the the on

through you a will market, good So it's make bring do not a and one, to is Robbie. software we to point. pull-through, it's capability. It that a but starting software good point pull we The want be just

Just done that which to build Xi we with add and a we that do we time, for skill back launch at do the something will for years, build years platform of It's is possibly that remind everybody to period, and come. over Xi upon can everything many in we can to we've DDX as same first we that could either. launch have capability build didn't the in it year

the operating both. OpEx addressing talked talked this Maybe a when where in And plants. spending we're about seeing in then for for these are see all one is year, seeing you particularly product them X might SG&A? maybe good expansion margin these what about of How versus year, And years elevated the about we each? new moderate? of up types trends R&D all manufacturing frame stepping activities about midterm as the with And expenses think going, Great. to time the OpEx in CapEx should think Jamie. launch, midterm, we you also this

Yes.

investments In manufacturing and CapEx add Mexicali for take facilities me 'XX capital capacity Let are to and first. 'XX, in manufacturing our the factory. majority particular to of those

So guidance. sales, in portion and comes reflected gross depreciation in that of show with will part 'XX the a margin in significant cost that's of up the that

R&D Obviously, in will least SG&A. If important relative SG&A in innovation opportunity similar. an of in to be little have growth at depreciation. still in impact There broadly respect and do the to other leverage scale also functions. are that opportunity I'd of that leverage bit up in in OpEx, of for is relatively and over that of operating said enabling prepared reflected to my show in incremental of us. some will can margin But we'll the expansion so you functions see And the it that our described term, some as grow, X-year We that's and 'XX, 'XX horizon. therefore a to R&D we over look the of to X- at it's a kind remarks. and next kind we medium Some think I I I say couple will look years. With

completed. terms variability, be as specific a and actions of There's to there's some and goals. that to set set how interrelationship have need Those executed of We that in execute. we those some obviously, between get need plans they actions have teams of

at of executed. business there in which that our can the course, dynamics meantime. And have speed the impact that gets there we So run to are

And Rick Wise, of we'll to line Stifel. go over the

different we details, what just ever. can to are updates Ion curious Maybe demand continue. couple the get more that, for some X largely to great gets Gary, dialing you 'XX? next thinking 'XX going see into How are color When of I'm what -- thoughts limitations? on and for the go and into in more Gen you are 'XX your priorities about for Jamie, next? more good thinking quarter SP. about the SP, Maybe us your and you Everybody, gave constraints better announcement. on about the the strong probe hoping direction. I'm Ion you color a of years. vision slightly How team are What's strongest catheter maybe the some the and side, And are you resolution result? and supply that and

Rick. Thanks,

which took On has in It in and We're the see U.S., activity of 'XX. front, the we're with been efforts about too. Japan, into in step in seeing SP more good. team starting forward good. our we're commercial a build was pleased they its We're to Japan, excited focused entry the

So good. that's been

that's as 'XX, was I to Europe expect Japan. nice in see broader it of think it We indications and a that's set in step. Korea another And in clinical and

more that great. In or been have -- have is soon use U.S., that more So multiplatform it SP gives us will submitted a we submitted be environment. little give colorectal operate, multispecialty accrual opportunity and customers freedom thoracic had our trials in and the to a which to will U.S. finished in

be So I to build. a think SP nice continues

has and that And So good. looks that is marching of working team orders their set processes. down

make 'XX, thereafter. trial oncology we're opportunity big about starts breast surgery additional access a but ongoing have in that excited not that impact We that's also will a for open narrow to

of SP, turn where it far, so so about good. I'll to So Jamie and we in that's kind over Ion. talk are

supply the to particularly on ready are specific chain yet Not when be challenges behind us.

For you catheter, X have dynamics.

impacted supply that had a we constraint us. specific So

lines is And business to on same you're new train so transferring staff, catheter them. as Mexicali. the doing you're of to number We doubling, we're time, effectively the are, at a that having bringing

there's effort in think real time. to I a of that's get when terms And that we some So us. variability where bit of point that's takes little a behind

to another going we making but us work talk before quarter when still be I'm that's progress, about have are The done. let will clear there's teams So resolved.

are doubling probe, the I really a able dependency again, the execute, to transfer being simple address. just On team and stay But making great as progress. us us problem a think business a It's for particular relatively Vision supplier line There that within tuned. the it's to is isn't area.

Gen what's next. And follow-up Got one just on and you. X

this all the or upgrade customers that could probably If dynamics said, Jamie, launch, How should term does makes leasing this was to them probably an for favorable Or those X the position. I you to this how with sales is guess, potentially Gen preferentially, sort that, that you. Xi near and toward puts occurs? a lean be work? of in accelerate leases just until as more it, -- quarters couple imagine But up of You that on approach in understood and going Better it sense the reflecting I are people, next Is more that it more that in maybe clause. will we I and all possibly good? get for complicated? transition line

those it we'll first it's think been. proportion I so that the because they have placements is effect when that's Vinci increased can broadly becomes lease from customers upgrade clauses X da motivated the where see again, in that's more of to the are protection Well, operating available. And

So was XXXX terms to in wanted the modeling. provide that message we of first of kind

does a upgraded, work there's function of obviously In about of specific be right then time X and can't launch period things constrained over phased go with which gets a really some it's then from a through when FDA. the to what's that full we then launch, Vinci da which now, terms how of or launch. to we And

And so somehow a as in revenue particularly I that 'XX. don't see benefit

is and over leased is have revenue of that more you'll the saying time. I think that we're are what placements spread therefore,

as it, transparency, feeling More having the likely it and to wait of customer to place they'll a we've mitigate And ability accelerant. be things in to chance for I a But work see put to a an their than it on to slight I hands think see the get and see the put slight don't negative positive. it.

to And of Piper Sandler. line go the Maeder, Adam we'll

regarding and to I the that I correctly, wanted heard -- system Congrats like as on sounds effective about correct on it last the quota commentary to went placements be anticorruption summer as year. If start ask first geography systems the -- the through mean expect great get optimism year? seeing well impacted a the just could additional appreciated. China XXXX. you campaign. some you're in campaign Does would that placements what there's very color any half the of that in impacted be be on of to anticorruption better back And that half

a that, the that have is been year-long which would effort anticorruption far 'XX. effort Indications us take to middle of so

we frankly, at that have And great 'XX. half of ongoing. in We 'XX. why first effort period remarks, half don't that's said expect is why beyond we delayed which the indicated so prepared of that least the visibility, would through And first in the the we that's tenders through

where start at in a So normalize the yes, see in if not can to to recover. effort then which to resolved, tenders things that opportunity predict of pace that be at terms we point. occurred, But for position that you some we're could this and was if

That's helpful as, the that ask bit, year. for to to color, the flesh wanted I follow-up, this you well versus procedure growth guidance, Jamie. a could cadence Maybe as And little little be for would as for XX% XX% quarterly on about the out you're U.S. guess, color thinking international. I a How about geography, And bit by appreciated Europe well. just Asia that versus specifically. any

And I'm seasonality. a think will year. I first emphasize with versus start do that comp cadence, me that tried not last going specific quarterly Let on the be our be remarks but believe to half we tougher I to in prepared

thinking could about And last and I also at comparison -- growth then just that rate history assumption growth that and an you throughout quarter. be can so year, think historical look from year what sort the the of our that, on make by what using rates cadence those

about talk in Let's procedure the factors guidance.

bariatric the called and in we've We there's factor. a primarily -- -- factors, an China backlog primary system. talked and You out bit also rates, OUS that's those really growth perspective, So U.S. have X right? a about then from

so also And still backlog broader. U.S. factor. But the being could primarily a be

rates. assumes the persists the you the just right rates, I the some versus in the China current on at comments go that bariatric think U.S. how how as continued there's and end range far discussion backlog at that and as around of there's of specifics impact and in really back benefit I'd growth it throughout then into go the center anticorruption range year. procedures actually from the Low long to going not high the end right? will you moderation That an end that had I'm that bariatric So OUS. now just of that range our and some growth assumes of persist But low and

primary in core, OUS, would is XXXX. general we 'XX, be 'XX. beyond you surgery drivers In tissue those if urology X at continue growth think called that the XX% XX% in growth at say, the for U.S., soft for I look surgery, in grew that business. to just grew out And the that And we've the drivers

line. Morgan Stanley. line the And Drew we'll the go next to Go to of Ranieri of

thinking and just, maybe broadly you Gary, you're bariatrics, you maybe on on the updated could could us today I ], of set help surgery level hernia, TAM update where just this are a because month. the kind you earlier da for you that another this at just general how with And Vinci maybe be about like X just How us progression it penetration conference just the -- colorectal are had in in sounds to general follow-up. [ COLI then company? surgery,

characterization of I'll general curves [indiscernible] are Jamie, where on. surgery, the calling and Sure. kind you we adoption hernia in of let so take the of

Yes.

you along quartiles look the in adoption at second adoption quartile curve, in the and take second a If where and for colorectal second quartile. are also curve. I'm the put in U.S., actually the cholecystectomy second in we're where the this are they quartile hernia going a the to all terms Bariatrics, of of terms we in in

in U.S. on surgery, general we're that surgery way, most behind general growth first start colorectal the and stick growth beyond seeing thoracic. in start cancer -- surgery of seen. In some early. in grow, procedures, growth for adoption. those we're that's most rates. is And just to and markets, the we've in us of driver continuing Particularly the runway early larger the markets, hysterectomy What the a that don't rates quarter international general obviously the It's be in so of the gives terms to part and and to by

call clearance. about We'll places. look you targeting we about it's improve do something a DDX think can We forward what I to get multiple that specific DVX talking talk we out the in And chance talk about we been. to have With that when won't [ outcomes help about more regard to ], opportunity. that has to when

the you If Drew, follow-up, one we'll Otherwise, have close follow-up. I'll the take call.

one have you Drew, So more?

Sure. Yes.

it just have having more maybe access might multiport with have in be Can opportunity? added to portfolio? maybe IDNs you many about even do do da better systems hospitals able access you to see improve hospitals. on how you know systems, X. that I Or the but that Vinci for see as Just that talk more just you smaller an

Thank Yes. I be will a prepared that We the part about makes hospitals. that for having a in give ton of you to think this choices portfolio. portfolio script. ought talked And of sense for We of a the choice. question. it people

Some of how that view do choice to will with practice. have they their

like looks do Some of what of with and may it feels site have their to care like.

that and some gives customers gives So optionality. our optionality us

that's think really healthy. I

Appreciate question. That last continue surgery to our So interventions. and opportunity Drew. closing, substantial thank acute was is believe improve the question. to there In and durable a we you, fundamentally

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

joining We thank call. you, you everyone, for today's for Thank conference joining. do

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