Intuitive Surgical (ISRG) 17 Oct 242024 Q3 Earnings call transcript

Thank you, everyone, for standing by, and welcome to the Intuitive Third Quarter 2024 earnings release. [Operator Instructions] I will now turn the conference over to your host, Brandon Lamm with Investor Relations for Intuitive. Please go ahead.

Good afternoon to Intuitive's third quarter earnings conference call. With me today, we have Gary Guthart, our CEO; Dave Rosa, our President; and Jamie Samath, our CFO.

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in like differ would you inform expressed a implied materially call from the These detail Commission XXXX uncertainties. risks I on ended risks and forward-looking most statements. are described December filings. result that our and to as be Exchange those in deemed on, contain and filings, mentioned of Actual recent today's uncertainties Securities to Form fiscal XX, Moving our including comments subsequent XX-K and may results for certain may or year

through website. on at the found available place will Investor Relations or Our for Please page. not forward-looking to call replay can our Investors website section reliance cautioned that on SEC SEC's intuitive.com on such under note be our the audio undue Events statements. be at are conference website this filings our

procedure question-and-answer Jamie a for Today's described announced will by host I data question-and-answer our been quarter website. and then outlook session. highlights, review as finally, business, will to our highlights press our session. consist provide we will tables quarter's updated results format highlights, clinical followed provide you third financial press will and posted our business Today's of of the and introduce results a and call our have earlier providing release today, release in supplementary with overview, And Gary a Dave the will a will operational present XXXX. financial of provide financial

to will turn it that, Gary. I With over

strong us a of execution for us operational capital with and in joining placements quarter for Thank QX XXXX dynamic a environment. procedure growth, solid global healthy you was today. good

X,XXX platforms our have globally. multiport installed base on regions. system, providing roughly off and perspective of an our kick I'll now we by our a Starting with

is capability da platforms, hear year care Our X-year in over to approximately multiport months. and this which multiport hospitals Vinci approximately system million Systems March while and across X our completed today Vinci first-of-their-kind has procedures product past standard the procedure using outstanding, launched our you'll taken the growth features broad setting years. outcomes. later helping Da our our we in which Vinci XXX past margins. the of bringing treated lines managing over XX,XXX has are for X da XX securing logistics roughly improvements well installed for ensure several in additional dependability. were patient customers outstanding for with da total Manufacturing, stability the XX%, clearances call. rate Vinci has towards will in for multi-port been moving X, X of think in We're into process addition and regulatory improve surgeons, and launch multiport availability global fifth have teams increased compound annual been in that service about with using X years, XX patients a generation million We

anatomically which biopsies every to Turning Physicians States. installed segmented the Today, completed QX Ion we personalized based the is of than our anatomy, base have one XXXX. model a in on more of for uses in United machine XXX system, date. lung launched XXX,XXX digital of endoluminal intervention patient-specific are Ion which case. the XXX lung to Each in using learning-created

peer-reviewed are compound over has been X-year Ion. XXX XXX%. and rate has data Ion outstanding. There growth annual for accuracy Overall assessing articles safety procedures been Our

and in experience. quality, product have customer availability Over year, we the excellence past focused on product

vision upgrades significant and improvements have our launch made dozens catheters with updated feature and have and to times of its Ion X software We since probes.

to now regulatory play growth completed and XXX. efforts X-year additional procedures with strong XX% Over increased continue growing stands expand our the continued in We Korea, in Japan CAGR we'll U.S. and applicability. base cadence the to indications. been utilization innovation pursuit systems next Europe encouraging performance We've at globally broaden a United the date. and installed of da increase XX,XXX total existing to have of in States SP system SP at launched have and accounts seen to its to procedures in beyond early SP QX and our in XXXX of of software X years, Vinci activity

clinical Japan, clinical over stands as outside peer-reviewed at and base the U.S. in found has Taiwan The broader uptake than United SP now evidence the Europe, Korea indications SP States stronger XXX journal are articles.

is Our on SP including increasing on on indications markets proctoring advanced stapling system extending and SP next-generation energy instrument networks U.S. the lineup, in and team our in global focused enabling our innovation.

quarter. are X,XXX our efforts, base In on per virtual installed digital the in nearly Vinci reality training complete da approximately simulators XX,XXX simulators hours of surgeons and

Intuitive surgeon intuitive custom X,XXX and is enabled approximately XX,XXX. now We of a program, over app rooms. analytics at my rate Hub run hundred operating our several Our for analytics quarter. outperformed active exceed users X,XXX times hospital in per

faster lower enabling digital outstanding progress ownership, a Dave Our tools will data in tools outcomes and interventional that X and focused the of in on and is pursuing pillars, tools capabilities efficiencies help privacy. better all total that digital suite, create improve cost and digital cybersecurity care that shortly. touch OR drive team on while teams our

region. high-quality multiyear us balanced serve satisfaction increased and commercial include has been global our teams Regionally, and to customer engagement, that to logistics that build R&D, payer has country strengthen we activity, capabilities and been capability. globally regional have effort with customers investing interactions. a These allow in This production

the In XX%. annual the the has has in Europe X-year Our rate outside Asia it procedures other markets XX% U.S., region has compound XX%. CAGR been growth our been region, procedure X-year and for been

teams early our serve we're patients our obtained Reimbursement other the new pursuing Overall, to coverage ability to clinical been globally dozens platforms, for the in relatively robot-assisted services around the robot-assisted of products customers to That serve we or have in and still localize has industrial by of surgery new our at expanding serve. our scale, interventions for more indications. many strengthening surgery expanded and world. procedures been opportunity obtaining countries applicability of said, our capabilities and

to are aim bigger our on improve is We've digital strengthening with there. our patients insight. customers and ever, to and execution get been to disciplined high-quality our for support like ecosystem and quintuple outcomes opportunity ecosystems company also data technology our and we focused customers' ours through than advanced The

R&D the updates. over I'll to to and time turn take operational through clinical, you now Dave

the was relative to QX Da growth additional Growth an day U.S. XX%, surgery Starting Gary. these U.K. you in procedure Asia, again to call. from consistent the market will dynamics we contributions with Vinci the Germany, the business France Japan, growth by Jamie conditions, with accretive Thank mixed global first procedures. half aided the on XXXX. later year. In largely describe with and general have of rate the centered in quarter in the

placed systems Turning to da SP Vinci XXX and XXX We including Vinci XX systems the quarter, capital. systems. X in da

Ion. globally our installed Europe We markets for also and Capital clinical installed SP our quarter. utilization the X% defined procedures platforms, quarter, for XX X% Japan, and pressure Ion as capital in multiport System systems in distribution for U.S., China year-over-year per system continued. grew and in solid XX% placements and for the India were

was our within our quarter, and expectations. grew the spending XX% Turning finances. Revenue to in

in research to later tools, in the and and manufacturing finances from platforms of through will Our expansion the our spending functions. Jamie our our reflects support planned detail development of greater investment growth in facilities our and leverage you enabling digital take call.

the launch QX, In continued our Vinci our we XXX plans. in systems progresses line with rollout of da measured X as placing

becomes completed We care X. month, user professionals several cases da data use of preference we presented with gathered X conference, are X,XXX encouraged health and XXX X data over more robotic feedback. Customers available. A highlight Xi, have Vinci platform broader to early programs. aspects analyses broad to customers customers da case across a when of reported XX,XXX specialties savings at our time and force as comparing by look expressing da their number for efficiency Intuitive console about to the of and around their Vinci various Last with forward Vinci annual have

voice in of colorectal with with and her described Rashidi Force a leading from initial her focus recovery patients Even X its impact forces, on when managing on cases Dr. Health da for gentler Before a MultiCare show its results. Leila surgery our Feedback force feedback, Dr. used. in Rashidi Tacoma, Vinci reduction is about on surgical further XX%

X have pursuing on been complex Force than a more from and lead for less experiences. Feedback force belief is it patient decades, to improved that tissue stems that can technology we a

study Force believe accelerate will of may for Feedback Force we We to our and Feedback care with customers. also teams, the use continue learning

working continue teams our and Feedback increased margin quarters, coming the to over publications of more supply product expect Force We improve instruments. hard and

said have these maturing before, time. insights take As will we

future. improving procedures our used, Ion record enable we these have the innovations core part our and instruments Turning digital in millions duration learning procedure To electronic such to operational on insights, unique insights that extract and da review medical digital efforts. Vinci believe from date, We become efficiencies platforms with to should more. of of data and outcomes, customers metrics and as data, coupled clinical operational a can that

enabling are be electronic of cases hypotheses In tested. and records, clinical addition, de-identified hundreds thousands operational certain corresponding medical these of connected to

case Force outcomes. in will or video tool Feedback analytical a Kinematic, to that data operational clinical postoperative analyses and between new our reports, data further is Vinci system enabling Insights da Case My identify to Intuitive connection physicians and add

require build at validated will of believe But are it will time of cycles data We take we technology stages and be innovation innovative sets. to the early powerful. rapid

process for X and technical submitted we in forth regulatory Last received Vinci the in week, QX, we in In Japan. and back clearance in are Korea file our CE Europe. da

began This update quarter, hardware addresses completed launch software that of da early Vinci customer X we broad a shipping feedback. and aspects our

enabling imaging digital launch we midyear driving simulator when in XXXX released a of to the and features. have are operations, we'll broad scale our various update toward and hub We at along software manufacturing and be with integrated expect

our visualize instruments we XX-millimeter tissue of the procedures. tight surgeons XX-millimeter QX, to that spaces often SureForm currently is in used kidney XX thoracic where primarily lengths. SureForm and stapler, clearance millimeter X and obtained includes in for XXX(k) our diameter decreased staplers better Moving instrument access cases and seen or as and portfolio of In to XX XX, versions accessories. SureForm X-millimeter XX expanding advanced enables

are where first perform our We cases. China and saw in we commercial starting Ion, systems placed with X physicians their journey

that We number commercialization early Germany expanded strategy data broader into to In country. working and Italy. medical inform our centers the our a of Europe, launch begin will collect with will in

In Taiwan, received Korea, and Japan broad the SP. with to to clearance quarter, indications similar in we Turning Europe.

continues a U.S. for indication. we're interest in also Commercialization and submission customer colorectal SP. We encouraged plan, a XXX(k) early completed to Europe for by according

published recently we found review some you with share to peer literature like notable. I'd Now to be that

CONFIRM The with tool enabled noted location XX.X%, in high size or all of observed. nodule and size, diagnostic Center In of Subgroup less presented results at CT over regardless nodule observed yield a published demonstrated presence rate to across of addition consistent the presented multicenter integrated XX years. patients a of analysis diagnostic of on throughout Pulmonology millimeters, in results Oncology bronchocine. XXX a Ion with specific centers from call, were system pneumothorax nodule yields beam cone results X% body Kettering integrated conclusion robotic-assisted the highlighted platform CT for X from across shape-sensing encourage this and outcomes scientific in X the to CT a of institutions." evidence close from high we the evaluating pulmonary detailing nodules, the study median Memorial centimeters is the topics platform U.S. a be These yield Interventional and Cancer small In quick. bronchoscopy mobile With the diagnostic data complex the that centers Sloan with approach small excel enrolled. the a reproducible August, physicians able study. may than in Dr. CONFIRM cone studies to "integrated safety compete X and global size, prospective from you endoluminal of with wide the nodules consider demonstrated beam biopsy Hoste nodules and American results and XXXX Conference Brian biopsy Association transthoracic for Annual in these suggested integrated

XX,XXX in indications Atlanta, of Surgeons' in College Earlier National XX,XXX study in in a arm this Surgical and the Program which robotic-assisted regression database study Dr. over confounding procedures for Department patients the from American included benign multivariable arm over the laparoscopic were the year, performed through logistic X,XXX in controlled Improvement with Quality for the XXXX. Magala analysis, factors. Ember approximately University in journal robotic laparoscopic surgery, cholecystectomy Using of published the comparing Surgery and Georgia, the at

Patients also conversion undergoing when than XX% the conversion authors risk a risk might hospitalization adoption safety lower minimally of suggest with and with national for that chance reported compared surgical a study conversion robotic of lower well authors a XX% recent hours and robotic-assisted The a of a independently "using open of cholecystectomies associated XX hours chance of to to and elective to findings open requiring laparoscopy. The of hours. showed robotic-assisted hospitalization enhance than a as serious to XX% cholecystectomy that in lower XX lower associated at invasive lower These lower and of cases." chance selected cholecystectomies. the of technologies overall, and rate reoperation a risk at greater experiencing serious XX of lower complications, XX% of XX% new large as an more surgery The concluded odds open were cholecystectomies lower XX% only looked lower hospitalization chance of over implication database.

are In improving margins; and priorities, to Vinci benefit finally, by quality procedures a supporting those and global scale. in other committed our surgeons' of measured productivity and of closing, focused supporting we from continuing to XXXX new that functions region, product our improve da X adoption our launch platforms

will the finances detail. take highlights over now I'll procedure who turn time through greater Jamie, to in you and our

on GAAP on afternoon. our reconciliation forma forma I GAAP basis or prepared A website. posted the our our also our describe my remarks. later pro in of and between a highlights is Good performance performance and will pro results will summarize non-GAAP

growth strong a growth in of da Vinci business growth general installed the was of with systems XX%, and the and reflecting India Japan, France days procedures U.S. last grew XX% surgery, strong da procedure grew base to OUS solid procedures and growth On procedures. South growth bariatric be U.S. quarter. system a in to similar Procedure strong thoracic the by on general surgery. XX%. QX benefited robotic in a growth Vinci growth improved our in the in and in overall several basis, market we XX%, the procedure given competition. growth was still to prior trends year in longer-term given from described driven Vinci was benign the continued precision below corporate da higher Procedure compared ago OUS U.K. average, XX%, X%. metrics historical procedures China, range, quarter in day-adjusted Within declined period from in previously below system but was day-adjusted of recent Core ongoing Korea that up of number utilization basis, Germany, QX mid-single-digit the trends have and In domestic markets, Eli. placement reflecting growth strike. procedure and gynecology dynamics QX

in to XXX year. quarter XXX da the Vinci performance, placed placements. QX to compared the third we capital placements X X compared in placed year. XXX systems last of XXX system systems XXX of respect in with we systems In U.S., placed With last the U.S. QX in quarter in quarter systems included

we we systems and progressively X trade-ins. launch the shift broad As we last mid-next into year. in compared toward U.S. XXX systems supply year, with the move placed in XXX placements will expect increases da quarter the Outside of U.S., X Vinci

Excluding net system new markets in year-over-year. trading XX% transactions, placements increased OUS

China into QX XX with XX included Europe, continued challenged capital compared by Europe, XX impacting Japan care spending. Europe of government last into pressures into and in into be X into in XX China into Placements XX XX health ongoing year. system and budget Japan to placements quarter

base in by from business. an was increase Third quarter and year procedure of our XX% expansion Vinci driven ion da growth the Vinci billion, installed $X growth, revenue last da of

was growth On a currency XX%. also revenue constant basis,

and statistics of prefer are revenue periods, represented and as of selling as QX greater higher proportion million of reflected buyout $XX mix Leasing $XX in QX average higher lease follows: a million da relative reflecting placements, of trade-ins. capital systems. revenue compared XX% X $X.XX prices customers strength a recognized recent to much Additional system ASPs year-over-year a the than year. last where We last trends $X.X to with system million mix X million quarter our and quarter were U.S. in $XX Vinci Higher million of year. compared last lease lower

distributors. was decline and last lower procedure driven primarily year-over-year served $X,XXX. revenue accessory $X,XXX, per flat Vinci by per Da and than year's was and mix prior to quarter in procedures approximately mix procedure a lower instrument procedures The the bariatric I&A by markets a higher of in of

in XX% grew our and XX,XXX XX% systems compared third to approximately Turning procedures quarter. to QX, quarter. XX% In Ion year to Procedures we platform. XX last last placed the Ion

backlog reflected first in lease system as of vision operating As and Ion year-over-year XX% XXX X included Europe supply XXX in a QX base Ion arrangements. of first placements placements of improved. increased catheters The systems X and a China. are placements in catch-up placements systems, half installed to probes reminder, of our which under

Third quarter Europe. in strong SP which XX OUS were and was the SP to in with multi-specialty XX% in stage from of base growth growth installed the early in Korea, year-ago and in growth quarter U.S. quarter of XX the placed systems systems. Japan The grew placements procedure markets. systems, growth were XXX strong the SP XX%

XX% the partially costs of XX.X% lower was rest for the third costs the component compared of with year-over-year overhead, gross P&L. and of improvement to margin fixed in higher primarily offset the quarter leverage to on forma XX.X% margin last forma quarter third inventory XXXX pro quarter. for XXXX by Pro and reflects The logistics gross Moving reserves. lower

we Coast new systems our of and at Peachtree East X production commencing Georgia, at site. facility manufacturing quarter, the system our hub Corners, in During Xi that opened

our Bangalore, Center training for other in center and teams and India, and capability global local service new IT are our Global where shared resources. commercial opened co-locating also the We we

significant capital recent depreciation as given expense in ongoing reminder, a increase investments, we additional online expect a facilities. we in bring and XXXX As

Third and Consistent increased XX% revenue of roughly customer-facing we year, aim of the quarter expenses with investments activities. innovation XX% growth. quintuple by operating forma and have count forma pro prioritization higher R&D compared of of driven with our couple the expenses head expenses last our years, that increased given legal held higher pro last in drive

allow to scale benefit growth. as efficiently we continue us that prior from expenses with investments SG&A leverage to

QX a compared of During growth. which in added INA approximately driven points high-volume of of same gross support was increased of basis in forma result period revenue, year. and the basis, revenue half basis pro XXX SG&A year-to-date the XXX XX% through increase margins a and to of year-to-date our were leverage operating employees, to margin higher prior On XX% in higher we a on an just manufacturing XXXX, by facility quarter, pro Mexicali from the expenses EPS margin growth over procedure XXXX, as forma operating

income income. for $XX.X quarter Pro was the forma primarily QX, higher interest other to due million $XX.X million prior higher than in

Given expect going rate interest decline and interest environment, XXXX. will cash average the on we investments the into yield our

pro benefits and an of primarily certain the for approximately Our forma tax of third reflecting expiration to rate quarter million, for the deferred relating adjustment limitations $XX reserves discrete was effective tax assets. tax XX.X%, statutory to our

pro $X.XX share last per $XXX quarter $XXX year. with share million $X.XX or per or Third the for quarter was income third XXXX million forma net compared of

The include of in $XXX ended net and billion quarter. quantified million share stock-based than $X.X for pro adjustments offset We on and summarize are income and litigation plans, income with GAAP reflected tax of equity and charges capital the GAAP cash for benefits intangibles, employee $X.XX from and partially of associated website GAAP million. $XXX The activities, we share with between with compensation, now increase employee $X.X net billion, last sequential the the GAAP investments third $X.XX or per losses was and cash of QX quarter $XXX forma and cash generated ended will by on higher operating investments of gains investments. XXXX strategic expenditures third XXXX. million compared excess I quarter our per of outlined income or our net results. amortization

that, with updated outlook. like Brandon it would And our over to turn I discuss to to

On turn full XXXX our and XXXX. year a now Thank outlook to I you, for our range forecasted within financial last with we procedures. will call, XX.X% growth procedure Jamie. of Starting XX%.

procedure in are and and Asia from elective do XX.X% strikes low We procedures a end range China China not low we of current growth. systems bariatric end increasing year significant Korea to of XX% headwinds in IV and in growth of full get high at does domestic robotic procedures with headwinds procedure in The quarter assumes shortages now of rates the The along expect physician impacting raising therefore, XXXX capital the XX% growth range in within worse. bariatric the in further hurricane-related from assume result range Korea and delayed range, XX%. to other and from a and tenders end as softening stabilizes and placements impacts. not reflect impact At or the

Turning to gross profit.

forma profit within We to continue be gross margin to revenue. and XX% pro expect XX.X% a net of of range

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

Turning call, XX% operating growth to year expenses. be range forma a of XX%. our to we XXXX within operating On full forecasted and expense last pro

year a and are lowering and high XX% be our pro end expense XX%. of the full expect range growth to XXXX We of operating within forma now estimate

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

We mostly million between to $XXX and is interest comprised million XXXX. are increasing of income, our estimate which total income in for $XXX other

capital construction to to income activities. the forma we rate range primarily With range and With billion, facility $X.X pro be tax, continue of XX% our planned of XXXX a prepared within to to regard XX% comments. income. for we estimate income for a That of to pretax expenditures, concludes billion $X regard tax expect

questions. your to open We will now the call

first America. go Steed, we'll Bank queue in Travis Instructions] of [Operator through question And the

a resonating software? just dVX broad and upgrades the launch. thinking Sure. of CFOs now contribution ad little a dVX? the some customer data of with data more I'd and expect mid-XXXX of any dVX about little contribution make you to kind the Do bit some the the on or dig benefits, of between with to on fairly on in Maybe ramp are profitable the hospital more margin benefits actions And that love early margin to

answer some scheduled in of those your in are you'll launch updates, our make terms continue And is software them come see this out questions routine of broad where Dave. I we going on from here -- to kind we'll plans. around they're so Travis, of to semi basis. a as will

have additional to described as comments, that release broad enable have some software to some that in that hardware We get in features and launch, we my of a will broad frame. launch time

side that supply we we of modestly the year next quarter-over-quarter broad For dVX, into into expect get to as increase and launch.

margin Jamie... contribution the On maybe, side,

terms just we're that, the what I'd with that a say seeing with to Yes. margin was might executive in publications we was in the given obviously, institution gains an of that contribution assisted get respect there it illustrative publication one efficiency. of

seen. I collect the early surgeons they've the that gains in of surgeons allows in both have time, early are number for and have and the think And feedback given in we reporting launch, platform. our and as say to higher administration. has a of KOLs broad efficiency number we and console I the efficiency are with have that early, the I'd sophistication We think that on improvements part that's get that that's on use a from focused perhaps a Vinci into conversation opportunity look evidence terms validation been of but throughput of of to da procedure

next Wells Larry Biegelsen, go Fargo. to the we'll And question,

have I think, supply in how to process procedures, take? expecting the earlier you review may. heard for launch update Do and that on than I One approval, timing? I to the on came in And long The the are people back remarks? me, Korean Europe forth on And follow-up. I what's international away? right you just if the And have one Japan one prepared expected.

be We Korea have demand. do support Yes. to able supply to

so true. is And that

in have We Japan. timing outlined not

remain forth. year Europe, next of respect and expect where end no that then from that the with XXXX. And Mark to we different in we in So back last near quarter CE

and you commercial in Could we've And you Dave key and where regulatory size recently from for some forgot, about addressing And please standpoint? these such clinical, leaders tell heard and you helpful. That's new you it. talking opinion procedures. of as or are these us hepatobiliary new Gary, appendectomy, procedures? started procedures would how a Got emergent

foregut are They relatively in to gone small rates a time. categories, earlier for they accretive terms probably is and that's been those some in to U.S. accretive It's time both much the are respect them a of of commentary nicely the growth actually us. we've haven't average. growth. is They've been procedures With Currently, for Yes. the appendectomy U.S. HPB, for for growing procedure. why also air and lot quite our It small in us. the

settings the use approach I and routinely. settings, think you kind expanded practice general that over to taking adopted surgeons into they appendectomy of to have they've seeing care what Xi acute surgery. care start with is extended a you're emergent Xi as time as their What more is see gets then

concentrated clinical We for U.S. a an appendectomy. done some do in We FDA indication have us in small on procedure and and it's appendectomy, the savings. have work emergent that's the with obviously,

to Robbie next And we'll question go from Marcus, JPMorgan. the

a know starting might great for flow wanes I benefit be heavy to next let a like investment both year. feel impressive, is period. is through. I'll both on we're once were again into question coming go? very operating gross some to margin decide. you through and off margins probably that And Maybe do this first, margin. Really, much Two the me, you for the quarter. Jamie, more really room is Congrats definitely X there flowing year see da And Vinci there We're depreciation just how

mix flowing forward, think about products the should So these new margin how through we as I we you question is, progression evolve? have to guess starts move the and as the

just first. framing some Yes. Maybe

you'll with a We've that above we've think have had with to what margins know said expect year-to-date. quarter, back and that at XXXX respect of to significant that those the would of also we gross early be you're profitability. should And just I that look expense. margins top depreciation objective depreciation we we XX% to but the take We period to back were margins management versus us phase level med because expect tier of online, where, balancing incremental a incremental our that's you is have facilities we in we in of on right a start expectation have tech kind this a op management kind as little that of that fact, don't be investment for period we're margin said described, peers. level, the facilities margin -- new those them of front, don't we've were I the XX% What I into capitalizing are to the expensing have inventory. pre-COVID, as that to board lower come is level on consistently XX%. in next they think production rate just year gross have ramping given depreciation

we've in going we don't That's we what also now, much be you of that a think the have XX%, narrow we range have to opportunity, aspiration. the XX%. I be to [ will is year-to-date, what a But over right on management we on the midterm margin our how think, are by we said we improve. above do objective function we in XX% invest back balanced ] opportunities of is to gross to to the is get a midterm that about be R&D, relatively which midterm where The if see. think question

is of full move next the trade-ins expect into repurpose as opportunity, traded an There's a year and you you X resell launch. of that. talked Vinci da in. as and from coming Great. follow-up, into the get move as about obviously, that Appreciate refurbished more to And you some we then

we about that? any talk you there, can to maybe about? speak how think immediate the plans Just should opportunity And

Yes.

for the internationally should that think to be in will, site Xi will of and which, care U.S. done the that for sensitive. markets those, as progressive So does past, in and be segmentation way, as we over we've the expect by you could refurbished that cycle trading as are occurs, the occur back, allow of cost we us will years, segmentation, example, segmentation more in come multiple

but could you with be, we'll that respect kind to what expect how through -- those . framing, within worked that's refurbished haven't We plans do excise. of will what exactly

David go line we'll Roman, next to And Sachs. Goldman the here,

Maybe can start on Ion. we

and you Maybe public you've And launched we of been both activity, forums, Europe new U.S. think each in amount the are help in in you P&L about follow-up. growth variety considerable of if have of we look us go-forward geographies basis? think could think and in and there's adoption launch I one in then about promotional markets. the a I a as a on where that how the Ion curve segment should in target

take It double-digit in it's use. biopsy crossed one. Sure, the in of that total is of chasm. think in We its progressing think should nodules. Ion David, the well Gary. suspicious be I first In U.S., I'll terms it's biopsy indication, lung prevalence

is now focus the customers. there, bit on a think I So less little the earliest

pursuit of satisfaction, I innovation some lung utilization, think into our focus care, done United the great. pretty States. on earlier much outside indications the the in We're of the customer journey Ion high customers sites early the those and will using additional of high penetrated platform. have and We're inside deeply there be

Germany, in first early steps an and early momentum so far started early, Europe base in the off steps building likewise, So China. into then U.K. early experiences into some They're early

of toward markets. X-phased customers. moving the strong out So set little approach OUS, bit a of high journey in And of concentrated first the utilization, it's the it's initiating in here a U.S. high really in satisfaction different move

a super P&L. That's maybe then on And helpful. follow-up the just

the has quarter notable and placed is One this of agreements. the of couple the usage being systems things percentage that past under increased was been

gone what the you means about placement model that XX% help that P&L? it's us about of now. the trajectory to and contribution year XX% to Can the think earlier I for about think this from

operating arrangements an a the reflected Those where use are so done customer leases. obviously, subset arrangements Well, of of what the And those the they system. are customers in expectation pays that's those arrangements will for system with as the arrangement. service and procedures year be per have the

in think should similar of least arrangement you of purchase in operating slightly there. as a interest regular fixed rate a economics, target accretive it because to the and it's to general at offering, at then so leases embedded are And payment

in of usage-based is arrangement the the by course, the actual have arrangements. uses-based customer the is you those for Of usage the what difference then risk

to what target. when regularly are, terms of usage business are their respect the at what the We have we with expect a in with would the as and you they're distribution, particularly plans rates customers not engage

customers. In the it to to popular new and of It it terms in be lower terms with consume both to system risk access grow. of the a how trajectory, customer obviously, does capital is for taking you've seen It without a that's going well to way relative is additional capacity budgets, utilized. having

the continue customer, protections it's for routinely. and penetrated look to we arrangements relatively provisions expect and highly would have the grow, in those I in it us at U.S. for We those and to but

markets, In of much And the we're will rate a so at growth international stage. moderate. earlier likely the that

think I call in that's of grow. that might early terms So too how to

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

see -- I'm sample. conversations the that implications wonder get smaller continue more we now potentially call with going see assume that to availability. what Is I'll accurate who hospital are dual are or less X. nonacademic. what's they're academic an our waiting, I for multisystem, whether hospitals procedure me, a to couple interested console Is smaller bigger waiting some of it's hospitals, when console more is they're you're things, an everybody, Vinci available is of saying centers next when affected or institutions, sample, dual of our the you're do just lot They're making launch, Dave faster. growth dual we as negative more decision full it, right? They're by acceleration And on? right Gary, on focused not in interested I in have sort of And positively And they're console. on, year of decisions mid- to da And but that making? I larger surgeons that. saying dependent that middle this to a

and bit speak little can and question. you a there, console then we speak the Dave, answer are availability going will dual on what's let to I'll just to what trends the

and Rick, said it. you

as being our with console system incremental in supply we're ramping this capabilities, prioritized is deals. single dual So

capacity, for dual we we And producing start additional consoles placements. so as system build our will

system you And the and differ to of and don't what meet institutions. as their is if about with I working to a needs -- right or it program that In for in our may put smaller set have larger their is team academics think or between a are. broad understand information being lot how of customers terms and whether prioritized, I of X da prioritization Vinci their customers needs

model anticipate change significant forecast another. wouldn't way I one or a

And rate or as think pipe to we serve inflects go growth all because it, will a dual you we seek and I up, don't suspect the large another do. do small. if and those I I to analysis small we broad be it console expect. relatively will differences the of hard that's procedure suspect versus to launch one way what customers. opens I to think relative

follow-up, quick I on a Hub. And if could,

Vinci just think procedures. was the through over and our it maybe experience X there both early and I to da again, in hear exciting implications help X,XXX ORs think us the for

Yes.

ability track It's things, which enjoy management as implementations of there's been and it the move strong well toward other today, to cloud What to does that recorder to Over data So X a early versus exists Hub installs like it. lot lot forward it data on-premise time, as implementations and and and provides that I a includes as generation move do? device media post-op X. it A a them about their we of that linked are assess performance, those their Gen that we lot our has think those Customers cloud. great. are for leverage as and compatibility

capability work good. is want are core There the on. think some really we I things to

to is about dVX really those We're really great. things workflow, I making excited think be refinement, it. easy integration going in

matters. I think it

so far, good. So

of at the future in terms team beginning think not penetration I the both in And making. Hub of end the content is I'm of of it. journey, proud of and we're progress the terms the

We're going Maeder, of to Adam go over Piper Sandler. line to the

ask how it and XXXX. piece appetite you're thinking end color And of China, around capital to additional there's year hospital the about for commentary there. budgets the for Europe I the like wanted of larger the sounds and the heard into around continued capital pressure I some heading in and environment

quo the Is Just worse? of to expect year? half versus going that have that forward? do how a getting first curious, follow-up. And And I kind you kind evolve then is the of status of it

on I'll Jamie, why then at the the China you don't take end. broad touch and answer,

Yes.

interest da of stable, I Vinci U.S. think in X. albeit characterize I'd is relatively a with lot

In countries Europe, for predict come that play quarter to in the profile seeing is spending pressures robotics in care characterize like But overall of extent. and I capital capital U.K. in Europe, been Germany the couple And think early that's on of exist the there. health we or In out government to too in in again, events related stable. that in dynamics. budget so. have that's the kind how I pressure what raised the quarters, might you're think next interest but government-related relatively of changes that terms similar the the capital some particularly of last case the some space, to in again is I'd the environment

Yes.

turning of market. in price pricing There's the some rebaselining value-based the market some as gone has of care have of China, health the in well gone through caps clearly of China. the Just total across as in our to kind a stress there in broad there's through that end that

is So I pressure think there. that still

I universe, have as they in it them will don't that the quickly. be also preference they're to think I quarters. a of to think launch. there that resolves get some for tend competitors for There's province some entry provincial domestic in which the tends preferences, headquartered our

it see you that show as so as around. up kind And goes popcorn of

a for think little that while, persist will I too.

think I we've year it's a had. surprise for So given not the us,

wash them. ultimately, yet these think long takes it through I through it how on and stabilizes walk as will things for to

Brandon of line the to go We'll William Blair. Vazquez,

new systems of there base? Vinci now. a whether really base, it's of quick one within of software. procedures any little a those talk compare go-forward lot little relative which throw what Vinci it of just a can sounds -- at the to been, to is types X going you or are follow-up, Xi unique guess, kind contrast. insights systems accounts was they're Are the I launch you bit I be And installed I'll a and has Can curious cycle coming da of side maybe the then utilization from innovation cycle software innovation the a da You would X in features on those doing the contrast and rest have you a that amount kind hardware? have there. if could compare out in here like good you on of versus Can just what basis you bit longer speed historically that

Yes.

may to Vinci with set and the used across is of of those the things we're I side that one da on hit both pleased it is Xi, the being comparison of to X try So -- broad procedures. a

us set their And a enough With data base so soon history yet compare utilization them X customers isn't big supply really fullest. da it's respect The give do long to with to the really using to with how those installed to Vinci make Xi, too you to are limited a good enough to say. comparisons.

nonmedical On device. there to out are around still ability a side, the the of roll that And kind are will regulatory sets in see globe. and processes able innovation field. longer hardware would operate to to than major more then products follow X and buckets software And have like of cadence, that. cycles second things is of the our those software or that we our probably in it -- generally there changes rapid the And bit there's a quicker XXX(k) a and by set you that governed those are

happen fall on the into. software -- upgrades which but more on depends so bucket average, And kind it a updates higher cadence, on we'll and on they likely see a of

a might assumption I bit. little the challenge

going to I some do. want don't hardware still away. we hardware is think I think there's

opportunities going too. that's that dVX think some for and to described. that, I continue the do software you we'll just has and

Operator, we'll chance a do one more take we'll and questioner, get both. we to but great, it's think I close. then

And Miksic, that's of from Barclays. line the Matt

a big of from version growth. a kind opportunities in Maybe just get this talking drivers, about often some investors, question question. I of growth picture procedure follow-on

existing next obviously, years penetration And be Do the or and looking in you're could driving you're time. you any that like if that to say couple market would expect maybe by any to you drive now, of that Or growing of go more help add be the is helpful? driven U.S. categories? new or at color procedures growth super deeper expect where so it segments, be see sort and looks important able years X over you would rate segments maybe large where the the do mix and you'd into you to

It's Matt. you, a Yes. great Thank I question. look at.

There's but yet participated the think opportunity. indications they'll more you markets and there's do tell although tend a over -- those back balanced coming opportunity we opportunity perspective. And about the keep Over a back some ways, to sure some we'll of that, us I SP. engaged what we're I really serve see there. about curves think patients some also, really you're the to than want some serve niche way. make opportunities the you're to time, in it's more patients of for in not to to that the plenty Clearly, looking want or going split, At fully, before, start exact new set U.S., and to who In for, I it's and of we're quarters, think you haven't new give as the half or multiport, procedures and What it's actually you from different need opportunities that we depth. won't for whether are Ion make ones. where be sure new we getting they that as half, have approaching to big looking opportunities do the mature. there's we same in the you do participating folks time, still us indication and to starting have

question. thank That you. our was last So

to surgery In closing, there's we fundamentally a opportunity and intervention. acute improve durable substantial believe and

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

gentlemen, thank conclude you We ladies does joining. do and conference. your And that for

disconnect. may now You