Intuitive Surgical stock fell 11.5% in value on Wednesday after a disappointing quarterly earnings report and the FDA raising cancer concerns over how robotic hysterectomies are performed.
The Sunnyvale, CA–based maker of da Vinci surgical robots reported that first-quarter earnings were down 76% and revenue was down 24% from a year before. It was one of the worst-performing S&P 500 stocks on Wednesday, according to Forbes.
Intuitive saw $44.3 million in earnings off $464.7 million in revenue for the quarter ended March 31, a big drop from $188.9 million in earnings off $611.4 million in revenue for the same period a year ago.
"Certain elected da Vinci procedures in the U.S have been under significant pressure driven in part by changing surgical admissions, hospital financial uncertainty and payer incentives favoring watchful waiting and conservative treatment," Intuitive Surgical CEO Gary Guthart told analysts during a conference call transcribed by Seeking Alpha.
Meanwhile, FDA has discouraged the use of cutting tools called power morcellators for hysterectomies because it poses a risk of spreading unsuspected cancerous tissue, notably uterine sarcomas, beyond the uterus.
The Wall Street Journal reports: "Intuitive Surgical doesn't make power morcellators, but gynecologists say it's common to use Intuitive's da Vinci robots to perform the initial parts of hysterectomies, then follow-up by morcellating with the hand-held tools."
Intuitive Surgical's stock was down $48.40 per share, or 11.5 percent, to $373.93 at the close of trading Wednesday. Its impressive stock gains for the year are now erased, with stock down 2.6% in value from Intuitive's $384.08 per share close on Dec. 31, 2013. It was trading at more than $500 per share a year ago.
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Intuitive this week received FDA 510(k) clearance for the da Vinci Sp Surgical System, which is designed to expand the company's single-port product offerings. The initial clearance is specific to urologic surgical procedures that are appropriate for a single-port approach.
The company also recently received FDA clearance for its new da Vinci Xi Surgical System. The Xi is meant to replace large-incision abdominal surgeries (open surgery) with a minimally invasive approach.
Company executives, though, explained to analysts that the Xi will negatively impact profits in 2014 because it has a lower gross profit margins at launch than the mature Si-e platform.