By Bill Berkrot
(Reuters) - Intuitive Surgical Inc on Tuesday lowered its full-year forecast for procedure growth after posting a disappointing growth rate of 22 percent for surgeries using its high-priced da Vinci robots in the third quarter.
Intuitive's shares dropped more than 4 percent after it reported its third quarter results.
The company said it now expects 2012 procedure growth of 24 percent, down from its prior view of 25 percent to 27 percent.
Intuitive said the slower growth was due to spending constraints in Europe and a slowdown in U.S. prostate surgeries, and it reiterated that it sees those trends persisting through the year. It said procedure growth, which came in below its own expectations, was propped up somewhat by gains in gynecological and other surgeries.
However, Intuitive said it now sees full-year revenue growing at the upper half of its previous forecast of 20 percent to 23 percent.
"What was different this quarter relative to our expectations was that they were much worse in terms of their original business of prostatectomies in the U.S.," said Canaccord Genuity analyst Jason Mills.
The company said the downturn in U.S. prostatectomies was due in part to a trend toward less frequent prostate cancer screenings. In addition, recent studies have suggested that many prostate surgeries may be delayed or are unnecessary as many men with prostate cancer are more likely to die of something other than the disease.
The company believes many delayed prostate surgeries will eventually translate into future Intuitive business.
"At some point DVP (da Vinci prostatectomies) will bottom out," said Mills, adding that growth in other types of procedures, including colon surgery and hysterectomies "was outstanding."
The company reported third-quarter profit only a bit higher than expectations, compared with its typical trend of sailing past Wall Street forecasts.
Excluding a one-time tax gain of about $38 million, Intuitive earned $3.54 per share, topping analysts' average expectations by 4 cents, according to Thomson Reuters I/B/E/S.
Third-quarter net profit rose to $183 million, or $4.46 per share, from $122 million, or $3.05 per share, a year ago.
Revenue rose about 20 percent to $538 million, primarily driven by the sale of 155 da Vinci systems at a cost of about $1.5 million each. That exceeded Wall Street estimates of $535.4 million.
The 155 da Vinci's sold - 79 of them to repeat customers - was up from 133 a year ago and 150 in the previous quarter. Only 13 of those were sold in Europe, down from 18 a year ago.
Procedure growth in Europe was an anemic 9 percent.
"Europe is going to be a headwind to many companies, including medical device companies that have a presence in Europe, just given the austerity measures there," Mills said.
One bright spot was Japan, where 16 da Vinci systems were sold in the quarter. Japan is considered an important new market for Intuitive that will grow as the company secures reimbursement for more procedures. It is currently only reimbursed for prostatectomies in Japan.
"Long term, we're really excited about the Japanese opportunities," Chief Executive Gary Guthart said on a conference call with analysts.
Instruments and accessories sales for the quarter rose 24 percent to $218 million, while service revenue climbed 22 percent to $88 million.
Intuitive Surgical shares fell to $510 in extended trading from a Nasdaq close at $533.13, more than giving back the day's gains of 4 percent. Intuitive shares are up about 13 percent for the year.
(Reporting by Bill Berkrot; Editing by Gary Hill, Leslie Adler and Tim Dobbyn)