Intuitive Surgical’s Revenue Recognition to Slow as Lease Program Grows
Robotic surgical systems manufacturer will recognize revenue slower as lease program scales.
October 2, 2021
Since 2013, Intuitive Surgical (ISRG), a manufacturer of robotic surgical systems, has allowed certain customers to lease systems they’d otherwise have to purchase. The leases offer customers flexibility in how they acquire systems and expand their robotic-assisted surgery programs. In its latest 10-Q, Intuitive Surgical included new language indicating it’s planning to expand its financing program:

“We believe that these alternative financing structures have been effective and well-received, and we are willing to expand the proportion of these structures based on customer demand.”

In 2020, Intuitive leased 432 surgical systems up from 272 in 2018. Though lease transactions generate similar margins as systems sales, Intuitive added new language to its most recent quarterly report warning investors it will recognize less revenue in periods when it leases more systems:

“As revenue from operating lease and usage-based arrangements is recognized over time, total systems revenue growth is reduced in a period when the number of operating lease and usage-based placements increases as a proportion of total system placements.”

The disclosure comes five months after we warned Intuitive Surgical’s extended use program will slash instrument and accessories sales by hundreds of millions of dollars.
Related: MDT, ISRG, SNN, GMED, SYK, ZBH, VERO
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