Intuitive Surgical Slumps After FDA Warning Letter
Shares of Intuitive Surgical Inc. slumped in after-hours trading Thursday after the robotic surgery device maker said it received a warning letter from the Food and Drug Administration.
Intuitive Surgical said the warning relates to two problems the FDA observed during an inspection performed during the second quarter. The company said the FDA has asked it to take additional steps to resolve those concerns, and said it is in the process of taking those steps.
The company also said it expects continued pressure on U.S. sales of its da Vinci surgical system for the rest of 2013. It disclosed that sales of the system fell during the quarter because of a decline in the U.S. market.
Intuitive Surgical shares dropped $50.47, or 12 percent, to $371 in late trading. That put the stock on pace for an annual low. The shares rose $5.93 to $421.47 during the day.
The da Vinci system uses robotic arms, cameras and a remote control console to help doctors perform surgery with tiny incisions. It is used in gynecological procedures, heart surgeries, prostatectomies, urology procedures, and other operations. Intuitive Surgical makes money by selling the systems and disposable instruments that must be replaced after each procedure.
The Sunnyvale, Calif., company also reported its quarterly results, saying its net income rose 3 percent to $159.1 million, or $3.90 per share, from $154.9 million, or $3.75 per share. Revenue grew 8 percent, to $578.5 million from $536.5 million. The results were in line with estimates Intuitive Surgical gave earlier this month, but Wall Street had initially expected stronger results.
According to FactSet, analysts expected earnings per share of $4.04 on revenue of $595.7 million.
Total sales of the da Vinci system fell to 143 from 150 a year ago, and U.S. sales declined to 90 from 124. An important reason is slower growth in the use of da Vinci in gynecology procedures: in recent months, some experts have questioned the use of da Vinci systems in routine hysterectomy procedures, saying the procedures are more expensive but don't improve outcomes for patients. Economic concerns also affected the company's business because hospitals held off on device purchases.
In late February the Food and Drug Administration also announced a probe into the da Vinci system.
Shares of Intuitive Surgical have fallen 26.5 percent since the end of February.