Intuitive Surgical, Inc. (NASDAQ:ISRG) Q2 2023 Earnings Call Transcript

Gary Guthart: Yeah, it’s a good question. I think we see that one size doesn’t fit all. There are some folks for whom they still remain happy about capital purchases. They see it as the cheapest way for them to access systems. They have high confidence and they’re going to buy. There are some folks for whom capital is tight or scarce, and — or they’re interested in future technology protection clauses and they would try to lease. And there are some folks who are looking at expansions, are a little bit unsure about how fast volume might ramp and for them uses based arrangements give them some protections about ramp timing and speed. Our analytical capabilities are pretty good and our finance flexibility is pretty good. And as a result, we’ll have that conversation pretty direct way. And I think the market starts to settle where it settles. If you ask, do we have a strong preference for one of those models? The answer is not really.

Jamie Samath: The motivation by the way for the new disclosure was simply the rate at which those adoption of those models have grown, we felt like it was important to be transparent as to what portion of operating leases and placements that structure was. If you kind of assess all of our usage-based arrangements in aggregate, life today relative to usage patterns and economic objectives in total on average they’re slightly above our expectations. So they’ve performed well so far. That’s obviously a blend across different customers and systems, some are overperforming, some are underperforming. But I think part of the way that we operate the program is to look carefully, is it actually reducing barriers for accelerated growth for our customers and is it producing the economic results for us and our customers? And as we and customers have gained confidence, that’s part of the reason why it’s expanded the way it has.

Ryan Zimmerman: Thank you.

Operator: And we’ll go to the next line. Go to the line of Drew Ranieri, Morgan Stanley. Please go ahead.

Drew Ranieri: You’re squeezing me in here. Maybe just one other follow-up question on bariatrics, but maybe a different angle. I mean we’ve talked to some general surgeons too that they’re kind of suggesting that these new drugs might even open up potential procedure categories where these patients might not have been suited to have surgery. Gary, kind of like, what are your views on this? Do you see some near-term disruption from GLP-1s on the bariatric side, but maybe this opening doors for other procedure categories? Thanks.

Gary Guthart: Yeah. That that’s a little bit of the narrative we’re hearing too. We go out and canvas our customers pretty widely. There may be a role for kind of a new adjuvant use of drugs. And then as you say, that may condition some patient populations to be beneficiaries of surgery downstream. There may be folks who start the drugs, get the benefits that they were hoping for, but either side effects or the costs or the changed lifestyle that drugs are implying, make it hard to sustain. There’s a fair amount of that in the literature. So that may — that population may look for other solutions. I think we’re just going to have to work through it and see. What we don’t see yet is a magic pill, one that cures it and doesn’t require behavior change or other lifestyle modification.

And that — and it seems unlikely. And as a result, I think we’re going to see an adjustment. How long that adjustment period lasts? None of us know. But we know that there will be a role for surgical and mechanical intervention after the fact and I think we’re well positioned. And as Jamie had mentioned, it looks like even in the current environment, the share continues to move our way. So we’re going to stay close to it.

Drew Ranieri: Is there any procedure categories that are coming up in your conversations that stand the most to benefit?