(This April 22 story has been corrected to say ’over 80%,’ not ’over 90%,’ in paragraph 7)
By Kamal Choudhury
(Reuters) - Medical device maker Intuitive Surgical (NASDAQ:ISRG) said on Tuesday that U.S. tariffs will increasingly weigh on its business for the rest of the year, disrupting operations in China and potentially eroding its competitive edge in contract talks with hospitals.
Investors and analysts are closely monitoring how medical device makers will handle tariffs and whether they expect benefits from foreign currency fluctuations.
Intuitive suggested that an increase in costs for its robotic systems could impede its ability to "win future tenders".
The surgical robot maker is considering operational changes to counter tariff impacts on sales and demand but foresees no substantial benefits this year, Jamie Samath, chief financial officer, said in a post-earnings call.
The company’s current outlook takes into account tariffs that are in effect or have been announced, but if additional tariffs are implemented, there could be "material" impact on the company’s 2025 results, it said.
Intuitive now projects its adjusted gross profit margin to be between 65% and 66.5% of revenue in 2025, which is lower than last year’s 69.1%. This range includes an estimated impact from tariffs of 1.7% of revenue, plus or minus 30 basis points, the company said.
The company operates in several international markets, notably Mexico and China. Over 80% of the instruments and accessories for its da Vinci (EPA:SGEF) Surgical Systems are produced at its facility in Mexico.
Despite tariff concerns Intuitive beat analysts’ estimates for quarterly sales and adjusted earnings.
On an adjusted basis, the medical device maker reported earnings of $1.81 per share for the quarter ended March 31, beating analysts’ estimates of $1.72 per share, according to data compiled by LSEG.
The company reported revenue of $2.25 billion for the first quarter, compared to analysts’ estimates of $2.19 billion.
Shares of the Sunnyvale, California-based company fell 2.3% to $467.80 in after-hours trading.