Intuitive Surgical, Inc. (ISRG) reported strong fourth quarter and full fiscal 2009 results. For the fourth quarter, earnings per share were $1.95, beating the Zacks Consensus Estimate of $1.71 and the year-ago earnings of $1.27. For fiscal 2009, earnings per share were $5.93, compared to the Zacks Consensus Estimate of $5.72 and the year-ago earnings of $5.12.

Quarterly results

Total sales in the fourth quarter increased 40% year over year to $323.0 million. Growth was driven by continued robotic procedure adoption, thereby leading to higher sales of Intuitive’s da Vinci Surgical System. Instruments and accessories revenue increased 39% year over year to $113.3 million. Systems revenue increased 42% year over year to $162.0 million. Services sales increased 32% year over year to $47.8 million.

Intuitive ended the fourth quarter with a gross margin of 72.2%, an increase of 80 basis points (bps) year over year. Higher gross margin can be attributed to increased system average selling pieces (ASPs). ASP per system was $1.41 million, compared to $1.32 million in the year-ago quarter.

Selling, general and administrative (SG&A) expenses as a percentage of sales declined 220 bps year over year to 24.5%. Research and development (R&D) expenses as a percentage of sales declined 100 bps year over year to 8.0%.

Operating margin increased 400 bps year over year to 39.7%. Higher gross and operating margin resulted in a higher net margin of 210 bps year over year to 24.0%.

Fiscal year results

Total revenues in fiscal 2009 increased 20% year over year to $1,052.2 million. In terms of business segments: Instruments and accessories revenue increased 33% year over year to $389.4 million. Systems revenue increased 8% year over year to $490.5 million. Services sales increased 36% year over year to $172.3 million.

Both gross and operating margins for fiscal 2009 increased 40 bps year over year to 71.4% and 35.9%, respectively. Lower non-operating income resulted in a decline in net margin by 130 bps year over year to 22.1%. However, Intuitive lowered its number of diluted shares outstanding by 180 bps year over year that raised earnings per share in fiscal 2009.

Intuitive ended fiscal 2009 with cash, cash equivalents and investments of $1,172 million, a sequential increase of $148 million.

Intuitive Surgical designs, manufactures and markets the da Vinci Surgical System, an advanced robot-assisted surgical system used in urologic, gynecologic, cardiothoracic and general surgeries. This represents a new generation in surgery.

Presently, we have a Neutral recommendation on Intuitive Surgical.

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