Intuitive Surgical, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Intuitive Q1 2022 Earnings Release. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. Should you require assistance during the conference, please press star then zero and an operator will assist you offline. And as a reminder, your conference is being recorded. I would now like to turn the conference over to your host, Brian King, Head of Investor Relations. Please go ahead.

Good afternoon, and welcome to Intuitive's first quarter earnings conference call. With me today, we have Gary Guttart, our CEO, and Jamie Smath, CFO. Before we begin, I would like to inform you that comments mentioned on today's call may be deemed to contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Security and Exchange Commission filings, including our most recent Form 10-K, filed on February 3, 2022. Our SEC filings can be found through our website or at the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements. Please note that this conference call will be available for audio replay on our website at intuitive.com on the event section under our investor relations page. Today's press release and supplementary financial data tables have been posted to our website. Today's format will consist of providing you with highlights of our first quarter results as described in our press release announced earlier today, followed by a question and answer session. Gary will present the quarter's business and operational highlights. Jamie will provide a review of our financial results, and I will discuss procedure and clinical highlights and provide our updated financial outlook for 2022. And finally, we will host a question and answer session. With that, I will turn it over to Gary.

Thank you for joining us today. In the first quarter, procedure demand for our products was healthy, recovering where COVID receded. Drivers of procedure performance included general surgery in the U.S. and non-neurology procedures outside of the U.S., which are our areas of focus. Regardless of the health procedure demand, we are challenged by environmental stresses, including regional waves of COVID, staffing pressure at hospitals, component and raw material availability, and logistic delays. While it's difficult to forecast how long these headwinds will persist, our teams are working hard to meet the challenge. In the quarter, da Vinci procedures grew 19% compared to the first quarter of 2021. Use of da Vinci in general surgery in the United States grew 9%. led by bariatric procedures, colestectomy, hernia repair, and rectal surgery. Lobectomy growth was also healthy. Outside the United States, the UK, China, Japan, Germany, and Italy grew above our quarterly average growth rate, but I will note that some countries saw the beginnings of COVID slowdowns later in the quarter, in particular China and Korea. International use of da Vinci is diversifying beyond urology in several countries, with growth in oncologic procedures and thoracic surgery, gynecology, and general surgery. In Japan, MHLW increased reimbursement for robotically assisted gastrectomy and added another eight procedures to reimbursement coverage in April, bringing the total number of covered da Vinci procedure types to over 25 in Japan. In our flexible robotics program, ion procedures grew approximately 350% in Q1 compared with Q1 2021, reflecting continued strength in adoption and utilization of the platform. Turning to capital, our team installed 311 da Vinci systems in the quarter, compared with 298 systems in Q1 2021, bringing our total clinical install base to 6,920 da Vinci systems. Placements varied by region, with the UK standing out with a strong placement quarter. Capital placements have been historically lumpy, And after several quarters of capital strength, we're seeing some near-term softening of our capital placement pipeline in the U.S. Contributing factors may include a pull-forward of Q1 2022 demand into Q4 2021 due to customer budget utilization at year-end, a reduction in the number of third-generation da Vinci systems available for trade-ins, and an overall tightening of hospital finances. With a three-year CAGR in procedures of 15% from Q1 of 19 to Q1 of 22, and install base growth of 11% over the same period, utilization of installed systems continued to climb through the pandemic and in the first quarter. This is increasing the value derived from the existing install base for our customers and for us. Over the midterm, capital demand in mature robotic-assisted surgery segments is a function of procedure demand moderated by utilization growth. Jamie will give regional capital trends, and Brian will give a more detailed procedure review later in the call. As we exit the first quarter, we continue to invest in global expansion, innovation initiatives, and our business infrastructure. Our spending in the quarter was roughly in line with our target. In instruments and accessories, we received Chinese NMPA clearance for our 45-millimeter and 60-millimeter sure-form staplers. Our vessel sealer extend and our endoscope plus. These products support the utility of our XI systems for several procedures, particularly general and thoracic surgeries. Turning to ION, we submitted our EU medical device regulation application for the platform to allow the entry of ION into Europe. Our teams are also building production capability and capacity, pardon me, and making improvements to customer workflow, planning software, and reprocessing efficiency. In digital products, The My Intuitive app community tripled year over year and is now available in the U.S., Japan, Germany, France, United Kingdom, and Ireland, and Switzerland, with launches set for Italy, Spain, and India in Q2. Building on our Orpheus technology, our teams in Israel and the U.S. have created Intuitive Hub, a unified hardware and software solution for the operating room. Intuitive Hub enables OR teams to capture, edit, and share video clips using from clinical procedures and collaborate virtually using existing workflows and intuitive systems. In the quarter, we launched an upgraded interface to DaVinci Systems that allows for automated video capture with integrated procedure annotation for key events, creating convenient video storage and review for DaVinci cases. Customer feedback for this integration has been encouraging. Across the install base, the number of procedures in which intuitive hub was used grew approximately 60%, year over year. To our goal of adding iris anatomical models, we're in conversations with FDA on how best to characterize some of its core AI technology, which will require a resubmission of our 510K for the next set of segmented organ models. Finally, the install base of our virtual reality training simulator, SimNow, grew 33% in the quarter compared with a year ago. For our single port program, DaVinci SP, we began the launch of our next-generation SP endoscope, which includes our Firefly fluorescence imaging technology and has 65% longer life. We also launched our next-generation core SP instruments that can apply higher forces during surgery and are more durable. Feedback on both has been encouraging. In Japan, we submitted our DaVinci SP for clearance to PMDA, seeking broad indications. We continue to pursue additional indications for SP in the U.S., which is important for broader adoption, with an ongoing IDE trial in colorectal surgery and an approved IDE for thoracic surgery. COVID and some site-specific delays have slowed our progress in our colorectal trial. We're working hard to expand the number of participating sites to accelerate its completion. Stepping back, for 2022, our top priority is to support, supply, and train our customers as they navigate a challenging environment. We are also focused on helping general surgeons in the United States adopt our technologies in diversifying our business outside the United States beyond urology and in executing on our new platforms and digital tools. I'll now turn the time over to Jamie Sameth, who will take you through financial matters in greater detail.