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Intuitive Surgical gets drubbed as FDA hones in

Published: 18:26 19 Jul 2013 BST

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Investors are pounding Intuitive Surgical's (NASDAQ:ISRG) stock after safety concerns with its robot surgery over the past few months have culminated into a regulatory warning.

During the company's second quarter conference call, chief executive officer Gary Guthart said the Federal Drug Administration has warned that the company has not adequately reported issues with its surgical technology. 

The FDA had begun surveying surgeons five months ago, according to Bloomberg, amid reports of deaths connected to the robot procedures. A week ago, Intuitive said it recalled 30 devices because they hadn't been tested properly.

The FDA is asking Intuitive to take steps to resolve the deficiences. 

During the second quarter, Intuitive's revenue rose eight per cent to $579 million, but the sale of its systems dipped six per cent to $216 million from the same period a year ago. 

The company sold 143 of its surgical systems, compared to 150 in last year's second quarter. They were used in 367,000 procedures in the U.S. last year to treat a range of illnesses from kidney disorders to throat cancer. Aside from the FDA's probe, the systems have been the subject of lawsuits that allege negligence. 

Service revenue increased 18 per cent to $98 million and sales of instruments and accessories grew 18 per cent to $265 million.

Net income was $159 million, or $3.90 per share, compared with $155 million, or $3.75 per share, for the second quarter of 2012. The result came in 12 cents below the mean analyst prediction.

For the three-month period, Intuitive bought back 546,000 shares for $270 million.

Shares fell as much as 15 per cent in Friday's session. 

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