Intuitive Surgical, Inc. (ISRG) Earnings Call Transcript & Summary

Okay. Good morning, everyone, and welcome to day 3 of the 42nd Annual Raymond James Institutional Investors Conference. I'm Larry Keusch, the hospital supplies analyst, and it is my distinct pleasure to welcome the management of Intuitive Surgical. We're really appreciate for Intuitive showing up, and they've been certainly regular participants in this conference. So thanks again for joining us. Today, from the company, we have Jamie Samath, who's the Senior Vice President of Finance; and Philip Kim, as you all know, who is Head of Investor Relations. Apologies, guys, that we're not doing the conference from Florida this year. But again, thanks for joining in this virtual format. [Operator Instructions] Before we get into our discussion, let me just turn it over to Philip, who will read the forward-looking statement language.

Thanks, Larry. Before we get started, I'd like to mention that the comments made this morning 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, which are described in detail in our SEC filings. Investors are cautioned not to place undue reliance on such forward-looking statements.

Okay. With that, thanks, Phil. Let's dive into this. So Jamie, I guess to start off for you, you've been with Intuitive for just about 8 years. And the one thing about this conference that's a little bit different than others is that we tend to have more generalists in attendance. So what I'd like you to do, maybe just to start with, is talk about how the company has evolved over the years as it advances the state-of-the-art in robotics surgery. And maybe you can weave in a little bit about the evolution of the technology, the expansion of the procedure base and how the company is extending its geographic reach. And then we'll get into some more detailed question, but I think that's a good place to kind of just get people level set.

Happy to, Larry, and good morning. Thank you for hosting us today. I appreciate the opportunity to attend the conference. I guess I'd just start by saying, Intuitive is a mission-driven company. That's important to our culture. It's core to how we operate from a cultural perspective. And we're focused on helping our customers fulfill the quadruple aim: better patient outcomes, better patient experience, better experience for the care team and lowering health care costs. And that is meaningful in terms of how it guides, how we invest, and how we engage with customers. Maybe just a short recap in our history. So Intuitive went public in 2000. And its first generation system was initially adopted in prostatectomy in the U.S., where we learned improving clinical efficacy while reducing invasiveness, actually, drove adoption. Subsequently, over time, we expanded from urology to gynecology, and then to general surgery. Currently, we estimate that our global market opportunity in soft tissue surgery is about 6 million procedures annually. This is our estimate of robotically addressable procedures for which we have line of sight, meaning in targeted geographies for which we have existing products and regulatory clearances. And we think that market opportunity can expand over time as we launch new products and receive additional clearances. Maybe just to address your question, Larry, on my time at the company. On the technology side, I joined the company in 2013, about a year before we launched our fourth generation excise system. Many of the features of which, including its overhead boom, the multi-quadrant surgery capability and longer instruments, have enabled our growth we've seen over recent years in the general surgery and thoracic categories, particularly in the U.S. But what's important in that period, the period I've been at the company, is the investments we've made in the ecosystem. So if you look at our fourth generation ecosystem, we've introduced Table Motion, advanced our stapling and energy portfolios, developed our analytical capabilities, scaled our training infrastructure. And we talked about the ecosystem because we see it as an integrated set of products, services and capabilities that work together in a way that we believe is differentiated for our customers. We do that purposefully, and it's a holistic approach to design. We've also advanced in the last several years beyond multiport surgery, with the launch of our single port offering in 2018, our endoluminal platform ion in 2019. Our current focus there is on lung cancer biopsy. And in both cases, that's an extension of our mission where when we look for differentiated products that also improve outcomes for patients. Finally, I'd say, just on the technology front, we've also invested in improving economics for our customers. We released the X System as part of our fourth generation family in 2017. That's targeted at the cost-conscious markets. And most recently, in this past Q4, we launched our extended use instruments in the U.S. and Europe, passing on cost savings to customers, particularly for lower acuity procedures such as hernia repair and cholecystectomy. I think it's also important to describe how we've evolved on the customer side. In 2015, we appointed Dave Rosa as our Chief Commercial Officer, and subsequently evolved how we focused on customers. Our engagements moved from a conventional selling approach to an effort to align with our customers on identifying and meeting their needs. And those needs differ from hospital to hospital. So a couple of examples. A hospital may be focused on gaining share, on expanding MIS care, attracting surgeons who want access to technology. And so our engagements are explicitly designed to meet those needs, and I think that evolution has had a positive impact on our business. Internationally, we adjusted to take a more localized approach, a recognition of how each health care system in those markets operate. And we've invested in those key international markets accordingly in local clinical evidence generation, market access and economic resources. During my time, we went direct to Japan, India and Taiwan, and we created a 60% owned JV in China that includes our commercial team. I think, finally, what many of you have seen on the customer engagement side is that we have become more flexible on capital acquisition models with our leasing capabilities. That allows us to be more flexible on terms that meet customers' financial priorities. And leasing has grown to become a meaningful proportion of how customers acquire capital from us. And I think that's also tightened our relationship with customers. So maybe a long answer, Larry. We ended 2020 with about 6,000 systems in the installed base. And last year, about 1.2 million procedures were performed using da Vinci.

That was fantastic. Thanks for that, Jamie. And I'm sure that really helps those who are listening in to kind of quickly get up to speed here. So just on the COVID-19 side of things, and I'm hopeful that as the vaccine rolls out and we see more immunity across the globe, we're going to not have to ask these questions anymore. But I guess just to kind of get this out of the way. Certainly, we saw a surge in COVID-19 cases and hospitalizations in late December, certainly was through January. It feels like it was a portion of February. But just any comments that you can see from your perspective as to kind of how that progressed over that period of time and kind of where are we sitting today.

Yes. So from a broader standpoint, we all have access to the same information, so I'm not sure that I have too much that I can add here, incremental. But in the U.S., new COVID cases, hospitalizations and deaths appeared to have slowed in February after reaching a peak in January. It seemed similar in most of Europe, excluding the U.K. So -- but while COVID cases have flattened, there is still the potential for ongoing risk that new variants could cause resurgences. As we called out in our January call, Larry, hospitals seemed better equipped to handle COVID patients today compared to versus the outset of the pandemic. However, COVID-19 resurgences challenged hospital capabilities in late December, negatively impacting da Vinci volumes. In addition, delays in diagnosis and treatment of underlying conditions will negatively impact da Vinci procedures. We're in close contact with our customers right now, and we're positioned to help them when they return to surgery. The trends that we talked about on our conference call, it's really hard to make broad generalizations about procedure categories as the pandemic is ongoing. But on the positive side, we saw bariatric procedures performing well. Bariatric procedures were an increased area of focus for us in 2020 and also -- we also may have benefited from certain patients prioritizing weight loss, as obesity is a significant COVID-19 risk factor. In addition, our SureForm 60 stapler product provide surgeons with a more optimized robotic tool set for bariatric procedures. And we believe that we can continue to add value to our bariatric surgeon customers. With respect to DBP, it's a procedure category. We've highlighted that -- where we've seen diagnosis and treatment delays. Diagnostic procedures have run below pre-pandemic levels due to COVID. Also, prostate cancer patients tend to be in age categories that run greater risks of COVID complications, and so treatment can be deferred. We do not have great visibility on when DBP growth will return.

Okay. That was super helpful. One question there, either for you, Philip or for Jamie. I certainly get the point on diagnostic procedures being delayed through the pandemic. So putting aside benign uses of da Vinci, and obviously you did address this in some part through prostatectomy, but does the reduced number of diagnostic procedures potentially leave patients in a situation where they might be more -- where surgery might become more necessary than if they had caught it earlier? Is there some sort of potential backlog dynamic that kind of flows in here because of the diagnostics side of the equation?

Yes. I mean we certainly believe that backlog is -- that there is a backlog of patients being built. The timing of when that might flow through is difficult to call. But it's -- if we look at the example of DBP, when we saw the guideline changed in 2012-2013, all those patients came back much later with a more severe cancer. And so we could see a similar dynamic in certain procedure categories, as you alluded to.

Certainly, Larry, disease will progress. That may mean the surgery is more complex. It may mean in a small number of cases, the disease progresses beyond the ability to perform surgery. And I think that is uncertain for us.

Yes. Fair point. I appreciate that. For both of you guys, whoever wants to take this, what did you learn about the organization during the height of pandemic? What sort of were the strengths that you guys felt were demonstrated in the organization during the pandemic? And how do any of these learnings potentially benefit you now and, hopefully, in the not too distant future, post-pandemic world.

Yes. It's a good question. And I will say, we're really pleased with how our teams performed in the circumstances. In terms of strengths, I think the organization showed its ability to adapt and be agile just given the environment, particularly the support of the needs of our customers and supporting our employees and the communities in which we operate. I think some of the work done by the teams was actually outstanding. In Q2 of last year, we implemented the Customer Relief Program, providing some financial assistance to our customers. As part of that effort, we actually offered to loan or move debenture systems for our customers so that they can continue to offer surgical care to patients. An amazing work done by our training teams, they adjusted how we do training to localize it, to make it easier for surgeons to continue to train given the travel restrictions, and that allowed them to continue to start to adopt da Vinci surgery. Our sales teams continued to be engaged with customers, albeit virtually. And during this period, and we've been doing this for many years now, we saw our Net Promoter Score stay strong, and we think that suggests that customers value our efforts. And we take seriously the feedback we get from customers, and that's why we kind of measure how customers perceive us. From a post-pandemic perspective, we'll certainly leverage the learnings we got from how we localize trainings. And I think that has the opportunity to both better serve surgeons who maybe have less travel time, and there's a potential for us to actually lower the cost to train in that model. More meetings will likely take place virtually. I think there'll be a balance there because, certainly, there's value to in-person interactions. In terms of how we invest, I don't think COVID changes, in any meaningful way, our priorities. We'll continue to invest in the areas that we described on our last call, in R&D, in areas like Ion, SP, informatics. We'll continue to invest OUS, given the growth opportunities there, particularly in localized clinical data. And just given the size of the market opportunity that I described, we'll also make investments that enable us to scale as we grow.

Okay. Super. I guess as we sort of fast forward a little bit here and the economies start to reopen, people will -- I don't know if we ever go back to what was considered normal pre-pandemic. I assume there will be certainly changes in how people work, where they work, the need for various functions that they did that were thought to be necessary previously. But certainly, I think most companies are articulating that expenses will pick up as the economy opens up. Are there efficiencies and cost savings that you guys have been able to realize that might be a bit more permanent? In other words, you need less real estate. You -- Jamie, you alluded to perhaps more virtual training, less travel. So are there things there that can be considered to be more permanent? And any way to just put some framework around what that might be?

Yes. I think I would just first reinforce what you said, Larry, which is, there are expenses that were either eliminated or was significantly lowered during the pandemic and in 2020. So we expect many of those expenses to increase in '21. So for example, our variable compensation plans will result in higher expenses, will reset goals and targets. And there will likely be, at some point, higher travel costs. In-person market events should increase as the vaccination program scale and become effective, and as COVID-19 containment measures ease. We do have, I think, some areas where we can have sustainable practices that lower our expenses. But I think the way I'd ask you to think about it at this point is, given our market opportunity, we'd likely reinvest the savings from them. So in terms of from a modeling perspective, let's say, I don't think there's anything really to model in the P&L because we'd look to reinvest.

Okay. Very clear. One question that comes up a lot is the environment for hospital capital spending. I think if you were to ask anybody what they thought would have happened last April, the outcome has been stronger than anticipated, certainly due to the benefits of the CARES Act and a shift to higher acuity patients within the hospitals. How are you thinking about the current hospital spending environment? And does it -- you guys have talked a lot about this, and so I'm sort of asking a question that you've somewhat addressed. But does it really come down to, at the end of the day, how utilization fares over the coming months as to how hospitals start to think about adding to capital fleets?

Q4 capital was relatively strong at least as -- relative to our expectations as we headed into the quarter. And we saw customers invest remaining 2020 budgets. In some cases, customers invested to prepare for a post-pandemic environment. And we did see in Q4 higher trade-ins as customers standardized on fourth gen. But I'd say despite the relative capital strength in Q4, we did see Q4 utilization decline 2% year-over-year. And with budgets resetting, the slacking the existing capacity at customers given that utilization decline, we expect the capital environment to be challenging. Particularly in the short term, we expect the capital will be impacted by the relationship between procedures and utilization. So I think maybe the short answer to your question, Larry, is we do think system utilization is a key leading indicator to capital demand. I think we also consider the fact that hospital finances may be pressured if any macroeconomic concerns emerge. And as competition enters, we could also see competitive selling cycles lengthen. But I think as we look at '21, the system utilization metric is a key one to watch.

Yes. Okay. You mentioned this earlier, Jamie, in the first question when I asked you sort of frame the business, and you certainly talked about leasing. How are you thinking about sort of, directionally, where leasing can go? And I've asked Marshall this question a couple of times, I'll ask you as well. If 100% of da Vinci, and I'm being somewhat facetious, but let's just call it, 100% of da Vinci placements were under lease. Is that an issue for the company?

No. I think we've said in the past, we'd be happy for it to be 100%. I think that then takes the entire revenue stream to be recurring, which just allows you to kind of manage the P&L on a more predictable basis. I think the actual answer for us is, we're really happy to engage on either model purchase or leasing based on customer preferences. And our objective is to delight the customer. 2020, we finished our -- with 77% of our revenue is recurring. So it's pretty high as it stands. I think, directionally, we think that, over time, the proportion of placements that are under lease will continue to grow. I think hospitals have seen that as a attractive option to expand their robotic programs more quickly. But we are happy for that metric to continue to track up. And if it ever became 100%, providing that satisfies our customers' needs, we will be happy with that.

Larry, the only thing I'd add is, as you know, leasing is not permitted in China. So China placements are always capital. And then also, publicly traded hospitals have preferred to buy the capital outright, at least historically, because they participated in that depreciation as they're evaluated on EBIT to EBITDA multiples.

Okay, that's a good point. We got a question in from the audience, which actually dovetails with sort of my next question. But this is related to the extended use program for your instruments. And so I think just because this question is coming in, can you just go back to sort of what the high level sort of features of that extended use program are to make sure everybody understands that? And then there were a couple of questions that came in behind it.

I'll let you take that, Philip.

Sure. So with respect to the extended use program, we've talked about the virtuous cycle in the past driving volume increases, allowing us to invest in design and manufacturing at scale, and being able to share these savings on with our customers to allow them to use our products more broadly. And so we've characterized the impact of extended use in our previous calls, $150 million to $170 million. And so this -- ultimately, we believe that it will take some time, but that this will result in the increased usage of da Vinci documents or procedures over the long term. In the U.S., we've called out procedure categories as inguinal hernia, chole benign hysterectomy. And so this is something that, obviously, the short term, our customers are very focused on COVID. But in the longer term, this is something that we think in the long term, it will be a benefit and increase penetration over the long term.

And sorry...

Larry -- sorry, Larry, in the question, there was a question about features. Just to clarify, if that is referring to product features, the actual product doesn't change in terms of the features whatsoever. And as we launch the extended use instruments in a given market, then it becomes a cutover. There's obviously a short period where customers can manage their inventory, but they migrate 100% to the new instruments.

And just for either of you guys, I want to take this. I think the thrust of the question was, there's 2 aspects of this, right? There was -- I think there certainly was an extended number of uses for the instruments, and there was also sort of a commensurate price reduction when you build that in. So that, I think, was the thrust of the question of just kind of what exactly you are offering your customers under this new program. So the instrument usage went from what to what?

Right. It went from an average of 10 uses to 12 to 18, so.

On a per instrument basis, Larry, the actual price in many cases per instrument went up. But on a per use basis, the price went down.

Right. Okay. Perfect. And as part of this question that came in, there's an aspect of sort of why was it launched? And was it just your ability to, as you have gotten better manufacturing, the products and the life of these products could be extended, that this is a fair thing to do for the hospitals? Or was it hospitals pushing back on price? Or was it because there were some reprocessing potentially going on out there? But again, any sort of thoughts as to kind of what precipitated this shift here.

From a macro perspective, embedded in our strategy is the virtuous cycle that Philip described. And we think that's a powerful cycle in business. As you drive volume, your product costs will come down. You have the opportunity to share that with customers, and that can in turn allow broader usage of your products to increase this volume again and create this virtuous cycle. And so that's an element of our strategy and it recognizes one of the elements of the quadruple aim, which is to lower health care costs. And so we've done that broadly. We -- as we get volume, we automate lines. We get great negotiating power with our vendors. And we'd look to pass that on to customers. In the case of extended use instruments, specifically, generally, across the company, we have a high emphasis on product quality. We think that, that's another basis to be differentiated. And so we've been working on those instruments for an extended period of time in terms of improving quality and robustness. And as we have done that over time on a series of incremental changes, that allowed us through testing to extend the lives. And so when that became feasible and the testing was validated, we chose to take this action and launch these extended instruments where we could pass on the savings to customers. And I think that you'll continue to see us to look for opportunities to lower health care costs and improve economics for our customers.

Okay. Last one on this, and then we'll move on. You certainly have, I guess, hinted in the past that you have looked at elasticity of demand on those lower prices. You haven't really spoken about what you think that might -- that demand increase might be. I'm guessing you're probably not ready to necessarily go down that path of elucidating what that is, but I figured I should ask the question. And then along with that question, what happens to margins on instruments? Does it -- are you able to lower your manufacturing costs so that you actually can keep the margins basically the same? Or how does that work? So those 2 components.

Yes. I'd just say, early but anecdotal customer feedback to the launch of extended use instruments has been positive so far. And in the long run, we do expect to see price elasticity. And the impact of extended use instruments has a greater impact on lower acuity product procedures such as cholecystectomy and inguinal hernia. Those are relatively large categories, as you've hinted that, Larry. At this point, it's too early for us to describe more specifically, the future impact. And in part, clearly, because our customers continue to be focused on managing through the ongoing impact of COVID. The impact of COVID obviously kind of confounds what we see in our procedure data. So I think it will take some time before we know the extent to which lower-priced instruments will impact adoption. In terms of margins, because the unit manufacturing cost at the instrument level is relatively similar, you have a higher unit price on the instrument, the margins will be similar-ish.

Okay, great. We got about 10 minutes left here. So I just want to hit on a couple of things, maybe we can knock these off a little bit faster. You certainly made it clear that one of the key priorities during 2021 is the continued advancement of Ion, SP. Is there any update on the challenges from the manufacturing side on Ion supply? And for investors that are not fully aware of, what exactly is the issue there?

Sure, Larry. So our commentary on Ion remains consistent from the conference call. So for those who are newer to intuitive, Ion is our endoluminal, flexible catheter-based platform that uses shape sensing technology to navigate through the periphery of the lung for early-stage lung cancer biopsy. Ion is a platform, with potential for future applications beyond biopsy, though we are focused on the lung cancer diagnosis opportunity at this moment, which is quite substantial. If we zoom out for a moment on Ion. What happened is we had greater consumable demand than we originally planned, driven by higher earlier utilization and differing ordering patterns than we had expected. At this stage, and -- with Ion, we're refining and scaling our manufacturing operations. Some of the manufacturing processes are complex and labor-intensive, utilizing a dedicated team of trained assemblers. And in Q4, we experienced some production interruptions due to COVID quarantines on that team. And so that slowed our response to some of the increased demand. And we're currently shipping product and are working to clear the backlog, and we expect to resolve this issue in the first half of the year as we indicated on the conference call.

Okay. Great. So no change there. And on SP, what needs to happen to -- I mean, certainly, the rollout has been notable. You're placing systems. There's increasing usage of it. But what needs to happen to really expand the usage of that single-port platform? Is it simply an expansion of indications? Or are there improvements that need to be made to the system, or more exposure? Just trying to understand kind of what might cause more of an inflection on it. And trust me, I'm not dismissing the great work that's been done, just trying to understand where it can go.

Sure. On SP, to level set everyone. SP was designed as a platform technology to help facilitate surgeries where surgeons wanted to enter the body through a single entry point, sometimes through an incision, sometimes through a natural orifice to reach deep into the body. Examples include single port access into the abdomen and transoral access into the throat and so on. And so in the U.S., we're in a controlled launch. And the key to driving increased usage of SP will be adding additional clinical indications. Currently, SP is approved for urology and [indiscernible]. And we have a broader set of procedures that are approved in Korea. There are opportunities for us to make improvements to the system over time. In South Korea, where we have a broad clearance, utilization rates of SP are higher than Xi. And so we're encouraged by what we're seeing, even though it's early days. And the usage is broad based, with different procedure categories: urology, general surgery, women's health. More broadly, we are very pleased with the customer response to SP. And we continue to plan to work with surgeons to develop applications, over time.

Great. And Phil, just on that South Korea comment and general surgery, specifically, are you seeing usage of SP in rectal cancers, for example? That's one of the things that always seem to be a unique and interesting opportunity for this construct.

Yes. I don't have the specific data in front of me, so I don't want to misspeak, Larry. But I can get back to you offline on that.

Okay. No. No worries on that. Let's turn to competition for a moment because I know that, that's something that everybody focuses on. So competition has certainly been building. There's a couple of smaller competitors out there that are currently on the market. There are some larger well-funded players coming over the next several years. One thing that's interesting to me is that there was a lot of talk previously about how these new systems are all going to be less expensive. But that doesn't seem to have panned out at all. What do you think is behind that?

Larry, I guess I'd say maybe we'll see what -- where the pricing ends up being once the larger players launch. But independent of that, what I'd say is these are sophisticated technologies. The integration of hardware and software is a significant effort. Significant testing to be done there to properly validate that. There are complex supply chains. The quality and safety standards that everybody has to meet from a manufacturing and testing perspective are significant and high, obviously, given it's a regulated industry. Many of these companies, obviously, do not yet have the benefit of decades of manufacturing cycles of learning, scale and automation. And so I think each of the companies has to look at their cost profiles carefully.

Okay. And when -- at a high level, you've now seen -- we've sort of seen what Medtronic has for the better part of a year. J&J provided a little bit more insight and may have unveiled their system a couple of months ago. What's your -- as the market leader out there and one that continues to advance the technology base, what was your impression of kind of the competitive landscape with the systems that we've seen thus far?

There isn't anything we've seen from a technical perspective that was surprising from them. The different footprints and architectures may seem new to some observers, but they're not new ideas for us. We've explored many of these ideas in our labs. Each of these architectures involve trade-offs such as cost, workflow, product quality, others. We've been very intentional in our design choices as we've explored the different architectures. That doesn't mean that we'll always be right. But there's nothing that we've seen that has surprised us and that we haven't made conscious choices around. From our perspective, I think we believe the basis of competition will be ecosystem to ecosystem, as I described earlier, not robot versus robot. It's the integrated set of products, services and capabilities that I think will differentiate a given supplier here. And it's the ecosystem that best fulfills the quadruple aim that will likely be the one that succeeds. And certainly, that's where we're focused. And again, we take a holistic integrated approach to the ecosystem. We look for synergy and how each of the elements work together. And I think that's proven to be successful so far in our Xi ecosystem.

Okay. Great. Just in the last couple of minutes that we have here, I want to just touch on one dynamic that does seem like will have a lasting impact as we come out of COVID, which is the acceleration of the trend to move procedures out of the acute care setting into the ASC. Now I think that's been pretty profound in some of the orthopedic procedures. And it's a trend that's been happening, but it does feel like it's been accelerated and probably that care setting will become bigger. I know there are some -- there are challenges with economics within ASCs. But how are you viewing the opportunity from your perspective? You've made the pricing more attractive for higher-volume, lower-acuity procedures. But how can Intuitive really kind of assert itself into that care setting if it does start to expand for the procedures that you address?

Maybe I'll just make a couple of comments and then let Philip expand. So if you look at the market today, actually, the number of soft tissue surgery procedures done at ASCs is relatively low. As you said, Larry, high proportion of orthopedics, cosmetic procedures, colonoscopies. The number of soft tissue surgeries today is relatively low. If you examine the characteristics of the ASCs, the majority of them are surgeon owned, I think that IDNs are getting increasingly interested for the reasons you described. And if you look at those ASCs that do soft tissue surgery procedures and do them in volume, then the opportunity set starts to narrow further. That kind of describes where we are today. And just in terms of market characteristics, it's clear that you see a trend of that growing over time, and I think that's the trend that we want to be prepared for. We have a number of engagements with ASCs, both through searching owned facilities and as a function of IDN, JVs, et cetera. And they perform at varying levels. I think we've done our homework in this space, and we are prepared for that trend. Let me have Philip just expand on the answer.

Yes. I mean, Jamie did a great job answering that. The big thing that we would emphasize is that a reimbursement change would need to take place for more procedures -- more of our procedures to be done in the ASC. In the long term, we're going to go where the patients are. And we have the ability to operate in any environment, including the ASC. We -- there's no -- we already have existing systems there right now in current ASCs. And whether it's X or Xi, both systems work well in the ASC.

Okay. Perfect. Last question for you, and this one can be relatively quickly because we have fast approached our deadline here. But just thinking about the Biden administration and taxes in general, what do you think are the -- is the likelihood that we see a corporate tax increase in 2022? And the second part of that question is, what are your thoughts on the medical device tax reemerging here?

Larry, we work within the environment as it is, not how we would like it to be. So regardless of the political environment, Intuitive has shown its value to its customers by focusing on the quadruple aim. We've experienced different capital cycles under different presidencies, and ultimately, are focused on bringing real clinical value to the customer. We don't have a crystal ball. It's not our practice to speculate on what could happen. And frankly, we have no special insights on what may take place.

Okay. Perfect. Well, thank you, gentlemen. This was fantastic. Thank you for your time this morning. I know it's relatively early in California, but we appreciate it. And as I said, hopefully, we'll be able to entertain you back in Florida next year. Take care.

Thank you, Larry.

Thank you for having us, Larry. Take care.

Bye-bye, Jamie.

Bye.