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

All right. Good afternoon, everybody. I'm Tycho Peterson from the life science team. It's my pleasure to introduce our next company this afternoon, Intuitive Surgical. Just a quick reminder, you can submit questions through the website. And with that, I'll turn it over to Gary.

Well, thanks. Thanks to you, Tycho and the JPMorgan team, for putting on the conference again this year and to our shareholders for their continued interest in and support of Intuitive. Before I get started, please be aware that this presentation contains forward-looking statements. I encourage all shareholders and listeners to review the risks and uncertainties associated with our business in our company's SEC filings available on the Investors section of our website. Turning to Slide 3. Let's start today by grounding in what Intuitive is here to accomplish. We are driven by creating solutions that improve what our customers call the quadruple aim: better outcomes for patients undergoing interventions, better experiences for patients overall, better experiences for the teams caring for patients and lower total cost to treat per patient episode. While we've been at this for over 25 years, we believe there is a substantial opportunity for improvement of surgery and other interventions. We envision a future of care that is less invasive and profoundly better where diseases are identified earlier and treated quickly so patients can get back to what matters most. Referring to Slide 4, looking at 2021 by the numbers, physicians used our products to perform over 1.5 million da Vinci procedures in the year, bringing our cumulative experience with the da Vinci system to over 10 million procedures. We installed more than 1,300 new da Vinci systems in the year, bringing the installed base of clinical use systems to more than 6,700. In the year, physicians publish more than 3,000 peer-reviewed articles assessing our products, bringing the clinical database to over 29,000 articles. The vast majority of these conducted entirely independently of Intuitive. We looked at this base of experience as a rich resource from which we can inform our future. Turning to Slide 5. Qualitatively we started 2021 focused on 4 main thrusts: supporting our customers' recovery of surgery during the pandemic; advancing our launches for new platforms, imaging and digital tools; growing the capability and performance of our global teams; and expanding the clinical, economic and analytic evidence for Intuitive products and services. Challenges in the year are well known and broadly shared across our industry, including successive ways of pressure on diagnostic procedures, surgery and hospital staffing due to the COVID-19 pandemic. Likewise, broadly reported global disruption in supply chains and logistics pathways continued throughout 2021 and persist today. In the face of these headwinds, our teams and business also showed areas of strength in 2021. As waves of the pandemic receded, we saw surgery using our solutions return quickly as our customers appreciated the benefits of high-quality minimally invasive surgery that helps patients to recover quickly, and when they do, consume fewer hospital resources. Our system placements remained healthy in the year, with many integrated delivery networks standardizing on our fourth-generation da Vinci systems and investing in the robotics programs in anticipation of the recovery of surgery when the pandemic wanes. Our flexible robotics program, Ion, built momentum clinically and commercially through the year. Our customers and business in Asia showed strength in much of the year. Our Net Promoter Score rose during 2021. And finally, our ability to capture, curate and inform action using our digital tools continued to strengthen. Moving to Slide 6, our leading indicator of customer health and trust in Intuitive products is global procedures. 2021 procedure growth was 28%, rebounding from the first waves of COVID-19 in 2020. Our largest surgical categories grew with particular strength in general surgery. The compound annual growth rate over the period of 2019 to 2021 was 14%, slower than our growth going into 2019. This is driven by delays in diagnostic pipelines, along with deferred surgeries due to the pandemic. Many of these patients are likely to come back to surgery, although the timing and the extent of a recovery is hard to predict. Looking into 2022, we're guiding to 11% to 15% growth in procedures, a large range given the inherent uncertainty associated with the course of the pandemic and recovery of supply chain disruption. The low end of this range assumes moderate ongoing COVID and staffing pressure at hospitals. In addition, this range does not contemplate material supply chain disruptions, which we fought hard to manage throughout 2021. We expect to update the range in the year if visibility improves. Turning to Slide 7. On the capital side, our placement performance was healthy during the past couple of years, as hospitals deployed resources to outfit surgical departments with our latest generation da Vinci systems. The compound annual growth rate of our installed base during this period was 10% compared to the 14% CAGR for procedures, implying continued increases in utilization per installed system during the pandemic. It's a good sign for us and our customers. Referring to Slide 8, our procedure growth CAGR of 14% and installed base CAGR of 10% over the past 2-year period supported a revenue CAGR of 13% over the same period. Part of our -- the part of our revenues that we earn as recurring business has grown from 70% in 2015 to 75% in 2021 as customers make greater use of installed systems and adopt flexible capital acquisition models. We think this mix is appreciated by our customers and it's healthy for Intuitive. Flipping to Slide 9, Digging a little deeper into our procedures, Drivers of growth in the 2-year period 2019 to 2021 have been growth in U.S. general surgery procedures, namely hernia repair, bariatric surgery, colorectal surgery and foregut surgery, including cholecystectomy. We've also had success in diversifying adoption beyond the discipline of urology in countries outside of the United States. In 2021, non-urology specialties approached half of all OUS procedures and grew faster than urologic procedures. Moving to Slide 10. Double-clicking on sources of revenue, we've seen positive customer response to our advanced instruments. In the upper left hand of this chart, you see the constituents of revenue, including advanced instruments, namely energy and stapling; core instruments and accessories like needle drivers, scissors and drapes; system revenue and service revenue. As we've introduced and improved our energy and stapling offerings, adoption has been healthy with 5-year compound annual growth above 35% now becoming a material part of our total revenue at roughly 13% in 2021. Turning to Slide 11 and pulling back a step. We have a specific and complete ecosystem for customers, created by selling together world-class systems, instruments and accessories, regulatory clearances, training products and services, clinical trial efforts, sales service and marketing competencies, academic and society engagement and economic validation. It takes years to develop these competencies, and capabilities are required procedure by procedure and country by country. As a new system enters the market, ours or anybody else's, this ecosystem must be built or adapted. In the end, it is the competence and competitiveness of the ecosystem that ultimately delivers value for customers. Since this is a lot to take in, let me highlight 3 elements in particular. Slide 12. Starting on Slide 12, with instruments and accessories, we design and deliver broad INA sets that allow our systems to perform specific procedures while delivering an outstanding surgeon experience. Our fourth generation systems now support roughly 100 different types of procedures with appropriate and specifically tailored products that enable routine and successful case completion. And we launched an additional 8 INA products in 2021. Moving on to training on Slide 13. Our Genesis program provides best practices and consultation intended to help hospitals improve surgical and reprocessing efficiencies, develop standardized processes, communication pathways and leadership structures, enhance da Vinci system utilization and reduce process variability and procedure costs. Combined with our world-class position in technology training, our progress in 2021 and reaching physicians and OR staff exceeded our expectations. Finally, on Slide 14, I wanted to touch on economic validation. As hospitals have invested in electronic health records over the past several years, we've been able to thoughtfully combine our data insights with theirs to perform careful economic analysis of the value of da Vinci programs to hospitals and to payers. We do this through our custom hospital analytics program in which hospitals examine their own data and real-world evidence to evaluate the clinical and economic value of the programs. 30% more hospitals used our custom hospital analytics in 2021. Now moving to Slide 15. How are we doing in delivering this ecosystem for our customers? An increasing number of our customers are reinvesting with us over the past 5 years. For technologies like ours, customers first install a single system to evaluate its utility. As evidence grows in their own hands and in their own environment, they move from an evaluation stance to an integration approach, building intuitive solutions into their workflows. As real-world evidence grows within their department or broader integrated delivery network, these institutions start to standardize on best practices and technologies. In the chart in the upper right, you can see the growth in IDNs that own 20 or more Intuitive systems across their portfolio of hospitals. This number growing 29% year-over-year in Q4 of '21. The chart on the lower right shows the growth in single facilities that house 7 or more Intuitive systems within a single building. In this case, the number of concentrated da Vinci centers grew 50% year-over-year in Q4 2021. We believe a comprehensive and capable ecosystem, along with the analytic power to evaluate hospital and regional real-world evidence is driving this reinvestment cycle in Intuitive solutions. Moving from the programmatic level to the platform level, let's update the progress that our teams are making in identifying clinical need and delivering solutions that matter. Turning to Slide 16. Cancer treatment has progressed substantially in the past decades. That said, progress has been uneven. In the case of prostate cancer, 5-year survival is roughly 98%, up from 66% in 1975. Progress in prostate cancer survival comes from improvements in diagnosis and screening along with evolution in therapeutic approaches. By contrast, lung cancer 5-year survival remains a challenge, currently running at roughly 18%. Early definitive diagnosis can help, and we've targeted our Ion flexible robotics platform at lung biopsy as its first application. Moving to Slide 17. Ion is a robotically assisted catheter system that uses preoperative imaging and machine learning to build a segmented map of the lungs. Combined with advanced sensing and mechanics, the system aids the physician in precise acquisition of tissue. The burden of lung cancer globally is significant with annual incident rates in the millions, making the need for better approach is critical for patients and health systems alike. Turning to Slide 18. Ion's adoption is rooted in clinical utility, supported by the first results of the PRECIsE clinical study, our first prospective multicenter trial for Ion. Preliminary results of which on encouraging diagnostic yields for lung [indiscernible]. The results indicate that Ion helps identify smaller lesions on the periphery of the lung, away from the central airway where cancer is often harder to definitively identify. Not only do these early results show a very strong safety profile for Ion, but the results approach the current standard of care, CT-guided needle biopsy. As a result, Ion is now being routinely used by interventional pulmonologists and thoracic surgeons to gather tissue samples with confidence, allowing many patients and their caregivers earlier information regarding the nature of their condition. Referring to Slide 19. We continue to build our footprint for our SP single port surgery system with an installed base growth of 43% and procedure growth of 56% year-over-year for 2021. In the U.S., we're pursuing additional indications for colorectal and thoracic procedures, which requires completing IDE trials. Patient enrollment has started in our multicenter colorectal IDE study, and we expect to start accruing patients for our thoracic trial in 2022. Our SP dual console was cleared in the U.S. and Korea, which helps ease training pathways, and we started launching several products that improve usability and durability of the SP system. Now on to Slide 20. We've made significant progress in our digital and data programs. The da Vinci ecosystem is a natural digital engine, and we've been the Internet of Things in surgery for over a decade. The power of our data supports 3 virtuous cycles of collection, analysis and informed action, one in improving outcomes, one in improving and accelerating personalized learning and one in driving improved programmatic efficiency. The process starts with the right data of the right quality, curated on secure platforms and adhering to compliant privacy policies. Algorithms can then be developed to discover correlations to outcomes or best practices that in turn enable validated insights. Since again, this is a lot to take in, I'm going to talk about each of the 3 virtuous cycles individually. Starting with Slide 21. The focus of the first virtuous cycle is on outcomes, as we seek to discover lengths between patient selection, surgical technique and outcome. This is a complex and long-term goal. However, there's evidence that it's possible. Our Intuitive Hub has launched as an evolution of our Orpheus Media Manager and is now integrated with da Vinci X and da Vinci Xi data streams to help improve clinical workflows during surgical procedures. We aim for Intuitive Hub to become the point-of-care digital platform supporting all our robotic systems to organize data during the procedure and enable access to our digital ecosystem. In augmented reality, Iris generated strong clinical evidence during pilot studies, and our team submitted our next Iris 510(k) to enable additional anatomic models. Turning to Slide 22. Our second cycle focuses on learning by curating data that links high-performing surgical standards to individual surgeon skill assessments to personalized training curriculum. The idea is that data supported personalized training to proficiency in robotics. Our digital learning programs continue to advance in the year, bringing new capabilities for intuitive learning, SimNow virtual reality training, remote case observations and remote proctoring. Moving on to Slide 23. Our third cycle focuses on efficiency, and we are continuously improving analysis of resource consumption that highlights opportunities for savings for our customers. The My Intuitive community launched broadly in the U.S. as our customers' single application to access personalized products, services and data insights, and global expansion has started with launches in the European Union and Japan. Surgical program analytics have become a routine part of our customer offerings, and we have completed more than 1,700 analytic engagements. Moving to Slide 24. Customer experiences matter to us. To measure how well we're serving our customers, we routinely measure our Net Promoter Score using JD Power. This year, our U.S. NPS score registered as an exceptional 72, and our scores with U.S. hospital executives rose substantially in 2021. We think this performance is the result of the following: solutions that deliver on the quadruple aim, outstanding system dependability, excellence and agility in our learning programs, design and delivery of value-based programs that meet the needs of cost-sensitive markets, adapting to our customers' needs, particularly during the pandemic and analytic programs. Turning to Slide 25. As we move into 2022, we're focused on outstanding field and supply support for our customers in the face of the pandemic and supply chain disruption; outstanding execution of our platform and digital launches, including new indications and access to new markets; continued diversification of our growth beyond urology outside the United States; and continued growth in general surgery in the U.S. We have substantial opportunities ahead to create value in advancing acute care globally as we continue to bring solutions to the market that improve existing procedures and enable new ones. As we move into 2022, we'll be making significant investments to drive our innovations as well as increased capital investment to support the company at global scale, including manufacturing capability and automation. We are excited and optimistic about what's possible for the surgical and interventional market and for Intuitive over the long term. As we move to our Q&A session, I'd like to introduce team members who will be joining me to answer your questions. Allow me to welcome Jamie Samath, our incoming Intuitive CFO; and Brian King, our Senior Director of Treasurer -- Treasury and Investor Relations. I'd also like to publicly thank Marshall Mohr, our outgoing CFO and new Head of Global Business Services, for his outstanding stewardship as Intuitive's CFO over the past decade. Tycho, back to you.

Thanks, Gary. Great presentation. I'd like to start off just not to be too myopic, but just to touch on the preannouncement. Some good numbers in there and solid system placements, right? There seems to be a little bit of a recovery here. Can you maybe just talk on what you saw in the quarter, in particular on the systems side?

Jamie, I'll let you take that one.

Yes. I think, Tycho, particular strength in the U.S., there's a continuation of IDNs doing multisystem purchases. We saw that last quarter repeated in Q4. Within that trend, we see actually IDNs increasing the number of systems they're placing at greenfield hospitals, so the first da Vinci program. Those are typically smaller hospitals, a higher benign case mix. And that, I think, reflects just the growth we've seen over time in the general surgery category and customers having confidence that they can extend their programs to smaller customers. We also have seen over the last year or so kind of customers in the U.S. standardizing our fourth generation technology. The actual trade rates in Q4 were a little lower than we've seen, and we've talked about the depletion of the installed base there. But I think that U.S. in particular has performed well. In Q4, we also placed 37 systems in Japan. That's a new high for us. That was primarily driven, again, by new customers and by the private sector. And I think we're happy with the performance of the Japanese team in the quarter.

Great. And then thinking ahead, just so we're clear on the messaging around guidance, 11% to 15%. I mean, if Omicron does peak here in the next couple of weeks, knock wood, does that get you to the high end? You also mentioned hospital staffing is a bit of a constraint. So I'm curious how you think about those 2 dynamics.

Jamie, go ahead and kick it off and then I'll add a little.

Yes. Maybe let me talk the shape of the quarter first, Tycho. So what we saw in October and November actually was a continuation of trend from September where procedures continue to recover actually from the impact of the Delta variant in Q3. As you get into December, particularly the early part of December, you start to see the rapid rise in cases in particular, hospitalizations associated with Omicron. That impacted the U.S. and parts of Europe and started to impact our da Vinci procedures. That continued into January and so far actually has gotten worse as you might expect since the hospitalization rates have continued to climb. So when you look at the procedure range of 11% to 15%, as Gary said, the low end reflects not only the impact of Omicron and staffing shortages, but continued moderate impact for the remainder of the year from COVID, some choppiness there. At the high end, what you see is the impact of the current resurgence, and there are no significant new COVID waves thereafter. Not reflected at all in the range, Tycho, is any significant disruption from the supply chain environment, which, as Gary said, we've managed through that so far effectively.

Yes, just goes without saying, forecasting in the current environment is extremely difficult. And I just ask everybody to bear that in mind. The range is only a range, and we'll see as it plays out during the year.

I think in the past, Gary, you've also used our conference and guidance to talk a little bit about your view on spending and OpEx. Is this going to be another big investment year? Can you grow earnings this year?

So I'll start this off and then, Jamie, jump in. But we won't give you specific guidance in this session. We'll talk a little bit more about it in the earnings call upcoming soon. But we do think that we're going to be investing in the next couple of years. We have a couple of platforms that we're excited about that are in the early phases of their go-to-market between Ion and SP. We think those things are important. And we also are seeing really nice global growth, and we want to make sure that our manufacturing capacity and our manufacturing capabilities and automation capabilities within our workflows and internal processes are really well built for the virtuous cycle going forward that allow us to really serve the world at scale and to get manufacturing leverage over time. So we'll be spending on those things in '22.

One other dynamic before we talk on innovation and pipeline is we're obviously in an inflationary environment, input costs are going up. You're doing some interesting stuff with pricing adjustments, extended the use instruments. So how do you think about those trade-offs, the ability to kind of protect margins while also trying to be a little more user-friendly with your customers?

It's a balance that we're going to have to work through during the year. We think that the investments that we make in better design and the advantages we have when we automate some of our own workflows and we get scale advantages are some things that can save us money. And some of which we can pass along to our customers, extended use instruments being an example. And we'll keep doing that. I don't think that, that's an idea that changes. We do see inflationary pressure on our own costs. Certainly, hospitals are going to be seeing it in their cost, labor costs and otherwise. And what that implies for us going forward, we'll work to balance. At the end, we start with the customer's view of the quadruple aim in mind, can we demonstrate the value that we're bringing and does it make sense for them from a total cost to treat point of view. We'll continue to use that methodology regardless. Jamie or Brian, I don't know if you have anything you'd like to add there?

In product costs, costs from suppliers, we saw an impact in Q3, including on kind of the logistics chain and shipping costs. That's a small impact on our overall cost of sales. We'll kind of give you more color in terms of Q4 when we go through earnings next week.

Okay. One more came in on e-mail on just near-term trends. Have you seen further share gains in COVID due to faster recovery times from robotic versus open laparoscopic? Any way you can provide color on that?

I'll let Jamie you and Brian start, and then I'll add my perspective thereafter.

Yes. I think you have to look at the country and the procedure. In general, many of the markets that were in the procedures that we're in, the kind of, let's call it, overall surgical market grows pretty slowly. And so in the areas where we are seeing outsized growth, let's say, bariatrics in the U.S., hernia repair, cholecystectomy in the U.S., then by definition, you're effectively gaining share. It depends on the procedure, whether it's from open or lap in the case of bariatrics and chole where we've seen pretty good growth rates in the U.S., those are mostly lap penetrated procedures. So it's really a function of the individual adoption curve for a given procedure in a market. As we start to get into kind of the sweet spot of adoption in the early to mid innings, you see pretty good growth rates, and that usually implies you're gaining share.

Yes. And the one thing I'd add in the space, our ability to assess in near real-time or real-time robotic surgery is quite strong. Some of the other data, open and lap, lags a little bit in terms of ability to collect that data. In general, so watching through the waves of COVID and trying to discern what share and what's COVID takes a little while. There's some estimation that has to happen there. In general, we think that on the margins, it has been positive for Intuitive, that switching to minimally invasive surgery and stick rates within robotics are strong through this period.

And I guess on the procedure front, we're always looking to figure out what's inflecting here, right? I mean bariatrics been a newer one. As we think about the next year, are there newer procedures that are just beginning to open up?

Sorry. Go ahead, Gary.

I'll start and I'll let you jump in. We're in that kind of early middle innings of several procedure categories in the U.S., a little bit different OUS. So let's start in the U.S. In the U.S., in general surgery, I think we're still in the early to mid-innings on things like hernia repair, bariatrics, colorectal, a little more advanced, and then some of the foregut procedures, including things like cholecystectomy. So we're focused there. Those are big markets. The adoptions are not complete, and they have our full attention from an Intuitive point of view. In some other countries, we're seeing diversification beyond urology. So urology, for example, if you go to Japan or you go to Germany or you go to the U.K., urology was the first adopting procedure. And we're starting to see diversification and growth in adoption in some of the procedures beyond urology, be it thoracic surgical procedures or gynecologic procedures in which the underlying procedures are complex or driven by cancer have been things that have started to rise in those other markets. And in those cases, we're starting to support that set of adoption. Of course, longer term, we have other procedure categories that we're interested in and that we're either developing our products for or working on new indications. And as those start to mature, we'll bring them up. But from a '22, '23-point of view, we're really focused on the ones I just mentioned, Jamie or Brian, anything you'd add?

No, I think you got it, Gary. Thank you.

Gary, in one of your slides, you highlighted the economic validation programs you've been kind of working with customers. What are some of the learnings around that other than just kind of proving out you can make a profit through robotics?

Yes. It's interesting. One of the most immature places in terms of analytics that I thought the field as a whole was in when we started in robotic surgeries a couple of decades ago was really the economic analysis. And that is starting to really mature. So the easy things to compute are capital amortized over years and procedures and service costs and the consumables costs. The things that are likewise important are resource consumption outside of direct product costs, whether it's anesthesia costs or pharmaceutical costs associated with the surgery or labor costs, and then recovery costs and the cost of complications, so total costs. That has started to really settle. And 2 things that are happening there that are great. One of them is that the investments that hospitals have made in electronic medical records have given them access to their own data in their own environments. And while the EMRs are not specifically designed to do clinical trials for surgery, they do have meaningful data, specifically around cost. And it's in their own context with their own patient base and with their own surgeon base that allows them to do comparative analysis between robotics and lap and open and other procedures. And so you're not speculating or waving your hands or reading an academic study that wasn't the same patient population, it wasn't in your own environment. And that has been extremely powerful. What we find when we look at that is, number one, the underlying evidence for da Vinci is really strong. Number two is it points to opportunities to strengthen the economic profile even more by looking at variance between practice or variance between sites. So you might see different surgeons practicing differently. You might see different hospitals within an IDN practicing differently. And so they can go look at the most efficient or the best outcomes or the lowest resource consumption and then benchmark across that, and then start to drive best practices within their own institution. So those are the things that have been driving, and we feel a real pull from the market to work with them in that data. It's a collaborative effort. It's kind of an open set of algorithms and it's been really great for us.

Gary, can you spend a minute on China, what's left in the quota for tender expectations for this year?

Yes, I'm going to let Jamie speak to the quota as he'll have the numbers right in front of him, and then we'll sort of step back, talk about the situation and the overall outlook for China thereafter. So Jamie, why don't you answer the quota question first, and I'll take it.

Under the current quota, we have 63 systems left. As a reminder, if a local competitor got cleared or any competitor got cleared, then they could have access to that quota. The current quota cycle, there hasn't been issues yet is 21 through 25. Last couple of cycles, that quota has actually been issued in the third year. But as things stand, we have 63 systems left.

Overall, thinking about China, we -- clearly, the market is a growing one in which demand for high-quality surgery broadly, high-quality minimally invasive surgery and the category that we do are really important. Demand, I think, is really high. Right now, the demand is essentially and nationally regulated. That's the quota system. Clearly, core demand is much greater than the quota system currently allows. So there's a constraint. We are investing. We're really -- these are highly productive customers. We have strong customer relationships. And it will be a competitive market. We definitely see interest in international companies and domestic companies and pursuing that. And we're going to invest next year further into our JV. We think the JV has been great with our partner, Fosun Pharma. It's been a really productive engagement. And you'll see us continue to work to lead that market.

One that came in on e-mail was just your view on underlying procedure growth for 2022. Your guidance is 11% to 15%, but what do you think the market is growing for kind of the procedures you're targeting? How much of this is kind of share gains in conversion away from lap versus underlying market growth?

I'll start and, Jamie, you'll fix whatever I start. I think the question is hard to answer right off the bat. And the reason is that you're really asking what is surgery as a whole doing during this pandemic? And it is really driven by resource constraints at hospitals, whether that's ICU capacity, or more recently, the ability to staff ORs. That is by far the biggest demographic challenge or biggest issue going on in the last couple of years. And it may resolve, but it won't resolve quickly. And certainly, it's not going to resolve in the first half of 2022. It will take some time. The underlying share challenge, I think that we are doing a really nice job bringing open patients and some lap patients into robotic-assisted surgery for, I think, the right reasons for -- because of the value it brings. And I think the pandemic has not disrupted that underlying -- the underlying goodness of that value proposition. I think that's still there. So it's hard to answer the question in the current moment because a lot of what you're seeing in the waves of surgery are determined by pandemic response. Jamie or Brian, feel free to add to that.

I think that's exactly right, Gary. I think I'll just say underlying growth rates -- growth drivers continue to be what Gary showed earlier, it's general surgery in the U.S. and then OUS markets particularly kind of expanding beyond urology.

On the system side, trade-ins, if those are slowing down. Are you able to grow systems overall? Can you maybe just talk to the gives and takes around trade-ins?

I would just say that last year, globally, we had just over 500 trade-ins. Most of those came with U.S. customers. If you look at SIs in the installed base in the U.S. There's about 340-ish left. And so we do expect a relatively significant decline in trading volumes in '22 compared to '21. With respect to overall system placements, obviously, we don't give capital guidance. So we'll let you run that through your models. With respect to installed base expansion, particularly for mature markets, it continues to be the case. We believe the procedures drive the installed base growth. So you can reference off of there, 11% to 15% procedure guidance.

And do you think this is -- go ahead, Gary.

One thing I'd add to that, I'm sorry, Tycho, is we have a couple of platforms that are early in their launch experience, right? We have SP coming and we have Ion that's been growing really nicely. So that will be a part of the capital discussion going forward. It's not all multiport.

And have we reached steady state on operating leases? Is this kind of the right range to be thinking about going forward in your view?

I think the operating lease structure usage-based arrangements, which we actually first introduced in the U.S. back in 2013, I think that's progressed nicely in terms of how it's been received by customers. It will fluctuate from period-to-period, Tycho, just based on customer mix, geographic dynamics, but we think it continues to trend upwards moderately over time.

Gary, you highlighted Iris. Curious where you're headed next with that in terms of applications and the road map.

Yes. Just a few things. What's going in next, and I don't remember all the solid organs that we've put into this last 510(k), but right -- first 510(k) was around kidney modeling. The next sets include lung and other solid organs. There are several. And we'll expand. Essentially, if you look out and look for places where a preoperative image would be helpful in surgery to both review before the case and then have access to in a really natural way during the case, that's what's determined the road map. So you can kind of look out at the procedures we do and those that benefit from preoperative imaging and visualization, whether it's cancer or benign tumor or otherwise, those are the kinds of things that we have in the road map for Iris.

Just reflecting back a little bit on the conference so far, there's been -- one of the big things has been in our world around liquid biopsy. And you're in a little bit of a unique position. You're on the Board of Illumina. They bought Grail, they launched Galleri. how do you think about liquid biopsy longer term as you think about cancer surgery, right, and potentially impacting downstream a number of cases that are going to be surgically done versus treated earlier on?

Yes. Where we are today, I think in the near to midterm -- first of all, for the world, these are great things, right? Really, identification matters a lot and then specific identification. So going to a place where you're routinely screening as part of your normal diagnostic pathways. You see something, let's say, lung cancer, then the next thing is to go identify where is it. So long as surgery as a therapeutic approach is a high likelihood of resolution, high likelihood of cure and that it's well tolerated, in other words, it's minimally invasive, then I think while that's true -- where that's true, then early diagnosis and screening ultimately benefit surgery and ultimately benefits Intuitive. Now there are other great companies who are working on nonsurgical approaches, whether it's pharmacologic or otherwise. If those become better therapeutic approaches than surgery, okay, well, that will change in time, that will change share. But I think where we sit today, those tests are likely to stage shift detection of surgery forward. And we're in a lot of cases of cancer -- a lot of cases were in cancer. If you stage shift forward, in other words, lower stage earlier detection, then surgery becomes more attractive. It's a smaller surgery and the likelihood of full resolution, total cure tends to go up. So I think in the near midterm, it's a positive for the things that Intuitive and people like us do. I make one more point, which is if those kinds of technologies start to identify issues sooner, then it even drives even further the interest in both full resolution of the disease and is minimally invasive and back to full function as you can make them. And that's kind of core to our thinking, our core to our mission, but it also is what underpins the idea of going from a multiport to single-port or natural orifice access to flex robotics and Ion, as it's detected sooner in a smaller state than being less invasive and more delicate becomes more valuable, and that's part of what's informed our platform strategy.

But you don't think it would impact the overall number of surgeries? I mean because you could treat some of these low level immunotherapy, right? There might be other treatment options for Stage 1 and 2? Yes.

Yes. I think it depends a lot on -- and that's the specifics of what it is that you're identifying and the quality of the immunotherapy or alternative approach. That -- time will tell is the right answer to that.

Maybe last one before we wrap up, you highlighted the Intuitive Hub. And I know you haven't really been down the path to kind of monetize things like this with customers. But as you kind of think about longer term, is there an opportunity to actually add a revenue stream around some of the data aggregation for your customers?

It's not our first thought. As we think about the opportunities around machine learning and data, the very first things are, can we drive quality improvements and efficiency improvements for our customers and with our customers. And so that Intuitive Hub and some of the computational observer work we've talked about in the past, I think those things are really aligned to customers. And we're in pilot studies and in research collaborations with some of the top academic institutions in the world looking at, okay, well, how can we identify and drive key elements of quality and efficiency. I think that's where we'll start. There are opportunities for revenue generation on some elements, things like Iris. There also opportunities that lowering cost to serve in a bunch of different ways. If we can get people through the learning curves at high competency more quickly, that saves cost for them and for us. If surgeon adoption and stick rates go up, because it's easier to engage and it's more specific how to engage these kind of technologies, our costs go down. So we look at it all across those things. I don't think that you ought to be thinking about a specific line item, that is a revenue line, at least that's material in the near term.

Great. I think we're going to leave it at that. I appreciate you taking the time. Thanks, Gary, Brian and Jamie. We'll talk to you soon.

Tycho, thanks so much.

Thanks, Tycho. Bye-bye.