Jamie Samath
Chief Financial Officer at Intuitive Surgical
Good afternoon. I would describe the highlights of our performance on a non-GAAP or pro forma basis. I will also summarize our GAAP performance later in my prepared remarks. A reconciliation between our pro forma and GAAP results is posted on our website. Overall, Q1 results reflected approximately 19% procedure growth as compared to the first quarter of 2021 and system placements of 311 systems resulting in an expansion of the installed base of da Vinci systems of approximately 13%.
As a result of our procedure and capital performance, Q1 revenue increased by 15% year-over-year. Key business metrics for the first quarter of 2022 were as follows, within the 19% procedure growth, procedures in the U.S., increased 16% and OUS procedures grew by 25%. Procedures in the U.S., were impacted in January by the significant number of hospitalizations related to the Omicron variant, as rates of COVID related hospitalizations declined in February and March, da Vinci procedures recovered quickly. On a three-year compound annual growth rate basis, first quarter procedures grew approximately 15%.
First quarter system placements of 311 increased 4% from the 298 systems placed last year. The number of systems placed in conjunction with a trade-in of an older generation system declined by 18% from the first quarter of 2021, that decline was entirely driven by the U.S. Utilization of clinical systems in the field measured by procedures per system increased approximately 6% compared to last year. Using a three-year CAGR, first quarter utilization grew 4%.
During the quarter, the supply chain environment continued to be challenging and remains dynamic. In Q1, we continue to experience constraints in our ability to meet customer demand. And as a result on-time delivery performance to our customers was lower than we have experienced so far during the pandemic. In Europe, recently, we have experienced some geographically limited delays in fulfilling orders for some da Vinci instruments and accessories.
These delays were due to a combination of the global supply chain and logistics issues, including our freight forwarders unanticipated shutdown of its computer system. While these constraints did not have a material impact to our Q1 financial results, risks associated with potential disruption to our manufacturing operations and our ability to supply certain products to our customers remain significant. During the quarter, we also experienced higher logistic costs and manufacturing inefficiencies that impacted our gross margin. U.S. procedure growth of 16% over Q1 of 2021 reflected continued relative strength in bariatrics, cholecystectomies and hernia repair.
In Europe, we experienced strong growth in the U.K. reflecting in part the significant adverse impact of COVID in Q1 of 2021. Procedure growth in the U.K. also reflected strong early stage growth in hysterectomy, colorectal and thoracic procedures. Procedure growth in Germany and Italy was also strong while procedure growth in France was adversely impacted by COVID mitigation measures in the first part of the quarter. Overall, procedure growth in Asia was solid with growth across a broad set of procedure categories. Q1 procedures in China and Korea were slightly lower than our expectations, given the impact of the Omicron variant later in the quarter.
Procedure growth in Japan was strong reflecting some recovery in neurologic procedures and strong growth in rectal, hysterectomy and thoracic. Key procedures that were grant in da Vinci reimbursement in April of 2020. The impact of the Delta variant in Q3 of last year and the impact of the Omicron variant in this past quarter highlight the continued risk of future COVID waves, and they associate significant risks to the number of da Vinci procedures that may be performed.
Brian will provide additional procedure commentary later in this call. As Gary indicated, during the quarter, we experienced a softening in our U.S. capital pipeline, which we expect to impact system placements in the near term. In the U.S., we placed 186 systems in the first quarter, lower than the 190 in Q1 of 2021, reflecting a decline of 28 systems associated with trade-in transactions, partially offset by increased placements to greenfield customers. The remaining installed base of SI systems in the U.S. is approximately 268 systems.
Outside the U.S., we've placed 125 systems in the first quarter compared with 108 in the first quarter of 2021. Current core system placements included 78 into Europe, 19 into Japan and nine into China compared with 59 into Europe, eight into Japan and 23 into China in the first quarter of 2021. We placed 30 systems in the U.K. in Q1 driven in part by the timing of government budget cycles. We do not expect to place similar levels of systems in the remainder of 2022 in the U.K.
Capital performance in Japan was driven primarily by greenfield accounts and some existing customers adding capacity in anticipation of the eight additional procedure reimbursements taking effect on April 1. System placements in China were moderately impacted by longer logistic cycle times as a result of lockdowns in response to increased COVID cases. As of the end of Q1 2022, there were 55 systems remaining under the current quarter in China, which may also be available to competitors that have received local regulatory clearance.
Globally trade-in transactions represented 35% of placements in the quarter compared to 38% for the full year of 2021 and 48% for the full year 2020, given the lower number of older generation systems in the field, we expect the volume of trade-ins to be significantly lower in 2022, as compared to 2021. Hospitals continue to experience financial and operational pressures as a result of staffing shortages, the supply chain environment and resulting inflation. Since the start of the pandemic in 2020, the impact of COVID has placed a significant burden on hospitals. The financial pressures our customers have faced have been partially mitigated by government funding, such as the approximately $178 billion of CARES Act and other relief made available to hospitals in the U.S.
The rising interest rate environment increases debt servicing costs and may make access to new debt more challenging. To the extent, the hospitals continue to face financial pressures, reductions in government funding, and higher interest rates. Hospital capital spending may be adversely impacted. In addition, as competition progresses in various markets, we will likely experience longer selling cycles and price pressures.
Additional revenue statistics and trends are as follows. Total first quarter revenue is $1.49 billion, an increase of 15% from last year. Leasing represented 35% of Q1 placements compared 37% last year -- last quarter rather. The slightly lower first quarter lease mix primarily reflected the mix of customers who prefer to purchase systems, while leasing will fluctuate from quarter-to-quarter. We continue to expect that the proportion of placements under operating leases will increase overtime.
First quarter system average selling crisis were $1.54 million higher than the $1.45 million last quarter. The sequential increase was primarily driven by a lower mix of bulk by transactions with large customers and a favorable product mix in particular, a higher proportion of Xi dual system placements in the quarter. We recognize $16 million of lease buyout revenue in Q1 compared with $26 million last quarter and $19 million last year. Lease buyout revenue has varied significantly quarter to quarter and will likely continue to do so.
Instrument and accessory revenue per procedure was approximately $1,870 per procedure compared with $1,940 per procedure in the fourth quarter of 2021 and down 4% from the $1,950 realized in the first quarter of last year, the year-over-year decrease primarily reflects the benefit of stocking orders in Q1 of 2021 associate with the launch of our extended use instruments program in the U.S. and Europe and an unfavorable FX impact from the stronger U.S. dollar. The sequential decline primarily reflects lower stocking orders associated with lower system placements, hospital ordering patterns and a small unfavorable impact from FX.
We placed 34 Ion systems in the quarter as compared to 14 Ion placements in the first quarter of last year. The installed-base of ion systems is now 163 systems of which 70 are under operating lease arrangements. First quarter Ion procedures of just over 3,900 are up over four times compared to the first quarter of 2021. Seven of the systems placed in the first quarter where SP systems including three systems placed at customers in Korea. Our installed base of SP systems is now 106. First quarter SP procedures grew approximately 36% year-over-year with approximately 50% growth in transoral procedures, small, but high value segment.
Growth of the SP platform will continue to be gated by additional clinical indications and clearances in market beyond the U.S. and Korea, moving on to gross margin and operating expenses perform a gross margin for the first quarter of 2022 was 69.8% compared with 71.8% for the first quarter of 2021 and 70.1% last quarter. Pro forma gross margin was lower than last quarter, primarily as a result of higher logistics costs and increased fixed costs relative to revenue as we invest in our infrastructure and manufacturing capacity to serve our long term needs.
While net inventory, we grew approximately $66 million quarter-over-quarter, there are still a number of components and products that are below our targeted levels. Pro forma operating expenses increased 26% compared with the first quarter of 2021, the increase in first quarter operating expenses from a year ago, reflected an increase in headcount, increased variable compensation and higher customer facing costs, customer training, travel costs, and marketing programs. As of the end of Q1, we had just over 10,500 employees, an increase of 26% from the first quarter of 2021 or an increase of 20% on a three-year CAGR basis of the approximately 2,100 employees we have added over the last year, approximately 900 are manufacturing employees.
Capital expenditures in Q1 were $95 million primarily comprised of infrastructure investments to expand our facilities footprint, increased manufacturing capacity and automation of certain production lines. Our pro forma effective tax rate for the first quarter was 23.3% slightly above our expectations, primarily due to certain discreet tax items. Our pro forma tax rate was above the 22.2% for 2021 primarily due to a previous change in U.S. tax law that became effective on January 1, 2022. Our first quarter of 2022 pro forma net income was $413 million or $1.13 per share compared with $427 million or $1.17 share for the first quarter of 2021.
I will now summarize our GAAP results. GAAP net income was $366 million or $1 per share for the first quarter of 2022, compared with GAAP net income of $426 million or $1.17 per share for the first quarter of 2021. The adjustments between pro forma and GAAP net income are outlined and quantified on our website and include excess tax benefits associated with employee stock awards, employee stock-based compensation, amortization of intangibles and gains and losses on strategic investments.
We ended the quarter with cash and investments of $8.4 billion compared with $8.6 billion as of December 31, 2021. The sequential reduction in cash and investments in the first quarter primarily reflected share repurchases, capital expenditures and unrealized losses on interest-bearing investments classified as available for sale. Partially offset by cash from offering activities and proceeds from employee stock plans. During the quarter, we repurchased 398,000 shares at an average price of $268 per share for a total expenditure of $107 million.
And with that, I would like to turn it over to Brian who will discuss clinical highlights and provide our updated outlook for 2022.