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Robotic Surgery Company Behind da Vinci System

Written By Brian Hicks

Posted October 17, 2012

Robotic surgery is an emergent and expanding area of the medical world, though few companies have broken out so far. One that has is Intuitive Surgical (NASDAQ: ISRG), ranked sixth on Forbes’ list of the most innovative companies.

The company’s da Vinci system performed around 360,000 operations in 2011—growing 29 percent since 2010—and it has FDA approval for urologic, gynecologic, and cardiac procedures, head and neck surgeries, and prostatectomies among others, according to Daily Finance.

Of course, millions of operations are completed each year in the U.S., but Intuitive’s contribution is still impressive considering the FDA cleared the da Vinci system in 2000, and so far just 1,840 units have been installed in hospitals.

Intuitive increased unit sales by over 21 percent in 2011 year over year. Given this growth and the expanding applicability of the da Vinci system, the company may soon ramp up its profile and success.

The unit cuts down on patient recovery time—an attractive feature. And eventually, with widening applicability, the lifetime cost of the da Vinci unit will come down, making it an increasingly feasible choice for hospitals.

However, in a country that already spends more than most developed nations on healthcare without seeing greatly increased standards, Intuitive’s da Vinci might be difficult to integrate. It costs a few millions before maintenance and other service costs, and the Patient Protection and Affordable Care Act will make Intuitive’s pockets a bit lighter due to a 2.3 percent tax on revenues from medical device companies.

But with the domestic population over 65 years of age slated to increase to 20 percent by 2050 (up from 13 percent in 2000), the American healthcare system might need a comprehensive care package. And that’s exactly what the da Vinci offers.

Intuitive’s balance sheets are fairly healthy. Net margin has grown to 29 percent in 2011 from 22 percent in 2009, while costs of revenue have stayed stable.

It has diversified to reach a global market, although the ongoing Eurozone financial doldrums may make it hard to gain quick acceptance there.

But South Korea has already produced a distributor for the da Vinci units, and the entire sector is still in a teething stage, so Intuitive doesn’t have much heavy competition so far.

Intuitive was up 1% on Wednesday morning to $538.45.