💉 Has Intuitive Surgical Cracked The da Vinci Code?
Margin headwinds for Tesla; Legacy issues haunt IBM.
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💉 Intuitive Surgicals: Cracking The Code?
Medical equipment manufacturer Intuitive Surgical (ISRG) reported Q3 results that met analyst expectations. More promising was the preliminary data from its ION platform's peripheral lung nodule biopsies. Has the company managed to crack the fabled da Vinci code? (Tweet This)
Reducing Invasive Surgeries
If you've never heard of DARPA (Defense Advanced Research Projects Agency), you'd be excused. Most of the technology you take for granted today came out of DARPA's projects. The Internet, the GPS, Graphical User Interface, and the ubiquitous computer mouse… they all have DARPA to thank.
This secretive Pentagon agency took a keen interest in a robotic surgical system developed by SRI International, a non-profit research institute back in the late 1980s. DARPA was looking to use this system to allow surgeons to operate remotely on wounded soldiers.
In 1994, Dr. Frederic Moll, then working for Guidant - a company that specialized in cardiovascular pacemakers and stents (and later acquired by Boston Scientific) - wanted his employer to back the SRI system but to no avail.
Moll and John Freund acquired SRI's intellectual property from DARPA and incorporated it under a new company called Intuitive Surgical Devices in 1995. Early investors in the firm included the likes of the Mayfield Fund, Sierra Ventures, and Morgan Stanley.
The final prototype was named the da Vinci Surgical System in 1997 and was first commercialized in Europe in 1999. The FDA approved da Vinci for general laparoscopic surgery in 2000. The same year, the company went public, raising $46M in its IPO.
Approval for use in prostate surgery came through in 2001. Over the years, the system has been approved for thoracic, cardiac, and gynecological procedures.
Just before Intuitive went public, its competitor Computer Motion sued the company for patent infringement. At issue was Computer Motion's ZEUS system approved in Europe but was overlooked by the FDA, which approved da Vinci first. The litigation became a drag on both companies. They put an end to the ordeal by merging in 2003.
Precision Of The Surgical Kind!
Intuitive today has a market value of $120B. The da Vinci system contributes nearly half of the revenue, and the company's Q3 results largely met estimates.
Key Stats From Q3:
Revenue: $1.4B Vs $1.39B expected
EPS: $1.19 Vs $1.17 expected
Worldwide, da Vinci procedures rose 20% year on year. Intuitive shipped 336 da Vinci systems during the quarter, up 72% year-on-year.
The company has developed a robot-assisted platform for minimally invasive lung biopsy. The system allows navigation into the lungs and provides the necessary stability to conduct the biopsy.
Preliminary data from 69 subjects released this week as part of the clinical trial of its ION system established the possibility that tissue samples obtained during the procedure are good enough to enable the physicians to diagnose the patient's condition.
As life expectancy increases, non-invasive surgical procedures have become commonplace, reducing hospital stay and allowing for faster recovery. The number of US citizens aged 65 or older is expected to double by 2030. Intuitive expects demand for its products to increase as people opt more and more for minimally invasive surgeries.
Over the last five years, the stock has returned nearly 350% to its investors. The successful pulmonary trials only add to the optimism that a full approval is not too far away. Intuitive knows intuitively that it's on the right track. So do the shareholders who are happy to reap the rewards with minimal intervention!
ISRG ended at $339.80, up 1.04%. Shares are up 27.4% this year.
Company Snapshot 📈
ISRG $339.80 +3.50 (1.04%)
Analyst Ratings (20 Analysts) BUY 45% HOLD 50% SELL 5%
Headwinds: Tesla posts record revenue but says supply-chain issues may pressure margins (TSLA -1.64%)
Deal: Blackstone buys majority stake in Spanx, valuing it at $1.2B (BX +1.46%)
Legacy Issues: IBM revenue miss on weakness in legacy infrastructure unit (IBM -4.26%)
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