Are they a threat to the leadership of Intuitive Surgical robot surgeons?
The da Vinci robotic surgical system manufacturer, Intuitive Surgical Inc. ( ISRG), is the market leader. Its position remains strong despite a slight slowdown in sales due to the COVID pandemic. The drivers of Intuitive Surgical’s sales growth are several factors, and first of all, the interest of several parties in promoting da Vinci at once.
Thus, patients themselves are interested in robotic technology, who receive minimally invasive surgery with potentially fewer complications and a faster recovery period. In the case of da Vinci, the medical institution receives a shorter stay of the patient in the hospital after the procedure, and insurance companies benefit from lower bills for medical services.
The pandemic has become a challenge for Intuitive Surgical: many non-urgent operations have as medical facilities have on helping COVID patients. However, a 30% increase in 2021 offset a slight decline in 2020. The cumulative annual growth rate (CAGR) from 2017 to 2022 at 15%. It is crucial that Intuitive Surgical currently receives the vast majority of revenue from recurring sources.
The surgical system uses a lot of disposable consumables and instruments that the company sells at a high margin. Therefore, the more operations use Intuitive Surgical, the more money the company earns. In this direction, a positive trend is the constant expansion of the list of procedures that can carry out with the help of da Vinci. In general, robotic surgery is rapidly becoming an industry standard. At the same time, Intuitive Surgical’s dominance in the global market is 80%.
Hospitals invest millions of dollars in the purchase of equipment and training of surgeons, which increases the barrier to entry into this market to competitors and provides a strong position for Intuitive Surgical. Intuitive Surgical has also started leasing equipment to hospitals that cannot afford to buy this system to strengthen these positions further. As a result, Intuitive Surgical’s net operating margin exceeds 30% in 12 months. In addition, EBITDA profit for the same period exceeds 38%, generating colossal cash flows.
The company uses this money to invest in both short-term and long-term projects. Thus, Intuitive Surgical has favorable long-term trends that will support growth. Recently, the company divided the shares from 1 to 3, which made the securities more accessible to investors.
