Intuitive Surgical Leads the Robotic Surgery Movement

Key Points

• Intuitive Surgical is the pioneer and leading provider of robotic-assisted surgical systems.
• The da Vinci Surgical systems augment the capabilities of surgeons with 10X vision and smooth tremor, less fuller range of motion to perform precision robot-assisted surgeries.
• Intuitive Surgical grew its installed base of da Vinci systems 14% YoY to 8.887 worldwide.

While artificial intelligence (AI) and robots are in the spotlight regularly these days, there's a company that's been making surgical robots for over two decades. Intuitive Surgical Inc. NASDAQ: ISRG is the pioneer in robotic-assisted surgical systems. Their da Vinci Surgical System enables robotic-assisted precision surgical procedures ranging from prostatectomies and hysterectomies to hernia and cardiovascular procedures to lung biopsies.

The medical sector pioneer has been on the cutting edge of robotics applications for over two decades and continues to evolve with next-gen versions of its systems. Intuitive Surgical faces competition from Medtronic plc NYSE: MDT and Zimmer Biomet Holdings NYSE: ZBH.

Enhancement, Not Replacement, For Surgeons

The da Vinci system doesn't perform the surgeries but augments the abilities of the surgeon to make them better. Like the "Six Million-Dollar Man" with bionics or an Iron Man suit, the system enhances the natural abilities of the doctor.

The surgeon sits at the da Vinci system console. As the surgeon peers into the screen, their vision is vastly improved as the system delivers crystal clear high-definition 3D views that are magnified 10X more than what human eyes can see. The surgeon places their arms into the sleeves to move tiny instruments like a human hand with a far greater range of motion and precision thanks to the built-in tremor-filtration technology. This helps the surgeon move each instrument precisely and smoothly with no tremors. The system extends the capabilities of what the surgeon can do by enhancing vision and hands.

FDA Clears the Next-Gen da Vinci 5

On March 23, 2024, The United States Food and Drug Administration (FDA) provided 510(k) clearance for the next-gen da Vinci 5 multiport surgical robotics system. The surgical controllers are augmented with improved vibration and tremor controls, making the system smoother and more precise to date.

The system integrates Force Feedback technology to measure and relay the most subtle forces exerted on tissue back to the surgeon. Its studies show that the technology results in up to 43% less force exerted on tissue during surgeries, resulting in less tissue trauma. Da Vinci 5 has 10,000 more computing power than its predecessor, da Vinci Xi, enabling new systems and digital capabilities. Additional features were added for customizable console positioning, allowing surgeons to find their best fit for surgical viewing and comfort with options designed for pregnant surgeons. 

Daily Descending Triangle

ISRG's daily candle stick chart shows a descending triangle pattern. The descending trendline formed its $403.76 swing high on March 27, 2024, capping each bounce at a lower high. The flat-bottom lower trendline formed at $364.17 as shares traded closer to the apex point. The daily relative strength index has been falling towards the 30-band, sinking with the overall market. Pullback support levels are at $355.17, $332.80, $321.05 and $304.50.

Growth Acceleration

Intuitive Surgical reported Q1 2024 EPS of $1.50, beating consensus estimates by 8 cents. Revenues rose 11.5% YoY to $1.89 billion, beating $1.87 billion consensus estimates. Net income was $547.47 million compared to $360.8 million in the year-ago period.

Worldwide, da Vinci procedures rose 16% YoY. The da Vinci surgical system installed base grew 14% YoY to 8,887 systems after the company installed 313 systems in the quarter. The company didn't see any procedure disruptions from COVID-19 in the quarter. The company ended the quarter with $7.32 billion in cash and cash equivalents. The company raised its revenue outlook from 14% to 17% in 2024.

CEO Insights

Intuitive Surgical CEO Gary Guthart commented that the core business remained healthy with solid procedure growth and capital placements. Supply constraints for ion catheters improved in the quarter. Important milestones include launching its next-gen multi-port platform, da Vinci 5, and launching da Vinci SP in Europe.

Regional Performance

Guthart noted that general surgery led procedure performance in the United States. Regional strength was seen in China, Germany and the United Kingdom. Leading procedures were colon resection, foregut procedures and cholecystectomy. Japan saw a moderation in urology growth as they reached higher levels of penetration. Physician strikes beginning in February in South Korea caused lower-than-expected growth in the region.

Guthart concluded, "In closing, for 2024, our priorities are as follows. First, we'll support the measured launch of da Vinci 5 and our other new platforms by region. Second, we're focused on supporting surgeons' adoption of focus procedures. Third, we're focused on improving our product margins and quality. And finally, we're focused on improving productivity in those functions that benefit from global scale."

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