There's a whole lot of things to love about Intuitive Surgical (NASDAQ:ISRG). The company pioneered the use of robotic surgical systems. It has become very profitable along the way. And, of course, those who bought the stock early and held on are sitting on astounding gains of more than 5,500%.

If you love Intuitive Surgical, though, there's another company you should check out: Mazor Robotics (NASDAQ:MZOR). Here's why you should take a look at this up-and-coming robotic surgery stock.

Doctor holding out hand with robotic surgery text and digital image displaying in front of him

Image source: Getty Images.

Mazor's technology

Mazor Robotics focuses on developing precision-guided surgical systems. Its systems work similarly to Intuitive Surgical's da Vinci system, with a surgeon looking at a workstation with a close-up 3D video image of the patient. The surgeon uses controls on the workstation to guide a robotic arm to perform surgery on the patient, who lies just a few feet away. 

The big difference between the approaches of Mazor and Intuitive Surgical in the procedures performed. Intuitive Surgical has historically focused on minimally invasive surgical procedures such as hysterectomies, prostatectomies, and hernia repair. Mazor, on the other hand, focuses on spine and brain surgery.

Mazor Robotics has two products -- Mazor X and Renaissance. The company launched the Renaissance system for performing robot-assisted brain surgery in 2014. Mazor followed up the next year with its PRO (Predictable Renaissance Operation) product line designed to support additional brain procedures plus trauma and lateral spine procedures. Mazor X was introduced in 2016 for performing spine surgeries using analytical tools and precision robot guidance. 

On the road to profitability

Unlike Intuitive Surgical, Mazor Robotics isn't profitable. However, the company's financial position is rapidly improving. In July, Mazor gave a sneak peek at its second-quarter performance, announcing 19 system purchase orders, most of which were for the new Mazor X system. That news caused the stock to soar around 20%. 

Mazor reported its final second-quarter results on Aug. 1, and they were as good as promised. The company reported all-time high revenue of $15.5 million, up 87% year over year. While Mazor still posted a net loss during the quarter of $3.7 million, its bottom line improved significantly from the prior-year period.

Both Intuitive Surgical and Mazor Robotics have classic "razor-and-blades" business models. They sell their robotic surgical systems at hefty price tags, but even more money is made over the long run from recurring sales of instruments and accessories. Intuitive Surgical makes most of its money -- 71% last year and 74% in the first half of 2017 -- from recurring revenue sources. 

Mazor Robotics isn't quite at Intuitive's level yet, but it's on the way. The company announced recurring revenue of $6.3 million in the second quarter, up 50% year over year. Mazor's recurring sales of kits and services generated more than 40% of total revenue -- a level that is bound to rise over time, just as it has for Intuitive Surgical. 

Looking ahead

Could Intuitive Surgical potentially look at Mazor Robotics as an acquisition target? Probably not, because Mazor has even bigger partner already: Medtronic (NYSE:MDT). In 2016, the two companies forged a deal where Medtronic will distribute the Mazor X system. In addition, Medtronic acquired a stake in Mazor Robotics.

This relationship is going very well so far. On Aug. 30, Mazor announced that the two organizations had moved to the next phase of their strategic partnership earlier than planned. Medtronic is investing another $40 million in Mazor, bringing its total investment to $72 million. Around 30 members of Mazor's sales team will move over to Medtronic. The two companies will also move full-steam ahead with plans to co-develop robotic surgical systems for the spine market. 

It wouldn't be surprising at all for Medtronic to buy Mazor outright at some point. The big medical device maker is already planning to launch its own surgical system next year that will compete head-to-head with Intuitive Surgical's da Vinci system. Mazor's technology would be a perfect fit with Medtronic's strategic direction.  

I don't really think Mazor Robotics will become "the next Intuitive Surgical." For one thing, the company seems likely to continue to focus on niche spine and brain procedures. Also, because Medtronic is rolling out its own system, the likelihood of Mazor trying to compete against its big partner seems very slim.

But if you love Intuitive Surgical, Mazor Robotics is a stock to check out. While Intuitive Surgical stock has performed really well in 2017, Mazor Robotics stock has performed even better. That trend just might continue.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool owns shares of Medtronic. The Motley Fool has a disclosure policy.