Intuitive Surgical (NASDAQ:ISRG) is one of the leaders in the market for advanced medical devices, and the company is best known for its da Vinci system, which was first approved by the U.S. Food and Drug Administration (FDA) in 2000. However, other companies are looking to carve out a niche for themselves in this market. One such company is Accuray (NASDAQ:ARAY), which has developed several systems -- such as the CyberKnife -- which "empowers clinicians to make the most of their skills in treating cancer."

With a market cap of over $68 billion, Intuitive Surgical is much bigger than Accuray and its $244 million market cap. Furthermore, with its shares climbing by 23% in 2019, Intuitive Surgical outperformed Accuray -- whose shares declined by 17% over the same period. That said, past performance isn't a guarantee of future success (or failure). With that in mind, let's look into these companies' operations and decide which of the two is the better healthcare stock to buy right now.

Assisted surgery robotic device.

Image source: Getty Images.

Intuitive Surgical continues to impress

Intuitive Surgical's leadership position in its market is undeniable: Nearly 5,000 da Vinci machines have been installed worldwide (an industry-leading figure), and these devices have been used in more than 6 million procedures. However, the company is likely not done growing yet; here are three reasons why. 

First, only about 2% of surgical procedures worldwide are performed using robotic assistance, according to Intuitive Surgical's competitor Medtronic. If this is even remotely true, this market is ripe for growth, and despite increased competition in the industry, Intuitive Surgical's strong position should help the company capture a notable share of the market.

Second, in January of last year, the FDA approved Intuitive Surgical's Ion endoluminal system "to enable minimally invasive biopsy in the peripheral lung." Why is this approval a big deal? Intuitive Surgical's CEO, Gary Guthart, explains:

Early lung cancer diagnosis can save lives. Intuitive's advanced, robotic-assisted, minimally invasive Ion system helps address a challenging aspect of lung biopsy by enabling physicians to obtain tissue samples from deep within the lung.

Lung cancer is the leading cause of cancer death in the world, which means this approval opens a massive opportunity for the company. 

Lastly, Intuitive Surgical profits from its signature da Vinci devices in ways other than the sale of these machines. The company offers accessories and instruments that go along with its da Vinci systems, and it provides maintenance services for these machines as well. Revenue from the sale of accessories, as well as from maintenance services, will only increase as the number of installed da Vinci systems -- and the number of procedures performed with them -- continues to grow.

Accuray's growth opportunities

Accuray's medical devices -- which include CyberKnife, TomoTherapy, Radixact, and Onrad -- focus primarily on cancer treatments. The company only has about 900 systems installed worldwide, but Accuray is hoping to profit from the growth of the market in China.

In January 2019, Accuray entered into a joint venture with a Chinese company called CNNC High Energy Equipment. Accuray owns 49% of the venture, which goes by the name of CNNC Accuray. China is "the world's fastest-growing radiation therapy market," and as Accuray sells its radiation therapy devices through CNNC Accuray, the company could take the lead in this market.  Accuray CEO Joshua Levine said, "We remain excited about the China market opportunity as a significant growth catalyst for our business." During its latest reported quarter -- the first quarter of its fiscal year 2020 -- Accuray sold 11 new systems in the Chinese market.

Furthermore, Accuray is hoping to attract more clients for its CyberKnife. The company introduced a software upgrade (dubbed VOLO) for the CyberKnife in late 2018, and this upgrade improves performance by cutting the delivery of the treatment in half and reducing treatment planning times by as much as 90%.

Levine said, "We believe the availability of the VOLO upgrade on CyberKnife will be both the catalyst to our installed base replacement cycle and allow us to attract new customers to the CyberKnife platform." With these opportunities, there could be great days ahead for Accuray and its shareholders. 

Comparing their financials

Intuitive Surgical's financial results are much better than those of Accuray, as was evident during the third quarter (which corresponds to Accuray's first quarter for its fiscal year 2020). Intuitive Surgical recorded revenue of $1.1 billion, a 23% increase year over year. Furthermore, the company's income from operations of $365.7 million increased 17% compared to the prior-year quarter, and its $3.33 earnings per share was 36% higher than the year-ago period.

By contrast, Accuray's revenue for the quarter was $89.6 million and the company's top line decreased by 7% year over year. Also, Accuray isn't profitable yet, and the company recorded an operating loss of $4.3 million (slightly better than the $4.7 million operating loss recorded a year ago), and a net loss per share of $0.11, which remained flat compared to the year-ago period.

Which is the better buy?

It could be tempting to think Accuray has more upside than Intuitive Surgical. After all, Accuray is much smaller in terms of market cap, and its stock carries a much cheaper price tag (less than $3 per share compared to Intuitive Surgical's shares going for $579, at writing). However, Intuitive Surgical is the better buy in my view: The company's financial results are stronger, and its leading position in the robotic-assisted surgery industry means it can keep profiting from the growth of this market for many years to come. For those reasons, Intuitive Surgical comes out the runaway winner in this matchup.