Robotic surgeries are the future, and Intuitive Surgical (ISRG 0.50%) is dominating that market. Demand for minimally invasive procedures has been on the rise, mostly because of the quality experience and faster patient recovery time. Intuitive's da Vinci robotic surgery units have helped boost the company's revenue and profits and could continue to do so for a long time.

However, the pandemic continues to challenge most non-elective procedures, which is why the market initially reacted with some disappointment to Intuitive's fourth-quarter results. But let's take a look at why it is not too late to buy this excellent growth stock for the long haul.

Three doctors in an operating room.

Image source: Getty Images.

It has an exquisite business model

Intuitive's strength lies in its da Vinci robotic system that allows surgeons to perform minimally invasive operations. The system gives surgeons 3D high-definition views and the use of tiny instruments for smooth precision. Intuitive also manufactures disposable instruments and accessories for the machines that add to the company's revenue.

The company not only makes these state-of-the-art machines but also provides training to surgeons on how to use them. Considering the amount of time hospitals spend on learning how to use these robots, it becomes much less likely they will shift to a newer and cheaper product. Thus even if competition arises, it is safe to say Intuitive's revenue growth won't be hindered much because of the high switching costs. 

It also has strong financials

Intuitive's management believes the resurgence of the COVID-19 variant toward the end of the fourth quarter affected results. Despite the challenges, the company recorded another stellar quarter. Worldwide da Vinci procedures increased 19% compared to the year-ago period. Not only did the sale of the machines boost revenue, but sales from disposable instruments and accessories used by the machines also jumped 13% to $843 million from the prior quarter.

The company recorded a 17% jump in total revenue to $1.5 billion from the prior-year's quarter. Net income for the quarter came in at $381 million, which was a 4% year over year improvement. Not only did the company's revenue and profits rise, but so did its capital efficiency. Intuitive ended the quarter with a strong balance sheet, comprised of cash and investments of $8.6 billion.

It is interesting to note that Intuitive has also grown its free cash flow (FCF) by nearly 121% in the past five years. This frees up capital to use for new, innovative products and expand its business. Intuitive has been growing its revenue and profits at a similar rate.

Chart showing Intuitive's free cash flow, revenue, and net income rising since 2018.

ISRG Free Cash Flow (Quarterly) data by YCharts

There's more room to grow

With robotic surgery slowly becoming the future, Intuitive still has a lot of room to grow. This is a field that has not been fully explored, and it has bright prospects despite the pandemic -- which is by no means over. In fact, Intuitive's management said in the earnings call that it expects COVID-19 to adversely affect first-quarter results as well.

While it seems like the pandemic is never-ending, it will end someday, bringing back demand for elective procedures that require robotic-assisted surgery and boosting Intuitive's revenue further. Though the company has some competition in the market from companies like Johnson and JohnsonMedtronic, and Stryker, Intuitive nevertheless holds a strong position in the space.

The pandemic affected the performance of Intuitive's stock -- now trading 23% below its 52-week high -- but analysts still see a lot of upside. The dip in the stock could be the right time to include this healthcare stock in your portfolio, and Intuitive has the potential to outperform the market in the long run.