Intuitive Surgical (ISRG +2.46%) has the clear lead in robotic-assisted surgery. The company got approval for its da Vinci surgery system back in 2000. With more than two decades of research, development, and real-world use under its belt, competitors have an uphill battle if they want to catch up with Intuitive's technology.
That is unless Nvidia (NVDA +1.67%) provides some help. The chip designer and AI specialist revealed during its GPU Technology Conference (GTC) this week that many start-ups are tapping into its platform to accelerate development of their robotic surgery systems. Did Nvidia just deal a serious blow to Intuitive Surgical's ability to stay in the lead?
NASDAQ: ISRG
Key Data Points
A long list of competitors
Successful technology always attracts competitors, especially when it's lucrative. Intuitive Surgical has built an empire that hauled in $6 billion in revenue over the 12 months ended in June. It also generates operating profit margins in the high 20% to low 30% range.
Indeed, Intuitive has attracted would-be peers, some of them privately owned and some of them now publicly traded stocks. Many of these companies are trying to speed up their development using Nvidia's Orin IGX -- the same platform Nvidia has built to help with other robotics technology. At GTC 2022, Nvidia CEO Jensen Huang said over 70 medical device companies are using Orin IGX and the software stack built on top of it to accelerate their smart-device development.
Included in the list of companies using Orin IGX that Huang mentioned is none other than Intuitive Surgical. Other big-name peers that were mentioned include Siemens Healthineers, and Stryker. Smaller companies like Asensus Surgical and Olympus were also named. And start-ups Activ Surgical, Proximie, and Moon Surgical were also announced as Nvidia customers.
With the list of aspiring competitors heating up, should Intuitive shareholders be worried?
Lots of new business to go around
Surgeries performed using robotic assistance are still a small portion of the total procedures performed worldwide. Even in the U.S., where Intuitive has steadily increased the number of procedures that can be done with da Vinci and its newer Ion system, estimates are that upward of 80% of surgeries are still done without robots. That percentage of non-robotic surgery is much higher in most other countries.
There is still a massive amount of white space for Intuitive and others. Medical care is highly personalized, and the types of procedures that can be improved with AI-powered robotics number in the hundreds.
Nvidia is also involved in other areas where AI software can improve healthcare, like medical imaging and scanning, testing and diagnostics, and drug and treatment discovery.
But back to robotic-assisted surgery. Powered with Nvidia's tech, Intuitive's lead could be maintained as it develops new uses for its existing systems and broadens its offerings into new areas of healthcare. Intuitive has the benefit of already having a huge number of its machines in use. It had 7,135 da Vinci systems installed as of the end of June, plus another 204 Ion systems. These systems are expensive, so an upstart competitor won't be able to easily displace a da Vinci robot. Intuitive's $8.18 billion in cash and short-term investments and no debt also give it a leg up when it comes to funding innovation.
The days of Intuitive's rapid growth are likely over, but this is still a steadily expanding business worth staying invested in. At this stage, Nvidia's advance into the medical field should help Intuitive Surgical as much as it does other robotic surgery start-ups, so I don't think Intuitive investors need to worry just yet.
