Last week, Chindex
Foreign sales have become an important part of Intuitive Surgical's growth story. Last quarter, sales to foreign hospitals accounted for 27% of surgical systems sales, up slightly from the first quarter of 2007. All those sales of da Vinci systems aren't just one-time sales for the company. The installed base drives sales of high-margin disposable supplies to run the systems, so having the opportunity to sell systems to more hospitals is a driver of revenue growth in both the short and long term.
It could take a while for sales of da Vinci systems in China to pick up, since -- as in the U.S. -- the hospitals will have to work the major purchase into their budgets. When the sales do finally pick up, the average selling price may slip a little, but investors shouldn't be alarmed. Having a middleman sell the systems means that Intuitive Surgical will likely have to discount the systems sold to Chindex, but it'll make up for it in operating margin, since Intuitive Surgical won't have to pay a sales force.
With a P/E still north of 60, Intuitive Surgical isn't cheap by the standards of other medical device makers like Medtronic
More slicing and dicing ahead: