Red states, blue states, it doesn't seem to really matter. Intuitive Surgical
Next stop: the rest of the world.
Not to my surprise, Intuitive Surgical announced another wonderful quarter yesterday evening. The company sold 91 robots -- up from 63 in the year ago quarter -- bringing the total installed machines to 1032. Revenue was up 50% with recurring revenue -- accessories and service contracts -- up 54% year over year thanks to a larger installed base. The better gross margins on service revenue helps out with overall gross margins now expected to hit 71% for the year.
The greatest thing about the Rule Breakers pick is that it's nowhere near saturating the worldwide market for surgical robots. Only 20 of the 91 systems were sold to hospitals outside the U.S. and none of those were to hospitals that were repeat buyers -- compared to 15 U.S. hospitals that were. There's still plenty of room to run to get to the levels of Abbott Labs
And it's not just machines that are growing like weeds. The surgical procedures, which drive sales of accessories, are on the rise too. Intuitive surgical is expecting the procedures done with its machines to grow at least 57% this year compared to 2007. Prostatectomies -- prostate removal -- the procedure that started the robot craze, are expected to grow at just 30% this year, but other procedures like hysterectomies are expected to make up for it.
The potential problem that hospitals might not be able to purchase the fairly expensive machines during the credit crunch doesn't seem to be much of an issue. It appears that hospitals are turning to leasing the instruments when capital isn't available and the leasing company seems to have plenty of cash to gobble up the machines. Much like worries from investors in agricultural stocks like Monsanto
Investors seem to be giving the stock a vote of no confidence so far today, but long-term, I believe the stock is cheap.
Find out why the Motley Fool picked Intuitive Surgical for our high-growth Rule Breakers newsletter by grabbing a 30-day trial subscription. You'll get access to all our back issues and the most recent picks.