OK, there are probably more than 100 different surgical procedures. But two in particular are specialties of the da Vinci surgical robot: prostatectomies and hysterectomies.
And women seem to love Intuitive Surgical's
The number of prostatectomies remained flat quarter over quarter, and Intuitive Surgical doesn't expect it'll grow much in the U.S. going forward. While the first surgical procedure developed for the system may be maxed out, there's still plenty of growth remaining. Procedures grew 36% year over year in the second quarter, and the company thinks it can keep that pace for the rest of the year.
Intuitive Surgical has a typical razor and blade model similar to Hewlett-Packard's
But unlike the typical razor and blade model, the increase in the number of procedures performed can also work in the other direction on the model, increasing system sales. After all, there's only so much time available on the machines at a hospital. As one procedure becomes popular, the hospital needs to purchase an additional machine to satisfy the higher number of surgeons who want to (or can) use it.
Going forward, hysterectomies will continue to grow because it's a large market, but there's potential for growth into ear, nose, and throat procedures; lung surgeries; and surgeries to remove fibroids from uteruses. There's also global expansion into places like Japan, where the da Vinci was just recently approved.
Can Intuitive Surgical keep up the 50% revenue growth rate it's seen so far this year and justify its monster P/E that towers over medical-device makers St. Jude Medical
In the long run, Intuitive Surgical will have to be innovative, looking for the next big thing to drive growth. Considering how the company has timed its move from prostatectomies to hysterectomies, investors should have confidence that management can keep the growth train on track.
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