By Adham McGuire,
Money and Investing Writer
On Tuesday, April 1, Intuitive Surgical announced that the Federal Food and Drug Administration had approved the company’s newest product, the Da Vinci Xi Surgical System.
For most people, the prospect surgery is daunting by including a robot and a doctor that may not have great training with the highly complex device and a bad situation may become worse.
This was the problem that Intuitive Surgical (ISRG:NASDAQ) faced last year, and it was the source of the company’s financial woes.
It has not fixed the problem and there are many more that the company will eventually have to face: waning industry growth, high cost structure, high purchase and maintenance price, inability to reach more consumers, etc.
However, as most analysts focus on the ways Intuitive Surgical can be stagnant, the company has continued to churn out a new product that captures the attention of the entire industry.
“Intuitive Surgical, based in Sunnyvale, Calif., makes money by selling Da Vinci systems and disposable instruments that must be replaced after each procedure (Huffington Post).”
The new system is said to be a major leap forward in the robotic surgery systems industry. With the newest version of the Da Vinci system, doctors can now perform extremely difficult multi-quadrant procedures significantly easier and the new system allows for a faster recovery time.
“The features of the new system include longer instrument shafts that provide greater reach; smaller, thinner surgical arms with a new joint design that improves their range of motion; and a new overhead instrument arm design that is intended to give surgeons anatomical access from almost any position,” according to the Huffington Post.
During 2013, Intuitive Surgical had been on a financial downturn that was sparked by decreasing quarterly sales, an old product cycle, and bad press surrounding an FDA report on a survey of 11 doctors.
The doctors had experience with the Da Vinci system ranging from 70 to 600 procedures and most of the answers given were positive.
It spoke about a reduction of complications and an overall decrease in recovery time. That was the highlight of the FDA’s report on Intuitive Surgical because in that same year, the company saw a drastic increase in surgery incidents, which had doubled from 1,595 in 2012 to 3,697 in 2013.
The problem lies with training, the Da Vinci system’s user interface is highly-complex and it has become a challenge for doctors just to learn how to use it.
The case of Intuitive Surgical is a peculiar one, but the fact that the introduction of one new product could cure, or at least temporary cure, all of the shareholders woes shows that there are few sellers in the industry.
The introduction of the Da Vinci system has brought the company back to valuation levels of prior year and restored the stock price above the 500 dollar mark once again.
The blatant signs of a slowing growth rate have not bothered investors and since some hospitals withheld purchasing the old version in anticipation of the new Da Vinci system, those investors will likely see a steady increase in Intuitive Surgical stock.
A version of this article appeared in the Monday, Apr. 7 print edition.
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