Intuitive Wins FDA Clearance

Intuitive Surgical (ISRG - Analyst Report), a pioneer in less invasive robot-enabled surgery, recently revealed it was granted clearance by the Food and Drug Administration (“FDA”) to market its Single-Site instrumentation for laparoscopic cholecystectomy procedures, which is an operation to remove the gall bladder.

The entire range of the company’s da Vinci Si Surgical systems are in congruence with Single-Site technology. However, da Vinci S systems are not supportive of Single-Site technology.

Intuitive stated it was pleased to have received FDA clearance for its Single-Site instruments for usage in laparoscopic cholecystectomy utilizing the da Vinci System. The company intends to gradually roll out its new product in the U.S. and carry on with its launch in Europe.

Hospitals, using da Vinci Si, gain from Single-Site Instrumentation as it enables cholecystectomy procedures through just one incision. At the same time, this know-how carries the benefits of the former multi-port da Vinci operation.    

The architecture of the instrumentation of Single-Site and the da Vinci System’s Remote Center Technology are geared toward cutting down on crowding of instruments as well as collisions.     

We expect a number of procedures that are currently completed either in an open surgical manner or with laparoscopy to be eventually replaced by da Vinci surgery, as robotic surgery becomes the standard of care in many instances. The company enjoys a virtual monopoly in robotic surgery with little competition.

Intuitive’s recurring revenue stream continues to grow and provides a shield against cyclicality of revenues, arising from the sale of discretionary capital equipment to hospitals. However, we believe that until the global economy recovers, the stock may come under pressure as investors ponder whether lingering macro economic uncertainty weakens hospitals’ commitment to buy high-cost robotic systems.

The pace of adoption of robotic surgery may therefore be lumpy and growth in usage requires acceptance from patients and training to medical practitioners. Intuitive competes with Accuray Incorporated (ARAY - Analyst Report) in certain niches.

We prefer to remain on the sidelines partly due to high valuation, which factors in the attractive growth prospects of the company, despite the da Vinci system’s leading status as an enabler of robotic minimally invasive surgery. We currently have a Neutral recommendation on Intuitive. The stock currently retains a Zacks #1 Rank, which translates into a short-term “Strong Buy” recommendation.

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