Intuitive Surgical's Brilliant Marketing Pitch

Intuitive Surgical (ISRG) is a company that I have deep respect for. Much like US Surgicals, which revolutionized minimally invasive surgery [MIS] in the 1990's, ISRG is a revolutionary medical firm. It sells the first robotic surgical instrument with "wrists" and hence a surgeon can - after a year's training - perform surgeries which result in shorter hospital stays, less pain, less need for blood transfusions, less scarring, and a couple of other advantages that I will talk about in the next few paragraphs.

ISRG had stunning results. Looking at the 10Q (for the quarter ending June 30, 2008) ISRG's sales were $219M - up from $140M in the corresponding period in 2007. Basic EPS was $1.32 - up from $0.81 for Q2, 2007. The fully diluted numbers were $1.28 in 2008 vs $0.79 in 2007. Recurring revenue grew 56% to $103.0M from $66.1M. Instruments and accessories revenue grew 61% to $73.6M from $45.8M during the second quarter of 2007. ISRG sold 85 da Vinci Surgical Systems during the second quarter of 2008, an increase of 52% compared with 56 in Q2 2007.

The stock now has a market value of almost $12 BIllion - leaving no room for error from management. ISRG is expected to best the top end of analyst's estimates for the next several years, but I am not making a bear or a bull case for the stock in this article. I think that - apart from the four robotic arms with redundant circuits that can produce superior outcomes, I think that their brilliance in marketing is contained in the following paragraph that I'm quoting verbatim from their marketing material:

For most patients, dVP offers substantially less pain and a much shorter recovery than traditional prostatectomy. Other advantages include reduced need for blood transfusions; less scarring and less risk of infection. Moreover, studies suggest that dVP may offer improved cancer control and a lower incidence of impotence and urinary incontinence. [I added the bold/italics].

Prostatectomies drove ISRG's first growth spurt.  There will be hysterectomies and mitral valve repairs, but I think that if you give offer a guy these two alternatives:

a. dVP [da Vinci Prostatectomy]
or
b. Open surgery

and mention the magic words from the ISRG marketing document, his choice will be (a) with not a second thought given to (b).

Brilliant, even Freudian.

Disclosures: I currently have no positions in ISRG
Note: I am in no way making fun of cancer. In fact, I am a lucky survivor.

Comments

[longtermstocks]

sounds like a winner stock.