Rank: #16 (Last year: #18) $8.35 Billion
Prior Fiscal: $7.12 Billion
Percentage Change: +17.3%
R&D Expenditure: $1.14B
Best FY24 Quarter: Q4 $2.41B
Latest Quarter: Q1 $2.25B
No. of Employees: 15,638
Global Headquarters: Sunnyvale, Calif.

The statistics are troubling.

They’re especially troubling in light of all the recent breakthroughs in medical technology (i.e., artificial intelligence, virtual reality, robotics, and wearables, among others).

Theoretically, these statistics shouldn’t even exist. Yet they prevail, seemingly in defiance of logic: More than 12 months. More than five years. Seven percent.

Truly bothersome.

The first statistic—more than 12 months—represents the average time detectable lung cancer is undiagnosed. The second—more than five years—reflects the mean diagnostic delay for endometriosis (globally), and the third (7%) is the overall one-year mortality rate after mitral valve repair.

“I find the statistics disturbing…” Intuitive Surgical then-CEO Gary Guthart, Ph.D., wrote in a letter to company shareholders early this year. “In example after example, we see long diagnostic journeys and treatments that are hard on patients. Those of us in healthcare must do better. This reality motivates our mission and vision: We believe that minimally invasive care is life-enhancing care. We envision a future of care that is less invasive and profoundly better, where diseases are identified early and treated quickly so patients can get back to what matters most.”

Such a future is well within sight, thanks to Intuitive Surgical’s widely-accepted robotic surgical solution. Its da Vinci system has helped millions of patients worldwide reclaim their health, and turned formerly complicated, invasive surgeries into quick, easily navigable procedures.

Since its debut at the turn of the millennium, the da Vinci system has been used in nearly 17 million procedures. The company has introduced five iterations of the system over the last quarter century, with the latest debuting last March upon receiving U.S. Food and Drug Administration (FDA) 510(k) clearance.

The da Vinci 5 builds upon Intuitive’s da Vinci Xi’s functional design and incorporates more than 150 enhancements. Some of those new features include new surgeon controllers as well as powerful vibration and tremor controls for improved precision.

ANALYST INSIGHTS: “With major players Medtronic and J&J coming for them for years, Intuitive maintains its robotic dominance with da Vinci (and its next-generation pipeline). It will be interesting to observe if Medtronic and J&J expand the robotic market opportunity and create growth for all or if they (finally) begin to take some share from Intuitive in the U.S. (or globally).”

—Dave Sheppard, co-founder and managing director, MedWorld Advisors

The new iteration also has a next-generation 3D display and image processing capabilities that enable clinicians to view more of the surgical landscape. This enhancement also is built to support future generations of surgical endoscopes and vision software as those technologies evolve.

The da Vinci 5 has 10,000 times more computing power than the fourth-generation Xi system, for integration with Intuitive’s My Intuitive app, SimNow virtual reality simulator, Case Insights (computational observer), and Intuitive Hub (an edge computing system).

A first-of-its-kind force-sensing technology enables surgeons to feel subtle forces exerted on tissue during surgery—a feature the company claims no other surgical technology in any modality offers. The FDA cleared da Vinci 5 for the same indications as the da Vinci Xi, except for pediatric and cardiac surgeries; and the Force Feedback needle driver is contraindicated for hysterectomy and myomectomy.

Besides the additional computing power and trailblazing force-sensing technology, the da Vinci 5 also is equipped with design improvements and other features for increased surgeon autonomy and better workflow efficiency. Case(s) in point: The system has integrated key OR technologies such as insufflation as well as an electrosurgical unit. Moreover, da Vinci 5 has an optimized user interface with settings that are accessible by the broader surgical team and by the surgeon him (or her)self directly from the head-in menu.

“We design our systems so we can integrate new functions, capabilities, indications, and instrumentation over time,” Intuitive Chief Medical Officer Myriam J. Curet, M.D., said upon the da Vinci 5’s FDA clearance. “Our attention to customers’ long-term needs and goals has led our systems to become the hospital standard, and we expect to continue developing and innovating da Vinci 5 and da Vinci Xi over the coming years.”

Those developments and innovations are likely to bring additional regulatory authorizations as well. Last June, for example, the FDA cleared a radical prostatectomy labeling revision for Intuitive’s two previous da Vinci generations, X and Xi. The revision was based on real-world evidence collected from 2007 to 2014 that showed similar overall five- to 10-year survival rates for robotic-assisted and non-robotic radical prostatectomy.

FROM THE TOP: “The past year was a strong one for Intuitive, with robust early adoption of our fifth-generation multiport platform, da Vinci 5, and healthy procedure growth in many supported indications globally. Adoption of our Ion bronchoscopy platform and da Vinci SP single-port platform continued with new global clearances and increased utilization.”

—Gary Guthart, Ph.D., Executive Chairman

“We believe that many robotic procedures have advantages over traditional open surgery and laparoscopy for patients, care teams, and hospital customers—such as shorter hospital stays, fewer conversions, and less blood loss,” Dr. Curet said in a news release. “This is a significant step because it confirms non-inferiority for overall survival at 10 years for patients undergoing radical prostatectomy with the da Vinci surgical system.”

Intuitive received further confirmation of its da Vinci systems’ surgical superiority with a meta-analysis published late last year showing the benefits of the company’s robotic technology compared to laparoscopic and open procedures. The analysis concluded that da Vinci robotic cases were 56% less likely to convert to open surgery vs. laparoscopy; experienced 21% fewer blood transfusions vs. laparoscopy, and 75% vs. open; and had 10% fewer 30-day post-op complications vs. laparoscopy and 44% vs. open.

“The quality of scientific data we are seeing after decades of robotic surgery underscores the value the da Vinci robotic approach continues to have for improved surgical care,” Dr. Curet noted in announcing the meta-analysis results.

More clinicians are beginning to realize that value, too: Intuitive increased its customer base in 2024 by 17% and grew the number of integrated delivery networks that own 20 or more da Vinci systems by 16%.

Accordingly, the company’s fiscal 2024 sales rose 17.3% to $8.35 billion, driven by double-digit hikes in both product reporting segments. Instruments and accessories revenue soared 18.7% to $5.08 billion, and Systems proceeds jumped 17% to $1.96 billion. Similarly, U.S. sales ballooned 19.2% to $5.59 billion, and outside U.S. revenue swelled 13.4% to $2.76 billion.

$7.12 Billion
Prior Fiscal: $6.22 Billion
Percentage Change: +14%
R&D Expenditure: $999M
Best FY23 Quarter: Q4 $1.93B
Latest Quarter: Q1 $1.89B
No. of Employees: 13,676

Intuitive’s da Vinci Surgical System debuted around 2000 and has been the virtual undisputed champion of soft tissue robotic surgery ever since. While competitors have threatened, there has not been a substantial challenge made to the da Vinci’s reign. Both Medtronic and Johnson & Johnson have promised to put their own solution onto the market, but after two and a half decades of dominance, Intuitive has built up quite the buffer as it awaits those competitors.

While others cross the Ts and dot the Is on their own systems, Intuitive moves forward with installations, which continues to grow its market dominance. To that end, in 2023, there was a 22% increase in surgical procedures performed with the da Vinci system compared to 2022. The growth was across several of the various specialties for which the robotic solution is indicated—general, urologic, gynecologic, and biopsy procedures. This increase was experienced both within the U.S. and outside the U.S. Regarding actual placements of the da Vinci system, the number grew to 1,370 in 2023 from the 2022 total of 1,264.

In addition to gaining ongoing buy-in from the healthcare industry, Intuitive also notched several product wins during its 2023 fiscal. Most notable was the U.S. FDA clearance in April of the da Vinci SP for simple prostatectomy, a surgical procedure often used in patients with benign prostatic hyperplasia or enlarged prostate. In this procedure, the surgeon removes the part of an enlarged prostate that is blocking the flow of urine.

In the same action, the FDA cleared the da Vinci SP surgical system for a transvesical approach to simple and radical prostatectomy using the da Vinci SP. In radical prostatectomy, the surgeon removes the entire prostate gland, most often for patients who have been diagnosed with prostate cancer.

July saw the regulatory clearance in Japan and South Korea of the E-200 generator, which can be used in da Vinci robotic procedures, as well as non-robotic open and laparoscopic procedures, to deliver high-frequency energy for cutting, coagulation, and vessel sealing of tissues. The E-200 generator includes the same advanced energy capability as the E-100 generator and supports the same vessel sealing instruments.

The company also gained access to the Chinese healthcare market through its joint venture with Fosum Pharma. Through the agreement, a manufacturing license was secured that enables the venture to manufacture the da Vinci Xi surgical system to be sold in China. Approval from China’s National Medical Products Administration was granted in June to pave the way for this to take place.

Given the company’s continued rapid growth, it’s no wonder revenue has expanded substantially in recent years, even in spite of the pandemic. The 2023 fiscal reported a 14% gain compared to the prior period, finishing at $7.12 billion in revenue. The financial wins were enjoyed on both sides of Intuitive’s divisions.

The sales from Products contributed $5.96 billion to the company’s coffers, which reflected a 15% rise. The aforementioned growth in procedure volume and an increase in pricing were deemed responsible for the 22% explosion for Instruments and accessories revenue. The business tallied $4.28 billion during the year.

On the other hand, Systems was flat with $1.68 billion primarily due to higher operating lease revenue in contrast to lower sales-type lease revenue and more placements as the result of operating leases.

The 14% increase for Services, for which a larger installed base of systems producing service revenue was credited, ultimately materialized into $1.17 billion in revenue for the organization.

Given the success Intuitive continued to experience, it was determined changes should take place at the top. While Gary Guthart would remain as CEO (a role he’s been in since 2010), he gained a president in Dave Rosa in May. At the time, Rosa had 27 years of experience with Intuitive and had previously served as executive vice president and chief strategy and growth officer prior to the promotion. Responsibilities within the role would include leading Intuitive’s product, digital, quality, regulatory, supply chain, manufacturing, and commercial teams.

“Aligning our core business functions under Dave, a proven and outstanding leader with broad and deep experience across Intuitive, equips us to meet future opportunities to collaborate with hospitals and healthcare systems to address healthcare challenges at significant scale,” explained Guthart.

At the same time as Rosa’s ascension, Bob DeSantis moved into a newly created role—executive vice president and chief strategy and corporate operations officer—having come from the position of executive vice president and chief product officer. Under his new hat, DeSantis would lead strategic planning, operational structure, and management for the business.

Adding to the activity in May, the company reached an agreement with Titan Medical to license certain intellectual property (IP) for an upfront payment of $7.5 million. The arrangement provides Intuitive with a non-exclusive license to all of the firm’s IP with the exception of specific innovation that was already involved in an exclusive license agreement with another firm.

$6.22 Billion
Prior Fiscal: $5.71 Billion
Percentage Change: +9.0%
R&D Expenditure: $879M
Best FY22 Quarter: Q4 $1.66B
Latest Quarter: Q1 $1.70B
No. of Employees:12,120

More and more medical device manufacturers are adding robotic surgical systems to their portfolios, indicated for an array of surgical procedures from gastrointestinal to orthopedic. Seemingly just as common, however, are firms experiencing delays, development challenges, lawsuits, and other obstacles to achieving success in the space.

Then there’s Intuitive Surgical.

Intuitive essentially gave birth to the robotic surgical scene more than two decades ago and has been improving the technology, adding procedures, and gaining market share the entire time. Meanwhile, larger organizations with more financial resources pale in comparison in terms of progress.

“We see decades of opportunity in developing and deploying technology-enabled ecosystems to address acute care and we are in a strong position. We focus on what we can control and deal with reality as it is, not as we hope it could be,” Intuitive CEO Gary Guthart, Ph.D., stated in his letter to shareholders in the firm’s annual report.

ANALYST INSIGHTS: While its key upcoming larger (MDT and Ethicon) competitors continue their delays in launching their robotic solutions, Intuitive Surgical simply keeps humming along, taking advantage of its market leadership in a growing category. Intuitive is executing on all cylinders as it maximizes revenue from its current footprint (install base) while bringing out innovative new robotic solutions to expand procedural applicability for its solutions. The question is, “When will MDT or Ethicon get tired of chasing them and simply buy them?” Wild Card—Stryker could make a play some day. Let’s see what happens!

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Through the end of its latest fiscal year, Intuitive has achieved some significant milestones. Approximately 1.875 million procedures were performed with its da Vinci system, which bested 2021’s total by 18%. The installed base for the system increased by 12% (7,544). Meanwhile, procedures using the Ion system totaled 23,500, which reflected an astounding 218% growth. The installed base for this product rose 149% to reach 321 systems.

The financial picture is also a positive tale overall. The company ballooned 9% in FY22, which translated to $6.22 billion. Within the Product segment, which tallied $5.2 billion and accounted for 84% of Intuitive’s total revenue, resides Instruments and Accessories and Systems. The former inflated 13% for a $3.52 billion total, while the latter dipped by 1% to finish with $1.68 billion. The other main unit for Intuitive, Service, grew by almost 12% to post $1.02 billion.

In addition to gaining more ground on competitors through increased sales and system placements, Intuitive also puts forth effort into training surgeons on how to use these advanced technologies. In fact, the organization was recognized for its initiative to do so by the Royal College of Surgeons of England, the largest robotic-assisted surgery provider to achieve the honor.

In a different area of the globe, the company made headlines for gaining clearance from Japan’s Ministry of Health, Labour and Welfare for its da Vinci SP surgical system. The agency’s OK permitted the system to be used in general surgeries, thoracic surgeries (excluding cardiac procedures and intercostal approaches), urologic surgeries, gynecological surgeries, and trans-oral head and neck surgeries. The da Vinci SP system provides surgeons with robotic-assisted technology designed for deep and narrow access to tissue in the body. The ability to enter the body through a single, small incision helps enable a minimally invasive experience for complex procedures.

Although many leading firms do stand to become competitors to Intuitive through their own robotic surgical development efforts, others present opportunities for partnerships that aid both organizations and, of course, the patients they ultimately serve. One such arrangement was made in the middle of the 2022 fiscal year between Intuitive and Siemens Healthineers. The FDA granted clearance for the latter’s mobile cone-beam CT imaging technology to be used in conjunction with the Ion Endoluminal System, used for robotic-assisted bronchoscopy. Siemens’ Cios Spin mobile imaging offers integrated functionality with Ion to provide 2D and 3D imaging during procedures to help physicians gain confidence around refining Ion’s catheter positioning and help improve biopsy tool placement.

Unfortunately, not all of the news was positive for Intuitive. A Reuters article revealed a patent dispute had been revived. J&J’s Auris Health unit’s patent challenge was given life by a U.S. Court of Appeals decision. It ordered the U.S. Patent and Trademark Office’s patent tribunal to revisit an earlier decision it made regarding a 2012 patent Intuitive holds. Auris is seeking to invalidate Intuitive’s patent, citing the earlier decision relied on “general industry skepticism” of robotic surgery. A final decision regarding the issue has yet to be made public.

$5.71 Billion
Prior Fiscal: $4.35 Billion
Percentage Change: +31.3%
R&D Expenditure: $671M
Best FY21 Quarter: Q4 $1.55B
Latest Quarter: Q1 $1.49B
No. of Employees: 9,793

A week and a half before Christmas, robotic-assisted surgical technology maker Intuitive Surgical announced that the number of da Vinci surgical robotic procedures had surpassed 10 million.

The flagship surgical robot was FDA approved in 2000, and since has gathered an installed base of over 6,500 in 67 countries. Approximately 55,000 surgeons worldwide are trained to use the robot. da Vinci assists in almost 70 different surgical specialties, including urology, gynecology, thoracic surgery, general surgery, and transoral surgery.

“The growing base of clinical evidence—nearly 30,000 studies on robotic-assisted surgery—and the increasing ability of surgeons, hospitals, and healthcare systems to assess their own data and patient outcomes, have been major drivers of surgeon adoption and the procedure growth that follows,” CEO Gary Guthart told the press in December.

In the following two decades, the firm has released the da Vinci X, Xi, and single-port systems, the latter of which earned FDA approval for urology procedures in 2018 and radical tonsillectomy and tongue base resection in 2019. According to trial results from this year’s American Urological Association meeting, uro-oncologic surgical patients reported better cosmetic and pain outcomes using the single-port system against the multi-port version.

“Symptomatic and cosmetic advantages are present at the 20-day follow up, with better scar appearance being significant also 90 days after surgery,” the study authors reported in The Journal of Urology in May.

Until the COVID-19 pandemic stifled 2020 sales into a decline, Intuitive has been steadily climbing the Top 30. In just five years the firm has risen six spots in the list of the medtech elite with over $3 billion of revenue growth in the company’s pockets. 2021’s sales of $5.71 billion made up for lost time from COVID, growing by nearly a third over the previous fiscal year (ended Dec. 31).

Intuitive shook up its leadership in October by creating two new functional organizations: Strategy and Growth, and Global Business Services. Then-CFO Marshall Mohr was named executive VP of Global Business Services and was succeeded by current CFO Jamie Samath, who has been with the company since 2013. Dave Rosa—who has been with Intuitive for 25 years—became executive VP and chief strategy and growth officer. He was succeeded by 18-year Intuitive veteran Henry Charlton in the position of chief commercial officer. All of the employees began these positions on Jan. 1 this year.

Former AdventHealth executive Dr. Monica P. Reed was also appointed to the company’s board of directors last April. Across the Pacific, healthcare executive Yong-Bum Choi was named general manager for South Korea in August.

Robotic surgical instruments and accessories captured $3.1 billion of net sales, rising 26.2%. According to the company, the increase reflected continued procedure adoption.

The company’s only major product announcement last year came from this business in December with the U.S. Food and Drug Administration (FDA) clearance of its fully wristed, 8 mm SureForm curved-tip stapler and reloads for general, thoracic, gynecologic, urologic, and pediatric surgery.

The combination of the 8 mm-diameter instrument shaft and jaws, 120-degree cone of wristed articulation, and curved tip can help better visualize and reach anatomy. It fits through the 8 mm da Vinci instrument cannula to allow different angles of approach as well.

Systems revenue hiked up 43.7% with its proceeds of $1.69 billion. Last year saw placement of 668 da Vinci surgical systems compared to 2020’s 432 placements. About 1.6 million da Vinci surgical procedures were performed in 2021.

Intuitive shared preliminary results of the 69-patient PRECIsE trial of its Ion endoluminal system for peripheral nodule lung biopsy in October. An 83% average diagnostic yield was reached, with 82% of 1-2 cm nodule cases spotted and 85% for those between 2-3 cm. Sensitivity for malignancy from biopsy samples was 84%-88%. No serious adverse events were reported. As of the second quarter of last year, there were over 70 Ion systems installed in U.S. hospitals.

These preliminary results of 69 subjects with up to 14-month follow up for applicable subjects are a subset of the study’s total of 365 patients, who were enrolled across six medical centers beginning in March 2019.

Services revenue makes up the remainder of Intuitive’s business—it rose 26.7% to come to rest at $962 million. The increase was primarily driven by the growth of the base of installed da Vinci Surgical Systems producing service revenue, as well as effects of the Customer Relief Program in the prior year that caused an $80 million decrease in service revenue in 2020. The installed base of da Vinci Surgical Systems grew 12% to approximately 6,730 as of last year.

$4.35 Billion
Prior Fiscal: $4.47 Billion
Percentage Change: -2.7%
No. of Employees: 8,081

Intuitive Surgical Inc. might never have existed were it not for a pair of tragedies.

Its founder, Frederic Moll, seemed destined for a medical career: His parents were both pediatricians and his mother was the first woman to graduate from the Yale School of Medicine. Not surprisingly, he developed an interest in the field at an early age.

But misfortune struck while Moll was a teenager. He lost both parents within a few years—his mother first, the victim of a sailing accident during a family vacation, then his father, felled by a heart attack.

“I went to college trying to forget about my past,” Moll said in a 2019 J&J employee spotlight story (he currently is chief development officer for Johnson & Johnson Robotics). “I turned my back on medicine and majored in economics.”

Moll’s voluntary estrangement from medicine was short-lived, though. A new surgical procedure called a pulmonary-cardiac bypass eventually softened his stance toward the healthcare sector, for the surgery was saving the lives of men the same age his father had been when he died (54).

With his passion for medicine reinvigorated, Moll enrolled in medical school at the University of Washington. He began his residency in the early 1980s, when minimally-invasive surgery was more of a concept than a practice.

Moll witnessed his first laparoscopic procedure during a gynecology rotation and was instantly hooked. “I thought, this is such a fantastic capability but it’s underutilized due to inadequate technology and training in it. Why isn’t this the future of general surgery?” he recalled in the interview. “I got this idea that the field wasn’t going to go anywhere without somebody improving these instruments.”

That “somebody” was Moll. In the early 1990s, the non-profit scientific research institute SRI International—through National Institutes of Health funding—was developing robotic telesurgical technology for battlefield use. Moll learned about the project in 1994 and, fascinated, almost immediately envisioned ways to improve upon the innovation. He pictured, for example, remotely mimicking a surgeon’s hand movements during procedures without ever touching a medical instrument.

With that concept in mind, Moll embarked on a quest to develop SRI International’s innovation into a full-fledged telesurgical solution. He tried unsuccessfully to convince his employer (Guidant, at the time) to bankroll the project, but instead received support from healthcare financier/advisor/manager John Freund, who had recently left ultrasound imaging equipment manufacturer Acuson Corporation.

ANALYST INSIGHTS: Intuitive Surgical is exploring enabling technology solutions to allow it to continue to be a market leader in the surgical robotics space. With Medtronic, J&J, and others shooting at them, the good news is their market segment is expanding. The question will be “can they stay ahead of the competition” with new solutions to play offense or will they simply be playing defense?

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Freund, who met Moll in 1995, negotiated an option to acquire SRI International’s intellectual property, and with Moll, incorporated a new company named Intuitive Surgical Devices Inc.

“The Intuitive story starts in 1995, where bright minds with a common vision and the drive to do something completely new would change the face of surgery,” Intuitive’s 2020 Sustainability report states. “In 2020, we celebrated a quarter century of pioneering minimally invasive robotic-assisted surgery focused on helping physicians improve the lives of people around the world.”

Besides its 25th birthday, Intuitive last year marked the 20th anniversary of its historic regulatory approval; the company’s da Vinci Surgical System was the world’s first robotic-assisted device to be sanctioned by the U.S. Food and Drug Administration for use in laparoscopic procedures.

Despite the milestones, however, Intuitive had little time to celebrate in 2020. Like most of its peers, the Sunnyvale, Calif.-based company was consumed with pandemic relief efforts, dedicating manufacturing lines to PPE production and engineering staff to ventilator design, and reconfiguring employee workspaces to ensure uninterrupted product flow.

Intuitive also implemented a financial relief program for hospitals impacted by plummeting surgical caseloads. The program incorporated da Vinci service fee credits, lease payment deferrals, and/or flexible, extended payment terms.

The latter two options did not affect Intuitive’s 2020 finances but the service fee credits reduced its service revenue by $80 million. The credit recourse also offset last year’s growth in installed da Vinci Systems, thus keeping total service revenue flat at $724 million. Service gross profit fell 3.8 percent to $456.9 million.

“In surgery, COVID presented serious obstacles to our customers, who needed to treat COVID and non-COVID patients concurrently. During regional virus surges, hospitals faced constraints in staff and ICU capacity, deferring surgical procedures that could wait,” Intuitive CEO Gary Guthart, Ph.D., wrote in the company’s 2020 annual report. “Throughout the year, we worked closely with our customers, adapting to their evolving needs. We implemented a global customer financial relief program in Q2…We loaned or moved da Vinci systems for hospitals as COVID forced them to remap patient pathways. Customers have responded well to these programs, as evidenced in our direct interactions with them and through our Net Promoter Score—which landed us in the excellence tier of measured companies for the second consecutive year.”

Intuitive’s high NPS score, however, failed to beget higher profits in 2020. Total revenue fell 2.6 percent to $4.36 billion, gross profit tumbled 8 percent to $2.86 billion, and net income per share plummeted 24.2 percent to $9.06. Likewise, product revenue was down 3.2 percent to $3.63 billion, and product gross profit fell 8.7 percent to $2.4 billion.

Intuitive’s lost profits last year are directly attributable to the decline in surgical caseloads worldwide. Predictably, the dropoff (most prominent in the second quarter) triggered a 16 percent decrease in total robotic systems shipped (936 from 1,119 in 2019) and overall da Vinci Systems utilization (as measured by procedures per system annually).

Interestingly, though, both the installed clinical base of da Vinci Systems and total surgical procedures rose in 2020. The company’s clinical installed base jumped 7 percent to 5,989 systems while the number of worldwide procedures climbed 1 percent to 1.24 million.

“The pandemic challenged our customers and our business. It highlighted some core strengths for the company, introduced some obstacles to overcome, and triggered some changes for us,” Guthart told analysts during a Q4 2020/full-year earnings call in January (2021). “Despite pressure on utilization of our systems due to COVID, our hospital customers continue to invest in building their Intuitive’s robotics programs with additional systems, evidenced by a 7 percent increase in the clinical installed base in 2020. Our confidence in our core business and our long-term opportunity remains robust.”

Helping to boost that confidence was the acquisition of Israeli health IT startup Orpheus Medical last winter, and two product approvals.

Orpheus Medical’s technologies allow users to “capture and share clinical video and imaging from many sources, which may help improve physician and OR care team workflow and enable analysis of their interventions.”

“The addition of Orpheus will provide customers—including surgeons, patient care teams and hospitals—with ready access to and a deeper understanding of their data, which we believe may help our customers improve patient outcomes and lower total treatment costs,” Julian Nikolchev, Intuitive’s senior vice president of corporate development and strategy, said in announcing the February 2020 acquisition.

Orpheus Medical’s clinical video management and analytics platform can record and broadcast from a da Vinci robot, enable teleconferencing, and store/share content with a hospital’s electronic medical record, picture archiving, communication system, and vendor neutral archive, according to Orpheus Medical’s website.

The tech also can be used in cases of laparoscopic surgery, plastic surgery, and ophthalmology and dermatology procedures, as well as for pre-procedure documentation, mid-procedure complication analysis, daily peer review, and daily peer review.

“Combining both companies’ innovative technologies with Intuitive’s global reach and resources will enable current and future customers easier and faster access to their data,” Orpheus Medical CEO Gaddi Menahem said.

Orpheus Medical was the first acquisition Intuitive brokered since it purchased Schölly Fiberoptic’s robotic endoscope business in July 2019. Orpheus is now a wholly-owned subsidiary of Intuitive.

The other confidence-booster for Intuitive executives last year (besides the Orpheus acquisition) were the European, Japanese, and South Korean market approvals of SynchroSeal and the E-100 generator.

Cleared by the U.S. Food and Drug Administration in November 2019, SynchroSeal is a bipolar electrosurgical instrument that enables surgeons to perform rapid one-step sealing and transection with a single pedal press. The device uses advanced bipolar energy from its raised cut electrode to transect tissue, then cool down quickly. It features wristed articulation, a rapid sealing cycle, and a refined curved jaw.

The E-100 is an electrosurgical generator upgrade used to power Vessel Sealer Extend and SynchroSeal. It is an electrosurgical unit intended to deliver high frequency energy for cutting, coagulation, and vessel tissue sealing.

$4.48 Billion
Prior Fiscal: $3.72 Billion
Percentage Change: +20.4%
No. of Employees: 7,326

Intuitive Surgical has essentially had the robotic surgical systems market to itself for years. Today there are several others in the arena, but none of the rivals have gone head-to-head against its flagship da Vinci robotic surgical system.

That is, until last September, when Medtronic hosted an analysts day focused on robotic surgical systems with a special emphasis on a new soft-tissue robot to compete directly with da Vinci.

Recently retired CEO Omar Ishrak stated in the company’s Q1 fiscal 2020 conference call that “in virtually every area that we have a procedural presence, we will look at robotics because that’s how it’s going to be.”

Medtronic is a formidable threat. The company has close relationships with major hospital systems around the world, which frequently extend to personal contact with their surgeons. Medtronic isn’t new to robotic surgical systems—the company acquired robotic-assisted spinal and brain surgery technology firm Mazor Robotics in 2018.

Dethroning Intuitive won’t be easy. As of Dec. 31, 2019, the company had an installed base of 5,582 systems. Intuitive continued its meteoric rise last year, as sales rocketed 20.4 percent to $4.48 billion. Product revenue rose a sharp 22 percent to reach $3.8 billion, with instruments and accessories proceeds climbing 23 percent to $2.4 billion. This growth was mainly a result of 18 percent procedure growth and swelling advanced instrument sales. Strong increase in hernia repair, cholecystectomy, colorectal, bariatric, and thoracic procedures fueled U.S. sales. Procedures jumped 21 percent outside the U.S., mainly driven by growth in urologic, general surgery, and gynecology operations. The main growth hotspots globally were Japan, Germany, Korea, and China.

ANALYST INSIGHTS: As a market leader in robotics, Intuitive will continue to have many competitors attacking it (large and small) from multiple angles. The question remains: does Intuitive simply play defense or does it get aggressive on offense? It certainly has the capital and ability to make inorganic waves if it so chooses.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

Systems revenue shot up 19 percent to $1.3 billion, thanks to higher system shipments, higher 2019 ASPs, higher operating lease revenue, and higher lease buyouts. A total of 1,119 da Vinci systems were shipped in 2019, compared with 926 systems the previous year. Service revenue grew 14 percent to $724 million due to the larger installed base of da Vinci systems.

Intuitive earned FDA clearance last February for the Ion endoluminal system, a flexible robotic catheter for minimally invasive biopsy in the peripheral lung. The 3.5 mm diameter flexible articulating robotic catheter moves 180 degrees in all directions, passing through tight bends to collect peripheral lung tissue. A 2 mm working channel accommodates biopsy forceps or cytology brushes if necessary, and integrates into existing lung nodule biopsy workflows and imaging like fluoroscopy, radial-endobronchial ultrasound, and cone-beam CT. Shipments of Ion began in the second quarter of last year.

The da Vinci SP (single port) surgical system obtained an FDA nod for two lateral oropharyngectomy procedures last March—radical tonsillectomy and tongue base resection. Transoral otolaryngology procedures and urology procedures (cleared in 2018) are now in the da Vinci single port system’s skillset.

The da Vinci Handheld Camera, a lightweight 2D camera head, gained FDA clearance last June. It can connect to third-party laparoscopes, allowing image display on the da Vinci X/Xi vision cart to address aspects of procedures requiring laparoscope use. This eliminates redundant equipment in the OR.

In July, Intuitive acquired the robotic endoscope business of its over 20-year strategic supplier Schölly Fiberoptic, a German developer of visualization systems for minimally invasive diagnostics and surgical applications. The buy will integrate Schölly’s robotic endoscope manufacturing line and two Schölly sites (along with about 200 employees) into Intuitive operations.

“Application-specific and advanced image quality is our passion and the key for successful and safe minimally invasive surgery,” said Prof. Dr. Holger Reinecke, then-CEO of Schölly. “We have a long, successful relationship with Intuitive, and we share the common mission to advance healthcare by providing state-of-the-art technologies and innovative product features. This transaction will allow Schölly to focus more strategically on our global visualization business and ensure sustainable growth.”

The Sureform 45 mm Curved-Tip stapler and SureForm 45 mm Gray reload won an FDA nod in July as well. The SureForm 45 mm Curved-Tip single-use, fully wristed stapling instrument has a curved tip for resection, transection, and/or anastomoses creation. The single-use SureForm 45 mm Gray Reload cartridge contains multiple staggered rows of implantable staples and a stainless steel knife. Both are of particular utility in thoracic procedures.

November saw FDA clearance for two technologies to improve procedures requiring sealing: SynchroSeal and the E-100 generator. E-100 is a robotic generator to power the flagship Vessel Sealer Extend energy sealing instrument and the new, enhanced SynchroSeal instrument. SynchroSeal enables rapid one-step sealing and transection using bipolar energy from a raised electrode. This transects tissue then quickly cools it. SynchroSeal also features wristed articulation and a refined curved jaw.

The firm opened a new U.K. and Ireland headquarters and training suite at Oxford Science Park’s Schrödinger Building in September. The facility will offer a selection of education and training programs and help showcase its product pipeline.

COVID-19 Consequences

Q1 2020 Revenue: $1.1 Billion
Q1 2019 Revenue: $974 Million
Percentage Change: +12.9%

For the first two and a half months of Q1 2020, performance trended high, but procedure volume decline and system placement postponements began in the latter half of March in the U.S. and Western Europe due to the COVID-19 pandemic.

“In response to COVID-19, Intuitive’s priorities are the health and safety of those we serve, including care teams, their patients, our employees, our communities, and our suppliers,” Intuitive CEO Gary Guthart told the press. “While we cannot predict the depth or duration of the disruption caused by the pandemic, we remain committed to our mission and the long-term need to improve patient outcomes.”

Intuitive and the Intuitive Foundation have built or sourced over 100,000 pieces of PPE. The Intuitive Foundation also launched a DIY face mask initiative. To support the manufacturing of critical PPE, Intuitive employees assembled face shields at the company’s Sunnyvale, Calif. and Connecticut campuses. They have assembled DIY facemasks using materials and instruction from the Intuitive Foundation.

AT A GLANCE

Rank: #25 (Last year: #24)

$3.72 Billion

Prior Fiscal: $3.14 Billion

Percentage Change:+19%

No. of Employees: 5,527

Global Headquarters: Sunnyvale, Calif.

KEY EXECUTIVES

Gary S. Guthart, Ph.D., President and CEO; Member of the Board of Directors

Salvatore J. Brogna, Exec. VP and COO

Myriam J. Curet, M.D., Exec. VP and Chief Medical Officer

Marshall L. Mohr, Exec. VP and CFO

Dave J. Rosa, Exec. VP and Chief Business Officer

Bob DeSantis, Sr. VP and GM, Instruments and Accessories

Mark Johnson, Sr. VP, Regulatory and Quality

Charles Jones, Sr. VP, Design, Brand, and User Experience

Brian Miller, Ph.D., Sr. VP and GM, Systems and Vision

Colin Morales, Sr. VP and GM, Secondary Market Equipment and Service

Kara Andersen Reiter, Sr. VP, General Counsel and Chief Compliance Officer

Suresh Sathyamurthy, Sr. VP, Global Marketing

Craig Child, VP, Human Resources

With arguably still one of the most interesting pieces of medical equipment around (it would be hardly accurate to call the da Vinci Surgical System “new”), the company that developed this solution and is often credited with kicking off the robotic revolution in healthcare was, in contrast, quite quiet in 2018. Sure, the firm enjoyed a fantastic rise in revenue compared to fiscal 2017, and there were a few notable product announcements, but overall, the company took a year off from making waves in headlines.

CEO and president Gary Guthart indicated as much in his letter to shareholders in the firm’s 2018 annual report. He pointed to organic growth, the increased penetration of the organization’s products and technologies into hospitals, and the expansion of capabilities for additional types of surgical procedures. And of course, a rise of 19 percent year-over-year is the type of “quiet” fiscal period any company would likely sign up for.

Specifically, the company enjoyed another high double-digit growth period compared to prior year. The 19 percent increase translated to a revenue figure of $3.72 billion for 2018. That follows on the heels of a 16 percent rise in 2017’s revenue. From a real world perspective, the company’s technologies were used in more than 1 million procedures in 2018—an increase of 18 percent over the previous 12 months.

Upon closer examination, it is apparent all segments of Intuitive contributed to the success and growth. The company’s Product revenue, which accounted for 83 percent of the firm’s total in 2018, was reported as $3.1 billion, a substantial increase over 2017’s $2.6 billion. Comprising the segment is Instruments and Accessories, which increased 20 percent to close at $2 billion. The other portion of Products is Systems, which saw revenue gain by 21 percent to finish the year at $1.13 billion. According to the company, a total of 926 da Vinci Surgical Systems were shipped during the year, which increased the robotic system’s installed base by 13 percent to a total of 4,986 systems.

The Services portion of the company (representing 17 percent of total revenue) similarly contributed to the gains experienced during the year. The segment, which includes training and education for surgeons, posted $635 million in 2018 versus $573 million in 2017.

ANALYST INSIGHTS: With many companies nipping at its heels, Intuitive Surgical just simply continues to deliver performance as it takes advantage of its market leadership to increase its footprint, which will make it more difficult for the coming competition to displace it. A key portfolio decision will be whether Intuitive Surgical will expand its robotic portfolio into other market segments or will it continue to focus in its core markets. 

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

The company still primarily serves the United States healthcare marketplace, seeing 71 percent of its total revenue from domestic sales. The rest of the world, which could prove to be an optimal area for growth, makes up the remainder. The U.S. revenue figure did decrease just a bit compared to the prior year, when it was 73 percent, but the almost 3:1 ratio has remained fairly consistent over the past three years.

Perhaps with international growth at the top of its mind, the firm announced in 2018 it was beginning direct operations in India, having previously sold through a distributor in the region for seven years. “The adoption and advancement of robotic-assisted surgery has been enabled by critical contributions from health care professionals from India,” said Guthart. “As Intuitive continues to grow to serve patients, surgeons, and hospitals in India, we look forward to deepening our support of, and work with, health care professionals in their pursuit of the clinical and economic benefits robotic-assisted surgery offers.”

The company also moved forward with a number of product advancements to ensure continued growth for the years to come. It gained FDA clearance for its SureForm 60—a single-patient use 60-mm stapler. The device boasted an industry-first 120 degrees of fully wristed articulation. The stapler can be used for general, thoracic, gynecologic, urologic, and pediatric procedures as part of the da Vinci system. The device represents an extension of the company’s line of 30-mm and 45-mm products.

Also in 2018, the company saw the clearance of its da Vinci SP Surgical System, which presents a single port approach for surgeons. While the robotic system was cleared by the FDA in April 2014, this specific clearance was for urological procedures. According to a statement at the time of the announcement, the company anticipates pursuing further regulatory clearances for da Vinci SP, including transoral, transanal, and extraperitoneal applications, broadening the applicability of the platform over time.

The SP system includes three multi-jointed wristed instruments and the first da Vinci fully wristed 3D HD camera. The instruments and camera all emerge through a single cannula and are properly triangulated around the target anatomy to avoid external instrument collisions that can occur in narrow surgical workspaces.

“Intuitive continues to bring tomorrow’s surgery today by addressing surgeon and patient needs, as well as working closely with hospitals to systematically improve the overall experience in the operating room,” said Salvatore J. Brogna, Intuitive executive vice president and COO.

$3.1 Billion
NO. OF EMPLOYEES:  4,444

Intuitive essentially cornered the surgical robot market since launching the first iteration of its da Vinci system back in 2000. Recently, however, some competition has emerged in a young surgical robotic company named TransEnterix. Last October, the N.C.-based firm won FDA clearance for the Senhance Surgical System. Cleared for colorectal and gynecological surgery, it is the first system to compete head-to-head with da Vinci. Further, TransEnterix’s stock surged upward upon the announcement, while Intuitive’s shares fell slightly as investors fretted over impending competition.

Should Intuitive worry about the tiny contender? Senhance and da Vinci are comparable—both enable surgeons to conduct high-precision surgeries by operating robotic arms from workstations near the patient, and both target similar procedures.

Unlike da Vinci, however, Senhance features haptic feedback—da Vinci systems instead incorporate a form of tactile-visual sensory substitution to display information through visual cues. Senhance can recreate the sense of touch felt by surgeons using traditional surgical instruments. Further, surgeons using Senhance can control the robotic arm-mounted camera by moving the eyes and head, and Senhance’s instruments are reusable. Hospitals would presumably not have to stock up on as many replacement instruments and accessories as with a da Vinci system.

However, despite Senhance’s landmark FDA clearance and some alluring features, TransEnterix will have a tough battle to win against Intuitive. The company hasn’t made much progress in the global markets where da Vinci has already won approval, selling merely one unit in Germany and one in Japan in the first half of 2017. Assuaging some Intuitive fears, TransEnterix CEO Todd Pope said the company had “a lot of ground to cover” to compete directly with da Vinci in an interview with Reuters.

“We feel like we have got a lot of open field running ahead of us,” he said. “We are not going to be competing head-on with Intuitive.”

Analysts do not expect TransEnterix to chase the urological or prostate indications that Intuitive specializes in. Rather, Pope said the company would seek to convert delicate laparoscopic surgery, which is significantly wearing on surgeons, over to Senhance.

Intuitive should instead be worrying about Medtronic’s entry into the market. The global medical device giant’s revenue is 10 times that of Intuitive, and Medtronic plans to roll out its own surgical robot at some point this year. Although the global firm could face similar challenges to TransEnterix in gaining market entry, its size and stability as well as long-term relationships with hospitals could allow it to take at least some market share from Intuitive over time. Johnson & Johnson has also been teasing the public about entering the surgical robotics field by way of Verb Surgical, its long-heralded joint venture with Verily Life Sciences.

ANALYST INSIGHTS: Intuitive Surgical continues to benefit from being a ‘first-mover’ in surgical robotics. While many others (J&J, Google, Medtronic, etc.) are investing and trying to ‘catch up,’ Intuitive continues to simply execute and to increase its hospital ‘footprint.’ This will make it more difficult for the follow-on competitors to penetrate into their market share. Time to market is currently an advantage for this incumbent.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

Intuitive’s 2017 fiscal year performance (year ended Dec. 31) ought to ease some of that apprehension, however. Shares of the company reached an all-time high last April after the da Vinci surgery robot maker reported first-quarter earnings and sales that beat analyst estimates—$5.09 of earnings on sales of $674 million for that quarter—which topped Thomson Reuters estimates of $4.93 on sales of $669.7 million. According to CNBC, Intuitive shipped 133 of its da Vinci systems during the first quarter, compared to 110 delivered in Q1 of 2016.

Intuitive was able to sustain that impressive pace for the full year. The firm posted 2017 revenue of $3.1 billion, soaring nearly 15 percent upward over the previous year. This year’s surge in sales is a continuation of a very profitable trend for Intuitive. The company had also posted double digit revenue expansion in 2016, rising 13 percent from the year prior.

In fact, nearly every facet of Intuitive’s business boasted double-digit hikes in 2017. Instruments and accessories revenue grew 17 percent to $1.6 billion, systems sales escalated 15 percent to $910 million, and services income upturned 13 percent to reach $582 million. Much of this windfall was a result of a 16 percent boost in the use of da Vinci systems and a 13 percent rise in the installed system base—from 3,919 to 4,409 by the year’s end. da Vinci sales outside the United States also ballooned a whopping 23 percent from the previous year.

Gynecology proved to be Intuitive’s largest U.S. specialty in 2017, with about 252,000 procedures performed. General surgery applications followed not far behind with approximately 246,000 operations, most of which were ventral or inguinal hernia repair procedures. da Vinci’s use in colorectal procedures in 2017 grew as well, thanks to 2016’s launch of the da Vinci Xi system, EndoWrist Stapler and Vessel Sealer, and Integrated Table Motion.

The latest in Intuitive’s surgical robot iterations, the da Vinci X Surgical System, also won CE mark approval last April, and the FDA cleared it for use last May. da Vinci X uses the same vision cart and surgeon console found on the flagship da Vinci Xi system, and allows users to customize with whichever advanced capabilities and upgrade pathways their practice requires. The new surgical robot enables focused-quadrant procedures like prostatectomy, hernia repair, and benign hysterectomy, touting flexible port placement and 3D digital optics. da Vinci X’s setup technology also features voice and laser guidance, drape design to simplify surgical preparations, and a lightweight, fully integrated endoscope.

“The da Vinci X System is a value-oriented option for hospitals that are just starting their robotic-assisted surgical program and for our existing customers who want to expand their existing robotics programs,” said Henry Charlton, Intuitive’s senior vice president of U.S. sales. “As customers’ needs grow, the da Vinci X System can grow with them. The da Vinci X System enables our customers to take immediate advantage of Intuitive’s full ecosystem of support and services.”

Last November, results from the first clinical study of the company’s flexible robotics platform were published in the journal CHEST. The 30-patient study was conducted at Royal Brisbane and Women’s Hospital in Australia, in procedures where the platform was used safely to take lung tissue samples for biopsy. In the study, most of the target lung nodules were less than two centimeters in diameter.

The robotic-assisted, catheter-based technology is intended to access hard-to-reach areas of the body through natural openings like the mouth. When used in the lungs, it may be able to make early lung cancer diagnoses. The CHEST study also indicated no device-related adverse events, instances of pneumothorax, or excessive bleeding.

“I was able to reach nodules in the peripheral lung that I wouldn’t have been able to reach before,” said David Fielding, M.D., thoracic physician and principal investigator in the study. “The robotic-assisted technology in sampling facilitates diagnosis at a stage in which most patients wouldn’t yet know that they have cancer. Early diagnosis should allow us to start care plans for patients earlier and offer curative treatments.”

$2.7 Billion
NUMBER OF EMPLOYEES: 3,755

Robotic surgery has been garnering a lot of attention within a number of circles, from the mainstream media to medtech investors to surgeons. It has been a rapidly growing space as new competition emerged. Johnson & Johnson teamed with Google to form Verb Surgical to develop and commercialize a robotic surgical solution. Stryker Corp. has made a significant investment in its Mako robotic surgical system (which it acquired in 2013). Other companies are in various stages with their own innovations. But the company that really started the buzz about this surgical option was Intuitive Surgical with its da Vinci System back in 1999.

Since then, the company has enjoyed a substantial “lead” over the rest of the industry in terms of similar technologies coming to market. As a result, Intuitive Surgical has continued to see steady growth while continuing to expand its offerings to help support the system that put the company on the map. In 2016, that growth was reflected in a 15 percent increase in the number of da Vinci systems in clinical use, from 3,597 to 3,919 systems by year’s end. The systems can be used for surgeries in the areas of general surgery, urology, gynecology, thoracic surgery, and transoral surgery.

The aforementioned increase in units in 2016 resulted in a 13 percent rise in the company’s revenue for the year versus 2015 ($2.7 billion in 2016; $2.4 billion in 2015). That total breaks down into two segments—Product ($2.2 billion; 81 percent of the company’s total revenue) and Service ($517 million; 19 percent). As those segment percentages broke the same way in 2015, both segments saw bumps in revenue from 2015 ($1.9 billion for Product; $465 million for Service).

The Product segment further breaks down into two product types—Instruments and Accessories, and Systems. Driven by procedure growth of approximately 15 percent as well as higher sales of the company’s advanced instruments, the Instrument and Accessories sector saw a revenue increase of 17 percent over 2015 ($1.4 billion). The Systems division also saw an increase over 2015 (10 percent) to report revenue at $792 million.

ANALYST INSIGHTS: There are no questions Intuitive has a strong track record. It has single-handedly created a robotics category that is the envy of the medical industry. While the analysts expect a major M&A from Intuitive, it continues to preserve its cash (and shareholder value) through re-purchasing its stock. With upcoming robotic category pressure from Google, J&J, Medtronic, and others, it wouldn’t be surprising to see some type of M&A in 2018.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

In terms of region, the United States dominates the company’s sales, accounting for 72 percent of the total. That number inched up yet again in FY16, over 2015’s 71 percent and 2014’s 70 percent. U.S. locations were the destination for 338 of the 537 systems the company shipped in 2016, with 96 headed to Asia, 79 to Europe, and 24 into other markets.

The company’s Service revenue saw an 11 percent increase over 2015’s $465 million. The rise was attributed simply to the increased number of da Vinci Surgical units that were in the field.

Adding to the potential sources of revenue, Intuitive announced several notable technologies in FY16 that had received FDA clearance. One such innovation saw the integration of Intuitive’s da Vinci Xi Surgical System and Trumpf Medical’s (a division of Hill-Rom) TruSystem 7000dV advanced operating table, enabling Intuitive to be able to offer Integrated Table Motion in its system. The end result provides the real-time ability for surgical teams to be able to reposition the operating table while the surgical robotic arms are docked. This feature enables the team to benefit from the use of gravity to expose anatomy during a procedure, maximize reach and access, and reposition the table to enhance the anesthesiologist’s care of the patient.

“Our collaboration demonstrates the true power of partnership,” said Dirk Ehlers, president of Hill-Rom Surgical Solutions. “When innovative, focused companies like Intuitive Surgical and Trumpf Medical come together to bring highly advanced medical technologies together in a true spirit of cooperation, good things can happen for patients and their caregivers. We are proud of this new, enabling capability in minimally invasive surgery.”

Intuitive also received FDA clearance for its da Vinci Xi EndoWrist Stapler 30 instruments and reloads. With the new curved-tip offering, the instrument enables enhanced placement and visualization around tenuous vasculature, according to the company. The product was ready for distribution in the first quarter of 2016.

“Combined with the da Vinci Xi Surgical System’s 3DHD vision, access, and surgeon control and autonomy, the EndoWrist Stapler 30 naturally expands the da Vinci stapling portfolio,” Sal Brogna, executive vice president, Product Operations, Intuitive Surgical, said in a press release announcing the clearance. “This clearance further underscores the progress we’ve made in developing a broad suite of tools and resources for surgeons spanning several specialties, including thoracic and general surgery.”

Further expanding the company’s offering, FDA clearance was gained for da Vinci Xi Single-Site instruments and accessories. This line of products enables surgeons to perform certain procedures—cholecystectomy, benign hysterectomy, and salpingo-oophorectomy—through a single incision. The technology in this clearance is an improvement on previously existing devices for single-site procedures, which were first cleared in 2011. According to the company, these offerings improve the surgeon’s vision within the surgical field, offers an easier setup, and enhances patient access with greater range of motion for the arms.

“The da Vinci Xi was designed to seamlessly integrate advanced and future technologies and we are extremely pleased to further expand our line of product offerings with the clearance of Single-Site instruments and accessories,” said Brogna. “Single-Site technology adds great versatility to the da Vinci Xi by enabling both single port and multi-port surgery on a single system.”

In September 2016, Intuitive Surgical announced a joint venture with Shanghai Fosun Pharmaceutical Group to research, develop, manufacture, and sell robotic-assisted catheter based medical devices. The initial indication being targeted is for the treatment of lung cancer. The joint venture will be registered in Shanghai, where it will perform the research and development activities, along with distribution into China. Intuitive Surgical will handle distribution outside of China.

“We are excited to deepen our partnership with Fosun Pharma focused on delivering innovative healthcare solutions in China and around the world,” said Dr. Gary Guthart, president and CEO of Intuitive Surgical. “We are proud to make this important long-term commitment to China.”

Chindex Medical Ltd., a subsidiary of Fosun Pharm, has served as a distribution partner to Intuitive Surgical in China since 2011.

$2.4 Billion
NUMBER OF EMPLOYEES: 3,211

GLOBAL HEADQUARTERS: Sunnyvale, Calif.

The plethora of predictions about professionals being replaced by robotic substitutes reached an apex in 2015, as analyst after analyst published projections of likely candidates for bionic supplantation. (Go on, google “will a robot take my job” and see how many different results come up.)

Unless robotic synaptic technology experiences significant growth soon, journalists should have nothing to fear—it was mostly manufacturing employees projected to be replaced, as automation robots designed for routine manufacturing processes became standard practice in the plant. But surely a robot couldn’t replace a doctor: Metal hands are far too clumsy to handle the intricacies of human surgery, right?

Intuitive Surgical Inc.’s da Vinci surgical system, which first received U.S. Food and Drug Administration (FDA) clearance in 2000, indicates otherwise. Surgeons need not worry too much about being replaced; da Vinci still requires a surgeon at the helm in order to perform the procedure. Although it can be used for a slew of minimally invasive procedures (which will not be listed lest this entry become egregiously long; take a look at Intuitive’s website to see just how much this robot can do), it still lacks the decision-making software to make it fully autonomous…for now.

Financial Landscape

Intuitive Surgical’s product portfolio revolves almost entirely around its da Vinci system. (The company also provides the InSite and Firely Fluorescence imaging systems as peripherals to da Vinci.) The company’s business segments are broken up into categories based on the instruments and accessories for the da Vinci system, sales of the systems, and services such as installation and training to use the system. Some worry that the company is essentially putting all its eggs into one basket, leaving limited room for growth. However, those eggs can perform an astonishing (and increasing) variety of minimally invasive surgeries—which should alleviate some of that anxiety.

A particularly good sign is the fact that Intuitive Surgical made its debut in this year’s Top 30 listing. Intuitive’s fiscal 2015 (year ended Dec. 31) netted the firm $2.38 billion in sales, a 12 percent increase from 2014. This is a fairly significant rebound from 2014’s deficit (down 5 percent from 2013), which was due primarily to 24 percent lower sales of the da Vinci system, mainly in the United States and Japan. In 2015, 71 percent of revenue consisted of domestic net sales, and 29 percent comprised what the company calls “OUS” or outside the United States. This ratio has remained relatively stable through the last few years, with 70 percent and 30 percent in 2014 and

72 percent and 28 percent in 2013, respectively.

Intuitive’s phased global launch of the da Vinci Xi system in mid-2014 certainly had an effect on product net sales. In 2015, product revenue amounted to $1.9 billion, a 13 percent increase over 2014, largely due to the system’s launch. Systems revenue overall was $721.9 million, a 14 percent increase over 2014. Due to a higher product mix of advanced instruments (though offset somewhat by weakening foreign currencies), instruments and accessories revenue for fiscal year 2015 totaled $1.2 billion, a 12 percent increase over 2014. Contributing to this increase was a 14 percent higher procedure volume, with 11 percent domestic growth and 26 percent OUS growth, respectively. The larger sales volume of da Vinci systems worldwide also contributed to service revenue of $464.8 million, representing an 8 percent increase over 2014.

What’s New with da Vinci?

Intuitive’s latest iteration of its flagship product, the da Vinci Xi, launched in the United States in April 2014. As mentioned previously, the favorable market response to the new system was a large driver in the company’s overall revenue increase: 492 da Vinci systems were sold globally in 2015, 61 more than the year prior. As a result, da Vinci procedures also experienced a rise: in fiscal  2015, approximately 652,000 procedures were performed, about a 14 percent increase from fiscal 2014.

da Vinci Xi continues to build on the core systems features. It now includes wristed instruments, 3D high-definition visualization, intuitive motion, and an ergonomic design. Specifically, the newest version contains an overhead instrument arm to facilitate anatomical access from basically any position and a simpler, more compact endoscope digital architecture with improved vision definition and clarity (which can be attached to any arm). The arms themselves were designed to be smaller and thinner with joints that offer a more flexible range of motion, and the system’s longer instrument shafts offer surgeons greater operative reach. Xi was CE marked in June 2014, cleared in South Korea in October 2014, and cleared in Japan in March 2015. da Vinci Xi versions of the EndoWrist stapler 45—a wristed, stapling instrument meant for resection, transection, and/or anastomoses creation in general, gynecologic, and urologic surgery—were initially shipped in January 2015. The EndoWrist Stapler was CE marked to sell in European markets for the Si and Xi surgical systems in April 2015.

CE mark clearance was also achieved for da Vinci Xi Integrated Table Motion product in June 2015. This coordinates da Vinci’s robot arms with a version of the Trumpf Medical TruSystem 7000dV operating room table, enabling patient position shifting in real-time while the arms remain docked. It permits OR teams to optimally position the operating table so gravity exposes anatomy during multi-quadrant procedures, allows surgeons to interact with tissues at an ideal working angle, and repositions the table during procedures to assist the anesthesiologists’ care. It was introduced in phases to the European market in fourth quarter 2015, and was cleared by the FDA in January 2016.

With Great Innovation Comes Great Litigation

As of Dec. 31, 2015, Intuitive was named as a defendant in about 92 individual product liability lawsuits, alleging that a variety of personal injuries—and in some cases, death—resulted from botched da Vinci surgical system procedures. In fact, as recently as Dec. 21, plaintiffs in a Missouri legal action added 10 additional plaintiffs, seeking damages on behalf of 55 patients who underwent da Vinci surgeries in 22 different states. This isn’t exactly news for Intuitive, which has been receiving a steady stream of lawsuits related to da Vinci procedures gone awry since the product’s launch. The most recent allegations assert that da Vinci’s defects and/or Intuitive’s failure to adequately train healthcare professionals performing the surgeries resulted in the injuries. Further, the plaintiffs claim that Intuitive did not disclose and/or misrepresented the benefits and risks of the device.

Initiated by plaintiffs’ attorneys, da Vinci has also been subject to well-funded national advertising efforts directed at patients dissatisfied with their surgery. The company has received a significant amount of claims relating to alleged surgical complications from surgeries using the Monopolar Curved Scissor (MCS) instruments—the tip cover accessory for these were withdrawn from the market in 2012, and MCS instruments were the subject of a recall in 2013. One recent case, which is now before the Washington State Supreme Court awaiting review, specifically accused the company of failing to properly train, warn, and instruct the operating surgeon.

Product liability litigation is such a concern for Intuitive that the company often enters into tolling agreements to minimize the expense and distraction of defending multiple lawsuits. Pre-tax charges of these agreements were $13.8 million, thankfully significantly down from 2014’s $82.4 million.

Research and Training Initiatives

Toward the end of February 2015, Intuitive began a partnership with the American Hernia Society Quality Collaborative (AHSQC). Joining six other foundation partners, this initiated a surgeon-led, online quality initiative to share real-time patient data regarding abdominal hernias, review peer and institutional data, and analyze best practices, decision support, and care pathways. “It is critical that we follow and track the results of our operations to determine the best options that help our patients. We should all take responsibility for fostering a culture of quality improvement,” Dr. Benjamin K. Poulose, M.P.H., AHSQC director of quality and outcomes, said in a company press release. The study sought to address and improve upon health outcomes for hernia patients as well as optimize costs for surgical hernia repair by assessing factors responsible for hernia occurrence, quality of life following hernia repair, reducing surgical-site complications, evaluating advantages of minimally invasive repair, and minimizing perioperative pain.

The company announced a different type of quality initiative in August 2015, when simulator grants were awarded by Intuitive to five top U.S. medical centers to advance training in robotic-assisted minimally invasive surgery. The goal was to interpret how surgical skills learned in a virtual-reality environment translate to improved inter-operative skills, simultaneously identifying training needs and determining the research required to address those needs.

“As the da Vinci Surgical Systems emerge on the forefront of minimally invasive surgery, validation of safe training curricula for residents, fellows, and practicing surgeons will have to be sought with careful, scientific rigor,” Shawn Tsuda, M.D., FACS, associate professor of surgery at the University of Nevada School of Medicine, said in a press release. “This grant enables forward-looking programs to develop best-practices for integrating robotics into surgical training.”