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Intuitive Surgical, Inc. Message Board

  • medinsider medinsider Mar 23, 2013 12:46 PM Flag

    ISRG's Growth Strategy Revealed

    LEGAL DISCLAIMER: The statements made below are only my personal opinion.

    One of the worst kept secrets within the medical device world (albeit apparently unknown to Wall Street) is that the reason that Intuitive has been able to grow exponentially is that they have been leveraging the surgeons that they train against neighboring hospitals. To be specific, they train a group of surgeons then they threaten the neighboring hospitals that if they don't buy a DaVinci, then the surgeons will pull their cases from their hospital - effectively threatening their business. With no other option, most CFO's agree to pay the ransom and buy a DaVinci - not because it will result in better patient outcomes or reduce costs, but because they are afraid of losing their surgeons and the profitable caseloads that they bring to their facility.

    Now the reason that this is important to Wall Street is that if Intuitive loses the surgeons, as we recently saw with ACOG, then you cut the head off the dragon. I don't know if you've been reading the newspaper lately, but hospitals aren't doing that well, and CFO's are looking high and low for reasons not to spend $1.5M that they don't have. Now they are getting those reasons. And with the FDA polling surgeons of all specialties (not just the OB-GYN's in ACOG), this thing could unravel in pretty short order.

    Don't believe me? Pick up the phone and call the nearest hospital CFO that has one of these robots and ask them yourself.

    So now you know the business.

    Sentiment: Sell

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    • If what you say is true, I am curious why da Vinci customers continue to be repeat customers?

      Why would CEOs, purchase multiple dV systems if they lost money on each procedure that was performed on each system. Why would a CEO buy 2, 3, 4, and 5 systems only to accelerate his LOSS??
      What each CEO knows, and Wall Street does NOT, is they are actually making money on each system they own.

      This is a quote from the Q412 earnings transcript by Aleks Cukic:

      "We had a net 123 system additions to the installed base during the quarter, which brings to 2,585 the cumulative number of da Vinci systems worldwide, 1,878 in the United States, 416 in Europe, and 291 in rest of world markets. 114 of the 175 systems installed during the quarter represented repeat system sales to existing customers."

      Over half of the system sales are being sold to REPEAT customers. WOW!!!!

      explain that.

      Sentiment: Buy

    • " we recently saw with ACOG, then you cut the head off the dragon."

      However, in this case, when they tried to cut off the head, 30 others heads sprouted from the shoulder to contradict the ONE old head's opinion.

      "and CFO's are looking high and low for reasons not to spend $1.5M "

      Yep, that sure helps to explain why more than half the hospitals that buy one subsequently become repeat customers - i.e., own MORE than one,,,

      • 1 Reply to splaintome
      • " we recently saw with ACOG, then you cut the head off the dragon."

        I as I would like to reiterate about what I found out about ACOG, they are a bunch of nobodys. They are NOT the agency the certifies surgeons in the OB/GYN field. They are a 501(c) organization. They leader is not charged with discussing the latest and best techniques, he travels giving speaches to its members about how to INVEST, NOT do better surgeries.

    • andersongordon Mar 23, 2013 7:10 PM Flag

      I believe there is truth in what you say. I also believe there is real benfit brought to the patients and medical community by ISRG's new technology. Yes there is a similar pattern to other "wars" and "arms races". The side with the best or better, "the percieved best" arms have both a strategic (positional) and tactical (customer aquisition) advantage. The same could be said about other "arms races". College basketball is one current example. A coach recruits the percieved best players by touting the players best opportunity to "succeed" in his goals (pro career, winning team, ....etc.). Do they really have the best? There is always failure when it comes to human endeaver. There is always what people call "chance, luck, fate, you name it. The outcome of 350k surgeries by Da Vinci surgeons last year had "failures". Did they have advantages over other medical options? In many, I would even say in most , Yes. Were they worth the price paid? That answer will have to be debated and weighed in the future. The jury is still out, though both sides get a chance to present their cases. That's what makes the US the worlds leader in medical technology and inovation.

      Thanks for presenting you perspective. Contribution like yours makes this board valuable.


      • 1 Reply to andersongordon
      • My neighbor is an older cardiologist (~50s) and he has told me on numerous times that even if the DaVinci has a few hiccups, it is positively the future. He said his group that he works for has two
        DaVincis and it is because they need to stay on the cutting edge of technology. Not one single new doctor they interviewed to join their group in the last 6 years has not demanded that at least one unit be available to them. This is despite the fact that there really is not much that is approved for cardiac surgery for the DaVinci right now. As he said these young punks coming into the business can see the future. He also said just the simple fact that operating laparoscopic tools right side up is a gigantic advantage. He has been reading about the beating heart CABG and says that alone will be a solid home run. The left mitral valve replacement through the rib cage that is being done in a few places right now is a total breakthrough.

        Patients also drive the hospitals. I have 5 male coworkers that need prostate surgery. One of them got the DaVinci surgery about 6-7 years ago. Three others listened to his positive experience and they did the same and all are well. One guy's doc was not a DaVinci surgeon and so that coworker got traditional surgery. There were complications and he had to have corrective surgery. It was not bad, but that 1 in 5 number is enough so that anyone else that I work with knows about it and so I bet anyone that needs surgery will be heading the DaVinci route.

        Finally hospitals know about and they track outcomes, especially how fast they can get a patient out of their bed and get another one in. They know that nosocomial infections harm their results. They know that patient opinion counts. They will listen to what the patients want because without patients they do not survive.

    • And which short-seller do you shill for? Or - given the "LEGAL DISCLAIMER" comment, maybe you shill for one of the plaintiff's lawyers.

      You just joined Yahoo today. You really think we are dumb enough not to see through this? What's the matter - can't get Bloomberg to publish any more articles so soon after the last one? CNBC doesn't do live broadcasts on weekends? Herb Greenberg is on vacation? Are you guys really this desperate?

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