Disconnect? Domestic Surgeons increasing 17% faster than Q2's Record Rate
Here is the quandry--Last quarter (Q2 2013) ISRG added more surgeons to their on-line list than any previous quarter, yet the sales of domestic machines were down from 90 Q1 to 47 Q2 (removing trade-ins). Procedures were up 7% domestically even after removing ~10k benign Hysterectomies on very solid General Surgery growth. Did Surgeons move to the new technology and the patients did not? Could be, but why would there be a further acceleration of domestic surgeon to ISRG in the current quarter? Something has to give. These two indicators should be correlated--not perfectly but logic and history has them with very high correlation.
My take on this is that new robotic surgeons start slowly with regards to case load. All these new general surgeons will take a while to ramp up their volumes. Meanwhile benign hysterectomy which was a key driver is off for now. It would be very interesting to find a way to determine how much robotic procedure volume compares to overall procedure volume for benign hysterectomy. Has robotics market share growth for benign hystercetcomy slowed or is just that the total volume of cases has slowed. In prostatectomy it is my impression that ISRG has not lost any share of prostatectomy procedures, only that delaying or forgoing surgery has gained popularity at least for now. Is this the same thing that's happening to benign hysterectomy? If so, is it temporary or permanent? I expect overall hysterectomy growth to moderate as non-surgery gains ground but robotic will continue to steal SHARE of SURGICAL market from both open and standard lap.
Unfortunately the recent volatility has brought all the short term traders to the board who try to profit by posting ridiculous lies and non events. It's a pain to filter through their #$%$ and find meaningful posts like this. Having worked on the trading floor of one of the largest exchanges I can tell you the majority of traders wouldn't have a clue as to the long term potential of what they're trading. If they were truly intelligent they would be on twitter and would have a following, but they're not which is why they invade these boards where we can't block their posts. I appreciate the analysis of all the intelligent posters and wish I had something to add. I'm in this sub $90, this is the future of surgery and unless there's some catastrophic event I see no reason for this not to continue higher over the long term.
In the conference call ISRG management indicated (I'm paraphrasing) that because of growth in benign hysterectomy slowed from what was expected, projections of needed capacity were skewed and resulted in a temporary drop in domestic system sales. This makes sense from the stand point of hospital administrators, it's not that they won't need new machines, they just won't need them immediately, like they thought they would. This resulted in a sudden (and temporary) downward jerk on the pipeline.