Specialist
Former executive at Intuitive Surgical Inc
Agenda
- Intuitive Surgical’s (NASDAQ: ISRG) Q3 2022 performance in the surgical instrument market, including Da Vinci volume rebound
- Da Vinci robot placements and sales force assessment
- Acquisitive strategy, highlighting M&A opportunities
- Competitive threat from Medtronic’s (NYSE: MDT) Hugo robot coming to market
- Innovation prospects for robotics platform and adjacent offerings
Questions
1.
What are some of the most important trends and drivers you’ve been following in the soft tissue robotic surgery market over the past 6-9 months or so that might better inform our discussion on Intuitive Surgical?
2.
Regarding your comment on the volume front, what do you believe were the underlying drivers behind the strong 20% procedural volume recovery that Intuitive reported in its Q3 2022 earnings call? The company also beat Wall Street estimates on gross placements of robots with 305 vs the expected 284. How much would you read into one strong quarter as we look to get a better gauge on overall volume strength and commercial performance going into 2023?
3.
As you noted, on the macro front we’ve seen acute staffing pressures, supply chain inefficiencies and whinging COVID-19 cases making for a particularly tricky operating environment for US health systems. How has Intuitive reacted or adjusted to these headwinds to mitigate the impact on product placements? Are there any levers the company can pull to help customers manage a softer capital placement horizon?
4.
To rephrase, we know staffing pressures, supply chain efficiencies and coronavirus cases have had an acute impact on US health systems in particular. Is there anything Intuitive can do to help customers manage this environment and mitigate any impact on the sales cycle?
5.
To what extent has this macro backdrop shifted maintenance or device conversion timelines for Intuitive? How much of an impact can minor fluctuations here have on instrument and accessory sales as well as some of the maintenance revenues?
6.
Are there any drawbacks or risks to Intuitive having so much inventory on hand if the volume environment more severely compresses? Could the company be left with a massive surplus of inventory? What are the puts and takes there?
7.
Intuitive estimates its TAM is 20 million procedures across the three platforms – Da Vinci, SP and the Ion. Could you lay out a positive and negative scenario analysis for the procedural TAM going forward?
8.
To the extent you can, what is Intuitive’s approximate relative penetration per procedural type across urology, gynaecology, general surgery and so on, particularly for the Da Vinci?
9.
What’s your assessment of the Ion robot’s value proposition? How is its approach to peripheral lung biopsy differentiated from those of other devices and therapeutic offerings on the market?
10.
How would you break out the addressable market opportunity for the Ion robot in minimally invasive peripheral lung biopsy? Could you put any numbers around the market potential or total procedure instalments for this offering?
11.
Do you have any colour on Intuitive’s relative penetration in cancer-related procedures? What potential is there for robotic surgery to take market share from non-surgical cancer treatment such as radiation?
12.
Which other areas do you think are most attractive for Intuitive to expand into ex-robotics, and why?
13.
Looking at the base business, what are your thoughts on Intuitive’s ability to carve out further market share in robotics surgery, particularly open surgery and laparoscopic surgery? How much incremental share do you think the company can gain in these areas and why?
14.
What are the drawbacks of waiting to move into lower-cost geographies? Is this something Intuitive could push down the road as it waits for the more premium markets to saturate?
15.
Given all we’ve discussed, what do you think is a realistic growth curve for Intuitive over the next 2-3 years in both the US and ex-US markets, respectively?
16.
Could you quantify a growth clip for each geography – US and ex-US?
17.
What’s your assessment of Medtronic’s Hugo robot, which we mentioned is approved in some parts of Europe and is expected to come to the US market over the next year or so? How would you compare the Hugo against the Da Vinci considering breadth of capabilities, innovation, pricing, etc?
18.
How do you assess Intuitive’s efforts in performance-guided surgery? How well-positioned is Intuitive to withstand the potential threat from smaller players such as Asensus Surgical, CMR and Titan Medical?
19.
How do you think Intuitive’s acquisitive strategy will evolve in 2023? Where might the company deploy capital given some of the things we’ve discussed – expanding its device portfolio or procedural indications, acquiring start-ups to boost innovation, etc?
20.
Is there anything that we have not touched on or that you’d like to reiterate that might be especially important to highlight about Intuitive Surgical?
