Intuitive Surgical returns to the battlefield with $430M DOD contract

The da Vinci System for robotic surgery that is the backbone of Intuitive Surgical ($ISRG) was originally developed as a prototype for remote battlefield surgery by Stanford University researchers under contract for the U.S. Army. Now the med tech company is returning to its military roots with a massive contract worth up to $430 million with the Defense Logistics Agency, which is part of the U.S. Department of Defense (DOD).

The 5-year contract is for surgical robotic systems, instruments, accessories and upgrades. It's slated to be completed by Feb. 23, 2020. The robotic surgical technology is likely destined for military hospitals used across the service arms including the Army, Navy, Air Force, Marine Corps and federal civilian agencies.

The sizable contract demonstrates a certain level of acceptance for robotic surgery, which has remained somewhat controversial since any errors in the system or its use can have major implications for the efficacy and safety of surgical procedures. The FDA recently announced that it would hold a two-day public workshop in late July to address the "challenges and opportunities" raised by robotic surgery.

In Sept. 2012, Intuitive garnered a $33.9 million contract from the Navy for disposable and reusable instruments for use with the da Vinci Surgical Systems.

It's a sizable deal for Intuitive, which had $605 million in fourth-quarter revenue--a gain of 5% over the same quarter a year earlier. The company's share price gapped up on the news to as high as about $510 from around $502 in early trading on March 3, but then settled to around $505 in trading on the morning of March 4.

- here is the DOD contract announcement

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