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| Intuitive's current da Vinci model--Courtesy of Intuitive Surgical |
Investors drove Intuitive Surgical's ($ISRG) stock price more than 8% higher in early trading April 1 in response to the U.S. rollout of yet another iteration of its da Vinci surgical robot--a bid to expand its use and counter slumping sales.
The Sunnyvale, CA, company said it gained FDA clearance for its da Vinci Xi surgical system, which is designed to replace large-incision abdominal surgeries with a minimally invasive option. Intuitive appears to be making a bid for customers who have earlier versions of da Vinci and might want an update. It notes in the approval release that da Vinci Xi "has broader capabilities than prior generations" of the product and it can be used for "a wide spectrum of minimally invasive surgical procedures."
The company's stock traded at $476.08 in late-morning trading, up more than 8.7% in the wake of the announcement.
With the U.S. clearance in hand, Intuitive said it will now pursue clearances in other global markets for da Vinci Xi. It is looking to reach a wide market with this latest update, which features improvements including a greater range of motion and a new overhead instrument arm that can help access the anatomy from virtually any position, according to the company.
Intuitive's 2013 fourth-quarter revenue reached $576 million, a 5% drop compared to $609 million generated over the same period in 2012. Net income increased to $166.2 million, however, up from $156.8 million, as Intuitive boosted procedures with the device by 12%, even as sales dipped by double digits during the quarter.
Intuitive has faced safety issues with da Vinci, but the company blamed changing hospital spending priorities and costs relating to implementing the Affordable Care Act for the revenue challenges. To overcome this, Intuitive said it is focusing hard this year on broadening the use of da Vinci in general surgery and expanding its international market reach in Europe and Japan.
Safety issues may continue to dog the company in the coming months, however. The City of Birmingham Relief and Retirement System recently filed a federal shareholder lawsuit against Intuitive, accusing its leadership of underreporting complications caused by its da Vinci system, as well as hiding at least three voluntary recalls that warned about a malfunctioning tip cover that resulted in the burning of patients' internal tissue in some cases.
- read the release