Surgical precision growth

Intuitive Surgical (Nasdaq: ISRG) helped pioneer the concept of robotic surgery. Its da Vinci machines — which generally cost $1 million to $2 million apiece — enable surgeons to perform more than 1 million minimally invasive surgical procedures (such as hysterectomies and prostatectomies) annually.

Intuitive has had much of this market to itself for two decades, allowing it to build up a global installed base of more than 5,600 systems. That’s important to its strategy: Once health care providers become trained to use the da Vinci, they’re resistant to switching.

The beauty of Intuitive’s model is that it makes most of its money off the disposable instruments and accessories needed for each procedure, as well as through service contracts, as these sport fatter profit margins. This razor-and-blade business model is a big reason why the company’s revenue and profits have grown like clockwork for years.

While 2020 is going to be a rough year, surgeries can’t be delayed indefinitely. Longer term, the demand for minimally invasive surgery should continue to grow, which plays right into Intuitive’s hands.

Intuitive’s balance sheet also is impressive. With $5.9 billion in cash and zero long-term debt, there’s no doubt the company can easily handle the shortterm disruption to its business. (The Motley Fool owns shares of and has recommended Intuitive Surgical.)