Intuitive Falls on OB/GYN Group Comments
Shares of robotic surgery system maker Intuitive Surgical Inc. fell Friday after the president of the American College of Obstetricians and Gynecologists discouraged the use of robotic systems in hysterectomies.
THE SPARK: In a statement published Thursday, Dr. James Breeden said vaginal surgery and laparoscopic hysterectomies are both preferable to procedures performed with robotic devices. He said that for routine hysterectomies, the vaginal method lets women leave the hospital just as quickly and costs much less, and laparoscopic "keyhole" procedures are also less invasive and costly.
Last month a Columbia University study found that robotic surgery adds at least $2,000 to the cost of a hysterectomy without improving outcomes.
"There is no good data proving that robotic hysterectomy is even as good as_let alone better_than existing, and far less costly, minimally invasive alternatives," Breeden said.
THE BIG PICTURE: Intuitive makes the da Vinci system that uses robotic arms, cameras and a remote control console to help doctors perform surgery with tiny incisions. It is used in gynecological procedures, heart surgeries, prostatectomies, urology procedures, and other operations. The Sunnyvale, Calif., company makes money by selling the systems and disposable instruments that must be replaced after each procedure.
The company said about 450,000 da Vinci procedures were performed in 2012, an increase of 25 percent from the previous year. Gynecology procedures are an important part of that growth.
Intuitive Surgical responded to Breeden's statement by saying the da Vinci system allows some women who otherwise would need an old-fashioned open hysterectomy — because of obesity, scarring or other complexities — to instead have a smaller operation.
THE ANALYSIS: Cantor Fitzgerald analyst Jeremy Feffer said he expects Intuitive Surgical shares to be volatile in the coming months, but he said Breeden's statement "breaks no new ground." Feffer wrote that da Vinci systems are often used in more difficult surgeries, and in those situations it compares well to other methods because patients appear to have shorter hospital stays and fewer complications. That justifies the higher price tag, he said.
Feffer maintained a "Buy" rating on da Vinci shares with a price target of $575.
Janney Capital Markets analyst Spencer Nam said younger surgeons who have been trained on the robotic devices prefer them to other methods, and many patients feel the same way.
"We believe that unless physicians can assure patients that they can consistently outperform the robots (which they will not do due to malpractice risk), robots will continue to replace humans," Nam wrote. He rates the shares "Buy" with a price target of $670.
SHARE ACTION: Intuitive Surgical shares declined $31.38, or 6.4 percent, to $458.51 in afternoon trading. The stock is down 14.6 percent since the Food and Drug Administration announced a probe into the da Vinci system in late February.