New Changes in the Surgical Robot Market: How Used Equipment is Reshaping the Competitive Landscape

The latest financial report from Intuitive Surgical reveals an interesting business move - a large number of used da Vinci Xi systems are flowing into cost-sensitive markets.

What is the logic behind it? When hospitals upgrade to the new da Vinci 5 model, the outdated Xi devices become highly sought after. In Q3 alone, 141 old devices were used by hospitals as trade-ins for upgrades. These refurbished second-hand robots have a lower cost and serve as the key to outpatient surgery centers (ASC) and entry into emerging markets.

What are the market pain points? The reimbursement for surgical costs by the U.S. ASC is only a small portion of the hospital's expenses, making it unaffordable for them to purchase brand new machines at full price. Capital investment, rather than the cost of surgical tools, is the real bottleneck. The second-hand Xi addresses this issue - they are compatible with new systems, allowing doctors to switch seamlessly, and IDN (Integrated Delivery Network) can redirect lower complexity surgeries to outpatient settings, improving the utilization of high-end equipment.

International Prospects? China, Japan, and parts of the European market are facing budget pressures, and second-hand equipment has become a stepping stone to access the market. The new machines target the educational market, while the old machines support real business operations – this is a clever layered strategy.

Industry Trends: Medtronic's ROSA robot performed strongly in Q3, with over 50% of knee replacements in US hospitals equipped with ROSA being robot-assisted. Stereotaxis's next-generation GenesisX has received EU certification and is expected to be approved by the US FDA this year.

Valuation Highlights: The current PE of Intuitive Surgical is 61 times, which is higher than the industry average but lower than the five-year median of 71.5 times, and a 17.3% profit growth is expected in 2025.