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Controversy Over Surgical Robotics Heats Up

Thirteen years ago Intuitive Surgical's da Vinci robot was hailed as a revolution in the operating room, triggering a hot IPO and an even hotter stock. At its peak, the stock traded at nearly $600, versus around $500 now.

But with first quarter earnings reported Thursday, critics were scrutinizing the numbers for any signs of weakness.

First quarter revenue, reported after Thursday's market close, beat on the top and bottom lines, but there was a hitch: Procedure growth of 18 percent trailed analyst expectations of around 21 percent.

Procedure growth is a critical metric—one closely watched by investors looking for any sign that the mounting controversy and legal issues over injuries and deaths allegedly related to da Vinci procedures are affecting the company's growth.

Sales growth in recent quarters has slowed, but at 23 percent in each of the last two quarters is robust by most standards. Driving gains in recent quarters, in part, has been increasing use of the da Vinci for hysterectomies and other gynecological procedures.

"We are pleased with our first quarter revenue and earnings growth. Despite a concerted effort by vocal critics of robotic surgery, support remains strong among patients, surgeons and hospitals," CEO Gary Guthart said in the company's earnings release. "Da Vinci Surgery has clinically proven benefits in offering a minimally invasive option to a broader group of patients than traditional technologies."

But as more reports of complications have come to light, the da Vinci debate is heating up.

In late February, the FDA launched a probe calling for voluntary information from hospitals and surgeons using the da Vinci, in an effort to determine "if the rise in reports may be a true reflection of problems." Speaking at an investor meeting in early March, the company said, "The relationship we have with the FDA has been a long and very strong relationship."

In mid-March the American Congress of Obstetricians and and Gynecologists issued a statement, warning that "studies show there is a learning curve with new surgical technologies, during which there is an increased complication rate."And five days later, the Massachusetts Board of Registration in Medicine weighed in with an advisory citing an "increasing number of reports of patient complications associated with robot-assisted surgery."

In a statement to CNBC, Intuitive said: "In any definitive treatment for complex disease, such as surgery of the cancerous prostate, heart, or other major organs there are risks of complications. Robotic surgery has proven benefits in reducing the risk and complications associated with open surgical procedures thereby extending the benefits of minimally invasive surgery to a broader population of patients. Overall, adverse event rates are very low. Da Vinci surgery has been shown to be safer than the open surgery alternatives in numerous independent large scale, peer reviewed studies."

CNBC.com's Da Vinci Debate series:
Part 1: Controversy Over Surgical Robotics Heats Up
Part 2: Patients Scarred After Robotic Surgery
Part 3: Counting the Problems of Robot-Assisted Surgery
Part 4: Marketing Is Key to Surgical Robot's Success

(Related Article: Robotic Surgery: Growing Sales, but Growing Concerns)

—By CNBC's Herb Greenberg; Follow him on Twitter:@herbgreenberg and Google

Subscribe to Herb at http://www.facebook.com/herb.greenberg

Questions? Comments? Write to HerbOnTheStreet@cnbc.com


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