So, while the uncertain economic environment surrounding domestic health care may be having significant negative ramifications that prevent Intuitive from maintaining its incredible growth rates over the short term, it’s difficult to simply project those negative effects over to MAKO Surgical’s comparatively young business.
Intuitive’s results, no matter how bad they might seem on the surface, will still, in all likelihood, show that hospitals have at least some money reserved for these kinds of capital expenditures. If MAKO is properly focusing its efforts on the right hospitals, there’s no reason it shouldn’t be able to put up solid system sales numbers a few weeks from now.
In addition, Intuitive’s da Vinci robots have been the subject of much criticism, as the company defends itself from more than 20 civil lawsuits alleging negligence in properly training the surgeons who use its robots. Though Intuitive recently won the first of those lawsuits after it was proven that the company was not responsible for the damages, it’s hard to deny that the residual effects of that uncertainty could still be hurting Intuitive’s sales.
In the meantime, MAKO’s recent legal wranglings this year have consisted of not only legally neutralizing its patent-violating competition, but also successfully defending itself against meritless shareholder lawsuits stemming from the previous precipitous drop in its share price.
And, while it’s tempting to say Intuitive’s legal woes have tainted the robotic surgery market as a whole, MAKO has also been showing off a plethora of recent clinical research that touts the improved accuracy and decreased pain levels that can be achieved using its own robotic system in assisting orthopedic surgeries.
Foolish takeaway
Now, don’t get me wrong; this certainly doesn’t guarantee MAKO will post a fantastic quarter in stark contrast to Intuitive Surgical’s results.
I’m just saying that investors need to remember that, while Intuitive and MAKO are both involved in robotic surgery and both rely on hospital spending to keep their lights on, it doesn’t mean that Intuitive’s troubles directly dictate what will happen to MAKO Surgical’s business.
That said, even if MAKO does post another bad quarter as a result of the unpredictable economic climate, they still had $71 million in cash with no debt on their balance sheet at the end of March. If Sean’s assertions about Obamacare uncertainties lasting through the first or second quarter of next year are correct, then MAKO’s gradually slowing cash burn should afford them the ability to sit tight until things pick up again.
The article Does Intuitive Surgical’s Pain Spell Doom for MAKO? originally appeared on Fool.com and is written by Steve Symington.
Fool contributor Steve Symington owns shares of MAKO Surgical. The Motley Fool recommends Intuitive Surgical and MAKO Surgical. The Motley Fool owns shares of Intuitive Surgical.
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