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Understanding Intuitive Surgical’s Geographical Profile

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An overview of Intuitive Surgical’s geographical profile

Intuitive Surgical (ISRG) has established geographical growth as one its major growth drivers after procedure growth. The company is the leader in robotic surgical systems, which enable advanced MIS (minimally invasive surgery) procedures with high precision and better outcomes.

The United States is the company’s largest market, generating around 71% of its total revenue of ~$2.4 billion in 2015. However, the markets outside of the United States have registered revenue growth of ~15% over the last three years compared to the fall of ~0.6% in the United States.

Intuitive Surgical is focused on expanding its international presence, mainly in Europe and Asia. Peer companies Medtronic (MDT), Stryker (SYK), and Abbott Laboratories (ABT) generated revenues of around 60%, 72%, and 31%, respectively, from the United States in 2015.

Investors can invest in the PowerShares Dynamic Large Cap Growth ETF (PWB) for diversified exposure to ISRG. It accounts for around 1.5% of PWB’s total holdings.

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Geographical segmentation of procedure growth

In 2015, the company’s overall procedure volume improved, since more general surgery procedures were performed in the United States and more urological procedures were performed around the world.

The company’s da Vinci surgical systems were used to perform ~652,000 procedures in 2015 compared to ~570,000 procedures in 2014.

In 2015, the number of US procedures rose by ~11% to 499,000 from ~449,000 in 2014. The specialty area that reported the highest procedure volume in the United States was gynecology, which saw a rise of ~1.3%, followed by general surgery, which was the fastest-growing US specialty area at a growth rate of ~31%.

The number of urology procedures also rose at a rate of ~12%, second to general surgery procedures. These procedures are expected to contribute significantly to the company’s future growth.

Outside of the United States, procedure volume witnessed a rise of approximately 26.4% in 2015, to ~153,000 from 121,000 in 2014. 2015 procedure volume represented a higher number of Asian procedures, primarily in Japan, China, and South Korea.

International procedure growth was primarily driven by the da Vinci Prostatectomy (or dVP) along with contributions from general surgery, partial nephrectomy, and gynecologic oncology procedures. In the recent quarter, the United Kingdom and Germany exhibited solid revenue growth.

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