Hargrove, who is the CEO definitively (for those who were wondering), had a few compelling comments which I think we can all appreciate
-He discussed the actual size of the market, which I personally underestimated
- There are 6,000 hospitals in the US
- 2,000 currently have a da Vinci unit & 4,000 are underserved and can’t afford one
- As many if not more ambulatory surgery center placements in the US
The implications for these numbers is where the value proposition really is. Today’s market cap for ISRG is $14 billion. Assuming all goes according to plan and the milestones are achieved, taking 10% of Intuitive’s market cap should be simple. Not to mention all of the negative publicity now hitting the mainstream media regarding the class-action lawsuit against Intuitive (I saw a feature on CNN a couple of nights ago). Now consider the additional 4,000 hospitals in the US that were previously underserved because they couldn’t afford a da Vinci unit. And consider the 6,000+ ambulatory surgical centers that Titan can market the SPORT to.
So, say they sell 1,000 SPORT units year 1. Factor in life-time revenue of $5 million / unit and apply a standard industry metric, I would give them a $1 billion valuation all day long. Conservatively.
When I look big picture, compare the Surgibot and the da Vinci SP to SPORT, I would say that Titan has 2 years from when SPORT goes to market before anyone else can compete
Back to Hargrove…
-Referred to the current market opportunity as the “perfect storm”
- Affordable Care Act (“Obamacare” now in full-motion)
- People currently have a lack of healthcare options
-Told an anecdote about a case study with a group purchasing organization that bought a da Vinci unit for $2.1 million
- Once it was installed in the surgical room, it was there to stay – it’s not mobile
- The year before, the room did 4 procedures a day, 260 workdays a year, or 1,040 procedures (94% efficiency)
- The year after installation, the room only did 160 procedures
- That’s a displacement of 880 patients
In my opinion, Titan is developing a very exciting Product Line.
- Drive future revenue
- Already being planned
- Had a discussion about military applications (John is a West Point man and was recently at the Pentagon discussing Titan technology). Also discussed the possible application to deploy with MASH units
- Hepatic feedback
- Adding an arm
- Internet I/P
I expect this to have piqued the interest of many, it certainly got my attention.
