Intuitive Reclaims Defense Roots with $430M Deal

The surgical robotics pioneer recently won a five-year contract with the Department of Defense and saw a senior executive sell of the majority of his shares in the company.

Brian Buntz

Intuitive Surgical's flagship da Vinci robot is the culmination of research in the late 1980s that aimed to put surgical robots on the battlefield. Originally the brainchild of researchers at SRI International (Menlo Park, CA), the technology ultimately would find more interest from hospitals than the military.

Now, however, the company has won a Department of Defense (DoD) deal that could be worth up to $430 million. Beating out 34 other bidders, the contract would facilitate putting its da Vinci robot system into DoD hospitals.

A Leerink Partners analyst Richard Newitter believes that the five-year deal could increase the company's sales this year by 3-4%. Newitter notes, however, that the DoD is not committed to award Intuitive the full $430 million, but adds that "the contract should help streamline the purchase process."

The contract covers surgical robotic systems as well as related instruments and accessories.

The company inked a smaller military deal in September 2012, for $33.9 million, with the Navy covering disposable and reusable instruments. In March 2014, Intuitive Surgical announced a similar deal with Veteran Affairs.

In unrelated news, Salvatore Brogna, Intuitive Surgical's senior vice president, product development, sold off 1375 shares of the company's stock on March 2. The transaction was valued at $688,847.50. Brogna still owns 685 shares of Intuitive stock, which is worth roughly $343,171.30.

The company's stock traded down by 1.67% on Wednesday, to $500.56.

Brian Buntz is the editor-in-chief of MPMN and Qmed. Follow him on Twitter at @brian_buntz.

Like what you're reading? Subscribe to our daily e-newsletter.