Robotics and automation are everywhere – they permeate every industry we can imagine. As this technology evolves, more and more companies are coming onto the scene offering specialized technology that serves a particular sector. We’ve seen a boom in medical robotics, in particular, which is now running neck and neck with industrial automation. As a sector, medical robotics has the potential to be a leader in the entire automation space.

As we saw with Johnson & Johnson’s JNJ acquisition of Auris Health, surgical robotics are becoming more integrated in mainstream health care. In a few years, it will be commonplace to undergo surgery performed by a robot. The top human surgeons in the world share a specific weakness: a limited amount of manual dexterity, which has fueled the common phrase “inoperable.” But with the advancements in surgical robotics, the word “inoperable” may very well become obsolete. Robots do not have the same manual dexterity limitations as human surgeons.

If your life was on the line, would you choose a human to perform your surgery or a robot with an infinitesimally small margin of error? As more and more healthcare systems adopt these technologies, we’ll see minimized errors and greater precision with procedures. According to Tractica Research, patients who have robotic surgery can expect a reduction in hospital stay by about half, reducing hospital costs by approximately 33%.

For investors, this is a bright spot in the market. There are several companies that are worth considering in the surgical robotic sector:

Corindus Vascular Robotics CVRS

Founded in 2002, this robotics company develops remote control and robotics to move coronary guidewires and balloon/stent catheters. The company’s CorPath® System was the first FDA-cleared medical device to bring robotic precision to percutaneous coronary and vascular procedures.

Just recently, Corindus applied with the FDA for approval of its CorPath GRX robotic surgical platform for use in neurovascular interventions. This expanded use-case has the potential to open a whole new market for sales. The stock has also nearly doubled in price since the end of December 2018, and at $1.40, it’s still a cheap buy.

Transenterix TRXC

Focused on laparoscopy, Transenterix’s Senhance Surgical System has achieved quick adoption in the medical community. Designed to keep time and cost-per-procedure similar to manual laparoscopy, its technology is a compelling upgrade for hospital systems. It is currently available in the Americas, Germany, Italy, France, Japan and Taiwan.

TRXC has dipped in the last few months, a result of a Q4 2018 earnings report that missed analysts’ expectations. But this news buried the important stats: the company has experienced year over year revenue growth of 238.9% and was awarded approval by the FDA for additional 5mm instruments.

Intuitive Surgical ISRG

Intuitive Surgical has long been a favorite in surgical robotics investments. Since the beginning of 2019, the stock has risen 12%. Since March 2018, the stock is up 18%.

The company’s da Vinci surgical robotic system, which was prototyped in 1997 and received initial FDA approval in 2000, has revolutionized laparoscopic surgery and has added the ability for medical professionals to accomplish procedures remotely. This means a doctor in the U.S. can perform a real-time surgery on a patient in any other location in the world. The evolution of Intuitive Surgical has been remarkable, not to mention the total return of ISRG being 6855.1% since IPO in 2000.

Globus Medical GMED

Globus Medical develops musculoskeletal solutions, with an exclusive focus on advancing spinal surgery. The stock has surged in recent months, buoyed by a strong fourth quarter in 2018 and higher projections for the year ahead.

Last year, Globus introduced the ELSA-ATP System, which the company describes as an expandable lateral system designed to provide access to the lumbar spine anterior to the psoas muscle. This technology is important because it will reduce complications associated with lateral procedures.

Accuray ARAY

Accuray develops technologies for treating cancer. The company’s CyberKnife technology first debuted in 2005, and has since become a leader in cancer treatments. A fully robotic radiation delivery system, CyberKnife treats tumors and other targets, precisely delivering radiation anywhere in the body. As such, there is a strong demand for the technology, which was reflected in Accuray’s Q4 2018 earnings report. Since the beginning of the year, the stock is up 32%.

With a recent release of the Volo Optimizer software upgrade, the future projections for CyberKnife are a bright spot for Accuray.

Brian Gahsman is portfolio manager of the AlphaCentric Global Innovations Fund (GNXIX).