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Here's the Affirmation iRobot Has Been Waiting For

Steve is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

For as long as most of us can remember, the world has dreamed of the life-changing potential held in the field of robotics.  To be fair, robots today certainly make our lives easier by performing time-consuming or otherwise difficult tasks. 

Boston Dynamics' LS3 robot, for instance, can carry a 400-pound payload up to 20 miles across nearly any terrain.  Unmanned aerial vehicles like AeroVironment's Raven and Textron's Shadow can also quietly patrol our skies without putting soldiers' lives at risk. And commercial products from iRobot (NASDAQ: IRBT) help clean our gutters, maintain our pools, and vacuum our floors. 

Heck, even Amazon.com (NASDAQ: AMZN) agreed to spend $775 million last year to acquire Kiva Systems for its orange army of shelf-carrying, warehouse-optimizing bots.  In doing so, the web giant not only increased its operational efficiency, but also reduced the physical burden on its fulfillment center workers.

Even so, while many of today's robots are incredibly useful, their specialized purposes fall short of the vision many of us hold of intelligent, Jetson-esque automatons, able to complete a multitude of tasks without significant human intervention. 

Out of the lab

You can imagine my excitement, then, when iRobot debuted its Ava platform at CES more than two years ago.  At the time, I couldn't help but drool over the seemingly infinite number of possibilities the company had to monetize the system.  

After all, by enabling app-ready, tablet-controlled, self-navigating robots, Ava arguably represented the world's first practical solution for a real world robotic mobility platform.  Unfortunately, the system was still only a prototype and, for more than a year, merely served as a tantalizing reminder of better things to come.  

Finally, however, iRobot announced a partnership last July with InTouch Health to unveil the world's first medical telepresence robot, based on the Ava platform and dubbed RP-VITA.  The caveat?  Without the FDA's approval, RP-VITA would never be allowed to autonomously roam the halls of any reputable hospital.  While management assured investors they were actively working to clear the regulatory hurdle, we were once again forced to hurry up and wait for more significant news.

Into the fray

Now, nearly six months later, the FDA has finally given hospitals the go-ahead to use RP-VITA for "telemedicine consults inclusive of active patient monitoring in high-acuity environments where immediate clinical action may be required," according to a press release by InTouch.  Put another way, as InTouch CEO Yulun Wang stated, "This is the first FDA clearance for a navigating robot.  It's approved for emergency use, and will be used in life and death situations before other uses. Just as early cell phones were used in emergencies before becoming ubiquitous." 

Though it may seem overzealous to compare the potential of a specialized system like RP-VITA to a pervasive technology like cell phones, Wang's comments highlight the fact hospitals could be just the perfect stepping stone for the platform to expand its reach. 

In addition, while it remains to be seen how quickly hospitals will adopt the system, it should be relatively affordable at around $6,000 per month through a leasing model.  This may sound expensive at first glance, but it looks like pocket change next to the up-front and recurring costs for expensive robotic surgical systems like Intuitive Surgical's da Vinci robots or MAKO Surgical's (NASDAQ: MAKO) RIO platform, both of which can run well into the seven-figure range.  While these robotic solutions from Intuitive and MAKO serve very different niches than iRobot's RP-VITA, their continued adoption proves hospitals are able to find necessary funding should any given value proposition prove attractive.

Unlike the up-and-coming MAKO Surgical, however, iRobot is already solidly profitable thanks to its well-established commercial segment and shouldn't need to worry as much about chunky revenue negatively affecting its quarterly results.

Legislative challenges

Another significant obstacle to widespread adoption of RP-VITA lies in current archaic legal barriers that prevent reimbursement for and licensure of telemedicine services.  Luckily, according to a release last week from InTouch Health, the U.S House of Representatives is on the verge of approving legislation in the form of the Telehealth Promotion Act of 2012 (H.R. 6719) which, if enacted, "would extend the benefits of telemedicine to nearly 75 million Americans by increasing access through Medicare, Medicaid, the VA, Children’s Health Insurance Program, and other federal programs."

With these legal issues out of the way, iRobot will find it that much easier to reinforce RP-VITA's return on investment.

Foolish bottom line

Given RP-VITA's reasonable cost, recent FDA approval, and positive changes in legislation, iRobot should have little trouble convincing the medical world it will be better off by using its groundbreaking robotic telepresence system.  Even so, investors should be cautious not to expect RP-VITA to immediately move iRobot's revenue needle.  Instead, we should think of it as a necessary first step to showing the world just how effective products built on iRobot's Ava platform can be.

As iRobot CEO Colin Angle said last year, "If we can survive and be cleared to operate in that most challenging environment, that will open the door to many other environments." When that happens, patient iRobot shareholders should expect to be handsomely rewarded.

Steve Symington owns shares of iRobot and MAKO Surgical . The Motley Fool recommends Amazon.com, iRobot , and MAKO Surgical . The Motley Fool owns shares of Amazon.com and MAKO Surgical . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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