ISRG

Intuitive Surgical stock came into Thursday with strong recent momentum, then slipped about 2% after the market had its first clean look at Q3 2026 numbers. The initial reaction focused on the headline gap between rich expectations and reality. The company delivered roughly US$3.0b in quarterly revenue and about US$1.50 in basic earnings per share, solid figures for a surgical robotics leader but less thrilling next to a P/E multiple above 50x. Short-term traders are fixated on that compression. Long-term holders are asking a different question: Does a business with multi-year earnings growth and a quarter built on 22% top line expansion still justify that kind of premium price tag? Love Intuitive Surgical's 22% revenue expansion but worried about paying a P/E above 50x for that kind of growth profile? Consider a screener focused on robust growth paired with sturdier valuation support through our 33 high quality undervalued stocks. - Revenue (Q3 2026 vs. Q3 2025): US$3,048.7m vs. US$2,505.1m (up about 22%) - Net Income, Excl. Extra Items (Q3 2026 vs. Q3 2025): US$522.8m vs. US$704.4m (decline of about 26%) - Basic EPS (Q3 2026 vs. Q3 2025): US$1.50 vs. US$1.98 (decline of about 24%) - Trailing 12-Month Net Profit Margin (Q3 2026 vs. prior year): 25.5% vs. 28.6% (compressed by about 3.1 percentage points) Ask Charlie what Intuitive Surgical's new pricing means for margins. The bullish story around Intuitive Surgical hinges on using procedures and installed base growth to keep deepening its ecosystem. "Bullish analysts expect Intuitive Surgical to use global procedure growth, a larger installed base, and high recurring revenue to keep expanding its da Vinci and Ion ecosystems over time." Q3 hits key milestones on that front. Procedures grew in the mid-teens, Ion cases climbed faster, and the installed base moved above 13,200 systems. Recurring streams made up 84% of revenue, which is high for a medical technology platform. At the same time, trailing net margin compressed and non GAAP profitability relied partly on a tariff refund and aggressive buybacks. The ecosystem expansion is working, while the margin side of the thesis is under more pressure. Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there. Critics argue Intuitive Surgical is starting to show the strain of competition and policy shifts on its economics. "Bearish analysts expect Intuitive Surgical to experience sustained margin pressure as pricing competition, policy headwinds and new robotic entrants compress returns on its growing installed base." Q3 margins held up on a non GAAP basis, yet the trailing net profit margin slipped from 28.6% to 25.5% and required help from a tariff refund. Management also cut full year procedure growth expectations to a range of 14 to 15% and flagged deliberate I&A price cuts plus China reductions from late 2026. That combination points to early confirmation of the margin pressure concern, rather than a clean refutation. Intuitive Surgical just reminded investors that a strong operating engine can still meet valuation friction. The real opportunity is spotting companies that could be undervalued before the market closes the gap. - Company 1 - 23% below our estimate - sells grid testing gear utilities adopt as they upgrade networks for modern electrification demands. - Company 2 - 50% below our estimate - expands a dense, app-driven coffee footprint that depends on turning heavy delivery and rent spending into healthier store economics. - Company 3 - 40% below our estimate - builds niche deposit verticals and payments technology intended to convert heavier tech and branch spending into stronger fee income. That is three of the list. See the full list of 33 companies trading below our fair value estimates → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ISRG. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

- Interested in Intuitive Surgical, Inc.? Here are five stocks we like better. - Strong third-quarter growth: Revenue rose 22% to just over $3 billion, while non-GAAP EPS increased 25% to $3. Total da Vinci and Ion procedures grew 15%, and system placements rose 28% year over year. - International expansion and newer platforms drove demand: da Vinci 5 and SP systems accounted for 65% of global da Vinci placements, while SP procedures increased 55% and Ion procedures rose 31%. Europe placements grew 83% year over year. - Pricing changes may pressure near-term revenue per procedure: Intuitive expects instruments and accessories revenue per procedure to decline roughly 3% to 5% once pricing actions and China policy changes are fully implemented, aiming to encourage broader adoption of robotic surgery. - This AI ETF Is Missing the Biggest AI Winners Intuitive Surgical (NASDAQ:ISRG) reported third-quarter 2026 revenue growth of 22% to just over $3 billion as procedure growth, system placements and adoption of newer platforms supported results. The company said 84% of quarterly revenue was recurring revenue, while non-GAAP earnings per share rose 25% to $3. Total procedures across the da Vinci and Ion platforms increased 15% from a year earlier. da Vinci procedures grew 14%, including 10% growth in the United States and 20% growth outside the U.S., while Ion procedures increased 31%. Intuitive ended the quarter with more than 13,200 da Vinci and Ion systems installed worldwide. → Berkshire Just Backed This Little-Known Stock—Should You Chase It? - Why Intuitive Surgical's Strong Quarter Still Spooked Investors Chief Executive Officer Dave Rosa said nearly 7,000 customers in more than 70 countries performed da Vinci procedures during the quarter at a rate exceeding 10,000 procedures per day. He described demand as broad-based across the company's multi-port, single-port and Ion platforms. Intuitive placed 546 da Vinci systems during the third quarter, up 28% from 427 systems a year earlier. Placements included 315 da Vinci 5 systems, 87 Xi systems, 65 XiR systems, 42 SP systems and 37 X systems. → These 3 Green Stocks Have a Growth Story That Goes Far Beyond Washington - Intuitive Surgical's Selloff Sets Up a 30% Rebound Opportunity U.S. placements rose 27% to 335 systems, while placements outside the U.S. increased 29% to 211 systems. Europe accounted for 115 placements, up 83% from the prior-year period, while Asia placements increased 30% to 78 systems. The company said da Vinci 5 and SP represented 65% of global da Vinci placements. Intuitive exited the quarter with more than 2,000 da Vinci 5 systems installed globally, and more than 18,000 surgeons have used the platform since its launch. → Broadcom's CEO Sees Years of AI Demand But Warns of a Bigger Threat to the Boom Rosa said the XiR platform has drawn interest in the U.S. and internationally because customers can use its capabilities and cost profile to build procedure-focused programs. Intuitive installed 18 systems in U.S. ambulatory surgery centers during the quarter, including 15 XiR systems. Chief Financial Officer Jamie Samath said the company's penetration of the ASC market remains low, while the market represents just under 10% of U.S. soft-tissue surgery volumes and is growing. Intuitive also placed a record 42 SP systems, including 21 in the U.S. and 12 in Korea. SP procedure growth was 55%, driven by 50% growth in the U.S. and 40% growth in Korea. The company had 487 SP systems installed across 27 countries at quarter-end. For the Ion robotic bronchoscopy platform, Intuitive placed 56 systems, compared with 50 a year earlier. Rosa said the company recently announced plans for an Ion manufacturing facility in Penang, Malaysia, expected to begin operations in 2028. Intuitive also received reimbursement for Ion procedures in Korea during the quarter. Intuitive announced pricing actions intended to broaden adoption in high-volume benign procedures where cost can constrain use of robotic surgery. Samath said the changes, along with a policy-driven reduction in China, are expected to reduce da Vinci instruments and accessories revenue per procedure by approximately 3% to 5% on a constant-mix basis once fully implemented. Beginning in the first half of 2027, Intuitive plans to extend the usable life of a subset of core EndoWrist instruments on its fourth- and fifth-generation platforms and introduce volume-based pricing. The company said the extended-use program requires U.S. Food and Drug Administration 510(k) clearance, which is in process. In China, changes to charge-code policy are expected to result in a significant reduction in instruments and accessories prices beginning in November. Samath said the pricing actions will roll out progressively by country, with the company not expecting the full impact until the end of 2027. "We believe broader adoption creates more long-term value than near-term revenue per procedure," Samath said. He added that Intuitive expects lower customer costs to create elasticity in high-volume benign procedures, though the benefit would build over time rather than immediately. Third-quarter instruments and accessories revenue grew 18% to $1.8 billion. da Vinci instruments and accessories revenue per procedure was approximately $1,860, compared with $1,800 a year earlier, reflecting higher SP procedure volume and da Vinci 5-specific instruments and accessories, partly offset by procedure mix. Non-GAAP operating margin was 42% of revenue, or 41% excluding a one-time $28 million pretax refund of previously paid tariffs. Non-GAAP gross margin was 69.9%, or 68.9% excluding the tariff refund, compared with 68% in the prior-year quarter. GAAP net income was $523 million, or $1.49 per share, compared with $704 million, or $1.95 per share, a year earlier. The results included the impact of a $450 million litigation settlement related to a class-action lawsuit involving third-party remanufacturing of da Vinci instruments and third-party servicing of da Vinci systems. Rosa said the no-fault settlement, which remains subject to court approval, provides certainty for customers and Intuitive while preserving the company's ability to maintain the safety, quality and security of its products. The company does not expect a court decision until 2027. Intuitive ended the quarter with $6.8 billion in cash and investments, down from $8.6 billion in the prior quarter. Operating cash flow was more than offset by $2.9 billion of share repurchases at an average price of $377 per share and $113 million in capital expenditures. For 2026, Intuitive narrowed its forecast for da Vinci procedure growth to 14% to 15%, with an expectation toward the midpoint. The company also updated its non-GAAP gross-margin outlook to 68.7% to 69.3% of revenue and maintained its expectation for non-GAAP operating expense growth of 11% to 13%. Chief Medical Officer Dr. Jamie Wong highlighted the Benign COMPARE study, a meta-analysis published in Annals of Surgery Open that examined outcomes from 366 studies across 32 countries. The analysis included approximately 1.5 million da Vinci patients, 10.7 million laparoscopic patients and 1.7 million open-surgery patients. According to Wong, da Vinci procedures were associated with 54% lower odds of conversion to open surgery compared with laparoscopy across the studied benign procedures. The analysis also found 13% lower odds of blood transfusion and shorter hospital stays compared with laparoscopic procedures, while 30-day complications, readmissions and mortality were comparable. Average da Vinci operative times were about 24 minutes longer. Intuitive also cited advances across its product pipeline, including FDA clearance for surgeon-initiated tool eject and multi-arm targeting on da Vinci 5, as well as an integrated version of the da Vinci 5 handheld endoscope. The company submitted a cavitational ultrasonic aspirator for potential use in liver and pancreas procedures and received FDA clearance for a non-commercial next-generation flexible robotic endoscope system for gastrointestinal use. Rosa said Intuitive is continuing to develop digital and artificial-intelligence capabilities, including voice-activated controls and automated fourth-arm control. He said AI-controlled surgical motion remains early in development and will need to earn the confidence of regulators, surgeons, care teams and patients before broad deployment. Intuitive Surgical, Inc develops and manufactures robotic-assisted systems and related technologies for minimally invasive surgery. Its products are designed to help surgeons perform procedures through small incisions while providing enhanced visualization, precision and control. The company's primary platform is the da Vinci Surgical System, which is used across a range of specialties, including urology, gynecology, general surgery, cardiothoracic surgery and other procedures. The company also offers the Ion endoluminal system, which is designed to support minimally invasive lung biopsy procedures. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Intuitive Surgical (ISRG) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

This article first appeared on GuruFocus. - Revenue: Grew 22% to just over $3 billion; 84% was recurring revenue. - Systems Revenue: Grew 30% to $769 million. - Service Revenue: Increased 22% to $482 million. - Instrument & Accessories (I&A) Revenue: Grew 18% to $1.8 billion. - Da Vinci I&A Revenue per Procedure: Approximately $1,860 vs. $1,800 last year. - Non-GAAP Gross Margin: 69.9% (68.9% excluding $28 million one-time tariff refund benefit), up from 68% in Q3 last year. - Non-GAAP Operating Margin: 42% of revenue (41% excluding one-time tariff refund). - Non-GAAP Operating Expenses: Increased 18% year-over-year. - Non-GAAP EPS: Grew 25% to $3 per share. - GAAP Net Income: $523 million or $1.49 per share, vs. $704 million or $1.95 per share in Q3 last year (reflecting $450 million litigation settlement). - Non-GAAP Other Income: $75 million, down from $83 million last quarter. - Non-GAAP Effective Tax Rate: 21.4%. - Cash and Investments: $6.8 billion, down from $8.6 billion last quarter. - Operating Cash Flow: More than offset by $2.9 billion in stock repurchases (average price $377/share) and $113 million in capital expenditures. - Total Procedures: Grew 15% (da Vinci +14%, Ion +31%). - Da Vinci Procedures: +10% in US, +20% outside US. - Installed Base: More than 13,200 da Vinci and Ion systems worldwide; installed base grew 13%; average system utilization up 2%. - Da Vinci System Placements: 546 systems, up 28% (315 da Vinci 5, 87 Xi, 65 XIR, 42 SP, 37 X); net placements grew 40%. - SP Systems: Record 42 placements; installed base of 487 systems across 27 countries, up 42% year-over-year. - Ion Systems: 56 placements vs. 50 last year. - Average Selling Price (Purchased da Vinci Systems): Approximately $1.6 million, flat to last year. - Pricing Actions: Expected to reduce da Vinci I&A revenue per procedure by approximately 3%5% on a mix-constant basis once fully implemented. - Is ISRG fairly valued? Test your thesis with our free DCF calculator. Release Date: October 20, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Total procedures grew 15%, driven by 14% growth in da Vinci procedures and 31% growth in Ion procedures. - Revenue grew 22% to over $3 billion, with 84% recurring revenue, and non-GAAP EPS grew 25% to $3 per share. - Da Vinci system placements increased 28% worldwide, with Da Vinci 5 and SP accounting for 65% of global placements. - Non-GAAP operating margin was 42% (41% excluding one-time tariff refund), and non-GAAP gross margin improved 90 basis points year-over-year excluding the refund. - Clinical evidence from the benign COMPARE study showed da Vinci associated with 54% lower odds of conversion to open surgery compared to laparoscopy, supporting broader adoption. - U.S. da Vinci procedure growth was 10%, the lowest since COVID, reflecting a difficult comparison and potential headwinds. - Pricing actions and China policy changes are expected to reduce da Vinci I&A revenue per procedure by 3% to 5% once fully implemented, creating a revenue headwind. - China operating environment remains challenging, with lower recent capital placements and policy-driven price reductions starting in November. - A $450 million litigation settlement regarding third-party remanufacturing and servicing reduced GAAP net income to $523 million, down from $704 million year-over-year. - Potential impacts from lower ACA enrollment, changes to Medicaid eligibility, and potential 340B changes could affect U.S. procedure growth. Q: U.S. da Vinci procedure growth was 10% in Q3, the lowest since COVID. Is this a temporary lull, and will innovation and pricing actions accelerate U.S. procedures as soon as next year? A: CEO David Rosa framed the U.S. opportunity in two parts: the addressable opportunity today, particularly in benign general surgery, and a longer-term opportunity to expand indications. He noted large IDN customers are now building real-time dashboards comparing clinical and economic outcomes of da Vinci versus laparoscopy and open surgery, and robotics is comparing favorably. Combined with an expanding portfolio, capital capacity expansion, and the pricing actions, he sees this as the foundation for durable U.S. procedure growth. CFO Jamie Samath added four focus areas: adding capacity (U.S. net placements rose 41%), the ASC opportunity (more systems placed in ASCs in the last two quarters than in almost the last three years), progressing cardiac and breast along the early adoption curve, and R&D programs that could add new indications over longer horizons. Q: On the extended use program and China pricing, what is the timeline to full implementation, will there be stocking ahead of it, and what is the impact on gross and operating margin and volume elasticity? A: CFO Jamie Samath said there may be a little customer ordering pattern volatility but he doesn't expect it to be significant. The gross margin impact should be modest and offset across 2027 by cost reduction programs, with any residual impact falling through to operating margin being small. On elasticity, he said the actions are intentionally targeted where cost is a barrier to adoption, with the benefit for high-volume benign procedures greater than the blended 3% to 5%. He noted the first extended use program in 2020 supports the existence of elasticity, though it won't turn on immediately in 2027. Q: With the largest quarterly buyback ever, what pipeline itemssuch as AI use cases, imaging, the GI robot, or lung cancercould add revenue per procedure? A: CEO David Rosa highlighted two active Ion development programs: a ROSE system for real-time on-site cytology and integrated endobronchial ultrasound for staging, both expected to speed time from detection to diagnosis and treatment and be accretive to Ion revenue per case. On da Vinci vision, he cited multiple programs in advanced visualization including hyperspectral imaging, fluorescing molecules, and AI features that should bring incremental value and accretive revenue per procedure across the portfolio. Q: Can you discuss ASC progress and contribution to growth, and with competitors likely offering modular systems in the ASC, does Intuitive need a modular offering? A: CEO David Rosa said ASC customers want something repeatable, easy to learn and use, reliable, and consistentnot a particular architecture. He said winning requires the right architecture, the right portfolio to fit customer economics, a broader ecosystem, and supporting infrastructure. He noted Intuitive has engineered and tested nearly every architecture over 30 years, including modular and table-mounted, and continues to believe a cart-based architecture is the best balance of capability and usability. CFO Jamie Samath added that a little under 10% of the U.S. soft tissue surgery business is in ASCs today and growing, about 70% of those volumes are affiliated with existing IDNs, and Intuitive's penetration of the ASC opportunity is low, which is why XIR supply makes it a focus. Q: On the extended use program, no offset appears assumed for force sensing instruments in the 3% to 5% headwind. What is force feedback adoption today and how could it evolve? A: CEO David Rosa shared an anecdote of a high-volume prostatectomy surgeon whose da Vinci 5 potency-return curve shifted up about 10 points versus Xi, which he attributed to force feedback enabling gentler nerve-sparing. CFO Jamie Samath said about 8% of da Vinci 5 cases involved force feedback this quarter, limited by full supply arriving later in the quarter, and ambitions are for much higher penetration as evidence is built. He noted other offsets to the 3% to 5%: SP I&A per procedure is meaningfully higher and growing faster, and integrated insufflation on da Vinci 5 (used about 85% of the time) adds roughly $100 per procedure for tube sets. Q: How long will it take to fully implement the extended use program, and when do you expect the full 3% to 5% impact on revenue per procedure? A: CFO Jamie Samath said rollout is country by country: the U.S. first, starting sometime later in Q1 depending on 510(k) clearance, then Europe in the second half of 2027, and other markets just before or after that. He does not expect the full impact until the end of 2027. Q: What does the no-fault litigation settlement practically mean for customers, and has third-party remanufacturing been a real headwind? A: CEO David Rosa said the agreement with U.S. customers concerns third-party instrument remanufacturers and third-party service providers and provides a clear framework for working together in those areas, allowing Intuitive to focus on advancing safety, quality, and security. Chief Medical Officer Jaime Wong added that the resolution strengthens customer relationships and provides a defined framework for instruments and services. Q: Margins have improved well over the past few years and this quarter beat expectations. What other considerations should investors weigh for profitability and continued margin expansion? A: CFO Jamie Samath reiterated the expected operating margin range of 35% to 40%, which he called best-in-class medtech. He said the strategic lean is to invest where Intuitive can innovate and bring differentiated capability, and to support investments that accelerate growth. At the current 41% to 42%, there is capacity to invest, and the company will evaluate that carefully during planning, with guidance in January. Q: What drove the strong Q3 financial performance, and how should investors think about the pricing actions' impact on I&A revenue per procedure? A: CFO Jamie Samath reported revenue grew 22% to just over $3 billion, with 84% recurring, net da Vinci placements up 40%, non-GAAP operating margin of 42% (41% excluding a $28 million one-time tariff refund), and non-GAAP EPS up 25% to $3. He said the pricing actions, including the extended use program and volume-based pricing starting in the first half of 2027 plus the China charge-code price reduction beginning in November, are expected to lower da Vinci I&A revenue per procedure by approximately 3 For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Healthcare stocks Intuitive Surgical ISRG) and Elevance Health ELV) are worth considering after both companies delivered better-than-expected third-quarter results this week, highlighting encouraging growth across the medical instruments and services industries. With strong earnings momentum and favorable outlooks, both stocks present attractive investment opportunities following their strong Q3 reports. Intuitive Surgical, a global leader in robotic-assisted surgery, reported adjusted Q3 earnings of $3.00 per share, surpassing the Zacks Consensus Estimate of $2.61 by nearly 15% and climbing 25% from EPS of $2.40 in the prior-year quarter. Revenue jumped 22% to $3.05 billion, beating expectations of $2.88 billion by almost 6%. Growth was supported by continued adoption of Intuitive's da Vinci surgical systems, with worldwide da Vinci procedures increasing 14%. Notably, the company placed 546 da Vinci systems during the quarter, up 28% from 427 a year ago. Despite strong results, ISRG shares have faced selling pressure amid concerns about slowing procedure growth, increased competition, and a $450 million antitrust settlement. However, expanding robotic surgery adoption and Intuitive's growing installed base continue to support its long-term outlook. Encouragingly, management maintained its FY26 outlook for worldwide da Vinci procedure growth of 14%-15%, while projecting adjusted gross margins of 68.7%-69.3%, reinforcing expectations for continued demand and solid profitability. Furthermore, Intuitive Surgical has now surpassed earnings expectations for 15 consecutive quarters, posting an impressive average EPS surprise of 15.12% over its last four reports. Image Source: Zacks Investment Research Health insurance giant Elevance Health delivered an impressive Q3 earnings beat as well, posting adjusted EPS of $6.99. This exceeded the Zacks Consensus Estimate of $4.66 by 50% and increased16% from $6.03 per share a year ago. Operating revenue climbed modestly to $50.4 billion, topping expectations by nearly 3%, supported by stronger premium yields and growth in its Carelon healthcare services business. Optimistically, Elevance's benefit expense ratio improved 70 basis points to 90.6%, reflecting better medical cost management. Adding to investor optimism, Elevance raised its FY26 adjusted EPS guidance from $27.00 to at least $29.00 per share. Plus, management expects adjusted earnings growth of at least 12% in FY27, excluding certain one-time benefits from its FY26 results, signaling confidence in improving profitability. ELV shares are up 25% year-to-date and offer a solid annual dividend yield of 1.56%. Furthermore, Elevance has exceeded earnings expectations for five consecutive quarters, posting a very impressive average EPS surprise of 23.94% over its last four reports. Image Source: Zacks Investment Research Intuitive Surgical and Elevance Health offer two distinct ways to capitalize on growth in the medical sector, with ISRG benefiting from expanding robotic surgery adoption and ELV demonstrating improving profitability and cost management. Most importantly, both stocks currently sport a Zacks Rank #2 (Buy), making them compelling healthcare stocks to consider following their better-than-expected Q3 results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report Elevance Health, Inc. (ELV) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Intuitive Surgical, Inc. ISRG used its third-quarter 2026 earnings call to outline instrument pricing reductions aimed at expanding robotic surgery adoption, particularly in cost-sensitive benign procedures. Management also addressed slowing U.S. procedure growth, international expansion and product innovation while raising its gross margin outlook. The discussion emphasized balancing near-term pricing pressure with longer-term procedure opportunities. CFO Jamie Samath said planned pricing actions, alongside mandated reductions in China, will lower da Vinci instruments and accessories (I&A) revenue per procedure by approximately 3% to 5% on a constant-mix basis once fully implemented. Beginning in 2027, Intuitive Surgical plans to extend instrument useful lives and introduce volume-based pricing. China's reductions begin in November 2026, while broader implementation will progress throughout 2027. Responding to JPMorgan's question about pricing elasticity, Samath expressed confidence that lower costs would encourage adoption. He expects modest margin pressure, with ongoing cost-reduction initiatives providing offsets. Investor Relations Head Daniel Connally narrowed projected worldwide da Vinci procedure growth to 14%-15% for 2026, compared with the previous 13.5%-15.5% range. Management expects growth near the midpoint. The company raised its non-GAAP gross margin outlook to 68.7%-69.3% from 68%-69%. The updated range incorporates an estimated 90-basis-point tariff impact. Non-GAAP operating expense growth expectations remained unchanged at 11%-13%. Connally identified U.S. insurance-related uncertainty and competitive pressure in China among the factors influencing procedure expectations. U.S. da Vinci procedures increased 10%, compared with 16% growth in the year-earlier quarter. International da Vinci procedures grew 20%, supporting approximately 14% worldwide growth. Responding to Wells Fargo's concerns about U.S. momentum, CEO David Rosa emphasized expanding adoption across benign general surgery. He highlighted clinical evidence, hospital economics and increased system availability as important drivers. Samath identified ambulatory surgery centers (ASCs), additional surgical capacity and emerging procedures as priorities. The company placed 18 systems at U.S. ASCs during the quarter, including 15 XiR systems. International da Vinci placements increased 29% to 211 systems. Europe accounted for 115 placements, up 83%, while Asian placements increased 30% to 78 systems. Rosa highlighted India's 42% procedure growth and improving trends in Japan. He also emphasized international adoption of benign procedures, supported by regulatory clearances, reimbursement and clinical evidence. Samath reported 41% international benign procedure growth, accelerating from 37% in the preceding quarter. Management plans to expand into additional countries during 2027. Rosa highlighted expanding da Vinci 5 adoption, with more than 2,000 systems installed worldwide. The company also continued developing single-port instrumentation and broader surgical indications. Management discussed voice-activated controls, automated arm movements and advanced visualization capabilities. Rosa characterized AI-controlled surgical motion as an early-stage opportunity requiring regulatory and clinical confidence. On the Ion platform, development priorities include integrated endobronchial ultrasound and rapid on-site cytology. Rosa expects these technologies to improve diagnostic workflows and increase revenue per procedure. ISRG's third-quarter 2026 revenues reached $3.05 billion, beating the Zacks Consensus Estimate of $2.88 billion. Non-GAAP earnings of $3 per share also surpassed the $2.61 consensus estimate. Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote Non-GAAP gross margin reached 69.9%, including a one-time tariff refund benefit. Samath attributed underlying improvement primarily to product cost reductions and operating leverage. During the quarter, Intuitive Surgical repurchased $2.94 billion in shares. GAAP earnings reflected a $450 million antitrust settlement charge, with the agreement remaining subject to court approval. Addressing Barclays' margin question, Samath reiterated a longer-term operating margin range of 35%-40%, while emphasizing opportunities to reinvest profitability into innovation and expansion. Management's broader focus remains on improving surgical access through differentiated platforms, clinical evidence and customer economics. Pricing adjustments and continued research investment are central to that approach. Intuitive Surgical currently carries a Zacks Rank #2 (Buy), indicating favorable near-term potential under Zacks' earnings estimate revision framework. Its Growth Score of B and Momentum Score of B reinforce its relative attractiveness in those investment styles. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. However, the Value Score of D indicates less favorable valuation characteristics, while the combined VGM Score of C reflects a more moderate overall profile. The Zacks Rank can change as analysts revise earnings estimates following the reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Intuitive Surgical, Inc. ISRG reported third-quarter 2026 adjusted earnings per share (EPS) of $3.00, which beat estimates by 13.6%. The bottom line increased 25% from $2.40 in the year-ago quarter. GAAP EPS declined to $1.49 from $1.95, reflecting a significant litigation charge. Revenues increased 21.7% year over year to $3.05 billion, surpassing expectations by approximately 4.9%. Growth was driven by higher procedure volumes, increased system placements and an expanding installed base. Worldwide da Vinci and Ion procedures collectively grew approximately 15%. Image Source: Zacks Investment Research Instruments and accessories revenues increased 18.3% year over year to $1.80 billion from $1.52 billion. This growth reflected a 14% increase in da Vinci procedures and 31% growth in Ion procedures. U.S. da Vinci procedures increased 10%, while international procedures advanced 20%. Europe grew 20%, Asia increased 19% and Rest of World markets expanded 22%. India recorded 42% procedure growth, while Japan benefited from improving reimbursement conditions. Single-port procedures climbed 55%, supported by expanding adoption in the United States and Korea. Da Vinci instruments and accessories revenue per procedure increased to approximately $1,860 from $1,800, benefiting from favorable product mix and greater adoption of newer instruments. Systems revenues jumped 30.3% year over year to $769.1 million from $590.4 million, reflecting stronger placements and higher operating lease revenues. Intuitive placed 546 da Vinci systems compared with 427 a year earlier. Placements included 315 da Vinci 5 systems, 87 Xi, 65 XiR, 42 SP and 37 X systems. The company also placed 56 Ion systems versus 50 last year. U.S. placements increased 27% to 335 systems, while international placements rose 29% to 211. Europe recorded 115 placements, up from 63 a year ago. The worldwide da Vinci installed base expanded 12% to 12,094 systems, while Ion's installed base increased 21% to 1,152. Service revenues increased 21.8% year over year to $482.2 million from $395.9 million. Growth reflected expansion of the da Vinci and Ion installed bases and a higher proportion of da Vinci 5 systems. Recurring revenues represented approximately 84% of total quarterly revenues, underscoring the contribution of instruments, accessories, leasing and services to Intuitive's business model. Adjusted gross profit increased 25% to $2.13 billion from $1.70 billion. The adjusted gross margin expanded to 69.9% from 68% a year earlier, benefiting from product cost reductions, manufacturing efficiencies and tariff refunds. The quarter included a $28 million pretax tariff refund benefit. Excluding this item, adjusted gross margin was 68.9%, representing a 90-basis-point year-over-year improvement. Adjusted operating income rose 30.1% to $1.27 billion. Adjusted operating expenses increased 18%, reflecting higher compensation, headcount and prototype development spending. Intuitive ended September with $6.80 billion in cash, cash equivalents and investments, down $1.83 billion sequentially. The decline primarily reflected significant shareholder returns and capital investments. The company repurchased 7.8 million shares for $2.94 billion during the quarter. Capital expenditures totaled $113 million. GAAP net income declined to $523 million from $704 million, including a $450 million pretax charge related to an antitrust litigation settlement. Intuitive narrowed its full-year worldwide da Vinci procedure growth forecast to 14-15% from the previous 13.5-15.5% guidance. Management expects growth closer to the midpoint. The company raised its adjusted gross margin outlook to 68.7-69.3% from 68-69%, incorporating an estimated 90-basis-point tariff impact. Adjusted operating expense growth guidance remains at 11-13%. Management also outlined instrument pricing reductions beginning in 2027 and policy-driven reductions in China starting in November 2026. Together, these measures are expected to reduce da Vinci instruments and accessories revenue per procedure by 3-5% on a constant-mix basis, once fully implemented. The pricing initiatives target high-volume benign procedures where affordability limits robotic surgery adoption. Although they could pressure revenue per procedure, management expects lower customer costs, expanded access and continued innovation to support procedure growth over time. Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote Intuitive Surgical currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the broader medical space are Glaukos GKOS, Edward Lifesciences EW and Globus Medical GMED, each carrying a Zacks Rank of 2 at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Glaukos reported second-quarter 2026 earnings per share of 14 cents, which beat the Zacks Consensus Estimate by 50.00%. Revenues of $186 million surpassed the Zacks Consensus Estimate by 24.1%. Glaukos has an estimated earnings growth rate of 268.8% for 2027. GKOS' earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 25.87%. Edward Lifesciences reported second-quarter 2026 adjusted EPS of 78 cents, which beat the Zacks Consensus Estimate by 6.85%. Revenues of $1.74 billion surpassed the Zacks Consensus Estimate by 2.45%. Edward Lifesciences has an estimated long-term earnings growth rate of 12.7%. EW's earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.49%. Globus Medical reported a second-quarter fiscal 2026 adjusted EPS of $1.34, which beat the Zacks Consensus Estimate by 19.6%. Revenues of $790 million missed the Zacks Consensus Estimate by 0.35%. Globus Medical has an estimated long-term earnings growth rate of 12.4%. GMED's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.88%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report Globus Medical, Inc. (GMED) : Free Stock Analysis Report Glaukos Corporation (GKOS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Performance was driven by broad-based adoption across multiport, single-port, and Ion platforms, with da Vinci 5 and SP accounting for 65% of global placements. - Management is executing a segmentation strategy that tailors engagement, pricing, and solutions to specific customer needs across different geographies and sites of care. - The U.S. market is shifting toward real-time economic and clinical dashboards, where robotics are comparing favorably against laparoscopy and open surgery in benign procedures. - International growth is pivoting beyond urology and oncology into high-volume benign procedures like hernia repair and cholecystectomy, which grew 41% in Q3. - The da Vinci 5 platform is demonstrating higher utilization rates than the Xi base, supported by new features like surgeon-initiated tool eject and multi-arm targeting. - A $450 million litigation settlement regarding third-party remanufacturing and servicing provides a defined framework for future customer cooperation and product security. - Operational focus is shifting toward the Quintuple Aim, prioritizing predictable outcomes and lower total cost of care to expand the addressable market. - Full-year 2026 procedure growth is narrowed to 14% to 15%, accounting for U.S. ACA subsidy changes and competitive intensity in China. - A deliberate pricing action starting in 1H 2027 will extend the life of core instruments, expected to reduce I&A revenue per procedure by 3% to 5% to drive volume elasticity. - Management expects several regulatory clearances for telesurgery in the first half of 2028, building on current Telepresence adoption. - Expansion into new OUS geographies is planned for 2027, supported by a new manufacturing facility in Malaysia slated for 2028 operations. - R&D investment will continue to outpace SG&A growth, focusing on AI-controlled motion, voice-activated interfaces, and advanced imaging capabilities. - A one-time pretax tariff refund of $28 million positively impacted Q3 non-GAAP operating margins by approximately 100 basis points. - China remains a challenging operating environment due to lower capital placements and upcoming policy-driven price reductions in November. - The $450 million litigation settlement is subject to court approval, with a final decision not expected until 2027. - Short-term monitoring is focused on U.S. macro factors including lower ACA enrollment, Medicaid eligibility changes, and potential 340B adjustments. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management views the 10% U.S. growth as durable, supported by a 41% increase in net placements which adds necessary capacity for benign surgery expansion. - The strategy relies on a tiered portfolio where da Vinci 5 serves high-end hospital needs while XiR targets cost-sensitive ambulatory surgery centers. - Intuitive maintains that a cart-based architecture is superior to modular designs for the repeatability and reliability required in high-volume ASC environments. - Success in ASCs is attributed to the broader ecosystem and support infrastructure rather than just the robotic hardware itself. - The 3% to 5% pricing headwind will be partially offset by higher-value innovations, including Force Feedback instruments and integrated insufflation on da Vinci 5. - Adoption of Force Feedback reached 8% of da Vinci 5 cases in Q3, with expectations for significant penetration as clinical evidence of superior outcomes matures. - New Ion capabilities, including on-site cytology (ROSE) and endobronchial ultrasound, are expected to be accretive to revenue per procedure. - Advanced visualization programs, such as hyperspectral imaging and AI-driven vision features, are being developed to add incremental value to the da Vinci platform.

Image source: The Motley Fool. Tuesday, Oct. 20, 2026 - Head of Investor Relations - Daniel Connally - Chief Executive Officer - Dave Rosa - Chief Financial Officer - Jamie Samath - Chief Medical Officer - Dr. Jaime Wong - Chief Legal and Compliance Officer - Gary Loeb Operator: Hello, and welcome to Intuitive's Third Quarter 2026 Earnings Release. [Operator Instructions] I would now like to turn the call over to Dan Connally, Head of Investor Relations. You may begin. Daniel Connally: Good afternoon, and welcome to Intuitive's Q3 2026 Earnings Conference Call. Joining me today are Dave Rosa, our CEO; Jamie Samath, our CFO; Dr. Jaime Wong, our Chief Medical Officer; and Gary Loeb, our Chief Legal and Compliance Officer. Before we begin, I would like to remind you that comments made on today's call may contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in our Securities and Exchange Commission filings, including our most recent 10-K filed on February 3, 2026, and 10-Q filed on July 21, 2026. Our SEC filings can be found through our website at intuitive.com or at the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements. This conference call will be available for audio replay on our website in the Events section under our Investor Relations page. We have posted today's press release and supplementary financial data tables to our website. Our format for this afternoon's conference call is as follows: Dave will review our business and operational highlights, Jamie will review our financial results and procedure highlights, Jaime Wong will review clinical highlights, I will review our updated financial outlook for 2026 and finally, we will host a question-and-answer session. With that, I will turn it over to Dave. David Rosa: Good afternoon, and thank you for joining us today. Q3 was a strong quarter for Intuitive with broad-based adoption across our multiport, single-port and Ion platforms. In Q3, total procedures increased 15%, driven by 14% growth in da Vinci procedures and 31% growth in Ion procedures. In the U.S., da Vinci procedure growth was 10%, and outside the U.S., da Vinci procedure growth was 20%. We exited the quarter with more than 13,200 da Vinci and Ion systems installed worldwide. Over time, our customers have adopted, operationalized and standardized on the da Vinci ecosystem to provide their patients with improved care. That adoption has been driven by our commitment to innovation, robust training and clinical evidence, and it is apparent in how customers use da Vinci today. In the quarter, almost 7,000 customers in more than 70 countries performed da Vinci procedures at a rate of over 10,000 procedures per day. On the clinical evidence front, more than 48,000 peer-reviewed publications have evaluated the effectiveness of da Vinci surgery, including the recent benign COMPARE study, which Jaime Wong will discuss in more detail shortly. As I described last quarter, we continue to see increasing segmentation across our customer base. Needs vary by procedure, site of care, geography and health care system. We have been investing to support the segmentation, and we have positioned Intuitive to serve current and future customers with both our existing technologies and those in development. Meeting those needs also requires that we evolve our commercial approach to tailor how we engage, price and provide solutions for customers in each segment. In Q3, global customer demand across our da Vinci portfolio remains strong. Da Vinci system placements increased 28% worldwide with da Vinci 5 and SP accounting for 65% of global placements. Installations of XiR and X more than doubled in the quarter. Customers continue to adopt da Vinci 5 and its growing capabilities with demand for both capacity expansion and system upgrades. We exited the quarter with more than 2,000 da Vinci 5 systems installed worldwide used by over 18,000 surgeons since launch. We continue to see strong interest in XiR, both in the U.S. and internationally, where customers are leveraging its familiarity, capabilities and cost profile to build programs around a focused set of procedures. Our da Vinci single-port platform is playing an increasingly important role for our customers and their patients. Our investments in additional clearances and instrumentation are yielding results as SP procedures expand in the U.S. and internationally. Adoption of the new SP stapler continues to broaden. And in Q4, we plan to make a U.S. submission for the SP vessel sealer, which we believe is a key enabler for wider adoption of our SP platform. Increasingly, customers that adopt both multiport and single-port describe benefits to their overall da Vinci programs, with SP opening new approaches for the surgeon, while existing procedure demand fills their multiport capacity. In Q3, we finalized a set of pricing actions for a subset of high-volume benign procedures where costs may be a constraint to broader access to da Vinci surgery. We believe these actions, in conjunction with increased availability of XiR, will expand our addressable opportunity and enable da Vinci technology to reach more patients around the world. Jamie will describe the anticipated impact shortly. Outside the U.S., we are elevating our focus and increasing our investments to help customers establish and expand their da Vinci programs. As of Q3, nearly 4,000 international customers have a da Vinci program and nearly 25% operate two or more systems. These customers are moving beyond urology and cancer procedures into benign hysterectomy in Germany, cholecystectomy in the U.K. and India, and inguinal hernia repair in Japan. To support this growth, we are continuing to build the foundation of market access country by country through regulatory clearances, reimbursement, training and clinical and economic validation. Da Vinci placements outside the U.S. increased 29% in the quarter with broad-based global demand. In Europe, Germany led the region with 20 system installations. We also placed systems in more than 20 other European countries and benign procedures led procedure growth. In Asia, Japan improved on both system placements and procedure growth for the second consecutive quarter, while India had another strong quarter with 42% procedure growth, surpassing 200,000 cumulative da Vinci procedures. In China, the operating environment remains challenging. To support expected long-term growth in Asia, we recently announced plans for a significant new I&A manufacturing facility in Penang, Malaysia. We expect this facility to begin operations in 2028. Beyond da Vinci, we are investing in Ion outside the U.S. through multiyear country-by-country work that is foundational to broadening access and shortening the time between detection and treatment of lung cancer. During Q3, we received reimbursement for Ion in Korea, and we expect further reimbursement actions in other geographies in the coming quarters. This quarter, we received several CE marks, including Force Feedback instrumentation and cardiac procedures on da Vinci 5 as well as transvaginal gynecological procedures on SP. We now have da Vinci 5 cleared for cardiac procedures in the U.S., Europe, India, Japan and Korea. During Q3, we received FDA 510(k) clearance on da Vinci 5 for surgeon-initiated tool eject and multi-arm targeting, both of which bring incremental efficiency and surgeon autonomy to procedures. Surgeons have reported that these innovations support extending access to da Vinci surgery beyond traditional workdays and hours. Recently, we submitted a cavitational ultrasonic aspirator instrument for FDA 510(k) clearance for use in liver and pancreas procedures. And last week, we received FDA 510(k) clearance for an integrated version of the da Vinci 5 handheld endoscope. In August, we received FDA 510(k) clearance for our foundational noncommercial next-generation flexible robotic endoscope system for use in the gastrointestinal tract. This program is early in its development, but we are encouraged by our progress and look forward to updating you as we advance. Adoption of Intuitive Telepresence continues to increase with surgeons using these sessions to share techniques and to scale training in ways that were not previously practical. Telepresence on da Vinci 5 serves as a foundation for our efforts in telesurgery, where we expect several regulatory clearances in the first half of 2028. Our teams continue to develop additional digital and AI capabilities on da Vinci 5 including a voice-activated user interface and automated fourth arm control to further enhance efficiency and the user experience. AI-controlled motion in surgery has the potential to improve efficiency and outcomes, but it is early and must earn the confidence of regulators, surgeons, care teams and patients before we deploy it at scale. Looking ahead, our objective at Intuitive is to reach more patients with the best care available by combining robotics, human expertise, data and artificial intelligence so that minimally invasive care becomes more accessible and less variable. The problems we are working to address are significant and specific. Minimally invasive surgery access and adoption remain uneven around the world. Patients wait too long between detection and treatment and the care a patient receives still varies more than it should, depending on the hospital they enter and the surgeon available that day. Over time, we are focused on significantly advancing the Quintuple Aim to ensure that the broader patient journey can become more predictable, more connected and less disruptive to a patient's life. Before I pass the time to Jamie, today, we announced that we have reached an agreement, subject to court approval, with U.S. customers who participated in the class action lawsuit on third-party remanufacturing of da Vinci instruments and third-party servicing of da Vinci systems. We believe that this no-fault settlement provides certainty for both our customers and Intuitive and maintains our ability to advance the safety, quality and security of our products. And with that, I'll turn the time over to Jamie to take you through our finances in greater detail. Jamie Samath: Good afternoon. I'll describe our performance on a non-GAAP basis, and I'll summarize our GAAP results later in my remarks. A reconciliation between our non-GAAP and GAAP results is available on our website. The strength of our financial performance this quarter reflects the durability of our business model driven by an expanding portfolio of differentiated products that provide clear clinical and economic value for our customers and their patients. Increasingly, our da Vinci and Ion systems and the Intuitive ecosystem are being integrated into customers' core infrastructure across a variety of procedures, sites of care and geographies, driving value for hospitals and health care providers and recurring revenue for Intuitive. Today, we are also quantifying the instrument pricing actions we discussed in July, which we expect to reduce da Vinci I&A revenue per procedure by approximately 3% to 5% on a mix-constant basis once fully implemented. This is a deliberate choice to broaden adoption in high-volume benign procedures, and I will describe these actions in more detail shortly. Key financial highlights for the quarter are as follows: Revenue grew 22% to just over $3 billion, of which 84% was recurring revenue. Net da Vinci placements, that is placements that expand the installed base grew 40%. Non-GAAP operating margin was 42% of revenue or 41%, excluding a onetime pretax tariff refund of $28 million. Non-GAAP earnings per share grew 25% to $3 per share. Core metrics were solid in Q3. Taking da Vinci and Ion together, total procedures grew 15%, the installed base of systems grew 13% and average system utilization increased 2%. Revenue growth of 22% against total procedure growth of 15% reflects our innovation-led strategy and growth in system placements. As da Vinci 5, SP and Ion become a greater proportion of our business, revenue growth benefits from a richer product mix, higher levels of integration and incremental upgrade volumes. Additionally, the scale and cost advantages we have built allow us to broaden our platform portfolio, reach customers in more geographies and expand access by lowering the cost of da Vinci surgery. The price reductions are concentrated in high-volume benign procedures where cost may be a barrier to adoption. Those procedures, particularly outside the U.S. and in ambulatory settings are where we see the largest opportunity to serve incremental patients. This is a strategic decision to reinvest a portion of the value our innovation creates and lower customer costs where they will have the greatest impact on adoption. We believe broader adoption creates more long-term value than near-term revenue per procedure. Turning to the clinical side of our business. In the U.S., total procedures increased 11%, reflecting 10% growth in da Vinci procedures and 29% growth in Ion procedures. U.S. da Vinci growth of 10% was consistent with the expectations we described in July and reflects in part the 16% growth in the prior year quarter, our most difficult comparison of the year. After-hours procedures and benign gynecology procedures other than hysterectomy continue to lead growth. Da Vinci 5 accounted for more than 1/4 of U.S. procedures in Q3, up from 13% a year ago, and da Vinci 5 systems continue to run at utilization above our Xi base. Looking ahead, we believe the breadth of surgeon adoption, the continued expansion of benign general surgery and a growing da Vinci 5 and SP installed base, together with procedures earlier in adoption, including emergent general surgery, cardiac and nipple-sparing mastectomy positions us for durable U.S. procedure growth over the long term. In the short term, we continue to monitor the impacts from lower ACA enrollment, changes to Medicaid eligibility and potential changes to 340B. Outside the U.S., total and da Vinci procedures grew 20%, with Europe up 20%, Asia up 19% and Rest of World geographies up 22%. In Europe, growth was led by the U.K., Germany and Italy. In Asia, India and Taiwan led growth, and Japan procedure growth accelerated, reflecting early signs of a response to the June reimbursement changes. Procedure growth in China was roughly in line with the corporate average, reflecting lower recent capital placements. In Rest of World markets, growth was led by Canada, Australia and Brazil. Within OUS results, da Vinci adoption for benign procedures continued to accelerate, growing 41% in Q3, up from 37% in Q2 and 34% in Q1 with the strongest growth in hernia repair and cholecystectomy. Benign procedures represent over 1/4 of our international volume today and the significant majority of the gap between our current international volumes and the addressable opportunity, which is why they are a focus of our investments. As we build local clinical and economic evidence, a growing number of customers in OUS markets are recognizing the clinical benefits of da Vinci for these procedures and our tiered system portfolio, including XiR, together with the pricing actions I will describe shortly, provides customers the flexibility to rightsize their programs relative to local reimbursement. Third quarter SP procedure growth was 55%, reflecting accelerated growth in the U.S. of 50% and growth of 40% in Korea, our largest SP market. We now have 487 SP systems installed across 27 countries, and procedures in the 25 markets other than the U.S. and Korea nearly doubled from Q3 last year. Total I&A revenue in quarter 3 grew 18% to $1.8 billion. Da Vinci I&A revenue per procedure was approximately $1,860 compared to $1,800 last year, primarily driven by higher SP procedures and da Vinci 5 specific I&A, partially offset by procedure mix. With respect to instrument pricing, there are 2 developments to describe. The first is a set of pricing actions we will implement beginning in the first half of 2027, including the expansion of our extended use program announced in May. The second is a policy-driven price reduction in China that starts to take effect next month. As Dave described earlier, customer needs are increasingly segmented. In complex procedures, value comes from innovation and clinical capability. In high-volume benign procedures such as cholecystectomy and inguinal hernia repair, it comes from reliability, efficiency and economics, and that's where our pricing actions are focused. Beginning in the first half of 2027, we will extend the useful lives of a subset of core EndoWrist instruments on our fourth and fifth generation platforms and introduce volume-based pricing; both lower our customers' cost per procedure. Years of investment in instrument design and manufacturing scale enable us to preserve the quality and reliability customers count on. In the U.S., the extended use instruments require a 510(k) clearance, which is in process. In China, the charge code policy changes we described last quarter will result in a significant reduction in our I&A prices in that market beginning in November. We continue to engage with the provincial governments on implementation and to progress through the green channel process for SP and da Vinci 5. Taken together, we expect these pricing actions and the China price reduction to lower da Vinci I&A revenue per procedure by approximately 3% to 5% on a mix constant basis once fully implemented, meaning holding procedure, product and geographic mix constant to isolate the pricing changes themselves. For reference, that is less than the 7% we estimated when we launched our first extended use program in 2020. The accretive dynamics we described last quarter, including Force Feedback adoption and the mix shift toward da Vinci 5 and SP are not included and will be positive contributors to I&A revenue per procedure. In terms of timing, the China reduction takes effect in the fourth quarter, while the extended life instruments as part of our broader I&A pricing actions will roll out by country beginning in the first half of 2027. So the remaining impact will build progressively over 2027 rather than as a step function. Turning to cleared procedure categories that we expect to be future growth drivers. Cardiac procedures grew 40% in Q3. And during the quarter, we received CE mark for use of da Vinci 5 in cardiac procedures in Europe. We now estimate that the line of sight cardiac opportunity is between 300,000 and 400,000 procedures a year in the regions we are cleared. Separately, breast surgery grew 42%. Both remain early-stage opportunities whose near-term pace is linked to the training of surgeons and the accumulation of clinical evidence, and we are investing in both. Today, these procedure volumes are still small relative to our total volume. Turning to capital performance and starting with our da Vinci business. We placed 546 da Vinci systems in quarter 3, an increase of 28% compared to 427 systems in Q3 last year. Demand was broad-based across our platform portfolio, 315 da Vinci 5 systems, 87 Xi, 65 XiR, 42 SP and 37 X systems. Da Vinci 5 placements included 41 in OUS markets, up from 12 last year as da Vinci 5 becomes available in more countries. In the U.S., we placed 335 systems, up 27% from the 263 systems placed last year, driven by an increased number of multisystem deals as customers continue to convert to da Vinci 5. Building on our focus on ambulatory surgery centers, we installed 18 systems at U.S. ASCs in Q3, including 15 XiR systems. This is an early-stage multiyear effort and placements will be uneven quarter-to-quarter, but our pipeline of ASC opportunities continues to build, informed by customer familiarity with XiR's capabilities and reliability and its favorable cost profile. Outside the U.S., we placed 211 systems, an increase of 29% compared to the 164 systems placed last year. By region, we placed 115 systems in Europe, up 83% from 63 last year, 78 in Asia, up 30% from 60, and 18 in Rest of World countries compared to 41 last year. Rest of World placements tend to be uneven quarter-to-quarter. Europe's performance reflected our broadening focus with record quarterly placements in Portugal, Turkey and Austria and solid growth in Poland, Croatia and Romania. Across all geographies, we placed 37 X systems and 65 XiR systems with purchased ASPs of approximately $0.5 million and $1.2 million, respectively, demonstrating our ability and willingness to compete effectively across the broad spectrum of customers and their economic objectives. Over the last 3 years, we have entered new geographies, including Croatia, Peru, Morocco and Lithuania. And in 2027, we plan to accelerate our expansion into additional countries we do not serve today. Given increasing investments in OUS markets and planned expansion into new geographies, in January, we plan to update our estimate of the long-term opportunity in soft tissue surgery. We placed a record 42 SP systems in Q3, including 21 in the U.S. and 12 in Korea, and the installed base of SP systems increased 42% from the year ago period to 487 systems. For our Ion platform, we placed 56 systems in Q3 compared to 50 systems last year. Given our capital performance, quarter 3 systems revenue grew 30% to $769 million. The average selling price for purchased da Vinci systems was approximately $1.6 million, flat to last year as a higher mix of da Vinci 5 was primarily offset by a higher mix of XiRs. Quarter 3 service revenue increased 22% to $482 million, reflecting the increased installed base of da Vinci and Ion systems and a higher mix of da Vinci 5. Turning now to the rest of the P&L. Non-GAAP gross margin for the quarter was 69.9%, an increase from 68% in Q3 of last year. Q3 results included a onetime benefit of $28 million from the refund of previously paid IEEPA tariffs. Excluding this benefit, non-GAAP gross margin would have been 68.9%, an improvement of 90 basis points year-over-year. The underlying improvement primarily reflects product cost reductions and fixed overhead leverage and our engineering and operations teams continue to execute on cost reduction programs across each of our platforms. Quarter 3 non-GAAP operating expenses increased 18% year-over-year, driven by increased variable compensation, reflecting our results, higher headcount and higher prototype expenses as several programs advanced in development. R&D again grew faster than SG&A and a portion of the increase reflects the timing of expenses between quarters. Given the progress our R&D teams are making and the opportunities in front of us, we will continue to prioritize incremental investment in our existing and new platforms and in advancing our AI capabilities, which we believe will meaningfully differentiate our solutions and expand the number of patients we can serve. Non-GAAP other income was $75 million for the quarter compared to $83 million last quarter, reflecting lower average cash balances following our share repurchases. Our non-GAAP effective tax rate for the quarter -- for quarter 3 was 21.4%, consistent with our expectations. Now turning to our GAAP results. GAAP net income for the quarter was $523 million or $1.49 per share compared to $704 million or $1.95 per share in Q3 of last year. Our GAAP results reflect the $450 million litigation settlement that Dave described earlier. This settlement is subject to court approval, and we do not expect that decision until next year. We ended the quarter with $6.8 billion in cash and investments, down from $8.6 billion last quarter. Cash generated from operating activities was more than offset by stock repurchases of $2.9 billion at an average price of $377 per share and capital expenditures of $113 million. With that, I'll turn it over to Jaime to discuss recent clinical publications. Jaime Wong: Thank you, Jamie. It's a pleasure to speak with you this afternoon. As we routinely do on these calls, I'd like to share with you recently published peer-reviewed literature that we found to be notable. In addition to the specific data highlighted on this call, we encourage you to consider this data alongside the wider body of evidence detailing these topics and others and published scientific studies over the years. On our Q4 2024 earnings call, we described the landmark COMPARE study, a meta-analysis where the authors reported multiple benefits for the da Vinci approach when compared to alternative minimally invasive or open approaches in commonly performed oncologic procedures. Last month, Dr. Thomas Shin and colleagues from the Massachusetts General Brigham and the University of Virginia School of Medicine in collaboration with researchers from Intuitive, published the benign COMPARE study, comparing perioperative outcomes of benign, minimally invasive, laparoscopic, da Vinci robotic, and open procedures, a systematic review and meta-analysis of evidence in Annals of Surgery Open. This benign COMPARE study looked primarily at standard perioperative and 30-day clinical outcomes of 13 high-volume benign procedures across general surgery, gynecology, urology and bariatrics, including but not limited to, benign hysterectomy, cholecystectomy, benign colon and various hernia repairs. In many of these procedures, conventional laparoscopy has long been the standard of care. This meta-analysis included data from 366 studies across 32 countries published between 2010 and 2024 and included randomized controlled trials, prospective and retrospective cohort studies and large real-world database studies. In total, the analysis covered roughly 1.5 million da Vinci patients, 10.7 million laparoscopic patients and 1.7 million open patients. Results identified lower conversions to open surgery as the most clinically important and consistent finding. Compared with laparoscopy, da Vinci procedures were associated with 54% lower odds of conversion with significant reductions observed in benign hysterectomy, ventral and inguinal hernia repair, myomectomy, cholecystectomy and benign colon surgery. As the authors noted, conversion to open surgery is an important intraoperative event associated with increased morbidity and prolonged hospitalization, which has negative implications for patients and health care systems. Da Vinci patients also had 13% lower odds of blood transfusion and a shorter length of stay than laparoscopic patients, with the largest reductions in benign colon surgery, adrenalectomy and benign hysterectomy. Rates of 30-day complications, readmissions, and mortality were comparable between da Vinci and laparoscopy, while average da Vinci operative times were about 24 minutes longer. Compared with open surgery, da Vinci was associated with larger differences across nearly every studied measure, including 46% lower odds of postoperative complications and hospital stays that were nearly 2 days shorter. These differences have positive implications for patients and health care systems. The authors concluded that da Vinci was associated with fewer conversions, less pain and faster recovery compared with open and laparoscopic surgery, supporting its effectiveness for benign indications. From my perspective as a surgeon, this large-scale analysis of millions of patients provides meaningful data on the expanding use of da Vinci surgery beyond oncology. These clinical correlations point toward a compelling value proposition for the use of da Vinci in these commonly performed high-volume benign procedures. With that, I'll pass the time over to Dan. Daniel Connally: Thank you, Jaime. Our updated financial outlook for 2026 is as follows: Starting with da Vinci procedures. In July, we forecast full year 2026 procedure growth to be within a range of 13.5% to 15.5%, with an expectation to be closer to the midpoint. We are narrowing our forecast to be within a range of 14% to 15% with an expectation to be closer to the midpoint. Our range continues to consider the impact of changes to ACA premium subsidies on patient behavior in the U.S. as well as tender volumes and competitive intensity in China, among other factors. Turning to gross profit. On our last call, we forecast non-GAAP gross profit margin to be within a range of 68% and 69% of revenue, including an estimated 100 basis point impact from tariffs as well as related refunds. We are updating our estimate to be within a range of 68.7% and 69.3% of revenue, including an estimated 90 basis points impact from tariffs as well as related refunds. Factors impacting the range include faster growth of newer products in da Vinci 5 and Ion, partially offset by product cost reductions. We continue to forecast higher input costs in certain areas like freight and semiconductor memory. Our actual non-GAAP gross profit margin will vary depending largely on product, regional and trade-in mix and pricing. For operating expenses, we continue to expect 2026 non-GAAP operating expense growth of 11% to 13%. As a reminder, in Q4 2025, we made a $70 million multiyear contribution to the Intuitive Foundation. We do not expect to make a contribution to the foundation in 2026. Throughout the year and in Q3, in particular, we grew R&D at a rate above SG&A. We expect that trend to continue over the remainder of the year. We now estimate noncash stock compensation expense between $860 million and $870 million. We now forecast non-GAAP other income, which is comprised mostly of interest income of between $300 million and $310 million due primarily to the impact of share repurchase activity in Q3. With regard to income tax, we expect our non-GAAP effective tax rate in Q4 to be 22%, plus or minus 50 basis points. That concludes our prepared remarks. As we open the line to your questions, we ask that you limit yourselves to 1 question so that we may reach as many analysts as possible. Operator: [Operator Instructions] Our first question comes from the line of Lawrence Biegelsen with Wells Fargo. Larry Biegelsen: I'll just keep it at one here, focused on U.S. procedure growth. So Jamie or Dave, U.S. da Vinci procedure growth was stable on a stack 2-year basis, but the 10% growth in the quarter was the lowest we've seen since COVID. Shipments were strong, and it sounds like you have a ton of innovation and the extended use program is coming. So are we seeing a temporary lull in U.S. da Vinci procedure growth and the innovations and the pricing actions will help accelerate U.S. da Vinci procedures as soon as next year? I'd love to get any color on that. David Rosa: Yes. Larry, this is Dave, and I appreciate the question. Let me frame up the U.S. opportunity a bit and then Jamie can dive in with some specifics. So for me, the U.S. opportunity really breaks down into 2 areas. The first is about the addressable opportunity right in front of us that we're going after on a daily basis. And the second is a longer-term opportunity to expand the indications that da Vinci can have an impact in. And so if we look at the first part for the procedures that we know where the U.S. procedure opportunity is significant, particularly in benign general surgery, when I'm talking to customers, in order for them to adopt robotics across the benign general surgery areas as well as other benign indications, they really want to see how it compares to the alternatives, where laparoscopy is well entrenched like Jaime described, and against open surgeries sometimes. They want to see how is it doing clinically, how is it doing economically. And that is something we've invested in for a long time. We've worked hard to provide customers the data that they need from Intuitive, combine it with their data so they can understand how those modalities are doing against each other. In Q3, I had the opportunity actually to meet with about 5 large IDN customers. And when I was meeting with them, what I'm seeing is now they are developing their own real-time dashboards, looking at the economics and the clinical outcomes relative -- of da Vinci relative to laparoscopy and open. And I think that's a shift that I believe is worth noting because it's moving from anecdotes and sort of episodic data that they may look at once a year, and they're looking at it on a routine basis. And so when I saw those data and talk to those customers, robotics is comparing favorably as compared to the other modalities. And so you take that, that sort of foundation of data. You get directional data from studies like COMPARE, but you get the actual data in our customers' hand through these interactions like I'm describing. Combine that with our portfolio, the rest of our ecosystem, with the commercial performance of our capital teams expanding capacity, with the focus of our commercial teams broadly, clinical service, training and the pricing actions that Jamie described. And I think that's the foundation of a durable U.S. procedure growth into that significant opportunity. Jamie Samath: Larry, I might just add. The way we think about it, the unit opportunity in front of us in the U.S. is significant. I understand investor intention on the U.S. kind of growth over the last several quarters. There's 4 things that we're focused on that we're driving, maybe just to add some color. First is adding capacity, particularly to support the benign general surgery growth. And what you saw in this quarter was U.S. net placements increased 41%, and that's a little bit of a change from what we've seen in more recent quarters. Second thing is, as we've talked about, we've more recently added a focus on the ASC opportunity. If you look at the number of systems we've placed in ASCs last 2 quarters combined, that's more than we've placed in ASCs in almost the last 3 years, and we think that continues to be an attractive opportunity for us. And those first 2 areas are supported by both the I&A pricing actions that we've described and our tiered portfolio. If you want to invest in da Vinci 5 in the hospital with its capability -- with a capability that will only grow every year as we do software updates and extend the ecosystem, that's a good investment. But our tiered portfolio offers those customers an XiR in a HOPD or an ASC. The other 2 areas that we're driving, we're focused on over longer horizons. Three is to kind of progress cardiac and breast along the early-stage adoption curve it's in, and that requires both investment and execution. And then the fourth is what Dave described, we have programs today in R&D that have the potential to add new indications in the U.S. and elsewhere. And those are moving along and progressing and those are quite interesting. Again, they're on longer-term horizons. Operator: Our next question comes from the line of Robert Marcus with JPMorgan. Robert Marcus: I want to follow up on the extended use, and it's great, I appreciate the 3% to 5% headwind over the total enactment period, both between that and the China pricing. How do we think about necessarily the time lines? Will there be any stocking ahead of the implementation of this? And how do we think about it down the P&L, both from a gross and operating margin? If I could add one more there. Last program, you did have a price elasticity benefit on volumes. How are you thinking about volumes in response to the pricing actions? Jamie Samath: You'll probably have to remind me of your questions, Robbie, as I go along. But there may well be a little bit of stocking kind of customer ordering pattern volatility across the period in which we launch. I wouldn't expect that at this point to be significant. And obviously, we'll call that out as that occurs. In terms of the impact on gross margin, I would say that it would be a modest impact on gross margin that we'll look across '27 to offset with the cost reduction programs that we have in play. And therefore, whatever impact there is on gross margin can fall through to operating margin, but I expect that to be small and offset at some point in the year. With respect to elasticity, I would just say we believe that these actions will drive elasticity. That's the underlying intention because where we're applying them to the greatest extent is where there is cost sensitivity or cost is a barrier to adoption. And the benefit for those high-volume benign procedures is quite a bit greater than the blended 3% to 5%. Obviously, that's our intention. We have looked back at the first EUP program that we did in 2020 and our data supports the existence of elasticity. And we have confidence that implementation was successful. That, of course, is looking at our own data, but also getting feedback from our customers. And so over time, as we address economics and you think about how we frame our line of sight opportunities, as we address economics and bring costs down, we expect to increase the addressable market for Intuitive. And so those are the underlying intents. But I think we have relative confidence in the elasticity. That doesn't obviously turn on immediately in 2027, but over time. David Rosa: You know what, I know that pricing is a focus of the question as it relates to benign procedures and addressable opportunity, but I also -- I want to make sure that we are recognizing the value of our entire portfolio. And so da Vinci 5 and its innovation, we're pricing such that innovation is correlated to the value it creates. And so we have that thrust and that focus in our portfolio while actively doing the lowering of cost that Jamie described because that's where broader access matters. And so it's not a trade-off, it's our strategy to really expand our addressable market and serve more patients around the globe, and we're confident that it's going to make a difference as we look forward. Operator: Our next question comes from the line of Travis Steed with Bank of America. Travis Steed: Maybe just a pipeline question, especially with this quarter being probably the biggest quarterly buyback you've ever done. So congrats on that. There's a lot of focus on U.S. procedures. And one of the things I've thought about is there are things that -- in the pipeline that can add revenue per procedure. And as we're looking at the pipeline, if there's anything you'd like to point to or what could be coming on AI use cases or imaging things or even anything that's interesting on the GI robot or lung cancer that could be helpful for investors at this point. David Rosa: Yes. Thanks, Travis. It's a great point and one that we've described a couple of times in previous quarters. Starting maybe with Ion actually, the 2 active development programs that we have that are progressing strongly. One is around a ROSE system. And that's on-site cytology so that the physician and the care team can understand if they -- the cells may be cancer or not real time. And so they can get better answers than they do today and do it more quickly. And the second program there is endobronchial ultrasound integrated into the Ion platform. And so that allows us to do staging. Both of those should be and bring value to the Ion program, speed up the time, we think, from detection to diagnosis and ultimately treatment, but will be accretive to the revenue per case on the Ion platform. You mentioned vision is another area that we're very excited about when it comes to da Vinci. And so we have multiple programs going there with advanced visualization technology around hyperspectral imaging of fluorescent molecules and some AI features that we do think will bring that incremental value, and we're going to be able to add some revenue per procedure as a result. And so it is exactly my point of this is where innovation can bring outsized value to the customer and then bring some accretive revenue on a per procedure basis to Intuitive. And we have that across our portfolio. Operator: Our next question comes from the line of Rick Wise with Stifel. Frederick Wise: Another question about the ASC opportunity. Can you talk about your progress and what's next and maybe bring the contribution to future growth and how these next-generation extended use approach maybe impacts the opportunity. But related to that, maybe you can touch on now just with the Stryker CMR news, we have 2 competitors likely offering modular systems in the ASC. How do the competitive dynamics play in there? Does Intuitive need a modular offering of some kind? And just help us think through those various points. David Rosa: I appreciate the question, Rick. And maybe I'll break it down into kind of 2 parts because one is around the ASCs. And again, we've described this before. If you talk to ASC customers, what they're asking for is not a particular architecture. What they're asking for is something that can be repeatable, easy to learn, easy to use, reliable and serve the procedures that they're targeting for the ASCs in a very consistent way because it's about volume and it's about getting patients out in a repeatable, knowable way. So if you use that as the problem to be solved in the ASC environment, now you can start saying what kind of technology matches that and best serves that problem or solves the problem to be solved. And so if you look at how might customers look at robotic competitors and make a choice and -- for me, it comes down to basically 3 areas. One is it's got to be the right architecture for the ASC. It's got to be -- have the right portfolio of systems so that it can be priced in a manner that fits their economics. You got to have that broader ecosystem because we know that's what leads to good outcomes. And then you have to have the supporting infrastructure, all the teams and capabilities that are required to make sure a program runs at pace. And so customers understand this. They're now looking across potentially multiple solutions. And there -- they understand that it takes more than a robot. It does take an ecosystem, but the robot is front and center. And so you asked about the architectures. And if I look back over our 30 years, we have engineered and tested just about every form of architecture there is out there. And that includes modular, table-mounted and other types of robots. We brought in customers to assess them and to evaluate them side-by-side with us. And we continue to believe that a cart-based architecture consistent with da Vinci is the best option. It's the best balance of capability and usability no matter where you look, and it might be in the main OR in the ASC environment. And so if you -- we believe that it is not required to have a modular type of architecture to serve the needs of the customer in these segments where they are doing benign procedures and maybe increasingly complex procedures over time. And so I think we are well positioned with our portfolio, the pricing that Jamie described to serve the needs of our customers there and we look forward to earning their first choice. Jamie Samath: And Rick, maybe just some framing in terms of numbers. These are a bit lagged, but we think a little under 10% of the U.S. soft tissue surgery business is in ASCs today. That's growing. About 70% of those volumes are ASCs associated with or affiliated with existing IDNs. So they are customers and surgeons that we know. That's our initial focus. Our penetration of kind of all of the ASC opportunity is low in the first quartile. And that's why now that we have XiR and we have the supply for XiR, it's a focus of ours. Operator: Our next question comes from the line of Adam Maeder with Piper Sandler. Adam Maeder: I wanted to ask about EUP 2.0 and specifically one of the offsets -- potential offsets force sensing instruments. And if I heard correctly, it doesn't sound like there's any offset assumed in the 300 to 500 basis point headwind for these. So I would love just any update on force sensing instrumentation. Where is adoption today? What percentage of procedures are being done with force sensing? And how do you think it could evolve over time? And would also just appreciate any color in terms of kind of primary use cases for the force sensing technology. David Rosa: Adam, I appreciate the question. Maybe I'll start with a quick story that just happened. And so a few weeks ago, we hosted the surgeon event here where the early surgeons that were involved with da Vinci came to our campus and we had a nice event. I had the opportunity to meet with a very well-versed prostatectomy surgeon who has done over 10,000 cases. And he showed me his results that were a comparator between Xi and da Vinci 5. And he was showing the return of potency in this case from time 0 through 12 months. And so -- and you watch it gradually increase from about 50% or so out of the gate to above about 80%. And he has very good data. He's one of the world's leading surgeons. And then he laid his recent da Vinci 5 experience on top of it and had moved the entire curve up by about 10 points. And so -- and I asked him why, and he attributed that to Force Feedback and the ability to sense those forces and be that much gentler around the nerve-sparing portion of the prostatectomy, which led to those results. And so that's maybe a little bit of color about how Force Feedback can make a difference in outcomes and even with surgeons who are very, very high up in their use of da Vinci. Jamie Samath: In terms of adoption, this quarter, about 8% of da Vinci 5 cases involve Force Feedback. That's kind of been kind of a slow increase from where we've started. We only got full, full supply later in the quarter, so that affected the 8%. I would say this, our ambitions are for that number to be -- that penetration number to be quite a bit higher. Obviously, to some extent, that requires us to create the evidence that supports the value propositions. The teams are working hard on that, and we have our eye very close in terms of how that gets adopted and the actual value of using the Force Feedback instruments is well understood. I would just say there are other offsets as we described, the SP I&A per procedure is quite a bit higher than multi-port. And obviously, those procedures are growing at a much higher rate. And on da Vinci 5, because of the integrated insufflation -- when integrated insufflation is used, which is about 85% of the time, there's an additional about $100 per procedure for the tube sets that connect to the insufflator. So those 3 can drive offsets in terms of the 3% to 5%, and they generally would be expected to grow at a faster pace than the base I&A. Operator: Our next question comes from the line of Jayson Bedford with Raymond James & Associates. Jayson Bedford: Maybe just for Jamie. On the EUP, how long will it take you to fully implement the program, meaning when do you expect to see the 3% to 5% gross impact on revenue per procedure? And is there any way to kind of frame the expected impact in '27? Jamie Samath: Yes. It will be country by country. The first is the U.S. As I said, that submission is in process. So we'd expect to start to roll that out sometime later in Q1, depending on obviously when we get clearance. Europe, it would be next, and that's not until the second half of '27. And then some of the other markets just before or just after that. So I don't think we get to the full impact until the end of the year, frankly. Operator: Our next question comes from the line of Matt Taylor with Jefferies. Matthew Taylor: I did want to follow up on the settlement that you talked about today. You mentioned onetime, no fault and just provide some certainty for your customers. I guess just wondering what this practically means for your customers and how they move on from that. And if you could just talk about remanufacturing in general and whether that's been any kind of real headwind. David Rosa: Yes, sure. Maybe I'll start and Gary will please weigh in. So this settlement really is an agreement with our customers, specifically regarding third-party instrument remanufacturers and third-party service providers. And I think the important part here is that it provides a clear framework on how we'll continue to work together in those 2 specific areas. And it lets us focus on really the things that are important. So advancing the safety, quality and security of our products for surgeons, care teams and their patients. And so we believe that this certainty that it provides allows us to move forward and really focus on building value with our customers. Gary Loeb: Yes. Just to add briefly, I think the resolution really strengthens our customer relationships, and it just provides a defined framework for how we work together on instruments and servicing. Operator: Our next question comes from the line of Chris Pasquale with Barclays. Chris Pasquale: I want to ask about margins. You guys have done a great job improving profitability over the past few years. This quarter was better than expected. Street is modeling operating margin flat next year. So while I appreciate you don't really want to get into '27 in detail right now, you talked about offsetting the gross margin headwind from extended use. Are there any other considerations that we should take into account as we think about profitability and your ability to continue to expand margins here going forward? Jamie Samath: Yes. I think what we've said for some time now is kind of the range of where we'd expect to be on operating margin is between 35% and 40%. And I think that's, frankly, best-in-class in MedTech. As we think about it from a strategy perspective, our lean is to invest, invest in areas where we can innovate and bring differentiated capability to our customers and their patients, but also to support investments that allow us to grow at accelerated rates so that we can, again, serve more patients. And where we are right now, 41%, 42%, we have the capacity to invest. And so as we finish our planning process, then we'll evaluate that carefully. I'm not ready to say what we'll do on operating expenses. But certainly, if there are opportunities for us to do what I just described, then we'll use that capacity to invest. We'll provide that guidance, obviously, in January. David Rosa: Okay. That was our last question. Thank you for the questions. In closing, we continue to believe there's a substantial and durable opportunity to fundamentally improve surgery and acute interventions. Our teams continue to work closely with hospitals, physicians and care teams in pursuit of what our customers have termed the Quintuple Aim: Better, more predictable patient outcomes, better experiences for patients, better experiences for their care teams, lower total cost of care and finally, increased access to care. We believe value creation in surgery and acute care is foundationally human. It flows from respect for and understanding of patients and care teams and their needs and their environment. At Intuitive, we envision a future of care that is less invasive and profoundly better where diseases are identified earlier and treated quickly so patients can get back to what matters most. Thank you for your support on this extraordinary journey. We look forward to talking with you again in 3 months. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. Before you buy stock in Intuitive Surgical, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intuitive Surgical wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $370,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,330,110!* Now, it's worth noting Stock Advisor's total average return is 924% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 21, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy. Intuitive Surgical (ISRG) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

SUNNYVALE, Calif., Oct. 20, 2026 (GLOBE NEWSWIRE) -- Intuitive (the "Company") (Nasdaq: ISRG), a global technology leader in minimally invasive care and the pioneer of robotic-assisted surgery, today announced financial results for the quarter ended September 30, 2026. Q3 Highlights - Worldwide procedures (da Vinci and Ion combined) grew approximately 15% compared with the third quarter of 2025. Da Vinci procedures grew approximately 14%, and Ion procedures grew approximately 31%. - The Company placed 546 da Vinci surgical systems, compared with 427 in the third quarter of 2025. The third quarter 2026 da Vinci surgical system placements included 315 da Vinci 5 systems, compared with 240 in the third quarter of 2025. The Company placed 56 Ion endoluminal systems, compared with 50 in the third quarter of 2025. - The Company grew its da Vinci surgical system installed base to 12,094 systems as of September 30, 2026, an increase of 12% compared with 10,763 as of September 30, 2025. The Company grew its Ion endoluminal system installed base to 1,152 systems as of September 30, 2026, an increase of 21% compared with 954 as of September 30, 2025. - Third quarter 2026 revenue of $3.05 billion increased 22%, compared with $2.51 billion in the third quarter of 2025. - Third quarter 2026 GAAP net income attributable to Intuitive Surgical, Inc. was $523 million, or $1.49 per diluted share, compared with $704 million, or $1.95 per diluted share, in the third quarter of 2025. - Third quarter 2026 GAAP net income attributable to Intuitive Surgical, Inc. included a pre-tax charge of $450 million in connection with the settlement of previously disclosed antitrust class action litigation. The third quarter 2026 expense was $347 million, net of tax, or $0.99 per diluted share. - Third quarter 2026 non-GAAP* net income attributable to Intuitive Surgical, Inc. was $1.05 billion, or $3.00 per diluted share, compared with $867 million, or $2.40 per diluted share, in the third quarter of 2025. - Third quarter 2026 GAAP and non-GAAP* net income attributable to Intuitive Surgical, Inc. included a benefit of $22 million, net of tax, or $0.06 per diluted share, related to refunds for tariffs paid in prior periods under the International Emergency Economic Powers Act ("IEEPA"). - The Company repurchased 7.8 million shares of its common stock for $2.94 billion in the third quarter of 2026. Q3 Financial Summary Gross profit, income from operations, net income attributable to Intuitive Surgical, Inc., and net income per diluted share attributable to Intuitive Surgical, Inc. are reported on a GAAP and non-GAAP* basis. The non-GAAP* measures are described below and are reconciled to the corresponding GAAP measures at the end of this release. Third quarter 2026 revenue was $3.05 billion, an increase of 22% compared with $2.51 billion in the third quarter of 2025. The higher third quarter revenue was driven by growth in procedure volume, higher operating lease revenue, and an increase in the installed base of systems. Third quarter 2026 instruments and accessories revenue increased by 18% to $1.80 billion, compared with $1.52 billion in the third quarter of 2025. The increase in instruments and accessories revenue was primarily driven by approximately 14% growth in da Vinci procedure volume and approximately 31% growth in Ion procedure volume. Third quarter 2026 systems revenue was $769 million, compared with $590 million in the third quarter of 2025. The higher systems revenue reflected increased da Vinci system placements and a higher lease installed base compared with the third quarter of 2025. The Company placed 546 da Vinci surgical systems, of which 315 were da Vinci 5 systems, in the third quarter of 2026, compared with 427 systems, of which 240 were da Vinci 5 systems, in the third quarter of 2025. The third quarter 2026 da Vinci surgical system placements included 291 systems placed under operating lease arrangements, of which 160 systems were placed under usage-based operating lease arrangements, compared with 231 systems placed under operating lease arrangements, of which 115 systems were placed under usage-based operating lease arrangements in the third quarter of 2025. Third quarter 2026 GAAP income from operations decreased to $593 million, compared with $760 million in the third quarter of 2025. Third quarter 2026 GAAP income from operations included share-based compensation expense of $216 million, compared with $206 million in the third quarter of 2025. Third quarter 2026 non-GAAP* income from operations increased to $1.27 billion, compared with $976 million in the third quarter of 2025. In October 2026, following a mediation in the "In re: da Vinci Surgical Robot Antitrust Litigation" class action, the Company reached written agreement, without any admission of liability or wrongdoing, to settle the previously disclosed antitrust litigation for a one-time payment of $450 million and mutually agreed injunctive relief. The Company recorded a $450 million charge to selling, general, and administrative expenses in the third quarter of 2026. The settlement remains subject to preliminary and final Court approval, and there can be no assurance the Court will approve it or that individual class members will not object. The third quarter 2026 expense was $347 million, net of tax, or $0.99 per diluted share. Third quarter 2026 GAAP net income attributable to Intuitive Surgical, Inc. was $523 million, or $1.49 per diluted share, compared with $704 million, or $1.95 per diluted share, in the third quarter of 2025. Third quarter 2026 GAAP net income attributable to Intuitive Surgical, Inc. included excess tax benefits of $13 million, or $0.04 per diluted share, compared with $24 million, or $0.07 per diluted share, in the third quarter of 2025. Additionally, third quarter 2026 GAAP net income included a benefit of $22 million, net of tax, or $0.06 per diluted share, related to refunds for tariffs paid in prior periods under IEEPA. Third quarter 2026 non-GAAP* net income attributable to Intuitive Surgical, Inc. was $1.05 billion, or $3.00 per diluted share, compared with $867 million, or $2.40 per diluted share, in the third quarter of 2025. Third quarter 2026 non-GAAP* net income included a benefit of $22 million, net of tax, or $0.06 per diluted share, related to refunds for tariffs paid in prior periods under IEEPA. The Company ended the third quarter of 2026 with $6.80 billion in cash, cash equivalents, and investments, a decrease of $1.83 billion during the quarter, primarily driven by cash used for repurchases of common stock and purchases of property, plant, and equipment, partially offset by cash generated from operations. "Our strong performance this quarter was marked by broad-based adoption across our multi-port, single-port, and Ion platforms, with customers using our systems to perform, on average, over 10,000 procedures per day throughout the period," said Dave Rosa, Intuitive CEO. "Looking ahead, we will remain focused on serving customers across geographies and sites of care, enabling them to deliver better patient care, outcomes, and experiences, reduce the total cost of care, and expand access to minimally invasive care." 2026 Financial Outlook The Company expects the following results for the full year of 2026: - Worldwide da Vinci procedure growth of approximately 14% to 15% in 2026. The Company expects to be closer to the midpoint of this range. - Non-GAAP* gross profit margin to be within a range of 68.7% to 69.3% of revenue in 2026. This range includes an estimated impact from tariffs of 0.9% of revenue (excluding recognized tariff refunds). - Non-GAAP* operating expense growth of 11% to 13% in 2026. The range for expected non-GAAP* gross profit margin reflects the Company's estimates of the adverse impact from tariffs that are currently in effect as of the time of this press release and assumes such tariffs remain in place through the end of the year. Should additional tariffs beyond our expectations be implemented, the additional impact on the Company's financial results in 2026, including the change in expected non-GAAP* gross profit margin, could be material. The ultimate effect of tariffs will depend on various factors, including the proportion of components procured and finished goods manufactured outside of the United States and the amount, scope, nature, and timing of the tariffs. The 2026 financial outlook provided above includes forward-looking, non-GAAP financial measures, which management uses in measuring performance. We do not provide a reconciliation of non-GAAP outlook measures to corresponding GAAP measures on a forward-looking basis, because we are unable to predict with reasonable certainty the exact timing and ultimate outcome of certain items, including but not limited to legal proceedings, without unreasonable efforts. These items are uncertain, depend on various factors, and could be material to the Company's results computed in accordance with GAAP. For additional information regarding the nature of these items, refer to the reconciliations of historical GAAP to non-GAAP measures included elsewhere in this release. Additional supplemental financial and procedure information has been posted to the Investor Relations section of the Intuitive website at https://isrg.gcs-web.com/. Webcast and Conference Call Information Intuitive will hold a teleconference at 1:30 p.m. PDT today to discuss the third quarter 2026 financial results. The call will be webcast live and can be accessed on Intuitive's website at www.intuitive.com. For those individuals planning to participate on the call, registration can be completed online at https://edge.media-server.com/mmc/p/6sniqxsm to receive dial-in details and an individual pin. The webcast replay of the call will be made available on our website at www.intuitive.com within 24 hours after the end of the live teleconference and will be accessible for at least 30 days. About Intuitive Intuitive (Nasdaq: ISRG), headquartered in Sunnyvale, California, is a global leader in minimally invasive care and the pioneer of robotic-assisted surgery. Our technologies include the da Vinci surgical systems and the Ion endoluminal system. By uniting advanced systems, progressive learning, and value-enhancing services, we help physicians and their teams optimize care delivery to support the best outcomes possible. At Intuitive, we envision a future of care that is less invasive and profoundly better, where diseases are identified early and treated quickly, so patients can get back to what matters most. Product and brand names/logos are trademarks or registered trademarks of Intuitive or their respective owner. See www.intuitive.com/trademarks. For more information, please visit the Company's website at www.intuitive.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements relate to expectations concerning matters that are not historical facts. Statements using words such as "estimates," "projects," "believes," "anticipates," "plans," "expects," "intends," "may," "will," "could," "should," "commit," "would," "seek," "potential," "targeted," and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements are necessarily estimates reflecting the judgment of the Company's management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements include, but are not limited to, the following: statements related to future results of operations, including expected worldwide da Vinci procedure growth in 2026 and where within the expected range such growth will fall, expected non-GAAP gross profit margins in 2026, including the estimated impact from tariffs on such margins, and expected non-GAAP operating expense growth in 2026; future financial position; the Company's focus on serving customers across geographies and sites of care and the goals the Company shares with its customers, including improving patient care, outcomes, and experiences, reducing the total cost of care, and expanding access to minimally invasive care; the estimated impact from tariffs, including the assumption that tariffs currently in effect remain in place through the end of the year and the potential for material adverse impact on the Company's financial results if additional tariffs beyond the Company's current expectations are implemented; the proposed settlement of the antitrust class action litigation, including the receipt of preliminary and final court approval, and the extent of any objections to the settlement; expectations regarding the continuation of share-based compensation expense as a significant recurring expense; the Company's strategic vision for the future of minimally invasive care; and the Company's inability to predict with reasonable certainty the exact timing and ultimate outcome of certain items, including legal proceedings. These forward-looking statements should be considered in light of various important factors, including, but not limited to, the following: the overall macroeconomic environment, which may impact customer spending and the Company's costs, including tariffs, the levels of inflation, and interest rates; the conflict in Ukraine; conflicts in the Middle East, including Israel and Iran; disruption to the Company's supply chain, including increased difficulties in obtaining a sufficient supply of materials; curtailed or delayed capital spending by hospitals; the impact of global and regional economic and credit market conditions on healthcare spending; delays in obtaining new product approvals, clearances, or certifications from the United States ("U.S.") Food and Drug Administration ("FDA"), comparable regulatory authorities, or notified bodies; the risk of the Company's inability to comply with complex FDA and other regulations, which may result in significant enforcement actions; regulatory approvals, clearances, certifications, and restrictions or any dispute that may occur with any regulatory body; healthcare reform legislation in the U.S. and its impact on hospital spending, reimbursement, and fees levied on certain medical device revenues; changes in hospital admissions and actions by payers to limit or manage surgical procedures; the timing and success of product development and customer acceptance of developed products; the results of any collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships, including the joint venture with Shanghai Fosun Pharmaceutical (Group) Co., Ltd.; the Company's completion of and ability to successfully integrate acquisitions, including the recently completed acquisition of the da Vinci and Ion distribution businesses in Italy, Spain, and Portugal and the transition from a distributor to a direct sales model in those markets; intellectual property positions and litigation; competition from companies offering alternative surgical approaches or robotic-assisted surgical systems, including domestic competitors in certain geographic markets such as China; risks associated with the Company's operations and any expansion outside of the U.S.; unanticipated manufacturing disruptions or the inability to meet demand for products; the Company's reliance on sole- and single-sourced suppliers; the results of legal proceedings to which the Company is or may become a party; the risk that the proposed settlement of the antitrust class action litigation does not receive preliminary or final court approval on the agreed terms or at all, including as a result of objections by class members, or that any approval is appealed; adverse publicity regarding the Company and the safety of the Company's products and adequacy of training; the impact of changes to tax legislation, guidance, and interpretations; changes in tariffs, trade barriers, and regulatory requirements (including changes to tariffs imposed by the U.S. on imports from various countries, including Mexico, where the Company currently manufactures a significant majority of its instruments and accessories, Germany, where the Company currently manufactures a majority of its endoscopes, and China, where the Company currently imports certain materials); hospital staffing constraints and labor availability; cybersecurity risks, including risks to the Company's supply chain; and other risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release and which are based on current expectations and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those risk factors identified under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as updated by the Company's other filings with the Securities and Exchange Commission ("SEC"). The Company's actual results may differ materially and adversely from those expressed in any forward-looking statement, and the Company undertakes no obligation to publicly update or release any revisions to these forward-looking statements, except as required by law. *About Non-GAAP Financial Measures To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income attributable to Intuitive, and non-GAAP net income per diluted share attributable to Intuitive ("EPS"). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding items such as amortization of intangible assets, share-based compensation ("SBC") and long-term incentive plan ("LTIP") expenses, acquisition-related items, a facilities asset abandonment charge, litigation charges, gains on the sale of businesses and assets, gains or losses on strategic investments, tax adjustments, and other special items. LTIP expense relates to phantom share awards granted in China by the Company's Intuitive-Fosun joint venture to its employees that vest over four years and can remain outstanding for seven to ten years. These awards are valued based on certain key performance metrics. Accordingly, they are subject to significant volatility based on the performance of these metrics and are not tied to performance of the Company's business within the period. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to its historical performance. The Company believes these non-GAAP financial measures are useful to investors, because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and (2) they are used by institutional investors and the analyst community to help them analyze the performance of the Company's business. Non-GAAP gross profit. The Company defines non-GAAP gross profit as gross profit, excluding SBC and LTIP expenses, amortization of intangible assets, and acquisition-related items. Non-GAAP income from operations. The Company defines non-GAAP income from operations as income from operations, excluding SBC and LTIP expenses, amortization of intangible assets, a facilities asset abandonment charge, litigation charges, acquisition-related items, and gains on the sale of businesses and assets. Non-GAAP net income attributable to Intuitive and EPS. The Company defines non-GAAP net income as net income attributable to Intuitive, excluding SBC and LTIP expenses, amortization of intangible assets, a facilities asset abandonment charge, litigation charges, acquisition-related items, gains on the sale of businesses and assets, gains or losses on strategic investments, tax adjustments, including the excess tax benefits associated with SBC arrangements and the net tax effects related to intra-entity transfers of non-inventory assets, and adjustments attributable to noncontrolling interest in joint venture, net of the related tax effects. The Company excludes the excess tax benefits associated with SBC arrangements as well as the tax effects associated with non-cash amortization of deferred tax assets related to intra-entity non-inventory transfers, because the Company does not believe these items correlate with the ongoing results of its core operations. The tax effects of the non-GAAP items are determined by applying a calculated non-GAAP effective tax rate, which is commonly referred to as the with-and-without method. Without excluding these tax effects, investors would only see the gross effect that these non-GAAP adjustments had on the Company's operating results. The Company's calculated non-GAAP effective tax rate is generally higher than its GAAP effective tax rate. The Company defines non-GAAP EPS as non-GAAP net income attributable to Intuitive divided by diluted shares outstanding, which are calculated as GAAP weighted-average outstanding shares plus dilutive potential shares outstanding during the period. There are a number of limitations related to the use of non-GAAP measures versus measures calculated in accordance with GAAP. Non-GAAP gross profit, non-GAAP income from operations, non-GAAP net income attributable to Intuitive, and non-GAAP EPS exclude items such as SBC and LTIP expenses, amortization of intangible assets, excess tax benefits associated with SBC arrangements, and non-cash amortization of deferred tax assets related to intra-entity transfers of non-inventory assets, which are primarily recurring items. SBC expense has been, and will continue to be for the foreseeable future, a significant recurring expense in the Company's business. In addition, the components of the costs that the Company excludes in its calculation of non-GAAP net income attributable to Intuitive and non-GAAP EPS may differ from the components that its peer companies exclude when they report their results of operations. Management addresses these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income attributable to Intuitive and non-GAAP EPS and evaluating non-GAAP net income attributable to Intuitive and non-GAAP EPS together with net income attributable to Intuitive and net income per share attributable to Intuitive calculated in accordance with GAAP. INTUITIVE SURGICAL, INC. UNAUDITED QUARTERLY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS, EXCEPT PER SHARE DATA) | | Three Months Ended | September 30, 2026 | | June 30, 2026 | | September 30, 2025 Revenue: | | | | | Instruments and accessories | $ | 1,797.4 | | | $ | 1,734.9 | | | $ | 1,518.8 | Systems | | 769.1 | | | | 685.0 | | | | 590.4 | Services | | 482.2 | | | | 472.4 | | | | 395.9 | Total revenue | | 3,048.7 | | | | 2,892.3 | | | | 2,505.1 | Cost of revenue: | | | | | Product | | 797.7 | | | | 777.0 | | | | 699.4 | Service | | 166.7 | | | | 154.9 | | | | 143.3 | Total cost of revenue (1) | | 964.4 | | | | 931.9 | | | | 842.7 | Gross profit | | 2,084.3 | | | | 1,960.4 | | | | 1,662.4 | Operating expenses: | | | | | Selling, general, and administrative (2) | | 1,083.4 | | | | 617.9 | | | | 573.3 | Research and development | | 408.3 | | | | 370.6 | | | | 329.4 | Total operating expenses | | 1,491.7 | | | | 988.5 | | | | 902.7 | Income from operations (3) | | 592.6 | | | | 971.9 | | | | 759.7 | Interest and other income, net | | 75.8 | | | | 82.7 | | | | 95.5 | Income before taxes | | 668.4 | | | | 1,054.6 | | | | 855.2 | Income tax expense (benefit) (4) | | 144.0 | | | | 231.4 | | | | 146.0 | Net income | | 524.4 | | | | 823.2 | | | | 709.2 | Less: net income attributable to noncontrolling interest in joint venture | | 1.6 | | | | 5.1 | | | | 4.8 | Net income attributable to Intuitive Surgical, Inc. | $ | 522.8 | | | $ | 818.1 | | | $ | 704.4 | Net income per share attributable to Intuitive Surgical, Inc.: | | | | | Basic | $ | 1.50 | | | $ | 2.31 | | | $ | 1.98 | Diluted (5) | $ | 1.49 | | | $ | 2.29 | | | $ | 1.95 | Weighted average shares outstanding: | | | | | Basic | | 349.0 | | | | 354.1 | | | | 356.6 | Diluted | | 351.6 | | | | 357.3 | | | | 361.8 | (1) Cost of revenue includes the following benefits related to refunds recognized for tariffs paid in prior periods under IEEPA: Product | $ | 25.7 | | | $ | 27.5 | | | $ | — | Service | $ | 2.1 | | | $ | 8.4 | | | $ | — | (2) Selling, general, and administrative includes the effect of the following item: | | | | | Litigation charges | $ | 454.9 | | | $ | 0.1 | | | $ | 8.1 | (3) Income from operations includes the effect of the following items: | | | | | Amortization of intangible assets | $ | (9.3 | ) | | $ | (24.0 | ) | | $ | (3.3 | ) Expensed IP charged to R&D | $ | — | | | $ | — | | | $ | (0.6 | ) (4) Income tax expense (benefit) includes the effect of the following items: | | | | | Excess tax benefits related to share-based compensation arrangements | $ | (12.6 | ) | | $ | (17.3 | ) | | $ | (24.2 | ) Discrete tax benefit from release of unrecognized tax benefits | $ | — | | | $ | — | | | $ | (22.5 | ) (5) Diluted net income per share attributable to Intuitive Surgical, Inc. includes the effect of the following items: IEEPA tariff refunds, net of tax | $ | 0.06 | | | $ | 0.08 | | | $ | — | Litigation charges, net of tax | $ | (1.00 | ) | | $ | — | | | $ | (0.02 | ) Amortization of intangible assets, net of tax | $ | (0.03 | ) | | $ | (0.05 | ) | | $ | (0.01 | ) Excess tax benefits related to share-based compensation arrangements | $ | 0.04 | | | $ | 0.05 | | | $ | 0.07 | Discrete tax benefit from release of unrecognized tax benefits | $ | — | | | $ | — | | | $ | 0.06 | | | | | | | | | | | | INTUITIVE SURGICAL, INC. UNAUDITED YEAR-TO-DATE CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS, EXCEPT PER SHARE DATA) | | Nine Months Ended | September 30, | 2026 | | 2025 Revenue: | | | Instruments and accessories | $ | 5,218.7 | | | $ | 4,360.6 | Systems | | 2,104.8 | | | | 1,687.8 | Services | | 1,388.3 | | | | 1,150.1 | Total revenue | | 8,711.8 | | | | 7,198.5 | Cost of revenue: | | | Product | | 2,354.7 | | | | 2,056.3 | Service | | 481.9 | | | | 404.2 | Total cost of revenue (1) | | 2,836.6 | | | | 2,460.5 | Gross profit | | 5,875.2 | | | | 4,738.0 | Operating expenses: | | | Selling, general, and administrative (2) | | 2,314.6 | | | | 1,697.9 | Research and development | | 1,140.8 | | | | 958.9 | Total operating expenses | | 3,455.4 | | | | 2,656.8 | Income from operations (3) | | 2,419.8 | | | | 2,081.2 | Interest and other income, net | | 243.6 | | | | 274.6 | Income before taxes | | 2,663.4 | | | | 2,355.8 | Income tax expense (4) | | 489.8 | | | | 278.7 | Net income | | 2,173.6 | | | | 2,077.1 | Less: net income attributable to noncontrolling interest in joint venture | | 11.2 | | | | 15.9 | Net income attributable to Intuitive Surgical, Inc. | $ | 2,162.4 | | | $ | 2,061.2 | Net income per share attributable to Intuitive Surgical, Inc.: | | | Basic | $ | 6.13 | | | $ | 5.77 | Diluted (5) | $ | 6.07 | | | $ | 5.67 | Weighted average shares outstanding: | | | Basic | | 352.6 | | | | 357.5 | Diluted | | 356.2 | | | | 363.5 | | | | (1) Cost of revenue includes the following benefits related to refunds recognized for tariffs paid in prior periods under IEEPA: Product | $ | 53.2 | | | $ | — | Service | $ | 10.5 | | | $ | — | (2) Selling, general, and administrative includes the effect of the following item: | | | Litigation charges | $ | 461.3 | | | $ | 12.5 | (3) Income from operations includes the effect of the following items: | | | Amortization of intangible assets | $ | (40.4 | ) | | $ | (9.9 | ) Expensed IP charged to R&D | $ | — | | | $ | (7.3 | ) (4) Income tax expense includes the effect of the following items: | | | Excess tax benefits related to share-based compensation arrangements | $ | (103.2 | ) | | $ | (202.5 | ) Discrete tax benefit from release of unrecognized tax benefits | $ | (1.6 | ) | | $ | (23.0 | ) (5) Diluted net income per share attributable to Intuitive Surgical, Inc. includes the effect of the following items: IEEPA tariff refunds, net of tax | $ | 0.14 | | | $ | — | Litigation charges, net of tax | $ | (1.00 | ) | | $ | (0.03 | ) Amortization of intangible assets, net of tax | $ | (0.09 | ) | | $ | (0.02 | ) Expensed IP charged to R&D, net of tax | $ | — | | | $ | (0.02 | ) Excess tax benefits related to share-based compensation arrangements | $ | 0.29 | | | $ | 0.56 | Discrete tax benefit from release of unrecognized tax benefits | $ | — | | | $ | 0.06 | | | | | | | | INTUITIVE SURGICAL, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (IN MILLIONS) | | | | September 30, 2026 | | December 31, 2025 Cash, cash equivalents, and investments | $ | 6,800.4 | | | $ | 9,034.1 | Accounts receivable, net | | 1,721.3 | | | | 1,527.3 | Inventory | | 2,128.2 | | | | 1,840.0 | Property, plant, and equipment, net | | 5,676.2 | | | | 5,342.4 | Goodwill | | 557.8 | | | | 370.3 | Deferred tax assets | | 719.7 | | | | 1,018.6 | Other assets | | 1,745.5 | | | | 1,326.0 | Total assets | $ | 19,349.1 | | | $ | 20,458.7 | | | | | | Accounts payable and other liabilities | $ | 2,561.9 | | | $ | 1,918.9 | Deferred revenue | | 669.4 | | | | 598.1 | Total liabilities | | 3,231.3 | | | | 2,517.0 | Stockholders' equity | | 16,117.8 | | | | 17,941.7 | Total liabilities and stockholders' equity | $ | 19,349.1 | | | $ | 20,458.7 | | | | | | | | INTUITIVE SURGICAL, INC. UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (IN MILLIONS, EXCEPT PER SHARE DATA) | | | | | | Three Months Ended | | Nine Months Ended | | September 30, 2026 | | June 30, 2026 | | September 30, 2025 | | September 30, 2026 | | September 30, 2025 GAAP gross profit | | $ | 2,084.3 | | | $ | 1,960.4 | | | $ | 1,662.4 | | | $ | 5,875.2 | | | $ | 4,738.0 | GAAP gross profit margin (1) | | | 68.4 | % | | | 67.8 | % | | | 66.4 | % | | | 67.4 | % | | | 65.8 | % Share-based compensation expense | | | 36.6 | | | | 36.2 | | | | 38.8 | | | | 108.8 | | | | 111.6 | Long-term incentive plan expense | | | — | | | | (0.1 | ) | | | 0.2 | | | | — | | | | 0.6 | Amortization of intangible assets | | | 8.7 | | | | 23.3 | | | | 2.4 | | | | 38.6 | | | | 7.3 | Acquisition-related items | | | — | | | | 4.1 | | | | — | | | | 10.0 | | | | — | Non-GAAP gross profit | | $ | 2,129.6 | | | $ | 2,023.9 | | | $ | 1,703.8 | | | $ | 6,032.6 | | | $ | 4,857.5 | Non-GAAP gross profit margin (1) | | | 69.9 | % | | | 70.0 | % | | | 68.0 | % | | | 69.2 | % | | | 67.5 | % | | | | | | | | | | GAAP income from operations | | $ | 592.6 | | | $ | 971.9 | | | $ | 759.7 | | | $ | 2,419.8 | | | $ | 2,081.2 | Share-based compensation expense | | | 212.6 | | | | 209.9 | | | | 203.5 | | | | 632.0 | | | | 584.9 | Long-term incentive plan expense | | | 0.3 | | | | (0.4 | ) | | | 1.3 | | | | 0.4 | | | | 2.4 | Amortization of intangible assets | | | 9.3 | | | | 24.0 | | | | 3.3 | | | | 40.4 | | | | 9.9 | Facilities asset abandonment charge | | | — | | | | 6.9 | | | | — | | | | 6.9 | | | | — | Litigation charges | | | 454.9 | | | | — | | | | 8.1 | | | | 461.2 | | | | 11.6 | Gains on sale of businesses and assets | | | — | | | | — | | | | — | | | | (7.9 | ) | | | — | Acquisition-related items | | | — | | | | 5.7 | | | | — | | | | 11.7 | | | | — | Non-GAAP income from operations | | $ | 1,269.7 | | | $ | 1,218.0 | | | $ | 975.9 | | | $ | 3,564.5 | | | $ | 2,690.0 | | | | | | | | | | | GAAP net income attributable to Intuitive Surgical, Inc. | | $ | 522.8 | | | $ | 818.1 | | | $ | 704.4 | | | $ | 2,162.4 | | | $ | 2,061.2 | Share-based compensation expense | | | 212.6 | | | | 209.9 | | | | 203.5 | | | | 632.0 | | | | 584.9 | Long-term incentive plan expense | | | 0.3 | | | | (0.4 | ) | | | 1.3 | | | | 0.4 | | | | 2.4 | Amortization of intangible assets | | | 9.3 | | | | 24.0 | | | | 3.3 | | | | 40.4 | | | | 9.9 | Facilities asset abandonment charge | | | — | | | | 6.9 | | | | — | | | | 6.9 | | | | — | Litigation charges | | | 454.9 | | | | — | | | | 8.1 | | | | 461.2 | | | | 11.6 | Gains on sale of businesses and assets | | | — | | | | — | | | | — | | | | (7.9 | ) | | | — | (Gains) losses on strategic investments | | | (0.9 | ) | | | (0.2 | ) | | | (3.0 | ) | | | (1.7 | ) | | | 2.0 | Acquisition-related items | | | — | | | | 5.7 | | | | — | | | | 11.7 | | | | — | Tax adjustments (2) | | | (144.4 | ) | | | (62.1 | ) | | | (49.9 | ) | | | (347.6 | ) | | | (344.3 | ) Adjustments attributable to noncontrolling interest in joint venture | | | (0.1 | ) | | | 0.2 | | | | (0.5 | ) | | | (0.1 | ) | | | (1.1 | ) Non-GAAP net income attributable to Intuitive Surgical, Inc. | | $ | 1,054.5 | | | $ | 1,002.1 | | | $ | 867.2 | | | $ | 2,957.7 | | | $ | 2,326.6 | | | | | | | | | | | GAAP net income per share attributable to Intuitive Surgical, Inc. - diluted | | $ | 1.49 | | | $ | 2.29 | | | $ | 1.95 | | | $ | 6.07 | | | $ | 5.67 | Share-based compensation expense | | | 0.60 | | | | 0.59 | | | | 0.56 | | | | 1.77 | | | | 1.61 | Long-term incentive plan expense | | | — | | | | — | | | | 0.01 | | | | — | | | | 0.01 | Amortization of intangible assets | | | 0.03 | | | | 0.07 | | | | 0.01 | | | | 0.11 | | | | 0.03 | Facilities asset abandonment charge | | | — | | | | 0.02 | | | | — | | | | 0.02 | | | | — | Litigation charges | | | 1.29 | | | | — | | | | 0.02 | | | | 1.29 | | | | 0.03 | Gains on sale of businesses and assets | | | — | | | | — | | | | — | | | | (0.02 | ) | | | — | (Gains) losses on strategic investments | | | — | | | | — | | | | (0.01 | ) | | | — | | | | — | Acquisition-related items | | | — | | | | 0.01 | | | | — | | | | 0.03 | | | | — | Tax adjustments (2) | | | (0.41 | ) | | | (0.18 | ) | | | (0.14 | ) | | | (0.97 | ) | | | (0.95 | ) Adjustments attributable to noncontrolling interest in joint venture | | | — | | | | — | | | | — | | | | — | | | | — | Non-GAAP net income per share attributable to Intuitive Surgical, Inc. - diluted | | $ | 3.00 | | | $ | 2.80 | | | $ | 2.40 | | | $ | 8.30 | | | $ | 6.40 | | | | | | | | | | | (1) Gross profit margin is calculated by dividing gross profit by revenue. (2) For the three months ended September 30, 2026, tax adjustments included: (a) excess tax benefits associated with share-based compensation arrangements of $(12.6) million, or $(0.04) per diluted share; (b) the tax impact related to intra-entity transfers of non-inventory assets of $10.7 million, or $0.03 per diluted share; and (c) other tax adjustments effects determined by applying a calculated non-GAAP effective tax rate of $(142.5) million, or $(0.40) per diluted share. For the three months ended September 30, 2025, tax adjustments included: (a) excess tax benefits associated with share-based compensation arrangements of $(24.2) million, or $(0.07) per diluted share; (b) the tax impact related to intra-entity transfers of non-inventory assets of $10.6 million, or $0.03 per diluted share; and (c) other tax adjustments effects determined by applying a calculated non-GAAP effective tax rate of $(36.3) million, or $(0.10) per diluted share. For the nine months ended September 30, 2026, tax adjustments included: (a) excess tax benefits associated with share-based compensation arrangements of $(103.2) million, or $(0.29) per diluted share; (b) tax impact related to intra-entity transfers of non-inventory assets of $32.1 million, or $0.09 per diluted share; and (c) other tax adjustments effects determined by applying a calculated non-GAAP effective tax rate of $(276.5) million, or $(0.77) per diluted share. For the nine months ended September 30, 2025, tax adjustments included: (a) excess tax benefits associated with share-based compensation arrangements of $(202.5) million, or $(0.56) per diluted share; (b) tax impact related to intra-entity transfers of non-inventory assets of $32.0 million, or $0.09 per diluted share; and (c) other tax adjustments effects determined by applying a calculated non-GAAP effective tax rate of $(173.8) million, or $(0.48) per diluted share. Contact: Investor Relations (408) 523 - 2161

For the quarter ended September 2026, Intuitive Surgical, Inc. (ISRG) reported revenue of $3.05 billion, up 21.7% over the same period last year. EPS came in at $3.00, compared to $2.40 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $2.88 billion, representing a surprise of +5.84%. The company delivered an EPS surprise of +14.94%, with the consensus EPS estimate being $2.61. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately. Here is how Intuitive Surgical performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: - Total System Units Placed - Total Company: 546 versus the four-analyst average estimate of 475. - Da Vinci Surgical System Installed Base: 12,094 versus 12,080 estimated by three analysts on average. - Revenue- Product (Instruments and accessories and Systems): $2.57 billion compared to the $2.38 billion average estimate based on five analysts. The reported number represents a change of +21.7% year over year. - Revenue- Services: $482.2 million versus $457.34 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +21.8% change. - Revenue- Systems: $769.1 million compared to the $650.13 million average estimate based on five analysts. The reported number represents a change of +30.3% year over year. - Revenue- Instruments and accessories: $1.8 billion versus the five-analyst average estimate of $1.73 billion. The reported number represents a year-over-year change of +18.3%. - Gross Profit- Service: $315.5 million versus the two-analyst average estimate of $303.04 million. - Gross Profit- Product: $1.77 billion versus the two-analyst average estimate of $1.57 billion. View all Key Company Metrics for Intuitive Surgical here>>> Shares of Intuitive Surgical have returned +7.9% over the past month versus the Zacks S&P 500 composite's +0.7% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research