What Intuitive Surgical (ISRG) Said on Its Q3 Earnings Call

Key Points

• 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.

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.

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.

System Placements and International Expansion

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.

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.

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.

Pricing Actions Target Benign Procedures

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.

Profitability, Settlement and Outlook

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%.

Clinical Evidence and Technology Development

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.

About Intuitive Surgical (NASDAQ:ISRG)

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 contact@marketbeat.com.