Intuitive Surgical, Inc. (ISRG) Earnings & Analysis

Latest quarter

Intuitive Surgical reported Q3 FY2026 revenue of $3.0 billion, above the $2.9 billion consensus, and adjusted earnings per share of $3.00, above the $2.61 consensus.

The filing shows revenue rose from $2.5 billion a year earlier. Instruments and accessories revenue increased 18% to $1.80 billion, which Intuitive attributed primarily to higher procedure volumes and a product mix that lifted da Vinci revenue per procedure. Systems revenue rose 30% to $769 million, while the company placed 546 da Vinci systems, up from 427 a year earlier.

Intuitive reported gross margin of 68.4%, compared with 66.4% a year earlier, while operating margin fell to 19.4% from 30.3%. GAAP diluted earnings per share declined to $1.49 from $1.95; CFO Jamie Samath said the quarter’s GAAP results reflected a $450 million litigation settlement subject to court approval. Intuitive reported free cash flow of $1.1 billion, up from $735.6 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Jamie Samath said U.S. da Vinci procedure growth was consistent with the company’s July expectations. He said after-hours and benign gynecology procedures other than hysterectomy continued to lead growth, while the company was monitoring lower Affordable Care Act enrollment, Medicaid eligibility changes and potential changes to the 340B program.

Outside the U.S., Samath said benign da Vinci procedures grew 41% in Q3. He said Japan’s procedure growth accelerated, with early signs of a response to reimbursement changes, while China’s growth reflected lower recent system placements.

Samath said instrument price reductions were concentrated in high-volume benign procedures where cost may restrict adoption. Beginning in the first half of 2027, Intuitive plans to extend the useful lives of selected instruments and introduce volume-based pricing; he said the U.S. instrument changes require regulatory clearance. He expects those actions and a China price reduction to lower da Vinci instruments-and-accessories revenue per procedure by approximately 3% to 5% on a mix-constant basis once fully implemented.

Asked about the margin effect, Samath said he expected a modest gross-margin impact and would seek to offset it with cost reductions during 2027. He said the company intended the pricing actions to increase adoption over time, rather than immediately. Samath also said Intuitive would prioritize investment in existing and new platforms and AI capabilities.

On competition for ambulatory surgery centers, executive David Rosa said customers need a suitable system, supporting services and infrastructure. He said Intuitive continued to favor the cart-based da Vinci architecture over a modular design. Asked about future spending, Samath said he was not ready to specify what Intuitive would do on operating expenses and would provide guidance in January.

Guidance

Intuitive narrowed its FY2026 worldwide da Vinci procedure-growth forecast to approximately 14% to 15%, from the 13.5% to 15.5% range it gave in July. The company also expects a FY2026 non-GAAP gross profit margin of 68.7% to 69.3% of revenue, compared with its previous range of 68% to 69%.