Intuitive(US:ISRG)2025-07-23 20:53PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Intuitive Surgical's unaudited condensed consolidated financial statements present the company's financial position and performance for the period Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $20.16 billion driven by cash, while liabilities remained stable and equity grew Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $20,163.2 | $18,743.2 | | Total current assets | $8,745.9 | $7,111.0 | | Cash and cash equivalents | $3,403.1 | $2,027.4 | | Inventory | $1,667.0 | $1,487.2 | | Total Liabilities | $2,210.1 | $2,213.6 | | Total current liabilities | $1,692.6 | $1,745.3 | | Total Stockholders' Equity | $17,953.1 | $16,529.6 | Condensed Consolidated Statements of Comprehensive Income For Q2 2025, total revenue grew 21.4% to $2.44 billion with net income rising 25.0% to $658.4 million, reflecting strong performance Q2 2025 vs Q2 2024 Performance (in millions, except per share amounts) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,440.0 | $2,009.9 | +21.4% | | Product Revenue | $2,048.8 | $1,692.6 | +21.0% | | Service Revenue | $391.2 | $317.3 | +23.3% | | Gross Profit | $1,617.9 | $1,372.7 | +17.9% | | Income from Operations | $743.4 | $567.3 | +31.0% | | Net Income Attributable to Intuitive | $658.4 | $526.9 | +25.0% | | Diluted EPS | $1.81 | $1.46 | +24.0% | H1 2025 vs H1 2024 Performance (in millions, except per share amounts) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $4,693.4 | $3,900.5 | +20.3% | | Gross Profit | $3,075.6 | $2,618.1 | +17.5% | | Income from Operations | $1,321.5 | $1,036.7 | +27.5% | | Net Income Attributable to Intuitive | $1,356.8 | $1,071.8 | +26.6% | | Diluted EPS | $3.72 | $2.97 | +25.3% | Condensed Consolidated Statements of Cash Flows Net cash from operating activities significantly increased to $1.30 billion for the six months ended June 30, 2025, with investing activities providing cash and financing activities using cash Cash Flow Summary for Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,297.0 | $885.9 | | Net cash provided by (used in) investing activities | $474.2 | $(595.6) | | Net cash provided by (used in) financing activities | $(383.6) | $3.3 | | Net increase in cash, cash equivalents, and restricted cash | $1,384.1 | $296.7 | Notes to Condensed Consolidated Financial Statements These notes provide detailed disclosures on accounting policies, financial instruments, revenue recognition, and legal contingencies, including the company's business and investment portfolio - The company develops, manufactures, and markets the da Vinci surgical systems and the Ion endoluminal system, aiming to improve minimally invasive care19 - Future results could be adversely affected by macroeconomic and geopolitical factors, including tariffs, supply chain challenges, inflation, and interest rates23 - As of June 30, 2025, the company held $9.53 billion in cash, cash equivalents, and available-for-sale debt securities, primarily in U.S. treasuries and money market funds30 - The company is involved in various legal proceedings, including product liability, patent, and commercial litigation, but cannot reasonably estimate potential losses for most cases at this time687376 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting a 21% revenue increase driven by strong procedure growth and system placements, alongside external factors and liquidity Overview and Business Strategy Intuitive Surgical advances minimally invasive care through its da Vinci and Ion systems, focusing on the 'Quintuple Aim' and launching the new da Vinci 5 system - The company's mission is to advance minimally invasive care, guided by the 'Quintuple Aim' to deliver value to patients, clinicians, and healthcare systems110111 - The da Vinci 5 surgical system, cleared by the FDA in March 2024, is in a phased launch, with the installed base reaching 689 units as of June 30, 2025117118 - The Ion endoluminal system for minimally invasive lung biopsies has received clearances in the U.S., Europe, South Korea, and China, with plans for further expansion123 External Factors and Market Environment The company faces significant external pressures including new U.S. tariffs, macroeconomic uncertainties, and increasing competition in the robotic-assisted surgical market - New U.S. tariffs on imports, including a 145% tariff on Chinese goods (later reduced to 30%), are expected to significantly increase cost of revenues in H2 2025126127131 - Macroeconomic uncertainties, including inflation, high interest rates, and supply chain stress, could adversely affect operations and customer spending132133 - Competition is growing, with third parties offering remanufactured instruments and several companies introducing or developing robotic-assisted medical procedure products136189 Business Model and Revenue Streams Intuitive's business model relies on upfront system sales combined with a significant and growing stream of recurring revenue from instruments, accessories, and service contracts - Recurring revenue (instruments, accessories, service, operating leases) is a core part of the business model, accounting for 84% of total revenue in 2024138142 - The company offers various leasing arrangements, with operating leases making up 51% of da Vinci system placements in 2024, up from 39% in 2022147 - The installed base of da Vinci systems grew 15% to approximately 9,902 as of December 31, 2024, driving growth in service and instrument revenue144 Procedures and System Demand Procedure volume is a key performance indicator, with da Vinci procedures growing 17% and Ion procedures 52% year-over-year, alongside system placement trends Procedure Growth YoY (Q2 2025 vs Q2 2024) | Procedure Type | Q2 2025 Growth | Key Drivers | | :--- | :--- | :--- | | Total da Vinci | ~17% | U.S. general surgery, OUS general surgery & urology | | U.S. da Vinci | ~14% | General surgery (cholecystectomy, hernia) | | OUS da Vinci | ~23% | Broad growth, especially in Asia and Europe | | Total Ion | ~52% | Larger installed base, conversion from other modalities | System Placements (Q2 2025 vs Q2 2024) | System Type | Q2 2025 Placements | Q2 2024 Placements | | :--- | :--- | :--- | | da Vinci | 395 | 341 | | - da Vinci 5 | 180 | 70 | | Ion | 54 | 74 | Results of Operations Analysis Q2 2025 total revenue increased 21% to $2.44 billion driven by instruments and systems, despite a decline in product gross margin due to launch costs and tariffs Q2 2025 Revenue Breakdown (in millions) | Revenue Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Instruments and accessories | $1,474.1 | $1,244.4 | +18% | | Systems | $574.7 | $448.2 | +28% | | Service | $391.2 | $317.3 | +23% | | Total Revenue | $2,440.0 | $2,009.9 | +21% | - Product gross profit margin decreased from 68.1% to 66.5% in Q2 2025 YoY, primarily due to higher costs from the da Vinci 5 launch, new tariffs, and expanded manufacturing overhead221 - Selling, general, and administrative (SG&A) expenses increased 7% YoY to $561 million in Q2 2025, driven by higher headcount and compensation expenses230 - Research and development (R&D) expenses grew 12% YoY to $313 million in Q2 2025, reflecting increased investment in a broad set of product development initiatives234 Liquidity and Capital Resources The company maintains strong liquidity with cash and investments totaling $9.53 billion, supported by robust operating cash flow and planned capital expenditures - As of June 30, 2025, cash, cash equivalents, and investments totaled $9.53 billion, an increase of $0.70 billion from year-end 2024247 - Net cash from operating activities for the first six months of 2025 was $1.30 billion, up from $885.9 million in the same period of 2024250251 - Capital expenditures for 2025 are projected to be between $650 million and $725 million, focused on expanding infrastructure and manufacturing254 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states there have been no material changes in its market risk during the six months ended June 30, 2025 - There have been no material changes in market risk during the first six months of 2025256 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of the end of the reporting period258 - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting259 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference information on legal proceedings detailed in Note 8 of the financial statements, covering product liability, patent, and commercial litigation - Information regarding legal proceedings is detailed in Note 8 to the Condensed Consolidated Financial Statements260 Item 1A. Risk Factors This section refers to the detailed risk factors discussed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - The company refers to the risk factors disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024261 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities but repurchased 349,550 shares for approximately $181 million during Q2 2025 Issuer Purchases of Equity Securities for Q2 2025 | Fiscal Period | Total Shares Repurchased | Average Price Paid Per Share | Approximate Dollar Amount Remaining for Purchase | | :--- | :--- | :--- | :--- | | April 2025 | — | $— | $1.1 billion | | May 2025 | 100 | $533.20 | $4.0 billion | | June 2025 | 349,450 | $517.69 | $3.8 billion | | Total | 349,550 | $517.70 | $3.8 billion | - In May 2025, the Board increased the authorized amount for the stock repurchase program to $4.0 billion82263 Item 5. Other Information Several company executives and board members adopted Rule 10b5-1 trading plans between April and June 2025 to manage stock transactions - Between April and June 2025, several executives and directors adopted Rule 10b5-1 trading plans for the potential sale of company stock, including plans by CEO David J. Rosa, CFO Jamie E. Samath, and Executive Chair Gary S. Guthart266268272 Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including required CEO and CFO certifications and XBRL data files - The report includes standard exhibits, such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and Inline XBRL documents273