Intuitive Surgical (NasdaqGS:ISRG) Q4 2025 Earnings call January 22, 2026 04:30 PM ET Company ParticipantsTravis Steed - Managing Director of Equity Research in Medical TechnologyRick Wise - Managing DirectorJamie Samath - CFODavid Roman - Managing DirectorPatrick Wood - Managing DirectorDan Connally - VP of Investor RelationsDave Rosa - CEOConference Call ParticipantsRobbie Marcus - Senior Analyst of Medical Devices and ServicesLarry Biegelsen - Senior Medical Device Equity Research AnalystOperatorGood day ...

Financial Data and Key Metrics Changes - Revenue grew 21% year over year to $10.1 billion, with operating margins at 37% reflecting investments in R&D and manufacturing scale [8][16][29] - Proforma EPS increased 22%, marking the third consecutive year of growth above 20% [16] - Free cash flow rose to $2.5 billion, up from $1.3 billion in 2024 [16] Business Line Data and Key Metrics Changes - Total procedures grew 19%, with da Vinci procedures increasing 17% and Ion procedures growing 51% [5][16] - Single-port procedures grew 87%, while multi-port procedures increased 17% [5][11] - In Q4, da Vinci procedures in the U.S. increased 15% to over 2 million, while international procedures grew 23% [6][19] Market Data and Key Metrics Changes - U.S. procedures increased 16%, with da Vinci procedures growing 15% and Ion procedures growing 41% [17] - Internationally, da Vinci procedures grew 21%, with notable growth in Canada, India, Korea, and various European markets [20][21] - Japan's procedure growth was lower than expected due to capital placement challenges, with potential reimbursement changes anticipated in 2026 [21] Company Strategy and Development Direction - The company focuses on four strategic priorities: launching da Vinci 5, increasing adoption of focused procedures, building industrial scale, and enhancing digital tools [4][13] - Plans to expand into ambulatory surgery centers (ASCs) and enhance training and support for customers [19][56] - Continued investment in market access activities and local evidence generation to meet clinical and economic objectives [6][7] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in the early stages of advancing minimally invasive care, with significant growth opportunities ahead [4][78] - Anticipated da Vinci procedure growth for 2026 is projected between 13%-15%, driven by general surgery and international procedures [36] - Expected gross profit margin for 2026 is projected to be between 67% and 68% of net revenue, with various factors impacting this guidance [37] Other Important Information - The company placed 1,721 da Vinci systems in 2025, including 870 da Vinci 5 systems [7][23] - The installed base of da Vinci systems increased by 12% to over 11,100 systems, with average system utilization rising by 4% [17][26] - The company plans to introduce additional products and features for da Vinci 5 in 2026 [10] Q&A Session Summary Question: FDA approvals for cardiac non-force feedback instruments - Management discussed the importance of supporting cardiac surgery and the foundational work being done, including training pathways and developing cardiac-specific instrumentation [41][42][44] Question: Advanced imaging features in the robotic ecosystem - Management explained that advanced imaging capabilities are being developed, which will add revenue streams and improve surgical outcomes [48][49] Question: ASC opportunity and key procedures - Management highlighted the growing ASC opportunity, focusing on high-quality clinical outcomes and the need for repeatable procedures [53][55] Question: Gross margin and operating expenses assumptions - Management provided insights into the dynamics affecting gross margin, including higher trade-ins and the mix of da Vinci 5 systems [64][66] Question: Competition in China - Management acknowledged increased competition in China but expressed confidence in their ability to compete effectively with local robotic companies [68][70]

Financial Data and Key Metrics Changes - Revenue grew 21% year over year to $10.1 billion, with operating margins at 37% reflecting investments in R&D and manufacturing scale [7][15][27] - Proforma EPS increased 22%, marking the third consecutive year of growth above 20% [15] - Free cash flow rose to $2.5 billion from $1.3 billion in 2024, driven by increased profitability and lower capital expenditures [15] Business Line Data and Key Metrics Changes - Total procedures grew 19%, with da Vinci procedures increasing 17% and Ion procedures growing 51% [5][14] - In Q4, da Vinci procedures grew 18%, with general surgery in the U.S. and broad-based growth in international markets driving this increase [15][17] - The installed base of da Vinci systems increased by 12% to over 11,100 systems, while average system utilization rose by 4% [16] Market Data and Key Metrics Changes - U.S. da Vinci procedures increased 15% to over 2 million, while international procedures grew by 23% to over 1.1 million [5][19] - Growth rates were 21% in Europe, 24% in Asia, and 27% in the rest of the world [5] - In Q4, total procedures outside the U.S. grew 22%, with notable increases in Canada, India, Korea, and distributor markets [19] Company Strategy and Development Direction - The company focuses on four strategic priorities: launching da Vinci 5, increasing adoption of focused procedures, building industrial scale and product quality, and enhancing digital tools [4][5] - Plans to expand the da Vinci XIR system and related economic programs to increase access to da Vinci surgery internationally and in U.S. ambulatory surgery centers [7][11] - Continued investment in market access activities and local evidence generation to meet clinical and economic objectives [6] Management's Comments on Operating Environment and Future Outlook - Management believes the company is in the early stages of advancing minimally invasive care, with significant long-term opportunities ahead [4][5] - Anticipated full-year da Vinci procedure growth for 2026 is projected to be between 13%-15%, driven by general surgery in the U.S. and international procedures [32] - The company expects gross profit margins to be within a range of 67%-68% of net revenue for 2026, with potential impacts from tariffs and product mix [33] Other Important Information - The company received FDA clearance for several cardiac procedures on da Vinci 5, with plans for a measured rollout to support training and adoption [8][36] - The My Intuitive Plus digital subscription package is expected to enhance customer engagement and provide additional revenue streams starting in 2026 [55] Q&A Session Summary Question: About FDA approvals for cardiac non-force feedback instruments - Management discussed ongoing support for cardiac surgery and the importance of training pathways and developing specific instrumentation for cardiac procedures [36][37] Question: Expanding footprint in ASCs - Management highlighted the growing opportunity in ASCs for lower acuity procedures and the need for high-quality clinical outcomes and operational infrastructure [41][42] Question: Gross margin and operating expenses assumptions - Management explained the dynamics affecting gross margin, including higher trade-ins and the mix of da Vinci 5 systems, while also addressing operating expense growth expectations [46][47] Question: Position in China and competition - Management acknowledged increased competition in China but expressed confidence in their ability to compete effectively with local robotic companies [49][50]