Intuitive Surgical Reports Q3 Revenue Up 22% to Over $3 Billion

Intuitive Surgical (NASDAQ: ISRG ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Intuitive Surgical reported a strong Q3 2026 with a 22% revenue increase to over $3 billion, driven by a 15% increase in total procedures and a 28% rise in da Vinci system placements. The company announced a strategic initiative to reduce da Vinci I&A revenue per procedure by 3% to 5% to expand adoption in high-volume benign procedures. Intuitive Surgical plans significant investments in international markets and new technologies, including the Ion platform and AI capabilities, to broaden its market reach.

The company finalized pricing actions and submitted regulatory applications for new products like the SP vessel sealer and an integrated da Vinci 5 endoscope. The management highlighted the continued commitment to innovation and customer-focused solutions, emphasized by a no-fault settlement of a class action lawsuit related to third-party remanufacturing and servicing. Full Transcript OPERATOR Hello and welcome to Intuitive Surgical's third quarter 2026 earnings release. At this time, all participants are in a listen-only mode.

After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star one one again.

I would now like to turn the call over to Dan Connolly, Head of Investor Relations. You may begin. Dan Connolly (Head of Investor Relations) Good afternoon and welcome to Intuitive Surgical's Q3 2026 earnings conference call. Joining me today are Dave Rosa, our CEO; Jamie Samath, our CFO; Dr.

Jamie 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. Jamie 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. Dave Rosa (Chief Executive Officer) Good afternoon and thank you for joining us today. Q3 was a strong quarter for Intuitive Surgical 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 Jamie 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 healthcare system. We have been investing to support the segmentation, and we have positioned Intuitive Surgical 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 remained strong.

Da Vinci system placements increased 28% worldwide, with da Vinci 5 and SP accounting for 65% of global placements. Installations of Xi R 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 Xi R, 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 cost may be a constraint to broader access to da Vinci surgery. We believe these actions, in conjunction with increased availability of Xi R, 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 UK 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 INA 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 multi-year, 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, non-commercial 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 Surgical 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 Surgical 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 (Chief Financial Officer) 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 Surgical ecosystem are being integrated into customers' core infrastructure across a variety of procedures, sites of care, and geographies, driving value for hospitals and healthcare providers, and recurring revenue for Intuitive Surgical. 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, i.e., placements that expand the installed base, grew 40%. Non-GAAP operating margin was 42% of revenue, or 41% excluding a one-time pre-tax tariff refund of $28 million.

Non-GAAP earnings per share grew 25% to $3.00 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 in 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 a quarter 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 UK, 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 a quarter 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 Xi R, together with the pricing actions I will describe shortly, provides customers the flexibility to right-size 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 Q3 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 two 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.