INTUITIVE SURGICAL INC Q4 FY2025 earnings call

• 2025 was a strong year driven by multispecialty da Vinci procedure growth globally, with over 3.1 million patients treated and total procedures since 1997 exceeding 20 million. - Key priorities in 2025 included full launch of da Vinci 5, increased adoption of focused procedures, building industrial scale, and enhancing digital tools. - Da Vinci procedures grew 18% in 2025, with multiport up 17%, single-port up 87%, and Ion up 51%. - In 2025, 1,721 da Vinci systems were placed, including 870 da Vinci 5, 107 single-port (SP), and 195 Ion systems. - Revenue grew 21% to $10.1 billion, with an operating margin of 37%. - Da Vinci 5 continued expanding, received FDA clearance for certain cardiac procedures, and the MIA+ digital package was launched. - The single-port platform had an 87% procedure growth in 2025, with new indications cleared. - Ion procedures grew 51% in 2025, focusing on growing utilization and expanding capabilities.

In 2025, Intuitive's revenue reached $10.1 billion, a 21% year-over-year growth. The da Vinci platforms saw total procedures grow 19%, with multiport up 17%, single-port up 87%, and Ion procedures up 51%. The da Vinci business had procedures growing 17%, with the installed base of da Vinci systems increasing by 12% to over 11,100 systems and average system utilization up 4%. The Ion platform had procedures increasing 44%, with the installed base up by 24% to just under 1,000 systems and average system utilization up 11%. The single-port platform had a 78% growth in Q4 procedures, with strength in Korea and early-stage growth in Europe, Japan, and Taiwan.

• For 2026, da Vinci procedure growth is expected to be within the range of 13%-15%. - Pro forma gross profit margin is anticipated to be between 67% and 68% of net revenue, with a 1.2% impact from tariffs, plus or minus 10 basis points. - Operating expense growth is expected to be in the range of 11%-15% due to higher spending on early-stage R&D and distributor acquisition. - Noncash stock compensation expense is estimated to be between $890 million and $920 million. - Other income (largely interest income) is projected to be between $355 million and $375 million. - The 2026 pro forma income tax rate is expected to be within 22%-23% of pretax income.

• Tariffs could have an impact on profit margins. - There is capital pressure in parts of Europe due to macroeconomic factors and shifting governmental priorities. - China market faces intense competition from local suppliers, affecting the win ratio. - Recent capital challenges in Japan and their potential impact on procedures.

Q: About FDA approval for cardiac non-Force Feedback instruments on da Vinci 5.

A: Initial clearance incorporates non-Force Feedback instruments, with plans for a measured rollout, training, and development of cardiac-specific instrumentation including Force Feedback.

Q: On ASC expansion.

A: The ASC opportunity involves repeatable clinical outcomes, technology reliability, and the XiR system with its associated ecosystem.

Q: On gross margin and OpEx assumptions.

A: Gross margin has offsetting dynamics such as trade-ins, da Vinci 5 mix, and facility depreciation. OpEx growth is in the range of 11%-15% due to various factors.

Q: On China market competition.

A: Competing with the Xi system, a strong local team, and an ecosystem, with a focus on healthy pricing.

Q: On SP platform and digital subscription.

A: The SP platform had strong growth, and the MIA+ digital package with Telepresence, simulation, etc., has renewal potential and case insights development.

Q: On new form factors and cost competition.

A: The solution varies by procedure type, with the existing ecosystem serving current needs, focusing on clinical outcomes and routine use.