Intuitive Surgical Lifts Margin Outlook as Procedure Growth Slows
The company raised its 2026 adjusted gross-margin forecast to 68.0%-69.0%.
Intuitive Surgical (ISRG), the robotic-surgery systems maker, reported a 31% increase in operating income as stronger margins outweighed slowing procedure growth in the second quarter.
Worldwide procedures rose 16%, extending a slowdown from 17% in the first quarter and 20% in the third quarter of 2024. Da Vinci procedure growth decelerated for a third consecutive quarter to 15%, while Ion procedure growth slowed to 36% from 39% in the first quarter and 52% in the third quarter.
Revenue rose 19% from a year earlier to $2.89 billion, easing from 23% growth in the first quarter. GAAP net income increased 24% to $818 million, or $2.29 a share, from $1.81 a share a year earlier. Adjusted earnings were $2.80 a share, up from $2.19.
Instruments-and-accessories revenue increased 18% to $1.73 billion, trailing the prior quarter's 23% growth as procedure gains moderated. Systems revenue rose 19% to $685 million, supported by higher placements, average selling prices and leasing revenue. Services grew 20.8% to $472.4 million and was the fastest-growing category sequentially.
Da Vinci placements increased to 468 from 395 a year earlier, with Da Vinci 5 accounting for about 53% of the total, up from about 46%. Ion placements edged up to 55 from 54, while its installed base expanded 21% to 1,096 systems, a slower rate than in each of the previous three quarters.
Profit growth ran ahead of sales as GAAP gross margin widened to 67.8% from 66.3% a year earlier. GAAP operating margin reached about 33.6%, compared with 30.5%, and adjusted operating income rose 29% to $1.22 billion. The quarter included a $28 million after-tax benefit, or $0.08 a share, from refunds of tariffs paid in prior periods.
Intuitive narrowed its forecast for 2025 adjusted operating-expense growth to 11%-13% from 11%-14% and retained an estimated tariff impact equal to 1.0% of revenue. Its da Vinci procedure-growth outlook remains 13.5%-15.5%, though the company expects growth closer to the midpoint.
Share repurchases slowed to $380 million from $1.1 billion in the first quarter. Cash, equivalents and investments increased $650 million sequentially to $8.63 billion as operating cash generation strengthened and repurchase spending declined.