Intuitive Surgical, Inc. (NASDAQ:ISRG) Q4 2025 Earnings Call Transcript

Intuitive Surgical, Inc. (NASDAQ:ISRG) Q4 2025 Earnings Call Transcript January 22, 2026

Intuitive Surgical, Inc. beats earnings expectations. Reported EPS is $2.53, expectations were $2.27.

Operator: Good day, everyone, and welcome to Intuitive Surgical, Inc.’s Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 again. Please note this conference is being recorded. Now it’s my pleasure to turn the call over to the Vice President of Investor Relations, Dan Connolly.

Daniel Connally: Good afternoon, and welcome to Intuitive’s fourth quarter earnings conference call. Joining me today are Dave Rosa, our CEO; and Jamie Samath, our CFO. Before we begin, I would like to remind you that comments 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 January 31, 2025, and Form 10-Q filed on October 22, 2025. 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.

Please note that 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 earnings conference call is as follows: Dave will review business and operational highlights. Jamie will provide a review of our financial results and procedure highlights. I will review clinical highlights and discuss 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.

David Rosa: Good afternoon, and thank you for joining us. I’ll begin with summarizing our performance in 2025 and sharing our perspective as we enter 2026. 2025 was a strong year for Intuitive, driven by multispecialty da Vinci procedure growth across the globe, increasing adoption of da Vinci 5 and higher utilization across our 3 platforms. Physicians used our systems to treat more than 3.1 million patients in the year. Since the first procedure in 1997, more than 20 million patients have been treated using Intuitive platforms. While meaningful progress has been made in advancing minimally invasive care, we continue to believe we are in the early stages of this journey. We started 2025 with 4 strategic priorities: first, focusing on the full launch of da Vinci 5, its regional clearances and follow-on feature releases; second, pursuing increased adoption for our focused procedures by country through training, commercial activities and market access efforts; third, driving continued progress in building industrial scale, product quality and manufacturing optimization; and finally, focusing on excellence and availability of our digital tools.

I was pleased with our progress across these priorities. In 2025, da Vinci procedures increased approximately 18% with multiport procedures growing 17% and single-port procedures growing 87%, combined with 51% Ion procedure growth, total procedures grew 19% for the year. In the U.S., da Vinci procedures increased 15% to more than 2 million, with notable contributions from general surgery procedures, including after-hours use. Internationally, da Vinci procedures increased by 23% to over 1.1 million. The growth rates were 21% in Europe, 24% in Asia and 27% in rest of world markets. As a result, procedures outside the U.S. accounted for roughly 35% of our global procedures, reflecting clinical demand, improved market access, broad training initiatives and supportive economics.

Going forward, we will continue to invest in market access activities and local evidence generation to meet our customers’ clinical and economic objectives. In 2025, global system utilization increased 3% across our da Vinci platforms. Multiport grew 3%; single-port, 29% and Ion, 9%. Turning to capital. We placed 1,721 da Vinci systems in 2025, including 870 da Vinci 5 systems and 107 SP systems and 195 Ion systems. Demand for da Vinci 5 strengthened throughout the year with customers responding to broader availability as we scaled manufacturing and increasing capability through subsequent software and product releases. In the U.S., we saw robust demand for system upgrades and dual-console systems, reflecting customer interest in standardization, training and mentoring.

In the second half of the year, we launched da Vinci 5 in Europe, the U.K. and Japan. For the year, we placed 58 da Vinci 5 systems outside the U.S., mostly in Europe, and we are pleased with feedback from these early adopters. In 2025, we began offering refurbished da Vinci Xi systems as an integral part of our system strategy and placed 42 XiR systems in the year. Looking ahead, we believe there is a sizable long-term opportunity for our da Vinci XiR system and related economic programs to expand access to da Vinci surgery internationally and in U.S. ambulatory surgery centers. Financially, revenue grew 21% year-over-year to $10.1 billion. Operating margins of 37% reflected our deliberate investments in R&D and manufacturing scale as well as the impacts of tariffs and newer platform mix, cost efficiency initiatives helped to partially offset these pressures.

Turning to our da Vinci platforms. Customer feedback remains positive as da Vinci 5 continues to expand to new indications and geographies. Surgeons highlight the benefits of greater autonomy and enhanced efficiency, reflected in the higher utilization trends we’re seeing relative to Xi. Improved vision, Force Feedback capabilities and ongoing UI enhancements have also supported broad interest in da Vinci 5. We are excited to fully launch our Force Feedback instruments and work with customers to establish the clinical impact of Force Feedback at scale. This month, we received FDA clearance for several cardiac procedures on da Vinci 5 using non-Force Feedback instruments. Given the complexity of minimally invasive cardiac surgery, we are planning a measured rollout to support training, education and adoption.

We believe deeply that patients requiring cardiac surgery can benefit from a minimally invasive approach with da Vinci and look forward to actively supporting our customers through these procedures. Over the past year, we released 2 software updates that improve surgeon awareness in the console, supported better intraoperative decision-making and established the foundation for future remote updates. In 2026, da Vinci 5 capabilities will continue to grow as we introduce additional products and features. My Intuitive+, our digital subscription package offered with da Vinci 5 includes simulation, telecollaboration and case insights and is designed to help customers understand their surgical performance, collaborate in real time and receive personalized training recommendations.

Adoption of our Telepresence capabilities continues to increase, supported by recent software changes that enable surgeon-initiated scheduling. Surgeons are now able to more easily tap into the collective knowledge of the da Vinci community through real-time case observation, collaboration and mentoring. Increasingly, we are hearing from IDN executives that they value the ability to connect flagship hospitals within their broader network to provide consistent high-quality care to more patients. Our single-port platform continued to build operating and clinical momentum in 2025. Procedures grew 87%, driven by high rates of growth in Korea and the U.S. with accretive early growth in Europe, Japan and Taiwan. Our installed base increased by 39% to 377 systems.

Since clearance in 2018, we have methodically added indications and capabilities to the platform. In Q4, we received 510(k) clearance for several additional indications, including nipple-sparing mastectomy, inguinal hernia repair, cholecystectomy and appendectomy. For NSM in particular, we plan a measured rollout to support education, training and adoption in 2026 and beyond. Feedback on our single-port stapler during its initial launch has been very positive and moving into broad launch this quarter, will support deeper penetration in thoracic and colorectal procedures. We have additional regulatory submissions planned for 2026, and we’ll update you on our progress throughout the year. Turning to Ion. Worldwide procedures grew 51% to just over 144,000.

Since FDA clearance in 2019, physicians have performed over 325,000 Ion procedures with a global installed base approaching 1,000 systems. In 2026, we remain focused on growing utilization of existing domestic systems and ensuring excellent early results in the international markets. We are committed to expanding capabilities of Ion, including our efforts in ROSE, our rapid on-site tissue evaluation technology and the integration of endobronchial ultrasound. We believe Ion with these capabilities will help minimize the time from detection to treatment as we work to improve the survival rate of lung cancer patients. As we enter 2026, our company priorities are as follows: first, the global expansion of our platforms, digital feature releases and ecosystem enhancements; second, increased adoption for our focused procedures by country through training, commercial activities and market access efforts; third, building industrial scale, product quality and manufacturing optimization; and finally, advancing innovation to reach more patients in current and new disease states.

With that, I’ll turn the time over to Jamie to take you through our business and finances in greater detail.

Jamie Samath: Good afternoon. I will describe our performance on a non-GAAP or pro forma basis, and I will also summarize our GAAP results later in my remarks. A reconciliation between our pro forma and GAAP results is available on our website. To facilitate a deepening of understanding of the trends within our Ion business, we have added disclosures to the data tables posted on our website. All references to total procedures and their related growth rates include da Vinci and Ion procedures taken together. Q4 and 2025 revenue procedures and system placements are in line with our preliminary press release on January 14. I will briefly review full year 2025 performance before describing our Q4 results in greater detail. 2025 financial performance was strong.

Total procedures grew 19% and total revenue grew 21%. Despite the impact of tariffs, pro forma operating margin improved approximately 70 basis points to 37% for the year. Given the strong financial performance, 2025 pro forma EPS increased 22%, marking the third consecutive year of pro forma EPS growth above 20%. Consistent with our financial objectives for 2024, we saw a significant increase in free cash flow to $2.5 billion, up from free cash flow of $1.3 billion in 2024, driven by increased profitability and lower capital expenditures. During the year, we repurchased $2.3 billion of Intuitive’s stock at an average price of $478 per share. Turning to Q4. Total procedure growth was 18%, driven by general surgery in the U.S. and broad-based growth in OUS markets.

In quarter 4, revenue grew 19% to $2.87 billion with recurring revenue higher by 20% to $2.3 billion, accounting for 81% of total revenue. On a constant currency basis, revenue growth was 18%. Pro forma operating margin was 37%, which included an impact of approximately 95 basis points from tariffs and a $70 million contribution to the Intuitive Foundation. The strength of our financial results reflected continuing global expansion and procedure adoption of our da Vinci 5, Ion and SP platforms. For our da Vinci business, procedures grew 17%, the installed base of da Vinci systems increased by 12% to just over 11,100 systems and average system utilization increased by 4%. For our Ion platform, we continue to see robust clinical growth with procedures increasing 44%, the installed base up by 24% to just under 1,000 systems and average system utilization increasing by 11%.

In the U.S., total procedures increased 16%, reflecting 15% growth in da Vinci procedures and 41% growth in Ion procedures. da Vinci procedures performed after hours, a proxy for acute care, increased by 35% in Q4, primarily driven by cholecystectomy and appendectomy procedures and reflects our support for customers who are expanding access to da Vinci surgery. da Vinci utilization in the U.S. increased 3% in Q4, driven by continued adoption of da Vinci 5, where customers are leveraging the system’s efficiency advantages to increase cases performed per day. Over the past few years, our customers have increased their efforts to distribute surgeries across different sites of care from hospitals to hospital outpatient departments to ambulatory surgery centers or ASCs. Minimally invasive surgery has helped enable this shift.

As this occurs, we have increased our efforts to expand our footprint in ASCs, which we expect to be a multiyear effort. Our initiative currently leverages our XiR system and its associated ecosystem with economic and capital acquisition offerings we believe are well suited to meet the clinical and financial needs of this environment. Not all ASCs run at the same volume, but with the same mix of procedures and we have started our efforts focused on higher-volume ASCs that can sustain a robotic program. Approximately 70% of the ASC procedure opportunity is in ASCs affiliated with our existing IDN customers where a number of surgeons are already da Vinci trained. In addition, we actively support customers that upgrade to da Vinci 5 in their efforts to slide their existing Xi to the HOPD or ASC setting.

Outside the U.S., in quarter 4, total procedures grew 22% and on a day-adjusted basis, total OUS procedure growth was 23%. da Vinci procedures grew 21% in OUS markets, reflecting strong results in Canada, India, Korea and distributor markets and solid growth in Germany, the U.K., Italy, Spain and Taiwan. Consistent with the last quarter, procedure growth in Japan was a little lower than our expectations, reflecting lower capital placements over the last several quarters. The Japanese Ministry of Health, Labour and Welfare is currently in the final stages of evaluating granting reimbursement for additional robotic procedures starting in June of 2026. We will provide an update on the outcome on our next earnings call. Taking OUS markets combined, benign general surgery procedures increased 27%, driven by cholecystectomy and hernia repair.

Globally, we continue to see strong procedure growth for our SP platform at 78% for Q4 with strength in Korea and continuing strong early-stage growth in Europe, Japan and Taiwan. In the U.S., SP average system utilization accelerated, growing 21% as compared to quarter 4 of last year. We also see encouraging initial growth in thoracic procedures following clearance in 2024 and positive customer feedback on the limited launch of our SP stapler. As a result of our clinical performance, total I&A revenue in quarter 4 grew 17% to $1.7 billion, relatively consistent with overall procedure growth. da Vinci I&A revenue per procedure was approximately $1,850 compared to $1,860 last year, primarily driven by customer ordering patterns. We also continue to see downward pressure from lower bariatric procedures and higher cholecystectomy procedures, offset by higher SP procedures and da Vinci 5-specific I&A.

For our Ion platform, I&A revenue per procedure was approximately $2,200, relatively consistent with prior periods. Turning to capital performance and starting with our da Vinci business, we placed 532 da Vinci systems in quarter 4, an 8% increase from the 493 systems placed in the same quarter last year. 303 of the 532 placements were da Vinci 5, including 43 in OUS markets following recent clearances in Europe and Japan. The installed base of da Vinci systems is now 1,232 systems, used by over 10,000 surgeons since the launch of da Vinci 5. We saw 146 trade-in transactions in Q4, up from 62 a year ago, primarily driven by U.S. customers upgrading to da Vinci 5. In the U.S., we placed 304 systems, up from 204 — 284 last year driven by adoption of da Vinci 5.

Outside the U.S., we placed 228 systems compared to 209 last year. OUS placements included 118 in Europe, 40 in Japan and 17 in China compared to 89, 43 and 20, respectively, last year. We continue to see government budget challenges in Japan and the U.K. and robotic competition in China intensified in Q4, where we saw provincial tenders express preference for local suppliers and lower pricing impacting our win ratio in the quarter. Within the 532 da Vinci placements, we placed 35 SP systems in Q4, higher than the 30 systems last year, driven primarily by OUS markets. For our Ion platform, we placed 42 systems in Q4 compared to 69 systems last year, including 6 systems placed in OUS markets. Lower Ion placements in the U.S. continue to reflect a joint focus with our customers on increasing utilization in the U.S. increased by 11% in Q4.

Given our capital performance, quarter 4 systems revenue grew 20% to $786 million. For our da Vinci business, leasing represented 47% of da Vinci placements, as compared to 54% last quarter and 45% last year, driven by the mix of customers who prefer to purchase. However, over time, we continue to expect the proportion of systems placed under operating lease arrangements to increase, primarily driven by OUS customers. da Vinci leasing revenue increased 34%, reflecting a 15% expansion of the installed base under operating lease arrangements and a 13% increase in lease revenue per system driven by a higher mix of da Vinci 5 systems. The average selling price for purchased da Vinci systems was $1.68 million in Q4 as compared to $1.6 million last year, driven by a higher mix of da Vinci 5 systems and a higher mix of dual-console systems, partially offset by higher trade-ins.

Lease buyout revenue was $39 million as compared to $22 million last quarter and $28 million last year. Quarter 4 service revenue increased 21% to $422 million, reflecting an increase of the da Vinci installed base of 12% and the Ion installed base of 24%. Service revenue per system for our da Vinci installed base increased 7% year-over-year, primarily reflecting a higher mix of da Vinci 5 systems. Turning now to the rest of the P&L. Pro forma gross margin for the quarter was 67.8%, down from 69.5% in Q4 of last year. The year-over-year decline reflects a 95-basis-point impact from tariffs, higher facility costs, a greater mix of lower-margin da Vinci 5 and Ion revenue and higher service costs related to da Vinci 5, partially offset by product cost reductions and purchase component savings.

Quarter 4 pro forma operating expenses increased 16% year-over-year driven by a $70 million donation to the Intuitive Foundation, increased head count, higher variable compensation costs and increased facility costs, partially offset by lower legal expenses. We added approximately 200 employees during the quarter, primarily in our core commercial and engineering functions. The increased donation to the Intuitive Foundation as compared to the $45 million donated in quarter 4 of last year reflects our decision to make a multiyear donation given the impact of new U.S. tax rules effective in 2026. With respect to our plans to go direct in Italy, Spain and Portugal, we currently expect to close by the end of Q1, resulting in the transfer of approximately 250 employees.

Pro forma other income was $86 million for the quarter as compared to $93 million last quarter, reflecting lower interest income. Our pro forma effective tax rate for quarter 4 was 20.6%, slightly below our expectations, driven by $11 million in net discrete benefits primarily related to releases of tax reserves due to statute of limitation expirations and other various adjustments to our tax reserves. Pro forma net income for the fourth quarter was $914 million, compared with $805 million last year. Pro forma earnings per share was $2.53 per share as compared to $2.21 per share in quarter 4 of last year. Now turning to our GAAP results. GAAP net income for the quarter was $795 million or $2.21 per share compared to $686 million or $1.88 per share in Q4 of last year.

The differences between our pro forma and GAAP results are outlined and quantified on our website. We ended the year with $9 billion in cash and investments, up from $8.4 billion last quarter driven primarily by cash from operations, partially offset by stock repurchases of $201 million and capital expenditures of $155 million. With that, I’ll turn it over to Dan to discuss recent clinical publications and our outlook for 2026.

Daniel Connally: Thank you, Jamie. Turning to the clinical side of our business. I’d like to share with you data from recent studies that we found to be notable. In addition to the specific data highlighted on this call, we encourage you to consider the wide body of evidence detailing these topics and others in published scientific studies over the years. This past November, Dr. Antonio Gangemi of ALMA MATER STUDIORUM, Universita di Bologna in Bologna, Italy, along with co-authors published, the CONVERSION Study: Open Conversion Risk in Robotic vs Laparoscopic Surgery-A 20-Year Meta-analysis in the annals of surgery. Through a meta-analysis of literature from 30 different countries, the study compared conversion rates to open surgery for da Vinci and laparoscopic procedures, including abdominal wall and inguinal hernia repairs, gastrectomy, cholecystectomy and rectal resections.

The study included over 200,000 patients treated with da Vinci and over 1.3 million patients treated laparoscopically. The results demonstrated that patients undergoing robotic-assisted surgery were approximately 50% less likely to experience a conversion to open surgery than patients undergoing a laparoscopic procedure, with similar results across randomized controlled studies, prospective studies and retrospective study types. The authors hypothesized that technical advantages of robotic-assisted systems, specifically wristed instruments with 7 degrees of freedom, 3D high-definition visualization and physiological tremor filtration were potential explanatory factors for the results. The authors concluded “This meta analysis, which spans over 20 years of peer-reviewed literature and includes 14 oncological and nononcological surgeries across general surgery and related specialties suggests that robotic-assisted surgery offers a reduced risk of open conversion compared to laparoscopy.

These findings may inform decision-makers considering the adoption of robotic-assisted surgery in general surgery and associated specialties.” This past November, Dr. Nadia Henriksen from Bispebjerg Hospital in Copenhagen, Denmark published Procedural Costs of Robot-Assisted and Laparoscopic Ventral and Incisional Hernia Repair. A Propensity-Score Matched Nationwide Database Study in the Journal of Abdominal Wall Surgery. Using data from the Danish Hernia Database, which includes all hernia repairs performed in Denmark, the authors compared subjects undergoing elective primary ventral hernia repair or incisional hernia repair via the robotic-assisted approach or the laparoscopic approach from January 2017 to December 2022. After 1:1 propensity score matching with 554 patients in each of the robotic-assisted and laparoscopic arms, study results showed a significantly shorter length of stay for robotic-assisted procedures at 0.5 days versus 1.2 days for the laparoscopic group as well as a 44% reduction in the readmission rate for robotic-assisted procedures compared to the laparoscopic group.

Comparing costs, the mean total perioperative cost of robotic-assisted procedures was significantly lower than laparoscopic procedures with a EUR 660 difference in total costs between approaches. For robotic primary ventral hernia repair, multivariate regression analysis further confirmed independent association with decreased overall costs. The authors concluded “While the cost of the robotic surgical equipment surpassed that of conventional laparoscopy, it is offset by the need of more expensive meshes and tacker devices and higher readmission rates following the laparoscopic approach. This nationwide database study showed that for primary ventral hernias, the mean procedural costs of a robot-assisted and laparoscopic repair are comparable, but for incisional hernia repairs the mean procedural cost is decreased with a robot-assisted approach.” I will now turn to our financial outlook for 2026.

Starting with da Vinci procedures. As detailed in our announcement earlier this month, 2025 total da Vinci procedures grew approximately 18% year-over-year to more than 3.1 million procedures performed worldwide. For 2026, we anticipate full year da Vinci procedure growth within a range of 13% and 15%. We anticipate primary growth drivers in 2026 to be generally consistent with those in 2025, including general surgery in the U.S. and procedures outside of urology internationally. This range considers the potential impact of changes to ACA premium subsidies and Medicaid funding on hospital and patient behavior in the U.S.; capital pressure in parts of Europe related to macroeconomic impact and shifting governmental priorities; China tender volumes and competitive intensity in that market; recent capital challenges in Japan, how long those persist in 2026 and any related impact on procedures and new pharmaceutical products for obesity management.

Turning to gross profit. In 2025, our pro forma gross profit margin was 67.6%. In 2026, we expect our pro forma gross profit margin to be within the range of 67% and 68% of net revenue. This year, we forecast an impact from tariffs of 1.2% of net revenue, plus or minus 10 basis points. Other factors impacting the projected pro forma gross profit margin guidance include faster growth of newer products in da Vinci 5 and Ion, modest incremental depreciation from recent facility expansion and the impact from higher da Vinci system upgrades, partially offset by cost reductions. Our actual gross profit margin will vary quarter-to-quarter depending largely on product, regional and trade-in mix and pricing. Turning to operating expenses. In 2025, our pro forma operating expenses grew 12%.

In 2026, we expect pro forma operating expense growth to be within a range of 11% and 15% due to higher spending in support of advancing early-stage R&D programs as well as incremental expenses associated with our distributor acquisition. We estimate noncash stock compensation expense between $890 million and $920 million. We forecast other income, which is comprised mostly of interest income, to total between $355 million and $375 million. At this time, given our expectation that capital expenditures will return to more normalized levels, we are no longer providing specific capital expenditure guidance. With regard to income tax, in 2025, our pro forma income tax rate was approximately 21%. As we look forward, we estimate our 2026 pro forma income tax rate to be within a range of 22% and 23% of pretax income.

That concludes our prepared remarks. We will now open the call to your questions.

Q&A Session

Operator: [Operator Instructions] One moment for our first question, please. It comes from the line of Travis Steed with Bank of America.

Travis Steed: First, I wanted to ask about the FDA approval for the cardiac non-Force Feedback instruments. Just trying to get a little more color on what that is and what it opens up. When I was looking at your 2026 priorities that you mentioned you added new disease states. So if you could elaborate on that, if that’s cardiac or there’s more there?

David Rosa: Sure. Travis, thank you for the question. I’ll start maybe with some framing around cardiac and the work we’re doing, and then Jamie can follow up a bit. And so you know, we’ve been supporting cardiac surgery for decades and have a good understanding of what cardiac programs need to do to be successful and have great patient outcomes. And so there are some foundational aspects that we’re working on today. Those include the clearances on the platform, on dV5 in certain geographies, we just received the U.S. clearance, we’re working through approval in Europe and several other countries. Part of those indications as well will include Force Feedback instruments. And so cardiac surgery is a wide variety of procedures with a wide variety of tasks.

And we do think that Force Feedback can have some benefit in certain parts of certain procedures. And so the initial clearance here, I think incorporates our entire portfolio of non-Force Feedback instruments and has value today for cardiac procedures. And again, we’ll work to add Force Feedback in time through the regulatory pathway. We are also developing training pathways to support. It’s a unique pathway through to learn the cardiac robotic surgery business, if you will, for minimally invasive approaches with da Vinci. And so we’re investing there. We are developing cardiac-specific instrumentation, including Force Feedback, some accessories and tuning some of the digital tools we have, those will be multiyear efforts to bring all of those to the market.

And then finally worked with surgical societies. It’s an important aspect of, I think, doing this well for training and other parts that they are helping to develop. And so that lays this kind of foundation, if you will, for the beginning — for this cardiac journey that we’re on, particularly with dV5. And so maybe, Jamie…

Jamie Samath: Yes. Travis, I’ll just give some numbers maybe for grounding. So in ’25 globally, there were about 17,000 cardiac procedures performed, that’s on Si and Xi. That business has been growing for multiples of years but obviously, from a small base. The growth in recent years, including ’25 was accretive to the corporate average. While obviously, the cardiac TAM is really quite large, when we do our clinical analysis, when we look at where cardiac is cleared for da Vinci 5, which currently is now the U.S. and Korea, we think the opportunity from a da Vinci 5 perspective or a robotic perspective is about 160,000 procedures per year. And obviously, that has the opportunity to expand if and as we add additional geographies.

Travis Steed: Great. That’s really helpful. And you’ve talked a lot on advanced imaging. Just curious how you think about incorporating these additional advanced imaging features into the robotic ecosystem? Did you leverage the existing hardware? Or is there a new hardware? How do you think about recognizing the value of the — that you’re providing to customers? Is it just deeper penetration? Or is there a potential for new revenue streams? Just want to try to understand like how some of this imaging stuff could come into the business in a more detailed way.

David Rosa: Yes, Travis, some of the advanced imaging capabilities that we’ve talked about are additional molecules that we’re working on, and those are long time lines that will add to the fluorescence imaging capability of the system. Those molecules will have revenue streams attached to them. We recently have talked about kind of a form of hyperspectral imaging that shows tissue oxygenation. That is going to be a capability of the system that requires some new software and some tuning of some of our hardware. All of those are pointed at trying to give more information to the surgeon and to the system where we’re able to add perhaps some AI layers to it, but really with the intent of improving — ultimately improving outcomes, be it in prostate cancer or ureteral injuries or perhaps in areas of surgery where perfusion, which is where the tissue oxygenation is pointed, can make a difference in outcomes.

Operator: One moment for our first question, please. And it comes from the line of Larry Biegelsen with Wells Fargo.

Larry Biegelsen: I wanted to start with the ASC commentary. Dave, I’d love to hear you expand on your comments about expanding your footprint in ASCs. How large is the ASC opportunity for your focused procedures today? And what are those key procedures moving to the ASC? And what do you need to do to unlock the opportunity? And I did have one follow-on.

David Rosa: Yes. Maybe, Larry, I’ll start, just kind of — I always try to start with the problem we’re solving or what the customer needs are. And I’m going to start there and then Jamie can jump in on some of the numbers here. If I — when I meet with ASC leaders and when they’re wanting to say, I want to establish a soft tissue program within one or more of our ASCs, really what they’re looking for are repeatable, high-quality clinical outcomes, technology systems that work every day and operating infrastructure, training, supply chain, reprocessing, those sorts of things that is routine and easily accessible. And all of that has to fit into an economic structure that works for the reimbursement levels of that particular ASC.

And so when I look at what we have in our current portfolio of systems, including now XiR, the broader ecosystem of all the other products in training and services, that is well positioned to serve the needs that we’re hearing from our customers. The procedures that are generally within that environment are the ones that you know, cholecystectomy, hernia repairs, benign GYN. It oftentimes is the lower-acuity procedures where the volume and the repeatability can be managed in the ASC environment.

Jamie Samath: I’d just say, Larry, in terms of numbers today, it’s a relatively small proportion of U.S. procedures done, but we do see it growing at an accretive rate. I think those trends have been talked about just broadly. Most of our commentary today reflects what we’ve heard from customers. I think that in part reflects desire of payers to take advantage of the lower reimbursement in the ASC setting. And for us now, with the launch of da Vinci 5, the trade-in cycle has commenced, and we get the Xi back and we can refurbish them. We think the XiR in combination with our instrument portfolio is well positioned for that setting as procedures grow in ASCs.

Larry Biegelsen: That’s super helpful. Jamie, how should we think about utilization in 2026 and system ASPs in 2026 after we saw strong growth in 2025? Do the refurbished Xis put some downward pressure on the ASPs and the move into the ASCs maybe put some downward pressure on utilization?

Jamie Samath: Yes. I’d just say, if you look at the last couple of quarters, in each case, we saw overall da Vinci utilization grow 4%. We think that’s a healthy level, but we’re not ready to predict what that will be in ’26. For the presence that we already have in ASCs because we’ve been focused primarily with our existing IDN customers and we’ve looked for programs that have strong soft tissue surgery volumes that can support a robotics program, the existing utilization that we have in ASCs is actually pretty good. And I think economically, then, obviously, that works for them. On system ASPs, I’m not going to predict what the overall ’26 direction will be. Obviously, we don’t guide capital. I’d just say you should expect a higher da Vinci 5 mix in ’26 versus ’25.

That reflects, of course, the fact that we have, in part, new geographies cleared with da Vinci 5. You should also expect a higher mix of XiR, that’s going to be ASPs that are quite a bit below where Xi is today, but we haven’t said yet what the XiR price range is likely to be, and I would expect higher trade-ins. And so there’s a set of offsetting mix dynamics there that, frankly, we’ll let you model. I’d just also say in terms of system ASPs, of course, that is only on systems purchased, which roughly is about half of the system placements today.

Operator: One moment for our next question. And it comes from the line of Robbie Marcus with JPMorgan.

Robert Marcus: Congratulations again on a great quarter. Jamie, you touched on this a little bit, but I was hoping you could give a little more color into the gross margin and OpEx assumptions. There’s obviously a lot of moving pieces under the hood, wondering if you could tease out some of them as we think about how XiR ramps and impacts positively or negatively margins and trade-ins. And then what’s assumed at the high and the low end of the OpEx expense? And I have a follow-up.

Jamie Samath: Yes. With respect to gross margin, there’s actually a number of dynamics. You have the higher trade-ins that we just described. You have a higher mix of da Vinci 5 that’s not yet at target product costs. The procedure guidance is reflected in that gross margin range. We also have had for a couple of years now, kind of post-COVID recovery, a number of product cost reduction efforts that had a growing impact within what you see in gross margin. In ’25, you saw the impact of all the new facilities with incremental depreciation of facility costs, and that starts to — start to get leveraged in ’26. And so there’s a set of offsetting dynamics there in gross margin, the kind of net to the guidance that we provided, which effectively is flattish.

I would highlight again, we have 120 basis points of tariffs reflected in the ’26 guidance that was about 65 basis points in ’25. So an incremental 50-ish basis points from tariffs. With respect to XiR, like I said, we expect the pricing to be lower than currently what you pay for a new Xi, but the margins are relatively healthy on XiR.

Robert Marcus: Great. Appreciate that. And a quick follow-up. You mentioned increased pricing competition in China. I saw there were a new reimbursement program put out, some helps favor local competition. I was wondering if you could just comment on how you think about your position in China and your ability to continue to win there. And also, if you have any update on the latest tender.

David Rosa: Yes. I might start. So just to answer that question specifically, around the local robotic competitors that are in China, many — as you know, many of the architectures are very similar to Xi. And over time, there are instances where they may be favored by home provinces. And certainly, over the past several quarters, the number of robotic companies in China have been increasing. And as a result, what you see is that pricing has become even more intense as tenders are published and competed for. So given that sort of environment, you look at how are we competing, and that’s with an Xi system. We’re manufacturing it locally. We have a very strong team in China. And so feel very good about how we’re positioned with our system, our team, a broader ecosystem to compete in China with those local robotic companies that are increasingly coming to market.

And we believe we can do so at a price point that is healthy for them and healthy for us and can do — and can effectively compete on price where we want to and where it matters.

Jamie Samath: Robbie, I’d just add. There’s about 273 systems left in the current quota. And I would just say, as we said in the prepared remarks, the tender win ratio was lower in Q4. If you look at 2025 as a whole, it was slightly higher than the prior year. And obviously, as Dave described our ability to compete. I think I missed, Robbie, your question on OpEx. So I would just say in the 11% to 15% range, it does reflect the impact of going direct in Italy, Spain and Portugal but the range mostly is in relation to the procedure range.

Operator: Our next question comes from the line of Rick Wise with Stifel.

Frederick Wise: Dave, I was reflecting on your comment, your words, if I’m quoting you accurately, you said you still see Intuitive as being in the early stages of your journey. I mean that’s similar language I’ve heard from Intuitive for years. And I was reflecting on it in the context of a slide you posted during the JPMorgan conference a couple of weeks ago. About 9 million procedures in direct line of sight. I went back and looked at ’24 and you all said 7 million at the time. That’s nearly a 30% increase in procedures in direct line of sight. And I just wondered — I’m guessing maybe the cardiac opportunity, is that part of it? Is it the ambulatory surgery opportunity? Is it something instrument specific? Just — I was hoping you would just reflect on that with me and us and maybe unpack that a little bit.

David Rosa: Thank you for the question. And maybe I’ll comment on the early part of the journey, at least as I meant it with my words, and then Dan and Jamie can jump in. When I think about the journey with the ultimate destination, really improving outcomes substantially, eliminating complications to the extent that we possibly can. And you choose a procedure today and there’s still variability. There are still poor outcomes for a given set of patients even in the very best of hands with the very best of technology. And so that’s when I think about the journey, it’s the journey of impacting patients meaningfully and more than we even have today. With respect to the line-of-sight procedures and the growth and how that has increased over the years, maybe I’ll look to Dan.

Daniel Connally: Yes, Rick, 2024, 7 million; ’25, 8 million; ’26, 9 million. I’d say primarily strengthening clinical validation and supportive economics and benign procedures kind of the largest impact, also saw a modest impact from additional procedure clearances like nipple-sparing mastectomy of SP in the U.S. And then lastly, contributing as well kind of demographic impact from an aging population. So generally consistent with prior increases and the factors underneath that generally consistent as well.

Frederick Wise: Okay. And just a quick follow-up. Dave, you also highlighted digital subscription. And I’m just not sure if I’ve personally, maybe I’ve missed it, heard that language, it sounds like a positive economic factor and something potentially incremental. Again, could you just expand on your comments and what it might mean to the growth outlook or adoption of da Vinci 5, et cetera?

Jamie Samath: Yes, I’ll take that, Rick. So David was referring to MIA+, which comes with da Vinci 5, it incorporates Telepresence, integrated skill simulation and case insights. When we launched da Vinci 5, that package came with 1-year free use for customers. We actually did a significant software update in Q2 of last year. And so we extended that free period for customers. Technically, what happened when we did that was a portion of the system purchase price got carved out of systems revenue and deferred and put into service revenue over time, it’s just the way the accounting rules work. Come Q2-ish of ’26, then customers now have the opportunity to renew for that subscription package where they’ll now have to pay. And in the end, then the value that surgeons and the customers are experiencing with that package would determine both what is the renewal rate and what is the ASP that we realize.

With respect to the case insights portion of that package, we’ve got good early customer feedback. I think we have some work to do to continue to refine and enhance the capability there. And I think we see long-term value in what that could ultimately do. It also has quite a bit of synergy with Force Feedback, which has not been in full supply. And so as we get that into full supply later this year, you then get to kind of see the impact of Force more clearly in the case insights reporting that gets done. And so there is then some invoicing that we’ll do for customers that renew and that starts to get reflected in revenue.

Operator: Our next question comes from the line of David Roman with Goldman Sachs.

David Roman: I wanted to maybe come back to SP, and it seems like the second half of 2025 represented at least in the U.S., the potential of putting in place the dynamics you need to really see an inflection in growth in both SP placements as well as associated procedures. As you kind of look at the portfolio and indications you have entering 2026, is there anything left either from a technology standpoint, maybe a vessel sealer that you think would be necessary to really unlock the opportunity? And how you’re thinking about the SP strategy now that you have a more full portfolio of instruments as well as indications? And I have one follow-up.

Daniel Connally: Thanks, David. It’s Dan. I think, broadly, very encouraged by the response to the technology and the procedure growth rates that we’ve seen here recently. Looking to continue to build the platform internationally, we’re still relatively early, Europe, Japan and Taiwan. And then in the U.S. with recent clearances, colorectal, thoracic and NSM indications as well. You mentioned on instrumentation, we do need to continue development of the vessel sealer device, add that clearance and then add stapler clearances globally. I think we’re encouraged by the early feedback from initial launch on SP stapler in thoracic and colorectal and excited to bring that forward more fully. And I’d say, over time, we’ve also got the opportunity to take SP to additional geographies as well.

David Roman: Okay. And then maybe on the guidance, I think you talked about reflecting some of the risk around macro pressures, whether those are hospital purchasing on Medicaid cuts or potential changes in utilization associated with the exchange subsidies expiring. Maybe could you just help us understand how you saw these dynamics play out through the back half of 2025? I know, in Q3, you talked about the potential of some pull forward of procedure volumes, what you saw kind of exiting the year and how you’re kind of observing trends here early in January.

Daniel Connally: Yes. No specific comment on kind of early trend in January, but I’d say over Q4, do not have any evidence either way from an impact, but we haven’t heard that from customers at all. I know we spoke about that potentially in Q3 related to some intra-quarter dynamics there, but have not heard that from customers more broadly recently.

Operator: And our last question comes from the line of Patrick Wood with Morgan Stanley.

Patrick Wood: Beautiful. I guess, conceptually, thinking medium term into the future, how do you guys think about new form factors and cost competition? We’ve talked about lower acuity cases and going down. Is the solution here in your mind, like a lower-end form factor? Or do we stick with refurbished systems? Or is it the case that you think you can get to the point where speed and innovation is getting us faster than LAP with a lower cost curve than LAP and that’s the solution to the lower acuity. So is it a lower form factor? Or is it getting the tech to the point where automation and speed is just better than LAP anyway?

David Rosa: Yes. It’s an interesting question. And I will turn it back around to the problem to be solved. And I think it varies depending on where you look. And so if you’re in a complex cancer procedure where you’re trying to move the needle on, let’s say, cancer margins, it’s going to require a different solution set than if you’re looking for routine use in an ambulatory setting that is working on a very different set of procedures. And so I think we don’t have enough time to look through each one of those areas where customers are trying to work in particular. If we focus on, let’s say, the ASC setting, I’d go back to what we described before and say, what is required there is great clinical outcomes, routine use, repeatable use, reliability, those parts, the needs there that exist, I think, are really well served by the existing ecosystem that we have today.

Can it be optimized through new platform development or some other tweaks within the ecosystem? Maybe. We’d have to go see and see what that looks like. But today, I think what we have can serve the complex portion of the procedures customers are trying to do as well as these lower acuity, higher volume ones.

Jamie Samath: Patrick, I’d just add that I think segmentation can be important depending on the IDN and you can segment by using dV5 across a broad set of procedures that can do cancer and whatever other procedures that are done in the hospital. But you can also segment by a HOPD or by an ASC. And where we are today, we have the portfolio to do that. I think we have confidence in that. Of course, things change over time, and I think that’s part of our strat planning, and we wouldn’t comment on how we might further develop that just yet.

David Rosa: Okay. That was our last question. Thank you for the questions. In closing, we continue to believe there’s a substantial and durable opportunity to fundamentally improve surgery and acute interventions. Our teams continue to work closely with hospitals, physicians and care teams in pursuit of what our customers have termed the Quintuple Aim, better and more predictable patient outcomes, better experiences for patients, better experiences for their care teams, lower total cost of care and finally, increased access to care. We believe value creation in surgery and acute care is foundationally human. It flows from respect for and understanding of patients and care teams and their needs and their environment. At Intuitive, we envision a future of care that is less invasive and profoundly better, where diseases are identified earlier and treated quickly so patients can get back to what matters most.

Thank you for your support on this extraordinary journey. We look forward to talking with you again in 3 months.

Operator: And this concludes today’s conference. Thank you all for participating, and you may now disconnect.