Key Highlights

  • Revenue grew 22% to about USD 3.05 billion, with 84% recurring.
  • Non-GAAP EPS of USD 3.00 rose 25% year over year.
  • GAAP EPS fell to USD 1.49 from USD 1.95 after a USD 450 million settlement.
  • Da Vinci placements rose 28% to 546 systems, with procedures up 14%.

Intuitive Surgical (NASDAQ:ISRG) reported third quarter 2026 results on Oct. 20, with non-GAAP EPS of USD 3.00 against a USD 2.65 estimate, up 25% from a year earlier. Revenue grew 22% to about USD 3.05 billion versus a USD 2.91 billion estimate, a beat of 4.88%.

Intuitive Surgical, based in Sunnyvale, California, makes the da Vinci robotic-assisted surgical system and the Ion platform for minimally invasive lung biopsy.

Procedures, Placements and Revenue Mix

Total procedures grew 15%. Da Vinci procedures rose 14%, with growth of 10% in the United States and 20% outside it, while Ion procedures rose 31%. Single-port procedures grew 55%, cardiac procedures grew 40% and breast procedures grew 42%.

The company placed 546 da Vinci systems, up 28% from 427, including 315 da Vinci 5 units and a record 42 single-port systems. The installed base of da Vinci and Ion systems passed 13,200. Systems revenue rose 30% to USD 769 million, service revenue rose 22% to USD 482 million, and instruments and accessories revenue rose 18% to USD 1.8 billion. Recurring revenue made up 84% of the total.

Margins, the Settlement and Buybacks

Non-GAAP gross margin was 69.9%, compared with 68% a year earlier. That included a one-time USD 28 million refund of previously paid tariffs, and excluding it the margin was 68.9%. Non-GAAP operating margin was 42%, or 41% without the refund.

GAAP net income was USD 523 million, or USD 1.49 per share, compared with USD 704 million, or USD 1.95, a year earlier. The gap reflects a USD 450 million settlement with U.S. customers in a class action over third-party remanufacturing of instruments and third-party servicing of systems. The agreement is subject to court approval, and management does not anticipate a decision until next year.

The company repurchased USD 2.9 billion of stock at an average price of USD 377 per share. Cash and investments ended the quarter at USD 6.8 billion, down from USD 8.6 billion. Non-GAAP other income was USD 75 million, down from USD 83 million in the second quarter.

Instrument Pricing and Updated Guidance

Management quantified pricing actions that it said would lower da Vinci instruments and accessories revenue per procedure by about 3% to 5% on a constant mix basis once fully in place. They include extended-use instruments and volume-based pricing starting in the first half of 2027, plus a policy-driven price cut in China that starts in November. The U.S. extended-use instruments need a pending 510(k) clearance.

CEO Dave Rosa described the actions as aimed at high-volume benign procedures where cost can limit access. Revenue per procedure for da Vinci instruments and accessories was about USD 1,860 in the quarter, compared with USD 1,800 a year ago.

Full-year guidance now calls for da Vinci procedure growth of 14% to 15%, narrowed from 13.5% to 15.5%, and a non-GAAP gross margin of 68.7% to 69.3%, up from 68% to 69%. Operating expense growth is still guided at 11% to 13%, stock compensation at USD 860 million to USD 870 million, and non-GAAP other income at USD 300 million to USD 310 million.

Pricing and Approval Markers to Watch

The next report offers several measurable items. These include U.S. da Vinci procedure growth against the 10% posted here, the effect of the China price change in November, and the status of the 510(k) clearance for extended-use instruments.

Other markers are the court's handling of the settlement, further buybacks against the lower cash balance, da Vinci 5 placements outside the U.S., and the long-term soft tissue opportunity estimate that management said it plans to update in January.