AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Fixed-payment exit penalties and substantial contracted payments create identifiable friction, reinforced by recurring instrument and service demand. Cancellable usage-based arrangements and missing competitive switching data limit the demonstrated breadth of the advantage.
durability · 2/4 · Multi-year leases and continued recurring revenue growth support persistence over a bounded period. Protection after expiry and long-term competitive resilience are not established.
customer dependency · 3/4 · Recurring revenue represented 85% of revenue in both comparative six-month periods and increased across instruments, service and operating leases. Procedure growth and fixed-payment penalties demonstrate engagement and friction indirectly; no retention rate is inferred.
erosion resilience · 2/4 · Procedures and recurring revenue grew despite competitive offerings, while implemented China limits had no material impact as disclosed. Modified third-party instruments and cancellable usage-based leases create concrete vulnerabilities; competitor displacement data remain absent.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Higher first-quarter system ASP and higher second-quarter instrument revenue per procedure establish favorable realized monetization, principally from product mix. They do not isolate like-for-like price increases or demonstrate broad resistance to buyer pressure.
retention · 3/4 · Growing procedures and recurring revenue demonstrate repeat demand indirectly, supported by penalties for fixed-payment exits. New placements contribute to growth, so these results do not establish cohort retention or renewal rates.
margin resilience · 2/4 · Product gross margin improved to 67.9% from 66.5% in the second quarter and to 67.3% from 65.6% over six months. The disclosed quarterly improvement reflects tariff refunds, logistics costs and overhead absorption, limiting evidence that pricing itself protected margins.
contractual freedom · 2/4 · Contractual per-use fees and fixed-payment exit penalties support negotiated monetization terms. Longer agreements can impede repricing, and usage-based customers can cancel. The evidence supports partial contractual control without demonstrating unilateral repricing freedom.
Predictability94
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.23
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 7.19
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade, interestCoverageGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- currentRatioGrade
- 100.00
- Current ratio (x)
- 4.87
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- 0.12
- 3-year average SBC / revenue (%)
- 8.09
- cashConversionGrade
- 65.13
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half operating cash flow of $1.97 billion supported $216 million of capital purchases, substantial acquisition-related spending and $1.44 billion of cash repurchases. Shares outstanding declined and liquidity remained substantial, but cash fell and acquisition returns and repurchase value creation are unestablished.
incentive alignment · 3/4 · Actual three-year PSU grants link rewards to procedure growth and relative operating margin; 2023 awards vested in early 2026. Officers met ownership guidelines at December 2025. This supports demonstrated alignment, with limitations from qualifying time-vesting awards and incomplete ownership detail.
execution · 3/4 · Growth in procedures, service revenue, recurring revenue, Ion installed systems and operating cash flow demonstrates execution indirectly through operating outcomes. These results do not isolate management's contribution or establish acquisition integration success.
governance · 3/4 · Disclosed practices include independent committees, a lead independent director, equal voting rights, annual elections and shareholder rights. An existing clawback policy and favorable audited internal-control opinion support oversight. The proxy's independent nominee count is not treated as a subsequent election result; litigation allegations are weighed alongside the favorable trial finding and appeal.
Evidence
Customers generally do not have the right to exit or terminate a fixed-payment lease without incurring a penalty.
MD&A / fixed-payment lease termination penalties · Filed 21/07/2026
Leases have terms that generally range from 12 to 84 months and are usually collateralized by a security interest in the underlying assets.
Lease accounting / customer lease duration and collateral · Filed 03/02/2026
Future lease payments (excluding non-lease elements and contingent payments related to usage-based arrangements) related to the non-cancellable portion of operating leases as of December 31, 2025, are as follows (in millions): Fiscal Year Amount 2026 $ 326.1 2027 269.7 2028 208.6 2029 151.1 2030 83.5 2031 and thereafter 61.9 Total $ 1,100.9 Lessee Information The Company enters into operating leases primarily for real estate, automobiles, and certain equipment.
Lessor disclosures / non-cancellable operating lease payment schedule · Filed 03/02/2026
Recurring revenue during the periods presented was as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Instruments and accessories revenue $ 1,734.9 $ 1,474.1 $ 3,421.3 $ 2,841.8 Service revenue 472.4 391.2 906.1 754.2 Operating lease revenue 261.8 213.8 512.0 409.0 Total recurring revenue $ 2,469.1 $ 2,079.1 $ 4,839.4 $ 4,005.0 % of Total revenue 85% 85% 85% 85% 40 Gross Profit Product Our product gross profit during the periods presented was as follows (dollars in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ Change % Change 2026 2025 $ Change % Change Product gross profit (1) $ 1,642.9 $ 1,362.6 $ 280.3 21% $3,200.0 $2,582.3 $ 617.7 24% Product gross profit margin 67.9% 66.5% 67.3% 65.6% ________ (1) Includes the following expenses: Share-based compensation $ 28.8 $ 30.3 $ (1.5) (5)% $58.1 $60.5 $ (2.4) (4)% Intangible asset amortization $ 20.0 $ 2.3 $ 17.7 770% $25.8 $4.5 $ 21.3 473% Product gross profit margin increased for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by IEEPA tariff refunds, lower logistics costs, and fixed overhead leverage, partially offset by higher intangible asset amortization.
MD&A / recurring revenue and product gross profit results · Filed 21/07/2026
The increase in instruments and accessories revenue was primarily driven by approximately 15% higher da Vinci procedure volume, approximately 36% higher Ion procedure volume, and higher da Vinci instruments and accessories revenue per procedure, driven by the da Vinci 5 and da Vinci SP instruments and accessories mix.
MD&A / procedure growth and instrument revenue per procedure · Filed 21/07/2026
Service revenue increased by 20% to $906 million for the six months ended June 30, 2026, compared to $754 million for the six months ended June 30, 2025.
MD&A / six-month service revenue results · Filed 21/07/2026
The increase in service revenue was primarily driven by a larger installed base of systems producing service revenue and favorable product mix, particularly from da Vinci 5 surgical system placements.
MD&A / issuer attribution of service growth to installed base and product mix · Filed 21/07/2026
However, because of the variability in revenue recognized for usage-based lease arrangements, including our customers’ ability to exit or cancel those arrangements prior to the end of the lease term, there is no guarantee that we will recuperate the cost of the usage-based leased system, which, in turn, could adversely impact our gross profit margins if utilization of those systems is different from our expectations.
MD&A / usage-based cancellation rights and system cost recovery risk · Filed 21/07/2026
Third parties have offered, and may continue to offer, instruments that have been modified to support the use of some of our limited-use instruments beyond their labeled life.
Risk factors / existing third-party modified instrument offerings · Filed 03/02/2026
Companies that have introduced products in the field of robotic-assisted medical procedures, or have made explicit statements about their efforts to enter the field, include, but are not limited to, the following: Beijing Surgerii Robotics Company Limited; CMR Surgical Ltd.; Distalmotion SA; Harbin Sizhe Rui Intelligent Medical Equipment Co., Ltd.; Johnson & Johnson; Karl Storz SE & Co.
MD&A / companies introducing robotic products or announcing entry · Filed 21/07/2026
KG; Medicaroid Corporation; Medtronic plc; meerecompany Inc.; Noah Medical Corporation; Shandong Weigao Group Medical Polymer Company Ltd.; Shanghai Microport Medbot (Group) Co., Ltd.; Shenzhen Edge Medical Co., Ltd.; and SS Innovations International, Inc.
MD&A / continuation of named robotic company coverage · Filed 21/07/2026
We cannot assure you that the rollout of the NHSA unified national framework or future actions by provincial or national healthcare agencies will not result in further pricing limits or pressures, which could have a material impact on procedure volumes and our instruments and accessories revenue in China.
MD&A / potential China reimbursement pricing pressures · Filed 21/07/2026
Numerous initiatives and reforms by legislators, regulators, and third-party payers to curb the rising cost of healthcare have catalyzed a consolidation of aggregate purchasing power within the markets in which we sell our products.
Risk factors / consolidation of healthcare purchasing power · Filed 03/02/2026
Three class action complaints were filed against the Company in the Northern District of California Court alleging antitrust allegations relating to the service and repair of certain instruments manufactured by the Company.
Legal proceedings / service and instrument repair antitrust complaints · Filed 03/02/2026
Impacts from inflationary pressures could be more pronounced and materially adversely impact aspects of our business where revenue streams and cost commitments are linked to contractual agreements that extend further into the future, as we may not be able to quickly or easily adjust pricing, reduce costs, or implement countermeasures.
Risk factors / difficulty adjusting pricing under longer contractual agreements · Filed 03/02/2026
As of the date of this report, the limits that have been implemented have not had a material impact on our business, financial condition, or results of operations, as only a small portion of our installed base in China is currently located in impacted provinces.
MD&A / implemented China limits had no material impact as of the report date · Filed 21/07/2026
The higher first quarter 2026 ASP was largely driven by favorable product mix, including from da Vinci 5 sales, partially offset by an unfavorable geographical mix.
MD&A / realized first-quarter system ASP improvement and mix attribution · Filed 22/04/2026
For these usage-based lease arrangements, the lease fee is generally billed monthly in arrears based on a contractual per-use fee where usage is generally defined as the number of procedures performed with the system.
Lease accounting / contractual per-procedure usage fees · Filed 03/02/2026
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, in millions 2026 2025 Operating activities: Net income $ 1,649.2 $ 1,367.9 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and loss on disposal of property, plant, and equipment 371.2 289.6 Amortization of intangible and other assets 59.9 24.4 Accretion of discounts, amortization of premiums, and (gains) losses on investments, net (19.0) (27.4) Gain on sale of business and assets (7.9) — Deferred income taxes 370.3 (29.4) Share-based compensation expense 419.4 381.4 Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable (49.8) (44.1) Inventory (514.6) (494.2) Prepaids and other assets (179.0) (141.8) Accounts payable 21.4 72.4 Accrued compensation and employee benefits (229.7) (114.9) Deferred revenue 44.7 48.8 Other liabilities 36.8 (35.7) Net cash provided by operating activities 1,972.9 1,297.0 Investing activities: Purchase of investments (1,349.1) (691.8) Proceeds from sales of investments 0.1 249.1 Proceeds from maturities of investments 1,106.0 1,190.0 Proceeds from sale of assets 46.0 — Purchase of property, plant, and equipment (215.9) (271.9) Acquisition of business, net of cash, and intellectual property and other investing activities (528.2) (1.2) Net cash provided by (used in) investing activities (941.1) 474.2 Financing activities: Proceeds from issuance of common stock relating to employee stock plans 187.4 183.7 Taxes paid related to net share settlement of equity awards (365.4) (386.3) Repurchase of common stock (1,443.5) (181.0) Other financing activities (20.1) — Net cash used in financing activities (1,641.6) (383.6) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 8.1 (3.5) Net increase (decrease) in cash, cash equivalents, and restricted cash (601.7) 1,384.1 Cash, cash equivalents, and restricted cash, beginning of period 3,407.4 2,062.4 Cash, cash equivalents, and restricted cash, end of period $ 2,805.7 $ 3,446.5 Supplemental and non-cash disclosures: Equipment transfers, including operating lease assets, from inventory to property, plant, and equipment $ 419.3 $ 357.2 Acquisition of property, plant, and equipment in accounts payable and accrued liabilities 68.8 74.8 Unsettled common stock repurchases in accrued liabilities 63.5 — The accompanying notes are an integral part of these Condensed Consolidated Financial Statements (Unaudited).
Unaudited cash flow statement / operating cash generation, investment and financing spending · Filed 21/07/2026
•As of June 30, 2026, we had $8.63 billion in cash, cash equivalents, and investments, compared to $9.03 billion as of December 31, 2025.
MD&A / cash, cash equivalents and investments · Filed 21/07/2026
Common stock, 600.0 shares authorized, $0.001 par value, 353.9 shares and 355.1 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively
Balance sheet / common shares outstanding at June 2026 and December 2025 · Filed 21/07/2026
Performance Stock Units The Company grants performance stock units (“PSUs”) to officers and other key employees subject to three-year cliff vesting and pre-established, quantitative goals.
Share-based compensation / actual PSU grants and three-year vesting terms · Filed 21/07/2026
The 2023 PSU awards vested in the first quarter of 2026.
Share-based compensation / completed vesting of 2023 PSU awards · Filed 21/07/2026
The 2025 PSU grant metrics are focused on relative adjusted operating margin as compared to selected peers, da Vinci and Ion procedure growth in 2026 compared to 2024, and da Vinci and Ion procedure growth in 2027 compared to 2024.
Share-based compensation / 2025 PSU performance metrics · Filed 21/07/2026
Each of the individuals subject to the Officer Minimum Ownership Requirement met the guidelines as of December 31, 2025.
Executive compensation / actual compliance with officer ownership guidelines · Filed 13/03/2026
For purposes of determining stock ownership levels, the following forms of equity interests are included: (i) shares owned outright by the CEO, President, or Executive Vice President or by his or her spouse or children sharing the same household; (ii) shares held in trust for the benefit of the CEO, President, or Executive Vice President or for the benefit of his or her spouse or children sharing the same household; (iii) shares held through a fund or other entity as to which the CEO, President, or Executive Vice President has control; (iv) common stock, stock units, or other stock equivalents obtained through the exercise of stock options or vesting of Company equity awards; and (v) shares of common stock underlying outstanding restricted stock and restricted stock unit awards, in each case, that vest solely based on the passage of time or where the performance goals have been achieved.
Executive compensation / equity interests counted toward ownership guidelines · Filed 13/03/2026
•Strong Board independence (8 out of 10 director nominees are independent) •Lead independent director •Executive Chair and CEO positions are separate •100% of Board committee members are independent •All directors stand for election annually for one-year terms •Majority voting and director resignation policy in uncontested director elections •Newly revised and comprehensive Code of Business Conduct and Ethics •Proactive Board oversight of enterprise risks and risk management program •Bylaws provide for proxy access for stockholders •Single class of stock with equal voting rights •Robust stock ownership requirements for directors and executive officers •Stockholder right to call a special meeting •Simple majority vote for charter and bylaw amendments •Prohibition on transactions involving hedging, pledging, or short sales under our Insider Trading Policy Stockholder Engagement We value the opinions of our stockholders and remain committed to engaging with our investors in ongoing, constructive dialogue.
Corporate governance / disclosed governance practices and director nominees · Filed 13/03/2026
We have a Clawback Policy that complies with the SEC and Nasdaq listing standards and provides that the Company shall recover certain erroneously paid incentive-based compensation, including cash incentive or performance-vesting equity compensation of our current and former executive officers in the event that the Company is required to prepare an accounting restatement.
Corporate governance / existing incentive compensation clawback policy · Filed 13/03/2026
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Independent auditor report / effective internal control opinion at December 31, 2025 · Filed 03/02/2026
On January 28, 2025, after the close of both plaintiff’s and Intuitive’s cases in chief, the Court found in Intuitive’s favor on all of SIS’s antitrust claims and stayed Intuitive’s counterclaims.
Legal proceedings / January 2025 trial outcome on SIS antitrust claims · Filed 03/02/2026
On February 27, 2025, SIS filed a Notice of Appeal to the Ninth Circuit Court of Appeals.
Legal proceedings / February 2025 notice of appeal · Filed 03/02/2026
•As of June 30, 2026, we had an Ion system installed base of approximately 1,096 systems, an increase of 21% compared to an installed base of approximately 905 systems as of June 30, 2025.
MD&A / June 2026 Ion installed-base growth · Filed 21/07/2026
