◆ Inside the Latest Quarter (Q2 2026)

Intuitive Surgical (ISRG) — the variant view

Revenue up 19%, operating income up 31%, margin guidance raised, and the shares fell 12% the next day.

📈 ISRG valuation, revenue & earnings — P/E, P/S, revenue, EPS →

The June 2026 quarter was, on almost every operating measure, a good one. The market took twelve percent off the shares the following day1.

June 2026 quarter ($M)$2,892.3MRevenue$1.73BInstrumentsand accessories$685MSystems$971.9MOperating incomeRevenue +19%, operating income +31% on $743.4M. Gross margin 67.8% against 66.3%.
GAAP earnings of $2.29 against non-GAAP $2.80 — the gap is share-based compensation. The shares fell anyway, on two points of US procedure growth.

The results. Revenue $2,892.3 million, up 19% on $2,440.0 million. Instruments and accessories $1.73 billion, up 18%; systems revenue $685 million, up 19%. GAAP income from operations $971.9 million against $743.4 million, up 31%; GAAP net income attributable to Intuitive $818.1 million and diluted earnings $2.29, against $658.4 million and $1.812. On a non-GAAP basis, net income was $1.00 billion and $2.80 a share, up 28%, the difference being $213 million of share-based compensation3. Both figures include a $28 million after-tax benefit, $0.08 a share, from refunds of tariffs paid in prior periods under the International Emergency Economic Powers Act.

The operating detail was better still. Gross margin reached 67.8% against 66.3%, and full-year non-GAAP gross margin guidance was raised to 68-69% from 67.5-68.5%4. The company placed 468 da Vinci systems against 395, of which 246 were da Vinci 5 against 180, and 55 Ion systems. The installed base reached 11,710 da Vinci and 1,096 Ion systems, up 12% and 21%. Utilisation rose 3%. Recurring revenue was 85% of the total5.

The problem was in the procedure line. Total procedures grew 16%, da Vinci 15% and Ion 36% — but the geography split 12% in the United States against 20% outside it6, and the domestic figure had been 14% in the first quarter. Management identified the softness in deferrable benign procedures and attributed it to the expiry of enhanced Affordable Care Act premium subsidies, with the chief financial officer saying the expiry "had a modest adverse impact on U.S. da Vinci procedure volume in Q2". GLP-1 obesity medicines continued to pressure bariatric volumes.

Full-year worldwide da Vinci procedure growth guidance was held at 13.5% to 15.5%, with the company expecting to land nearer the midpoint7, and non-GAAP operating expense growth guided to 11-13% — close enough to the procedure range that the operating leverage of the past decade is no longer assured.

Two announcements matter more than the numbers. The Extended Use Program will raise the permitted number of uses on selected EndoWrist instruments in the first half of 2027, to reduce customer costs in benign procedures and cost-constrained geographies, with pricing to be disclosed later8. And Japan expanded reimbursement for multiple robotic procedures on 1 June — largest category inguinal hernia — taking Japanese placements from 15 to 25 year on year9.

Read together, the quarter says that Intuitive's machine is working better than ever and that the number of patients presenting for its use is now a policy variable. Against that, 468 systems were placed into a market whose growth rate management had just reduced — which is either conviction or the last quarter before the placements slow too.

References
  1. ReportedThe market took twelve percent off the shares the following day.
    Market data (stockanalysis.com) - $366.70 a share against a 52-week high of $603.88, market value about $130 billion from roughly $207 billion at the end of 2025, and about 41 times trailing earnings against 66 to 80 times in each of the previous five years — September 2026 · publ. September 2026 · source ↗
  2. ReportedGAAP income from operations $971.9 million against $743.4 million, up 31%; GAAP net income attributable to Intuitive $818.1 million and diluted earnings $2.29, against $658.4 million and $1.81.
    Intuitive Surgical Form 10-Q, quarter ended June 30, 2026 (installed base 11,710 da Vinci systems up 12%, 468 placements of which 246 were da Vinci 5, the operating-lease share, the distributor acquisitions in Italy, Spain and Portugal, cash and investments of $8.63 billion, and the factors expected to affect future placements) — Q2 2026 and the first six months · publ. July 21, 2026 · source ↗
  3. ReportedOn a non-GAAP basis, net income was $1.00 billion and $2.80 a share, up 28%, the difference being $213 million of share-based compensation.
    Intuitive Surgical second-quarter 2026 results release (Form 8-K exhibit 99.1) - revenue $2,892.3M up 19%, operating income $971.9M, GAAP diluted earnings of $2.29 against non-GAAP $2.80, recurring revenue 85% of the total, and the quarter's procedure and placement figures — Q2 2026 · publ. July 16, 2026 · source ↗
  4. ReportedGross margin reached 67.8% against 66.3%, and full-year non-GAAP gross margin guidance was raised to 68-69% from 67.5-68.5%.
    Intuitive Surgical Q2 2026 earnings call - the Extended Use Program raising permitted uses on selected EndoWrist instruments from the first half of 2027, US da Vinci procedure growth of 12% against 14% attributed to the expiry of enhanced Affordable Care Act premium subsidies, full-year guidance of 13.5% to 15.5% nearer the midpoint, gross-margin guidance raised to 68-69%, and Japanese placements of 25 against 15 — Q2 2026 · publ. July 16, 2026 · source ↗
  5. ReportedRecurring revenue was 85% of the total.
    Intuitive Surgical second-quarter 2026 results release (Form 8-K exhibit 99.1) - revenue $2,892.3M up 19%, operating income $971.9M, GAAP diluted earnings of $2.29 against non-GAAP $2.80, recurring revenue 85% of the total, and the quarter's procedure and placement figures — Q2 2026 · publ. July 16, 2026 · source ↗
  6. ReportedTotal procedures grew 16%, da Vinci 15% and Ion 36% — but the geography split 12% in the United States against 20% outside it, and the domestic figure had been 14% in the first quarter.
    Intuitive Surgical Q2 2026 earnings call - the Extended Use Program raising permitted uses on selected EndoWrist instruments from the first half of 2027, US da Vinci procedure growth of 12% against 14% attributed to the expiry of enhanced Affordable Care Act premium subsidies, full-year guidance of 13.5% to 15.5% nearer the midpoint, gross-margin guidance raised to 68-69%, and Japanese placements of 25 against 15 — Q2 2026 · publ. July 16, 2026 · source ↗
  7. ReportedFull-year worldwide da Vinci procedure growth guidance was held at 13.5% to 15.5%, with the company expecting to land nearer the midpoint, and non-GAAP operating expense growth guided to 11-13% — close enough to the procedure range that...
    Intuitive Surgical Q2 2026 earnings call - the Extended Use Program raising permitted uses on selected EndoWrist instruments from the first half of 2027, US da Vinci procedure growth of 12% against 14% attributed to the expiry of enhanced Affordable Care Act premium subsidies, full-year guidance of 13.5% to 15.5% nearer the midpoint, gross-margin guidance raised to 68-69%, and Japanese placements of 25 against 15 — Q2 2026 · publ. July 16, 2026 · source ↗
  8. ReportedThe Extended Use Program will raise the permitted number of uses on selected EndoWrist instruments in the first half of 2027, to reduce customer costs in benign procedures and cost-constrained geographies, with pricing to be disclosed...
    Intuitive Surgical Q2 2026 earnings call - the Extended Use Program raising permitted uses on selected EndoWrist instruments from the first half of 2027, US da Vinci procedure growth of 12% against 14% attributed to the expiry of enhanced Affordable Care Act premium subsidies, full-year guidance of 13.5% to 15.5% nearer the midpoint, gross-margin guidance raised to 68-69%, and Japanese placements of 25 against 15 — Q2 2026 · publ. July 16, 2026 · source ↗
  9. ReportedAnd Japan expanded reimbursement for multiple robotic procedures on 1 June — largest category inguinal hernia — taking Japanese placements from 15 to 25 year on year.
    Intuitive Surgical Q2 2026 earnings call - the Extended Use Program raising permitted uses on selected EndoWrist instruments from the first half of 2027, US da Vinci procedure growth of 12% against 14% attributed to the expiry of enhanced Affordable Care Act premium subsidies, full-year guidance of 13.5% to 15.5% nearer the midpoint, gross-margin guidance raised to 68-69%, and Japanese placements of 25 against 15 — Q2 2026 · publ. July 16, 2026 · source ↗
Sources
Generated September 23, 2026