From Selling Machines to Renting ThemNarrow moat

Intuitive Surgical (ISRG) — moat facet

Half the placements are now leases and 1,810 systems bill by the procedure: Intuitive is turning itself into a meter.

The most consequential change in Intuitive's business model in a decade is happening in a table most readers skip.

2025 da Vinci placements, by structure872Operating leases849Sold or sales-type lease496Of the leases, usage-based1,721 placements in total. The usage-based fleet reached 1,810 systems, from 1,492 and 1,023.
Just over half the year's placements were rentals. Intuitive is converting itself from a machine seller into a meter.

In 2025, 872 of 1,721 da Vinci placements — 51% — went out under operating leases rather than sales, and 496 of those were usage-based arrangements where Intuitive charges for the system and its service as procedures are performed1. The usage-based installed base has gone 1,023 to 1,492 to 1,810 across three years. Operating lease revenue reached $874.3 million, of which $531 million was variable revenue tied directly to usage2.

Read that as a strategy and it is the logical end point of the toll model. A hospital's objection to a da Vinci is a $1.6 million capital decision requiring board approval, a business case and a forecast of volume nobody can make confidently. A usage-based lease removes all three: the hospital pays when it operates, Intuitive carries the asset, and the surgeon gets the console. The company describes the pricing as "a modest premium relative to purchased systems reflecting the time value of money and, in the case of usage-based operating lease arrangements, the risk that system utilization may fall short"3.

What makes it possible is the balance sheet — $8.63 billion of cash and investments and no debt at all4. Very few medical device companies could finance their own customers at this scale; Intuitive can do it out of the interest it earns on idle money.

What it costs is reported revenue and reported risk. Upfront systems revenue is deferred into a stream, which the company notes "can create volatility in the systems revenue recognized in any given period". And the usage-based arrangements carry a warning most subscription businesses would not survive: they "generally contain no minimum payments; therefore, customers may exit such arrangements without paying a financial penalty"5.

This facet is rated below the first two because it is a transition rather than a fortification. It converts a customer's risk into Intuitive's, which is exactly the right trade while procedure volume compounds and exactly the wrong one if it does not.

Track the usage-based installed base, 1,810 systems and rising. Growing is the strategy working. Growing while utilisation falls is Intuitive underwriting volume it does not control.

Moat trajectory: Widening

872 of 1,721 placements were operating leases and 1,810 systems now bill by usage, both up sharply. The company is converting a capital sale into a meter as fast as hospitals will let it.

The number that tests this moat
Moat Explorer calc
Systems revenue as a share of the total
24.6% — $2,473.7M of $10,064.7M

Three quarters of the company has nothing to do with selling a machine, and the share keeps falling as leasing grows. It is also why systems revenue is a poor demand signal: the accounting choice moves it as much as the customer does.

How it's calculated: $2,473.7M of systems revenue divided by $10,064.7M of total revenue, both as reported in the fiscal 2025 Form 10-K.
Source: Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 ↗
Aspects of the moat
DIG DEEPER 01
Half the Placements Are Leases
Systems revenue has stopped being a demand signal, because the accounting choice moves it as much as the customer does.
DIG DEEPER 02
Eighteen Hundred Systems on a Meter
Intuitive owns the asset, the hospital supplies the traffic, and the revenue is the product of the two.
DIG DEEPER 03
The Balance Sheet as a Weapon
$8.6 billion and no debt lets Intuitive remove the purchase decision entirely — which almost no competitor can match.
DIG DEEPER 04
A Modest Premium for Taking the Risk
Intuitive charges more for a lease and says exactly why: the time value of money, and the risk that the machine is not used enough.
⚠ Threats to the moat
⚠ THREAT 01
No Minimum Payments, No Penalty for Leaving
Intuitive's own words about the arrangements it is placing fastest, on 1,810 systems it still owns.
⚠ THREAT 02
Leasing Moves the Volume Risk From the Hospital to Intuitive
A capital sale is settled; a usage-based lease is a bet on how many operations a hospital performs.
References
  1. ReportedIn 2025, 872 of 1,721 da Vinci placements — 51% — went out under operating leases rather than sales, and 496 of those were usage-based arrangements where Intuitive charges for the system and its service as procedures are performed.
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 7 MD&A, results of operations (instruments and accessories $6,018.9M, systems $2,473.7M, service $1,572.1M, recurring revenue $8,465.3M, gross margin 66.0%, operating income $2,945.5M, average selling price, lease revenue recognition, and the discussion of procedure categories) — FY2025 · publ. February 3, 2026 · source ↗
  2. ReportedOperating lease revenue reached $874.3 million, of which $531 million was variable revenue tied directly to usage.
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 7 MD&A, results of operations (instruments and accessories $6,018.9M, systems $2,473.7M, service $1,572.1M, recurring revenue $8,465.3M, gross margin 66.0%, operating income $2,945.5M, average selling price, lease revenue recognition, and the discussion of procedure categories) — FY2025 · publ. February 3, 2026 · source ↗
  3. ReportedThe company describes the pricing as "a modest premium relative to purchased systems reflecting the time value of money and, in the case of usage-based operating lease arrangements, the risk that system utilization may fall short".
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 7 MD&A, results of operations (instruments and accessories $6,018.9M, systems $2,473.7M, service $1,572.1M, recurring revenue $8,465.3M, gross margin 66.0%, operating income $2,945.5M, average selling price, lease revenue recognition, and the discussion of procedure categories) — FY2025 · publ. February 3, 2026 · source ↗
  4. ReportedWhat makes it possible is the balance sheet — $8.63 billion of cash and investments and no debt at all.
    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 ↗
  5. ReportedAnd the usage-based arrangements carry a warning most subscription businesses would not survive: they "generally contain no minimum payments; therefore, customers may exit such arrangements without paying a financial penalty".
    Intuitive Surgical Form 10-K, fiscal year ended December 31, 2025 - Item 7 MD&A, results of operations (instruments and accessories $6,018.9M, systems $2,473.7M, service $1,572.1M, recurring revenue $8,465.3M, gross margin 66.0%, operating income $2,945.5M, average selling price, lease revenue recognition, and the discussion of procedure categories) — FY2025 · publ. February 3, 2026 · source ↗
Sources
Generated September 23, 2026