The Intuitive Surgical story

What drives the business

• Intuitive's business extends beyond robot placements into instruments, accessories, training, maintenance, and digital services, with most da Vinci instruments reusable for a defined number of procedures before replacement.
• In the quarter to June 2026, da Vinci procedure volume grew approximately 15%, helping drive instruments and accessories revenue growth of 18%, while systems revenue reached $685 million.
• The da Vinci installed base reached 11,710 systems as of June 30, 2026, and da Vinci 5 adds force feedback and workflow improvements, while 254 of the quarter's system placements were under operating leases.
• Ion extends the business into minimally invasive lung biopsies, with procedure growth of approximately 36% in the quarter to June 2026 and an installed base of 1,096 systems as of June 30, 2026.
• In March 2026, Intuitive completed its acquisition of the da Vinci and Ion distribution businesses operated by ab medica, Abex, Excelencia Robótica, and affiliates, expanding direct operations in Southern Europe, where Italy, Spain, and Portugal had more than 470 da Vinci systems as of December 31, 2025.

What the price assumes

At $414.79, the reverse DCF implies free cash flow after stock pay grows 22.9% a year for ten years, using a 10.2% discount rate.

Intuitive delivered 4.8% annual growth in that measure over the last 10 years, while the TenQ check sets a 4.4% bar by slowing the historical record halfway to 4%.

Revenue growth of 20.7% over the last twelve months exceeds the 17.4% annual pace over the last three years, but revenue growth is distinct from the after-stock-pay cash growth embedded in the price.

Value ISRG on your own assumptions

What could change the story

• Regulators have cleared or approved remanufacturing of certain instruments, and lower-priced third-party alternatives could reduce the recurring revenue that follows each robot placement.
• Unauthorized instruments or service could also create safety and reputation problems, while laws governing third-party offerings could affect Intuitive's business.
• The quarter to June 2026 included a $28 million net tariff-refund benefit, but additional tariffs beyond management's assumptions could materially affect margins.
• Stock-based pay was $825 million over the last twelve months, making it a significant distinction between reported free cash flow and the cash measure used in the reverse DCF.
• Capital returns represented 110.4% of free cash flow in the TenQ check, failing its cash-coverage test despite the debt-free balance sheet.

What to watch next

• Management expects worldwide da Vinci procedure growth of approximately 13.5% to 15.5% in 2026, closer to the midpoint, making procedure volumes and accompanying instrument revenue the central operating measures.
• Da Vinci 5 placements, lease placements, and installed-base growth will show how adoption is progressing alongside demand for instruments.
• The 2026 non-GAAP gross margin outlook is 68.0% to 69.0%, including an estimated tariff impact of 1.0% of revenue, so subsequent margins need to be read alongside any tariff refunds or changes.
• Management expects non-GAAP operating expense growth of 11% to 13% in 2026, providing a spending benchmark as Intuitive expands direct European operations.

Sources

• Intuitive Surgical's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The ISRG stock report, for every figure and check