10-K – 2026-02-03 – isrg-20251231.htm

The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from management on our cybersecurity risk management program. Board members receive presentations on cybersecurity topics from our IT management team, internal security staff, or external experts as part of the Board’s continuing education. Six members of our Board have information security expertise, including Joseph C. Beery, Lewis Chew, Gary S. Guthart, Ph.D., Amal M. Johnson, Sreelakshmi Kolli, and Keith R. Leonard, Jr.
Our management team , including our IT management team, is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. Our management team is led by our Senior Director, IT Cybersecurity, who is within the organization of our Chief Information Officer (“CIO”). Our Senior Director, IT Cybersecurity has over 20 years of extensive information technology experience, including cybersecurity policies and standards, vulnerability management, data loss prevention, threat intelligence, incident response, risk management, and system, network, and web security. He holds a Certified Information Systems Security Professional (“CISSP”) certification. Our CIO holds a bachelor’s degree in Electronics Engineering from the University of Mumbai and has over 20 years of experience in CIO and other IT leadership positions at various public companies. Our management team has certifications from various organizations, such as ISC2 and Global Information Assurance.
Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the information technology environment.

ITEM 2.    PROPERTIES
As of December 31, 2025, we own approximately 4.1 million square feet of space on 128 acres of land in Sunnyvale, California, where we house our principal headquarters, research and development, service, and support functions, as well as certain of our manufacturing operations.
Outside of Sunnyvale, California, we own facilities in other U.S. locations that are used for sales, training, manufacturing, engineering, and administrative functions, including approximately 1.7 million square feet of space on 69 acres of land in Peachtree Corners, Georgia. We also lease approximately 1.1 million square feet of space for certain manufacturing, engineering, warehousing, and support functions at various locations in the U.S.
Outside of the U.S., we own and/or lease properties in Mexicali, Mexico, Germany, and Bulgaria, primarily for manufacturing operations, and Aubonne, Switzerland, primarily for our international headquarters. In China, our Joint Venture leases facilities for research and development, manufacturing, and sales operations. In Israel, we lease facilities for research and development. In addition, we lease various international facilities for sales and other operations.

ITEM 3.    LEGAL PROCEEDINGS
The information included in Note 8 to the Consolidated Financial Statements included in Part II, Item 8 of this report is incorporated herein by reference.

ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
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PART II

ITEM 5.     MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
COMMON STOCK
Our common stock is traded on The Nasdaq Global Select Market under the symbol “ISRG.”
As of January 28, 2026, there were 122 stockholders of record of our common stock, although there are a significantly larger number of beneficial owners of our common stock.
DIVIDENDS
We have never declared or paid any cash dividends on our common stock. We currently intend to retain earnings for use in the operation and expansion of our business. In addition, we may use a portion of our retained earnings to repurchase shares of our common stock, if appropriate.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Please see Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” under Part III of this Annual Report on Form 10-K for information on where to find information required by Item 201(d) of Regulation S-K.
RECENT SALES OF UNREGISTERED SECURITIES
In November 2025, as partial consideration for the acquisition of a business, we issued 29,572 shares of common stock to the sellers of such business. The shares were issued pursuant to an exemption from registration in Section 4(a)(2) of the Securities Act of 1933. We relied on this exemption from registration based, in part, on the nature of the transaction and the representations made by the sellers of the business.
ISSUER PURCHASES OF EQUITY SECURITIES
The table below summarizes our common stock repurchase activity for the quarter ended December 31, 2025.

Fiscal Period Total Number of
Shares
Repurchased Average
Price Paid
Per Share Total Number of
Shares Purchased As
Part of a Publicly
Announced Program Approximate Dollar
Amount of Shares That
May Yet be Purchased
Under the Program (1)
October 1 to October 31, 2025
463,190  $ 432.55  463,190  $ 1.7   billion
November 1 to November 30, 2025
—  $ —  —  $ 1.7   billion
December 1 to December 31, 2025
—  $ —  —  $ 1.7   billion
Total during quarter ended December 31, 2025
463,190  $ 432.55  463,190 

(1) Since March 2009, we have had an active stock repurchase program (the “Repurchase Program”). As of December 31, 2025, our Board of Directors (our “Board”) had authorized an aggregate amount of up to $13.0 billion for stock repurchases, of which the most recent authorization occurred in May 2025, when our Board increased the authorized amount available under our Repurchase Program to $4.0 billion, including amounts remaining under previous authorization. As of December 31, 2025, the remaining amount available to repurchase shares under the authorized Repurchase Program was $1.7 billion. The authorized Repurchase Program does not have an expiration date.
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STOCK PERFORMANCE GRAPH
This graph is not “soliciting material” or deemed “filed” with the SEC or subject to Regulation 14A or 14C (17 CFR 240.14a-1–240.14a-104 or 240.14c-1–240.14c-101) for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that Section, and shall not be deemed incorporated by reference into any filings of Intuitive Surgical, Inc. under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2020, and December 31, 2025, with the cumulative total return of (i) the Nasdaq Composite Index, (ii) the S&P 500 Healthcare Index, and (iii) the S&P 500 Index over the same period. This graph assumes an investment of $100.00 on December 31, 2020, in our common stock, the Nasdaq Composite Index, the S&P Healthcare Index, and the S&P 500 Index and assumes the re-investment of dividends, if any.
The comparisons shown in the graph below are based on historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG INTUITIVE, NASDAQ COMPOSITE, S&P HEALTHCARE INDEX, AND S&P 500 INDEX

December 31,
2020 2021 2022 2023 2024 2025
Intuitive Surgical, Inc. $ 100.00  $ 131.76  $ 97.30  $ 123.71  $ 191.40  $ 207.69 
Nasdaq Composite $ 100.00  $ 122.18  $ 82.43  $ 119.22  $ 154.48  $ 187.14 
S&P 500 Healthcare Index $ 100.00  $ 124.16  $ 119.75  $ 120.12  $ 121.20  $ 136.40 
S&P 500 Index $ 100.00  $ 128.71  $ 105.40  $ 133.10  $ 166.40  $ 196.16 

ITEM 6.
[RESERVED]
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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis should be read in conjunction with our Consolidated Financial Statements and Notes thereto.
We refer to our fiscal years ended December 31, 2025, 2024, and 2023 as “2025,” “2024,” and “2023,” respectively. Unless the context requires otherwise, we are referring to Intuitive Surgical, Inc. and its consolidated subsidiaries when we use the terms “Intuitive,” the “Company,” “we,” “our,” or “us.”
This section of the Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Overview
Open surgery remains a prevalent form of surgery and is used in almost every area of the body. However, the large incisions required for open surgery create trauma to patients, typically resulting in longer hospitalization and recovery times, increased hospitalization costs, and additional pain and suffering relative to minimally invasive surgery, where MIS is available. For over four decades, MIS has reduced trauma to patients by allowing selected surgeries to be performed through small ports rather than large incisions. MIS has been widely adopted for certain surgical procedures.
Da Vinci surgical systems enable surgeons to extend the benefits of MIS to many patients who would otherwise undergo a more invasive surgery by using computational, robotic, and imaging technologies to overcome many of the limitations of traditional open surgery or conventional MIS. Surgeons using a da Vinci surgical system operate while seated at a console viewing a 3D, high-definition image of the surgical field. This immersive console connects surgeons to the surgical field and their instruments. While seated at the console, the surgeon manipulates instrument controls in a natural manner, similar to open surgical technique. Our technology is designed to provide surgeons with a range of articulation of the surgical instruments used in the surgical field analogous to the motions of a human wrist, while filtering out the tremor inherent in a surgeon’s hand. In designing our products, we focus on making our technology easy and safe to use.
Our da Vinci products fall into five broad categories: da Vinci surgical systems, da Vinci instruments and accessories, da Vinci stapling, da Vinci energy, and da Vinci vision. We provide a comprehensive suite of systems, learning, and services offerings. Digitally enabled for nearly three decades, these three offerings aim to decrease variability by providing dependable, consistent functionality and an integrated user experience. Our systems category includes robotic platforms, software, vision, energy, and instruments and accessories. Our learning category includes learning and enabling technology, such as simulation and telepresence, as well as technical training programs and personalized peer-to-peer learning opportunities. We have a global network of field service engineers and distributors through which we deliver a suite of services, including installation, repair, maintenance, around-the-clock technical support, and system monitoring. We also offer customized analytics and consultation to hospitals for program optimization.
We have commercialized the following da Vinci surgical systems: the da Vinci standard surgical system in 1999, the da Vinci S surgical system in 2006, the da Vinci Si surgical system in 2009, the fourth-generation da Vinci Xi surgical system in 2014, and the fifth-generation da Vinci 5 surgical system in 2024. We extended our fourth-generation platform by adding the da Vinci X surgical system, commercialized in 2017 and targeted at more cost-sensitive markets.
In March 2024, we obtained FDA clearance for our da Vinci 5 surgical system, our next-generation multi-port robotic system, for use in all surgical specialties and procedures indicated for da Vinci Xi, except for cardiac and pediatric indications. In October 2024, we obtained regulatory clearance in South Korea for the da Vinci 5 surgical system for use in urologic, general, gynecologic, thoracoscopic, thoracoscopically-assisted cardiotomy, and transoral otolaryngology surgical procedures. In June 2025, we obtained regulatory clearance in Japan for the da Vinci 5 surgical system for use in all surgical specialties and procedures indicated for da Vinci Xi, except for cardiac indications. In July 2025, we obtained European certification in accordance with the EU MDR for the da Vinci 5 surgical system for adult and pediatric use in minimally invasive endoscopic procedures across abdominopelvic and thoracoscopic surgical procedures, including urologic, gynecologic, and general laparoscopic procedures, excluding the use of force feedback. We intend to seek European certification for the use of force feedback in the future. In our OUS markets, we are in the midst of a phased launch of our da Vinci 5 surgical system over several quarters. As of December 31, 2025, we have an installed base of 1,231 da Vinci 5 surgical systems.
Additionally, we extended our fourth-generation platform by adding the da Vinci SP surgical system, commercialized in 2018. The da Vinci SP surgical system accesses the body through a single incision, while the other da Vinci surgical systems access the body through multiple incisions. All da Vinci surgical systems include a surgeon’s console (or consoles), imaging electronics, a patient-side cart, and computational hardware and software.
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We are in the early stages of launching our da Vinci SP surgical system, and we have an installed base of 377 da Vinci SP surgical systems as of December 31, 2025. We have received FDA clearance for the da Vinci SP surgical system for urologic, colorectal, general thoracoscopic, and certain transoral procedures. Additionally, the da Vinci SP surgical system has received regulatory clearance in South Korea for a broad set of procedures. The da Vinci SP surgical system has also received regulatory clearance in Japan for the same set of procedures that are currently allowed with the da Vinci Xi surgical system in Japan. In January 2024, the da Vinci SP surgical system received European certification in accordance with Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017 on medical devices (the “EU MDR”) for use in endoscopic abdominopelvic, thoracoscopic, transoral otolaryngology, transanal colorectal, and breast surgical procedures, and we are commercializing the da Vinci SP surgical system in select major European countries as part of a measured rollout strategy. In August 2024, we obtained regulatory clearance in Taiwan for our da Vinci SP surgical system for use in endoscopic abdominopelvic, thoracoscopic, transoral otolaryngology, transanal colorectal, transanal total mesorectal excision, and breast surgical procedures. We plan to seek FDA clearances for additional indications for the da Vinci SP surgical system and expand the system’s regulatory approvals (including for additional indications) in other OUS markets over time. The success of the da Vinci SP surgical system is dependent on positive experiences and improved clinical outcomes for the procedures for which it has been cleared as well as securing additional clinical clearances.
We offer approximately 70 different multi-port da Vinci instruments to provide surgeons with flexibility in choosing the types of tools needed to perform a particular surgery. These multi-port instruments are generally robotically controlled and provide end effectors (tips) that are similar to those used in either open or laparoscopic surgery. We offer advanced instrumentation for the da Vinci 5, da Vinci X, and da Vinci Xi surgical systems, including da Vinci energy and da Vinci stapler products, to provide surgeons with sophisticated, computer-aided tools to precisely and efficiently interact with tissue. The da Vinci 5, da Vinci X, and da Vinci Xi surgical systems generally share the same instruments, whereas the da Vinci Si surgical system uses instruments that are not compatible with the da Vinci 5, da Vinci X, and da Vinci Xi systems. Additionally, we have introduced a unique set of force feedback instruments that are only compatible with our da Vinci 5 surgical system. We also currently offer 14 core instruments on our da Vinci SP surgical system. We plan to expand our da Vinci SP instrument offering over time.
Our learning and enabling technology offerings facilitate access to education and training on our products. Our enabling technologies include telepresence and Advanced Insights Suite (which includes Case Insights and Insights Engine), and our learning technology solutions include Intuitive Learning, SimNow, customized training models, remote case observations, and remote proctoring.
In 2019, we commercialized our Ion endoluminal system, which is a flexible, robotic-assisted, catheter-based platform that utilizes instruments and accessories for which the first cleared indication is minimally invasive biopsies in the lung. Our Ion system extends our commercial offering beyond surgery into diagnostic, endoluminal procedures. The system features an ultra-thin, ultra-maneuverable catheter that can articulate 180 degrees in all directions and allows navigation far into the peripheral lung and provides the stability necessary for precision in a biopsy. Many suspicious lesions found in the lung may be small and difficult to access, which can make diagnosis challenging, and Ion helps physicians obtain tissue samples from deep within the lung, which could help enable earlier diagnosis. Our Ion endoluminal system has received FDA clearance, and OUS regulatory clearances include European certification in accordance with the EU MDR, regulatory clearance in South Korea, and NMPA regulatory clearance in China. We plan to seek additional clearances, approvals, and certifications for our Ion endoluminal system in OUS markets over time.
The success of new product introductions depends on a number of factors including, but not limited to, pricing, competition, geographic market and consumer acceptance, the effective forecasting and management of product demand, inventory levels, the management of manufacturing and supply costs, and the risk that new products may have quality or other defects in the early stages of introduction.
Trade and Tariffs Update
Beginning in 2025, the U.S. implemented a baseline tariff framework on most imports with higher country- and product-specific rates for certain trading partners, including Mexico, Germany, and China, among others, alongside reciprocal measures announced by other jurisdictions. Our disclosure reflects tariffs currently in effect or announced as of the date of this report and assumes such tariffs remain in place, consistent with how we reflect tariff impacts in our financial outlook. We currently manufacture a significant majority of our instruments and accessories in Mexicali, Mexico. Most of these products qualify as originating under the USMCA and, therefore, have not been subject to U.S. import tariffs to date. We also import certain raw materials and finished goods from outside of the U.S. that are subject to tariffs, including our endoscopes, a majority of which are manufactured in Germany. In addition, our operations involve importing certain raw materials from China, importing sub-assemblies to support our local da Vinci Xi surgical system manufacturing in China, and selling U.S.-manufactured da Vinci Xi
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surgical systems into China. These imports into the U.S. and China are subject to tariffs, which we expect to continue to have an adverse impact on the product cost of our da Vinci Xi surgical system in China.
Some of our suppliers have also incurred incremental tariffs and have passed or may pass on those additional costs to us. These pass-through tariffs and other specific tariff actions against steel and aluminum, critical minerals, semiconductors, and other products have not had a material direct impact on our operations to date, but the long-term effect of these and other existing and future tariff actions is difficult to predict.
U.S. tariffs have also given rise to trade measures by other countries, including additional restrictions on certain exports. These trade measures could impact the reliability and efficiency of our supply chain if they are imposed on materials important to our production operations. In particular, restrictions on the export of rare earth elements, including magnets, and critical minerals from China could potentially restrict access to components used in many of our products and could have a material adverse effect on our business, financial condition, or results of operations.
In 2025, tariffs and other trade measures have increased our cost of revenues by approximately $63.0 million. Based on the announced and implemented global tariffs as of the date of this report, and assuming such tariffs remain in place, we expect our cost of revenues driven by tariffs and other trade measures to continue to increase in 2026. Future changes to tariff rates and the imposition of new tariffs by the U.S. and/or other countries could result in a material impact to our results of operations. The ultimate impact of changes to tariffs and trade barriers will depend on various factors, including the timing, amount, scope, and nature of any tariffs or trade barriers that are implemented, all of which could have a material adverse effect on our business, financial condition, or results of operations.
Remanufactured Instruments
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. We are aware that the FDA has granted 510(k) clearance for the remanufacturing of certain of these instruments for use with our da Vinci Si, da Vinci X, and da Vinci Xi surgical systems. To date, such offerings have not had a material impact on our revenues, but such activities could result in reduced revenue if these products have broader uptake as well as generate negative publicity for us if these products cause injuries and/or do not function as intended when used. Both of these possibilities could have a material adverse effect on our business, financial condition, or results of operations.
For further details on remanufactured instruments, refer to the “Products & Services – Da Vinci – Instruments” section of our corporate website. The inclusion of a reference to our corporate website in this filing does not include or incorporate by reference the information on our website into this Form 10-K.
Other Macroeconomic Environment Factors
Our future results of operations and liquidity could be materially adversely affected by uncertainties surrounding macroeconomic and geopolitical factors both in the U.S. and globally. These uncertainties include any introduction or modification of tariffs or trade barriers, supply chain challenges, inflationary pressures, elevated interest rates, and disruptions in the commodity markets stemming from conflicts, such as those between Russia and Ukraine and conflicts in the Middle East.
During the fourth quarter of 2025, we continued to experience isolated stresses to supply, particularly for specific component materials impacted by evolving trade requirements and at certain subcontract suppliers that were operationally challenged to meet our production requirements. These isolated instances did not have a material impact on our business during the fourth quarter of 2025. As a result of the escalation in tariffs and country-specific trade requirements, including export license controls between major economies, we may experience tariff-related inflation in raw materials costs as well as supply shortages based on shipment delays and the availability of alternative sources of supply for critical materials used in the manufacture of finished products.
Elevated interest rates may also impact the ability of certain suppliers to fund necessary investments in capacity and infrastructure. Any insolvency of certain suppliers, including sole- and single-sourced suppliers, may present heightened continuity risks. Additionally, although incidents of cybersecurity breaches have not significantly impacted our supply chain to date, they continue to be actively monitored to protect supply continuity. We are actively engaged in activities that seek to mitigate the impact of any supply chain risks and disruptions on our operations.
Some hospitals continue to experience challenges with staffing and cost pressures that could affect their ability to provide patient care. Additionally, certain hospitals are facing significant financial pressure as supply chain constraints and inflation have driven up operating costs and elevated interest rates have made access to credit more expensive. Hospitals may also be adversely affected by the liquidity concerns as a result of the broader macroeconomic environment. Any or all of these factors could negatively impact the number of da Vinci procedures performed or surgical systems placed and have a material adverse effect on our business, financial condition, or results of operations.
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Regulatory Activities
Overview
Our products must meet the requirements of a large and growing body of international regulations and standards that govern the product safety, efficacy, advertising, labeling, safety reporting design, manufacture, materials content and sourcing, testing, certification, packaging, installation, use, and disposal of our products. Examples of such standards include electrical safety standards, such as those of the International Electrotechnical Commission, and composition standards, such as the Reduction of Hazardous Substances and the Waste Electrical and Electronic Equipment Directives in the EU. Failure to meet these standards could limit our ability to market our products in those regions that require compliance with such standards.
Our products and operations are also subject to increasingly stringent medical device, privacy, and other regulations by national, regional, federal, state, and local authorities. After a device is placed on the market, numerous FDA and comparable foreign regulatory requirements continue to apply. These requirements include establishment registration, potential quality system and manufacturing audits and inspections, and device listing with the FDA or other foreign regulatory authorities and compliance with medical device reporting regulations, which require that manufacturers report to the FDA or other foreign regulatory authorities if their device caused or contributed, or may have caused or contributed, to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur.
We anticipate that timelines for the introduction of new products and/or indications may be extended relative to past experience as a result of these regulations. For example, we have seen elongated regulatory approval timelines in the U.S. and Europe.
Clearances, Approvals, and Certifications
We have generally obtained the regulatory clearances, approvals, and certifications required to market our products for our targeted surgical specialties within the U.S., South Korea, Japan, and the European markets in which we operate. We have additionally obtained regulatory clearances, approvals, and certifications for the following products over the past several years:
Da Vinci Surgical Systems
Multi-port
• In January 2026, we obtained FDA clearance for the use of our da Vinci 5 surgical system in selected thoracoscopically-assisted cardiac surgical procedures using non-force feedback instruments, including mitral valve repair and replacement, tricuspid valve repair, IMA mobilization for cardiac revascularization, patent foramen ovale closure, atrial septal defect repair, left atrial appendage closure/occlusion, atrial myxoma excision, and epicardial pacing lead placement procedures.
• In September 2025, we obtained regulatory clearance in Japan for our Vessel Sealer Curved for use with our da Vinci 5, da Vinci X, and da Vinci Xi surgical systems for grasping and blunt dissection of tissue, as well as bipolar coagulation and mechanical transection of blood vessels (veins and arteries) up to 7mm in diameter, lymphatic vessels, and tissue bundles that fit within the instrument’s jaws. In June 2025, we obtained FDA clearance for the same instrument.
• In July 2025, we obtained European certification in accordance with the EU MDR for our da Vinci 5 surgical system for adult and pediatric use in minimally invasive endoscopic procedures across abdominopelvic and thoracoscopic surgical procedures, including urologic, gynecologic, and general laparoscopic procedures, excluding the use of force feedback. We intend to seek European certification for the use of force feedback in the future. In June 2025, we obtained regulatory clearance in Japan for the da Vinci 5 surgical system for use in all surgical specialties and procedures indicated for da Vinci Xi, except for cardiac indications. In October 2024, we obtained regulatory clearance in South Korea for the da Vinci 5 surgical system for use in urologic, general, gynecologic, thoracoscopic, thoracoscopically-assisted cardiotomy, and transoral otolaryngology surgical procedures. In March 2024, we obtained FDA clearance for our da Vinci 5 surgical system for use in all surgical specialties and procedures indicated for da Vinci Xi, except for cardiac and pediatric indications as well as one contraindication related to the use of force feedback in hysterectomy and myomectomy surgical procedures. In our OUS markets, we are early in the launch of our da Vinci 5 surgical system.
◦ In December 2024, we obtained European certification in accordance with the EU MDR for our E-200 generator. In July 2023, we received regulatory clearance for our E-200 generator in Japan and South Korea. In November 2022, we obtained FDA clearance for our E-200 generator. The E-200 generator can be used in da Vinci robotic procedures, as well as non-robotic open and laparoscopic procedures, to deliver high-frequency energy for cutting, coagulation, and vessel sealing of tissues. The E-200 generator includes the same advanced energy capability as the E-100 generator and supports the same vessel sealing instruments.
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◦ In September 2024, we obtained FDA clearance for our redesigned 8 mm SureForm 30 stapler and 8 mm SureForm 30 Curved-Tip stapler instruments and reloads for use with our da Vinci 5, da Vinci X, and da Vinci Xi surgical systems in general, thoracic, gynecologic, urologic, and pediatric surgical procedures. In April 2024, we obtained European certification in accordance with the EU MDR for our redesigned 8 mm SureForm 30 stapler and 8 mm SureForm 30 Curved-Tip stapler instruments and reloads for use in general, thoracic, gynecologic, urologic, and pediatric surgical procedures.
◦ In August 2023, following approval by China’s NMPA for a local version of our da Vinci Xi surgical system in June 2023, our Joint Venture received a manufacturing license that permits the Joint Venture to manufacture our da Vinci Xi surgical system for sale to customers in China.
Single-port
◦ In December 2025, we obtained FDA clearance for the use of our da Vinci SP surgical system in cholecystectomy, inguinal hernia repair, appendectomy, and nipple sparing mastectomy (NSM) procedures. In May 2025, we obtained FDA clearance for the use of our da Vinci SP surgical system in transanal local excision/resection, a form of minimally invasive surgery performed through a natural orifice to avoid abdominal surgical incisions, for select procedures. In December 2024, we obtained FDA clearance for the use of our da Vinci SP surgical system in colorectal surgical procedures. In July 2024, we obtained FDA clearance for the use of our da Vinci SP surgical system in general thoracoscopic surgical procedures. In April 2023, we obtained FDA clearance for the use of our da Vinci SP surgical system in simple prostatectomy procedures and in transvesical approaches to simple and radical prostatectomy.
◦ In June 2025, we obtained regulatory clearances in South Korea and Japan for our SP SureForm 45 stapler and our SP SureForm 45 curved-tip stapler for use with our da Vinci SP surgical system. In March 2025, we obtained FDA clearance for our SP SureForm 45 stapler and our SP SureForm 45 curved-tip stapler for use with our da Vinci SP surgical system, which may be particularly useful in thoracic and colorectal surgical procedures.
◦ In August 2024, we obtained regulatory clearance in Taiwan for our da Vinci SP surgical system for use in endoscopic abdominopelvic, thoracoscopic, transoral otolaryngology, transanal colorectal, transanal total mesorectal excision, and breast surgical procedures. In January 2024, we obtained European certification in accordance with the EU MDR for our da Vinci SP surgical system for use in endoscopic abdominopelvic, thoracoscopic, transoral otolaryngology, transanal colorectal, and breast surgical procedures.
Ion Endoluminal System
◦ In October 2025, we obtained FDA clearance for software advancements for the Ion endoluminal system. This software release introduces artificial intelligence across Ion’s entire navigational workflow, while also integrating new advanced imaging capabilities to support accurate and efficient lung biopsies.
◦ In February 2025, we obtained European certification in accordance with the EU MDR to extend the number of uses of our catheter instrument used with our Ion endoluminal system from five to eight uses. In April 2024, we obtained FDA clearance to extend the number of uses of our catheter instrument from five to eight uses.
◦ In March 2024, we received NMPA regulatory clearance for our Ion endoluminal system in China. We placed our first Ion systems in China during the third quarter of 2024 and will continue our rollout of the Ion system in China in a measured fashion. In September 2023, we received regulatory clearance in South Korea for our Ion endoluminal system. In March 2023, we obtained European certification in accordance with the EU MDR for our Ion endoluminal system.
In June 2023, the China National Health Commission published the 14 th five-year plan quota for major medical equipment to be sold in China on its official website (the “2023 Quota”). Under the original 2023 Quota, the government will allow for the sale of 559 new surgical robots into China, which could include da Vinci surgical systems as well as surgical systems introduced by others. As of December 31, 2025, including systems that were sold in prior quarters, we have placed 162 da Vinci surgical systems under the original 2023 Quota and 5 da Vinci surgical systems under special approval. Future sales of da Vinci surgical systems under this and any previously published open quotas are uncertain, as they are open to other medical device companies that have introduced robotic-assisted surgical systems and are dependent on hospitals completing a tender process and receiving associated approvals. Our ability to track the number of systems that could be sold under these quotas in the future is limited by provincial and national agencies making such information publicly available.
Since 2022, several provinces in China have implemented significant limits on what hospitals can charge patients for surgeries using robotic surgical technology, including soft tissue surgery. These limits have impacted the number of procedures performed in those provinces as well as pricing of our instruments and accessories, which have impacted our instruments and accessories revenue. However, as of the date of this report, these limits have not had a material impact on our business,
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financial condition, or results of operations, as only a small portion of our installed base in China is currently located in the impacted provinces. Companies providing robotic surgical technology, including our Joint Venture, have been meeting with Chinese government healthcare agencies to discuss these developments and to provide feedback. We cannot assure you that additional provincial or national healthcare agencies and administrations will not impose similar limits, and we expect to continue to face increased pricing pressure, both of which could further impact the number of procedures performed and our instruments and accessories revenue in China.
The Japanese MHLW considers reimbursement for procedures in April of even-numbered years. The process for obtaining reimbursement requires Japanese university hospitals and surgical societies, with our support, to seek reimbursement. There are multiple pathways to obtain reimbursement for procedures, including those that require in-country clinical and economic data. An additional five da Vinci procedures were granted reimbursement in April 2024, including lobectomy for benign conditions. In addition, we received higher reimbursement for certain da Vinci rectal resection procedures, as compared to open procedure reimbursements. The additional reimbursed procedures have varying levels of conventional laparoscopic penetration and will generally be reimbursed at rates equal to the conventional laparoscopic procedures. Given the reimbursement level and laparoscopic penetration for these additional procedures, there can be no assurance that the adoption pace for these procedures will be similar to prostatectomy or partial nephrectomy, given their higher reimbursement, or any other da Vinci procedure.
Field Actions, Recalls, and Corrections
Medical device companies have regulatory obligations to correct or remove medical devices in the field that could pose a risk to health. The definition of “recalls and corrections” is expansive and includes repair, replacement, inspections, relabeling, and issuance of new or additional instructions for use or reinforcement of existing instructions for use and training when such actions are taken for specific reasons of safety or compliance. These field actions require stringent documentation, reporting, and monitoring worldwide. There are other actions that a medical device manufacturer may take in the field without reporting including, but not limited to, routine servicing and stock rotations.
As we determine whether a field action is reportable in any regulatory jurisdiction, we prepare and submit notifications to the appropriate regulatory agency for the particular jurisdiction. Regulators can require the expansion, reclassification, or change in scope and language of the field action. In general, upon submitting required notifications to regulators regarding a field action that is a recall or correction, we will notify customers regarding the field action, provide any additional documentation required in their national language, and arrange, as required, the return or replacement of the affected product or a field service visit to perform the correction.
Field actions, as well as certain outcomes from regulatory activities, can result in adverse effects on our business, including damage to our reputation, delays by customers of purchase decisions, reduction or stoppage of the use of installed systems, and reduced revenue as well as increased expenses.
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2025 Operational and Financial Highlights
• Total revenue increased by 21% to $10.1 billion for the year ended December 31, 2025, compared to $8.4 billion for the year ended December 31, 2024.
• Approximately 3,153,000 da Vinci procedures were performed during the year ended December 31, 2025, an increase of 18% compared to approximately 2,683,000 da Vinci procedures for the year ended December 31, 2024.
• Approximately 144,100 Ion procedures were performed during the year ended December 31, 2025, an increase of 51% compared to approximately 95,500 Ion procedures for the year ended December 31, 2024.
• Instruments and accessories revenue increased by 19% to $6.02 billion for the year ended December 31, 2025, compared to $5.08 billion for the year ended December 31, 2024.
• Systems revenue increased by 26% to $2.47 billion for the year ended December 31, 2025, compared to $1.97 billion for the year ended December 31, 2024.
• 1,721 da Vinci surgical systems were placed during the year ended December 31, 2025, an increase of 13% compared to 1,526 systems during the year ended December 31, 2024. The 2025 da Vinci surgical system placements included 870 da Vinci 5 surgical systems, compared with 362 in 2024.
• As of December 31, 2025, we had a da Vinci surgical system installed base of approximately 11,106 systems, an increase of 12% compared to the installed base of approximately 9,902 systems as of December 31, 2024.
• Utilization of da Vinci surgical systems, measured in terms of procedures per system per year, increased 3% relative to 2024.
• 195 Ion systems were placed during the year ended December 31, 2025, a decrease of 28% compared to 271 systems during the year ended December 31, 2024.
• As of December 31, 2025, we had an Ion system installed base of approximately 995 systems, an increase of 24% compared to the installed base of approximately 805 systems as of December 31, 2024.
• Gross profit as a percentage of revenue was 66.0% for the year ended December 31, 2025, compared to 67.5% for the year ended December 31, 2024.
• Operating income increased by 25% to $2.95 billion for the year ended December 31, 2025, compared to $2.35 billion for the year ended December 31, 2024. Operating income included $803 million and $688 million of share-based compensation expense related to employee stock plans and $20.2 million and $22.6 million of intangible asset-related charges for the years ended December 31, 2025, and 2024, respectively.
• During the year ended December 31, 2025, we repurchased 4.8 million shares of our common stock for $2.30 billion.
• As of December 31, 2025, we had $9.03 billion in cash, cash equivalents, and investments. Cash, cash equivalents, and investments increased by $0.20 billion, compared to $8.83 billion as of December 31, 2024, primarily as a result of cash provided by operating activities and proceeds from stock option exercises and employee stock purchases, partially offset by cash used for repurchases of common stock, capital expenditures, and taxes paid related to net share settlements of equity awards.
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Results of Operations

Procedures
We model patient value as equal to procedure efficacy / invasiveness . In this equation, procedure efficacy is defined as a measure of the success of the procedure in resolving the underlying disease, and invasiveness is defined as a measure of patient pain and disruption of regular activities. When the patient value of a robotic-assisted procedure is greater than that of alternative treatment options, patients may benefit from seeking out surgeons or physicians and hospitals that offer robotic-assisted medical procedures, which could potentially result in a local market share shift. Adoption of robotic-assisted procedures occurs by procedure and by market and is driven by the relative patient value and total treatment costs of robotic-assisted procedures as compared to alternative treatment options for the same disease state or condition.
We use the number and type of procedures as metrics for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Management believes that the number and type of procedures provide meaningful supplemental information regarding our performance, as management believes procedure volume is an indicator of the rate of adoption of our robotic-assisted medical procedures as well as an indicator of future revenue (including revenue from usage-based operating lease arrangements). Management believes that both it and investors benefit from referring to the number and type of procedures in assessing our performance and when planning, forecasting, and analyzing future periods. The number and type of procedures also facilitate management’s internal comparisons of our historical performance. We believe that the number and type of procedures are useful to investors as metrics, because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and (2) they are used by institutional investors and the analyst community to help them analyze the performance of our business.
The vast majority of our installed systems are connected via the internet. System logs can also be accessed by field engineers for systems that are not connected to the internet. We utilize certain methods that rely on information collected from the installed systems for determining the number and type of procedures performed that involve estimates and judgments, which are, by their nature, subject to substantial uncertainties and assumptions. Estimates and judgments for determining the number and type of procedures may be impacted over time by various factors, including changes in treatment modalities, hospital and distributor reporting behavior, and system internet connectivity. Such estimates and judgments are also susceptible to algorithmic or other technical errors. In addition, the relationship between the number and type of procedures and our revenues may fluctuate from period to period, and procedure volume growth may not correspond to an increase in revenue. The number and type of procedures are not intended to be considered in isolation or as a substitute for, or superior to, revenue or other financial information prepared and presented in accordance with GAAP.
Da Vinci Procedures
The adoption of robotic-assisted surgery using the da Vinci surgical system has the potential to grow for those procedures that offer greater patient value than to non-da Vinci alternatives and competitive total economics for healthcare providers. Our da Vinci surgical systems are used primarily in general, gynecologic, urologic, cardiothoracic, and head and neck surgical procedures. We focus our organization and investments on developing, marketing, and training products and services for procedures in which da Vinci can bring patient value relative to alternative treatment options and/or economic benefit to healthcare providers. Target procedures in general surgery include hernia repair (both ventral and inguinal), colorectal, cholecystectomy, and bariatric procedures. Target procedures in urology include prostatectomy and partial nephrectomy. Target procedures in gynecology include hysterectomy for both cancer and benign conditions and sacrocolpopexy. In cardiothoracic surgery, target procedures include lung resection. In head and neck surgery, target procedures include transoral surgery. Not all indications, procedures, or products described may be available in a given country or region or on all generations of da Vinci surgical systems. Surgeons and their patients need to consult the product labeling in their specific country and for each product in order to determine the cleared uses, as well as important limitations, restrictions, or contraindications.
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The following table summarizes the approximate number of procedures performed on da Vinci surgical systems in the US and OUS for the periods presented (amounts shown in thousands):

Approximate Procedures (Thousands) Percentage Change*
Year Ended December 31,
Year Ended December 31,

2025 2024 2023 2025 2024
U.S.

General Surgery 1,250  1,063  896  18  % 19  %
Gynecology 468  423  390  11  % 8  %
Urology 201  186  173  8  % 7  %
Other 93  85  73  11  % 18  %
Total U.S.
2,012  1,757  1,532  15  % 15  %
OUS

Urology 507  435  381  16  % 14  %
General Surgery 334  254  188  31  % 35  %
Gynecology 181  142  110  28  % 29  %
Other 119  95  75  27  % 28  %
Total OUS
1,141  926  754  23  % 23  %
Total Procedures
3,153  2,683  2,286  18  % 17  %
___________
* The approximate procedures are rounded to thousands, but the percentage changes are based on unrounded approximate procedures.

Overall. Total da Vinci procedures performed by our customers grew approximately 18% in 2025, compared to approximately 17% in 2024, largely attributable to growth in U.S. general surgery, OUS general surgery (particularly cancer), OUS urologic surgery, and U.S. gynecologic surgery procedures.
U.S. Procedures. U.S. da Vinci procedures grew approximately 15% in 2025, compared to approximately 15% in 2024. The 2025 U.S. procedure growth was largely attributable to growth in general surgery and gynecologic surgery procedures.
U.S. General Surgery. General surgery procedures in the U.S. grew approximately 18% in 2025, compared to approximately 19% in 2024, most notably cholecystectomy, hernia repair, appendectomy, and colorectal procedures. The number of U.S. da Vinci bariatric procedures performed declined in the high-single digits in 2025 compared to 2024. Cholecystectomy, inguinal and ventral hernia repair, and appendectomy procedures contributed the most incremental procedures in 2025. Cholecystectomy, inguinal and ventral hernia repair, and colorectal procedures contributed the most incremental procedures in 2024.
Given the already very high level of laparoscopic techniques used in cholecystectomy procedures, it remains unclear to what extent robotic-assisted surgery using da Vinci may continue to be adopted.
We believe that growth in hernia repair procedures using da Vinci reflects improved clinical outcomes within certain patient populations, as well as potential cost benefits relative to certain alternative treatments. We believe that hernia repair procedures represent a significant opportunity with the potential to drive growth in future periods. However, given the differences in surgical complexity associated with the treatment of various hernia patient populations and varying surgeon opinions regarding optimal surgical technique, it is difficult to estimate the timing of and to what extent hernia repair procedure volume will grow in the future. We expect a large portion of hernia repairs will continue to be performed via different modalities of surgery.
Growth in appendectomy procedures reflects greater access to acute and after-hours care. We believe that our stapling instruments may minimize complications and reduce operative times in emergent and after-hours settings. Similar to cholecystectomy procedures, there is currently a high level of laparoscopic techniques used in appendectomy procedures.
The adoption of da Vinci for colorectal procedures, which includes several underlying procedures, such as low anterior resections for rectal cancers and certain colon procedures for benign and cancerous conditions, has been ongoing for several years and is supported by certain technologies, such as our da Vinci energy and da Vinci stapler products as well as our Integrated Table Motion product.
U.S. Gynecology .  Gynecology procedures in the U.S. grew approximately 11% in 2025, compared to approximately 8% in 2024. Benign hysterectomy procedures contributed the most incremental procedures in 2025 and 2024. The growth in benign hysterectomy procedures has been largely driven by use of our systems by new da Vinci surgeons.
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OUS Procedures. OUS da Vinci procedures grew approximately 23% in 2025, compared to approximately 23% in 2024. In OUS markets, robotic-assisted procedures are at varying states of adoption in different areas of the world with cancer procedures outpacing benign procedures. We saw strong procedure growth in South Korea and India during 2025. We believe that growth in these global markets is being driven by increased acceptance among surgeons and health systems, supported by expanded global evidence validating the clinical and economic value of da Vinci procedures as well as increased surgeon training. In South Korea, the doctor strikes that began in the first quarter of 2024 have ended; we saw a recovery in the number of procedures performed in 2025, and the growth rate in South Korea exceeded the overall OUS procedure growth rate.
OUS General Surgery.   OUS general surgery procedures grew approximately 31% in 2025, compared to approximately 35% in 2024, most notably colorectal and hernia repair procedures. Colorectal procedures contributed the most incremental procedures in 2025 and 2024, aided by improved clinical outcomes relative to open and laparoscopic techniques within certain patient populations, along with enabling technologies, such as our da Vinci energy and da Vinci stapler products as well as our Integrated Table Motion product. The growth in hernia repair procedures has largely been driven by increased use of our systems by new da Vinci surgeons.
OUS Urology. OUS urology procedures have been a consistent contributor to our overall procedure growth. OUS urology procedures grew approximately 16% in 2025, compared to approximately 14% in 2024, most notably prostatectomy and partial nephrectomy procedures. In the U.S., da Vinci is the standard of care for the surgical treatment of prostate cancer, and we believe that the growth is largely aligned with surgical volumes of prostate cancer. In OUS markets, prostatectomy is at varying states of adoption in different areas of the world but is the largest overall da Vinci procedure. In 2025, we saw consistent growth in OUS prostatectomy procedures compared to 2024.
Kidney cancer procedures have also been a strong contributor to our recent global urology procedure growth. Clinical publications have demonstrated that the use of a da Vinci surgical system increases the likelihood that a patient will receive nephron sparing surgery through a partial nephrectomy, which is typically the surgical society guideline recommended therapy.
OUS Gynecology. OUS gynecology procedures grew approximately 28% in 2025, compared to approximately 29% in 2024, most notably hysterectomy procedures. The growth in hysterectomy procedures has been largely driven by increased use of our systems by new da Vinci surgeons.
Ion Procedures
The adoption of robotic-assisted bronchoscopy using the Ion endoluminal system has the potential to grow if it can offer greater patient value than non-Ion alternatives and competitive total economics for healthcare providers.
In 2025, approximately 144,100 biopsy procedures were performed with Ion systems, compared to approximately 95,500 in 2024 and approximately 53,800 in 2023. The increase in our overall procedure volume in 2025 reflects a larger installed base of approximately 995 systems, an increase of 24% compared to the installed base of approximately 805 systems as of 2024. Currently, the vast majority of Ion biopsy procedures are performed in the U.S.

System Demand
System placements are driven by procedure growth in most geographic markets. In some markets, system placements are constrained by regulation. In geographies where da Vinci procedure adoption is in an early stage or system placements are constrained by regulation, system sales will precede procedure growth.
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The following table summarizes our da Vinci and Ion placements during the periods presented (amounts shown in ones):

Year Ended December 31,

2025 2024 2023
Da Vinci Surgical System Placements by Region

U.S. unit placements 987  800  666 
OUS unit placements 734  726  704 
Total unit placements (1)
1,721  1,526  1,370 
________

(1) Includes the following number of units involving trade-ins:
437  150  240 

Ion System Placements by Region

U.S. unit placements 169  253  211 
OUS unit placements 26  18  2 
Total unit placements
195  271  213 

During 2025, 1,721 da Vinci surgical systems were placed compared to 1,526 systems during 2024. By geography, 987 systems were placed in the U.S., 342 in Europe, 269 in Asia, and 123 in other markets during 2025, compared to 800 systems placed in the U.S., 309 in Europe, 321 in Asia, and 96 in other markets during 2024. The increase in total units placed during 2025 compared to 2024, reflected incremental demand for our next-generation da Vinci 5 surgical system, an increase in trade-ins of our fourth-generation da Vinci surgical systems, and continued demand for additional capacity by our customers as a result of procedure growth, partially offset by a smaller number of third-generation da Vinci surgical systems available for trade-in. The 2025 da Vinci surgical system placements included 870 da Vinci 5 surgical systems, compared with 362 in 2024.
As of December 31, 2025, we had a da Vinci surgical system installed base of approximately 11,106 systems compared to approximately 9,902 systems as of December 31, 2024. By geography, 6,364 systems were in the U.S., 2,168 in Europe, 1,993 in Asia, and 581 in the rest of the world. The incremental system installed base reflects continued procedure growth and further customer validation that robotic-assisted surgery addresses their Quintuple Aim objectives.
During 2025, 195 Ion systems were placed compared to 271 systems during 2024. By geography, 169 systems were placed in the U.S., 16 in Europe, 7 in Asia, and 3 in other markets during 2025, compared to 253 systems placed in the U.S., 14 in Europe, and 4 in Asia during 2024. In the U.S., where we estimate that the Ion penetration of lung biopsies is approaching the halfway point of all lung biopsies performed, our customers’ focus has begun to shift from increasing capacity to increasing utilization of their existing systems. As of December 31, 2025, we had an Ion system installed base of approximately 995 systems, compared to an installed base of approximately 805 systems as of December 31, 2024.
We continue to see some customers challenged by staffing constraints, lower public funding of healthcare in certain markets (particularly in Europe and Japan), and other financial pressures. As a result, we expect our customers to continue to be cautious in their overall capital spending. In addition, system demand in China has been affected by increasing competition from domestic robotic-assisted surgical system manufacturers as well as a broader central government focus on systematic governance. Targeting the healthcare sector, this campaign was initially launched by the Chinese government in July 2023 and has resulted in heightened scrutiny by medical institutions with respect to initiating tenders, with some tenders being canceled or delayed without a timeline. In 2025, the effects of this campaign, combined with the competitive dynamics in China and various measures related to industrial policy, contributed to fewer systems being placed in China than we anticipated. Currently, the extent and impact of this campaign and the competitive dynamics in China on our business remains uncertain.
We expect that future placements of da Vinci surgical systems will be impacted by a number of factors: supply chain risks; economic and geopolitical factors; inflationary pressures; high interest rates; hospital staffing constraints; procedure growth rates; evolving system utilization and point-of-care dynamics; capital replacement trends, including a declining number of older generation systems available for trade-in transactions; additional reimbursements in various global markets, such as in Japan; the timing around governmental tenders and authorizations, as well as governmental actions impacting the tender process, such as the governance campaign in China; hospitals’ response to the evolving healthcare environment; the timing of when we receive regulatory clearance in our other OUS markets for our da Vinci 5, da Vinci X, da Vinci Xi, and da Vinci SP surgical systems and related instruments; and the market response.
Demand may also be impacted by the competition we currently face, or expect to face, from companies offering products for open or MIS surgeries, companies providing other therapeutic approaches for target clinical conditions, and companies developing diagnostic solutions that could serve as alternatives to current or planned Intuitive offerings. Companies that have introduced products in the field of robotic-assisted medical procedures, or have made explicit statements about their efforts to
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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. 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.
Many of the above factors will also impact future demand for our Ion endoluminal system, as we extend our commercial offering into diagnostics, along with additional factors associated with a new product introduction, including, but not limited to, our ability to optimize manufacturing and our supply chain, competition, clinical data to demonstrate value, and customer acceptance.

Distribution Channels
We sell our products and services through direct sales organizations in the U.S., Europe (excluding Italy, Spain, Portugal, Greece, and Eastern European countries), China (through our majority-owned joint ventures, Intuitive Surgical-Fosun Medical Technology (Shanghai) Co., Ltd. and Intuitive Surgical-Fosun (HongKong) Co., Ltd. (collectively, the “Joint Venture”), with Fosun Pharma), Japan, South Korea, India, Taiwan, and Canada. In the U.S. (for some government customers), China, and Japan, we also utilize certain distributors in addition to our direct sales organizations. In the remainder of our OUS markets, we provide our products for sale through distributors.

Seasonality
More than half of the da Vinci procedures performed are for benign conditions, most notably hernia repairs, hysterectomies, and cholecystectomies. These benign procedures and other short-term elective procedures tend to be more seasonal than cancer operations and surgeries for other life-threatening conditions. Seasonality in the U.S. for procedures for benign conditions typically results in higher fourth quarter procedure volume when more patients have met annual deductibles and lower first quarter procedure volume when deductibles are reset. Seasonality outside of the U.S. varies and is more pronounced around local holidays and vacation periods, which have lower procedure volume.
System placements also vary due to seasonality, largely aligned with hospital budgeting cycles. On an annual basis, we typically place a higher proportion of systems in the fourth quarter and a lower proportion in the first quarter as many customer budgets are reset.

Intuitive System Leasing
Since 2013, we have entered into sales-type and fixed-payment operating lease arrangements directly with certain qualified customers as a way to offer customers flexibility in how they acquire systems and expand their robotic-assisted programs while leveraging our balance sheet. These leases generally have commercially competitive terms as compared to other third-party entities that offer equipment leasing. We also enter into usage-based operating lease arrangements with qualified customers that have committed da Vinci programs where we charge for the system and service as procedures are performed, offering greater predictability in costs for customers. We believe that all of these alternative financing structures have been effective and well-received, and we are willing to expand the proportion of any of these structures based on customer needs and demand.
We include systems placed under fixed-payment and usage-based operating lease arrangements, as well as sales-type lease arrangements, in our system placement and installed base disclosures. We exclude operating lease-related revenue, including usage-based revenue, and Ion system revenue from our da Vinci surgical system average selling price (“ASP”) computations.
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The following table summarizes our da Vinci and Ion system placements under leasing arrangements for the periods presented (amounts in ones):

Year Ended December 31,
2025 2024 2023
Da Vinci Surgical System Placements Under Leasing Arrangements

Fixed-payment operating lease arrangements
376  309  304 
Usage-based operating lease arrangements
496  467  355 
Total da Vinci surgical system placements under operating lease arrangements
872  776  659 
% of Total da Vinci surgical system placements
51% 51% 48%
Sales-type lease arrangements 40  88  45 
Total da Vinci surgical system placements under leasing arrangements
912  864  704 

Ion System Placements Under Leasing Arrangements
Fixed-payment operating lease arrangements 43  85  63 
Usage-based operating lease arrangements 53  68  54 
Total Ion system placements under operating lease arrangements 96  153  117 
% of Total Ion system placements 49% 56% 55%
Sales-type lease arrangements 10  4  5 
Total Ion system placements under leasing arrangements 106  157  122 

Variable lease revenue recognized from usage-based operating lease arrangements has been included in our operating lease metrics herein. Operating lease revenue has grown at a faster rate than overall systems revenue and was $874 million, $654 million, and $501 million in 2025, 2024, and 2023, respectively, of which $531 million, $338 million, and $217 million, respectively, was variable lease revenue related to our usage-based operating lease arrangements.
Revenue for systems sold or placed under a sales-type lease arrangement is recognized upfront whereas revenue for fixed-payment operating lease arrangements is recognized on a straight-line basis over time. Therefore, in a period when the number of operating lease placements increases as a proportion of total system placements, total systems revenue is reduced, which can create volatility in the systems revenue recognized in any given period. We generally set fixed-payment and usage-based operating lease arrangements’ pricing at 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 of anticipated levels.
Revenue for usage-based operating lease arrangements is recognized as the system is used to perform procedures. Variable usage-based arrangements create better matching of reimbursements and cost for our customers. They also reduce our customers’ overall risk and need for capital outlay. However, because the number of procedures performed in any given period can vary significantly for many reasons, including but not limited to healthcare emergencies, alternative treatment options, and patient preferences, revenue recognized from these arrangements can be highly volatile.
Customers generally do not have the right to exit or terminate a fixed-payment lease without incurring a penalty. Generally, lease transactions generate similar gross profit margins as our sale transactions. 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 leased system, which, in turn, could adversely impact our gross profit margins if utilization of those systems are different than our expectations.
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The following table summarizes our da Vinci and Ion systems installed base under operating leasing arrangements as of the periods presented (amounts in ones):

As of December 31,

2025 2024 2023
Da Vinci Surgical System Installed Base under Operating Leasing Arrangements

Fixed-payment operating lease arrangements 1,400  1,307  1,204 
Usage-based operating lease arrangements 1,810  1,492  1,023 
Total da Vinci surgical system installed base under operating lease arrangements
3,210  2,799  2,227 

Ion System Installed Base under Operating Leasing Arrangements
Fixed-payment operating lease arrangements 110  126  96 
Usage-based operating lease arrangements 250  193  118 
Total Ion system installed base under operating lease arrangements 360  319  214 

Our exposure to the credit risks relating to our lease financing arrangements may increase if our customers are adversely affected by economic pressures or uncertainty, changes in healthcare laws, coverage and reimbursement, or other customer-specific factors. As a result of these macroeconomic factors impacting our customers, we may be exposed to defaults under our lease financing arrangements. Moreover, usage-based operating lease arrangements generally contain no minimum payments; therefore, customers may exit such arrangements without paying a financial penalty to us.
For some operating lease arrangements, our customers are provided with the right to purchase the leased system at certain points during and/or at the end of the lease term. Revenue generated from customer purchases of systems under operating lease arrangements (“Lease Buyouts”) was $130 million, $109 million, and $74 million in 2025, 2024, and 2023, respectively. We expect that revenue recognized from customer exercises of buyout options will fluctuate based on the timing of when, and if, customers choose to exercise such buyout options.
Systems revenue is also affected by the proportion of system placements under operating lease arrangements, which can fluctuate period to period depending on customer preference, recurring fixed-payment and usage-based operating lease revenue, Lease Buyouts, product mix, ASPs, trade-in activities, customer mix, and specified-price trade-in rights. We generally do not provide specified-price trade-in rights or upgrade rights at the time of a system purchase; however, in conjunction with the rollout of our next-generation da Vinci 5 surgical system, there may be limited instances in which certain arrangements include specified-price trade-in rights. For trade-in activities involving operating lease upgrades, depending on the timing and terms of the upgrade transaction, the amount of revenue generated on the initial and new lease arrangements may not, in the aggregate, generate the same amount of revenue that a traditional sale and trade-in transaction would. Systems revenue increased 26% to $2.47 billion in 2025. Systems revenue increased 17% to $1.97 billion in 2024. Systems revenue remained flat at $1.68 billion in 2023.

Procedure/Product Mix
Our da Vinci surgical systems are generally used for soft tissue surgery for areas of the body between the pelvis and the neck, primarily in general, gynecologic, urologic, cardiothoracic, and head and neck surgical procedures. Within these categories, procedures range in complexity from cancer and other highly complex procedures to less complex procedures for benign conditions. Cancer and other highly complex procedures tend to be reimbursed at higher rates than less complex procedures for benign conditions. Thus, hospitals are more sensitive to the costs associated with treating less complex, benign conditions. Our strategy is to provide hospitals with attractive clinical and economical solutions across the spectrum of procedure complexity. Our fully featured da Vinci 5 and da Vinci Xi surgical systems with advanced instruments (including da Vinci energy and da Vinci stapler products) and our Integrated Table Motion product target the more complex procedure segment. Our da Vinci X surgical system is targeted toward price-sensitive geographic markets and procedures. Our da Vinci SP surgical system complements the da Vinci 5, da Vinci X, and da Vinci Xi surgical systems by enabling surgeons to access narrow workspaces.

Revenue
We recognize up-front revenue from the placement of da Vinci surgical systems through sales or sales-type lease arrangements. Recurring revenue is recognized over time from the placement of da Vinci surgical systems under fixed-payment or usage-based operating lease arrangements, as well as from service arrangements. Recurring revenue is also recognized up-front from the sale of instruments and accessories.
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The da Vinci surgical system generally sells for between $0.7 million and $3.1 million (generally inclusive of one year of service), depending on the model, configuration, and geography, and represents a significant capital equipment investment for our customers when purchased. Our instruments and accessories have limited lives and will either expire or wear out as they are used in surgery, at which point they need to be replaced. We generally earn between $900 and $3,700 of instruments and accessories revenue per surgical procedure performed, depending on the type and complexity of the specific procedures performed and the number and type of instruments used. We typically enter into service contracts at the time systems are sold or leased at an annual fee between $95,000 and $225,000, depending on the configuration of the underlying system and the composition of the services offered under the contract. Our system sale arrangements generally include a five-year period of service, with the first year of service generally included in the selling price of the system. These service contracts have generally been renewed at the end of the initial contractual service periods.
We generate revenue from our Ion endoluminal system in a business model consistent with the da Vinci surgical system model described above. We generate up-front revenue from the placement of Ion systems through sales or sales-type lease arrangements and recurring revenue over time through fixed-payment or usage-based operating lease arrangements. We also earn recurring revenue from the sales of instruments, accessories, and services. The Ion endoluminal system generally sells for between $500,000 and $815,000 (generally inclusive of one year of service). Our instruments and accessories have limited lives and will either expire or wear out as they are used in procedures, at which point they need to be replaced. We typically enter into service contracts at the time systems are sold or leased at an annual fee between $55,000 and $70,000.
Additionally, as part of our ecosystem of products and services, we provide a portfolio of learning offerings and digital solutions. We do not currently generate material revenue from these offerings.
The following table summarizes our revenue for the periods presented (amounts in millions):

  Year Ended December 31,

  2025 2024 2023
Revenue
Instruments and accessories $ 6,018.9  $ 5,079.0  $ 4,276.6 
Systems 2,473.7  1,966.0  1,679.7 
Total product revenue 8,492.6  7,045.0  5,956.3 
Service
1,572.1  1,307.1  1,167.8 
Total revenue $ 10,064.7  $ 8,352.1  $ 7,124.1 
U.S. $ 6,815.8  $ 5,589.4  $ 4,688.6 
OUS 3,248.9  2,762.7  2,435.5 
Total revenue $ 10,064.7  $ 8,352.1  $ 7,124.1 
% of Revenue — U.S. 68% 67% 66%
% of Revenue — OUS 32% 33% 34%

Total revenue increased in 2025 compared to 2024, primarily driven by 19% higher instruments and accessories revenue, 26% higher systems revenue, and 20% higher service revenue.
We generally sell our products and services in local currencies where we have direct distribution channels. Revenue denominated in foreign currencies as a percentage of total revenue was approximately 24%, 24%, and 25% in 2025, 2024, and 2023, respectively. Fluctuations in foreign currency exchange rates had a favorable impact on OUS total revenue of $31 million for 2025 and an unfavorable impact on OUS total revenue of $34 million for 2024. The impact of foreign currency exchange rate fluctuations was calculated by comparing the USD value of foreign-currency-denominated transactions translated at exchange rates in effect during the period in which each order was recorded to the USD value of those same transactions translated at exchange rates in effect during the comparable prior-year period, net of the impacts from foreign currency hedges.
We believe that U.S. revenue has historically accounted for the large majority of total revenue due to U.S. patients’ ability to choose their provider and method of treatment, reimbursement structures supportive of innovation and MIS, and our initial investments focused on U.S. infrastructure. We have been investing in our business in OUS markets, and our OUS procedures have grown faster in proportion to U.S. procedures. We expect that our OUS procedures and revenue will make up a greater portion of our business in the long term.

Product Revenue
Instruments and accessories revenue increased by 19% to $6.02 billion for 2025, compared to $5.08 billion for 2024. The increase in instruments and accessories revenue was primarily driven by approximately 18% higher da Vinci procedure volume,
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approximately 51% higher Ion procedure volume, and incremental growth of SP procedures, partially offset by an unfavorable procedure mix. The 2025 U.S. da Vinci procedure growth was approximately 15%, driven primarily by strong growth in general surgery procedures, most notably cholecystectomy, hernia repair, appendectomy, and colorectal procedures, and gynecologic procedures. The number of U.S. da Vinci bariatric procedures performed declined in the high-single digits in 2025 compared to 2024. The 2025 OUS da Vinci procedure growth was approximately 23%, driven by growth in general surgery procedures, most notably colorectal and hernia repair procedures; urologic procedures, most notably prostatectomy and partial nephrectomy procedures; and gynecologic procedures. Geographically, the 2025 OUS da Vinci procedure growth was driven by several markets with particular strength in South Korea and India.
Systems revenue increased by 26% to $2.47 billion for 2025, compared to $1.97 billion for 2024. The higher system revenue for the year ended December 31, 2025, was primarily driven by an increase in da Vinci surgical system placements, including a decrease in the proportion of da Vinci surgical system placements under operating leases, higher operating lease revenue, and higher ASPs.
Operating lease revenue, including the contribution from Ion systems, was $874 million for 2025, of which $531 million was variable lease revenue related to usage-based arrangements, compared to $654 million for 2024, of which $338 million was variable lease revenue related to usage-based arrangements. Revenue from Lease Buyouts was $130 million fo r 2025, compared to $109 million f or 2024. We expect revenue from Lease Buyouts to fluctuate period to period depending on the timing of when, and if, customers choose to exercise buyout options embedded in their leases.
The da Vinci surgical system ASP, excluding systems placed under fixed-payment or usage-based operating lease arrangements, Ion systems, and the impact of specified-price trade-in rights, was approximately $1.60 million for 2025, compared to approximately $1.50 million for 2024. The higher ASP for 2025, was largely driven by favorable product mix, including from da Vinci 5 sales, partially offset by higher pricing discounts and more trade-ins. ASP fluctuates from period to period based on geographic and product mix, product pricing, systems placed involving trade-ins, and changes in foreign exchange rates.

Service Revenue
Service revenue increased by 20% to 1.57 billion for 2025, compared to $1.31 billion for 2024. The increase in 2025 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.

Recurring Revenue
Recurring revenue represents the revenue recognized from instruments and accessories, service, and operating lease arrangements. Recurring revenue is an operating measure that we use to assess the strength of our installed base, system utilization, and procedure adoption.
Recurring revenue during the periods presented was as follows:

Year Ended December 31,

2025 2024 2023
Instruments and accessories revenue
$ 6,018.9  $ 5,079.0  $ 4,276.6 
Service revenue
1,572.1  1,307.1  1,167.8 
Operating lease revenue 874.3  654.2  500.5 
Total recurring revenue $ 8,465.3  $ 7,040.3  $ 5,944.9 
% of Total revenue 84% 84% 83%

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Gross Profit
Product
Our product gross profit during the periods presented was as follows (dollars in millions):

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Product gross profit (1)
$ 5,626.5  $ 4,731.9  $ 3,914.5  $ 894.6  19  % $ 817.4  21  %
Product gross profit margin
66.3% 67.2% 65.7%
________

(1) Includes the following expenses:

Share-based compensation
$ 120.7  $ 98.5  $ 83.4  $ 22.2  23  % $ 15.1  18  %
Intangible asset amortization
$ 9.0  $ 11.5  $ 13.5  $ (2.5) (22) % $ (2.0) (15) %

Product gross profit margin decreased in 2025 compared to 2024, primarily driven by new tariffs, incremental fixed overhead costs, including depreciation expense associated with expanded manufacturing capacity, and higher costs associated with our da Vinci 5 surgical system, partially offset by lower excess and obsolete inventory charges. Our capital expenditures increased in 2024, as we continued to build the infrastructure needed to scale our business and, as a result, depreciation expense increased in 2025. We expect depreciation expense to continue to increase in 2026.
In 2025, new and incremental tariffs were imposed on goods imported to the U.S. We import raw materials and finished goods from sources outside of the U.S., which were subject to tariffs, including but not limited to our endoscopes, which are primarily manufactured in Germany. If the tariffs continue to be in effect in 2026 as currently implemented, we expect the associated expense to increase in 2026. The ultimate impact of tariffs will depend on various factors, including the amount, scope, timing, and nature of the tariffs.
Service
Our service gross profit during the periods presented was as follows (dollars in millions):

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Service gross profit (1)
$ 1,015.8  $ 902.3  $ 815.0  $ 113.5  13  % $ 87.3  11  %
Service gross profit margin
64.6% 69.0% 69.8%
________

(1) Includes the following expenses:

Share-based compensation expense $ 34.5  $ 30.5  $ 28.2  $ 4.0  13  % $ 2.3  8  %
Intangible asset amortization $ 0.7  $ 0.8  $ 0.9  $ (0.1) (13) % $ (0.1) (11) %

Service gross profit margin decreased in 2025 compared to 2024, primarily driven by higher costs associated with our da Vinci 5 surgical system, an unfavorable repair mix, incremental fixed costs, including depreciation expense, and new tariffs, partially offset by lower logistics costs and lower excess and obsolete inventory charges.

Selling, General and Administrative Expenses
Selling, general and administrative expenses include costs for sales, marketing, and administrative personnel, sales and marketing activities, trade show expenses, legal expenses, regulatory fees, and general corporate expenses.
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Selling, general and administrative expenses during the periods presented were as follows (dollars in millions):

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Selling, general and administrative (1)
$ 2,385.0  $ 2,140.0  $ 1,963.9  $ 245.0  11  % $ 176.1  9  %
% of Total revenue
24% 26% 28%
________

(1) Includes the following expenses:

Share-based compensation
$ 346.5  $ 304.5  $ 274.8  $ 42.0  14  % $ 29.7  11  %
Intangible asset amortization $ 0.7  $ 2.4  $ 3.3  $ (1.7) (71) % $ (0.9) (27) %

Selling, general and administrative expenses increased in 2025 compared to 2024, primarily driven by higher headcount and personnel-related expenses, including share-based compensation expense and variable compensation expenses, and a higher charitable contribution to the Intuitive Foundation.
In 2025, we made a charitable contribution of $70 million to the Intuitive Foundation, a not-for-profit organization whose mission is to reduce the global burden of disease and suffering through research, education, and philanthropy aimed at better outcomes for patients around the globe. In 2024, we made a charitable contribution of $45 million to the Intuitive Foundation.

Research and Development Expenses
Research and development costs are expensed as incurred. Research and development expenses include costs associated with the design, development, testing, and significant enhancement of our products. Our main product development initiatives include multi-port, Ion, and SP platform investments and our digital products and services.
Research and development expenses during the periods presented were as follows (dollars in millions):

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Research and development (1)
$ 1,311.8  $ 1,145.3  $ 998.8  $ 166.5  15  % $ 146.5  15  %
% of Total revenue
13% 14% 14%
________

(1) Includes the following expenses:

Share-based compensation
$ 301.1  $ 254.6  $ 211.8  $ 46.5  18  % $ 42.8  20  %
Intangible asset-related charges
$ 9.8  $ 7.8  $ 13.5  $ 2.0  26  % $ (5.7) (42) %

Research and development expenses increased in 2025 compared to 2024, primarily driven by project costs incurred to support a broader set of product development initiatives and higher headcount and personnel-related expenses, including share-based compensation expense.
Research and development expenses fluctuate with project timing. Based upon our broader set of product development initiatives and the stage of the underlying projects, we expect to continue to make substantial investments in research and development and anticipate that research and development expenses will continue to increase in the future.

Interest and Other Income, Net
Interest and other income, net during the periods presented was as follows (dollars in millions):

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Interest and other income
$ 365.9  $ 324.9  $ 192.1  $ 41.0  13  % $ 132.8  69  %
% of Total revenue
4% 4% 3%

Interest and other income, net, increased in 2025 compared to 2024, primarily driven by higher interest income earned (due to higher average cash and investment balances).
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Income Tax Expense

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Income tax expense
$ 434.8  $ 336.3  $ 141.6  $ 98.5  29  % $ 194.7  138  %
Effective income tax rate
13.1% 12.6% 7.2%

Our higher effective tax rate for 2025 compared to 2024 was primarily due to lower tax rate benefits from federal research and development credits and excess tax benefits associated with employee equity plans, partially offset by lower taxes on foreign earnings.
Our provision for income taxes for 2023 reflected Swiss tax benefits of $92.3 million, net of a $67.3 million valuation allowance, related to certain tax assets recorded by our Swiss entity. In addition, a one-time net benefit of $67.1 million was recorded from the re-measurement of our Swiss deferred tax assets resulting from the Swiss cantonal tax rate increase enacted in December 2023 for years after 2024 as well as a Swiss cantonal tax rate increase from the discontinuation of our 2017 Swiss tax ruling, which was deemed effective as of January 1, 2023.
Our provision for income taxes for 2025 and 2024 included excess tax benefits associated with employee equity plans of $246 million and $223 million, respectively, which reduced our effective tax rate by 7.4 and 8.4 percentage points, respectively. The amount of excess tax benefits or deficiencies will fluctuate from period to period based on the price of our stock, the volume of share-based awards settled or vested, and the value assigned to employee equity awards under GAAP, which results in increased income tax expense volatility.
On July 4, 2025, OBBBA was enacted, introducing amendments to U.S. tax laws with various effective dates from 2025 to 2027. The changes introduced by OBBBA did not have a material impact on our effective tax rate for 2025.
In 2021, the OECD established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution to global taxation, focusing on global profit allocation and a 15% global minimum effective tax rate (“Pillar Two”). The OECD issued Pillar Two model rules and continues to release guidance on these rules. In January 2025, the OECD released additional guidance, which includes a limitation on certain deferred tax assets recognized after November 2021. Many countries have adopted new tax laws to align with the global minimum tax. We considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and there was no material impact to our tax provision in 2025. We will continue to evaluate the impact of these tax law changes on future reporting periods.
We file federal, state, and foreign income tax returns in many jurisdictions in the U.S. and OUS. Years before 2020 are considered closed for significant jurisdictions. Certain of our unrecognized tax benefits could change due to activities of various tax authorities, including evolving interpretations of existing tax laws in the jurisdictions in which we operate, potential assessment of additional tax, possible settlement of audits, or through normal expiration of various statutes of limitations, which could affect our effective tax rate in the period in which they change.
We are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. The outcome of these audits cannot be predicted with certainty. Management regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income taxes in the period such resolution occurs.

Net Income Attributable to Noncontrolling Interest in Joint Venture

Year Ended December 31,
2025 vs 2024
2024 vs 2023

2025
2024
2023
$ Change
% Change
$ Change
% Change

Net income attributable to noncontrolling interest
$ 20.6  $ 14.9  $ 19.3  $ 5.7  38  % $ (4.4) (23) %

The Company’s Joint Venture is owned 60% by us and 40% by Fosun Pharma and is located in China. In 2019, the Joint Venture began direct operations for da Vinci products and services in China. Following approval in June 2023 by China’s NMPA for a local version of our da Vinci Xi surgical system, in August 2023, our Intuitive-Fosun Pharma Joint Venture received a manufacturing license that permits the Joint Venture to manufacture our da Vinci Xi surgical system for sale to customers in China.
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Liquidity and Capital Resources

Sources and Uses of Cash and Cash Equivalents
Our principal source of liquidity is cash provided by our operations. Cash and cash equivalents plus short- and long-term investments increased by $0.20 billion to $9.03 billion as of December 31, 2025, from $8.83 billion as of December 31, 2024, primarily as a result of cash provided by operating activities and proceeds from stock option exercises and employee stock purchases, partially offset by cash used for repurchases of common stock, capital expenditures, and taxes paid related to net share settlements of equity awards.
Our cash requirements depend on numerous factors, including acceptance of our products, the resources we devote to developing and supporting our products, and other factors. We expect to continue to devote substantial resources to expand procedure adoption and acceptance of our products. We have made substantial investments in our commercial operations, product development activities, facilities, and intellectual property. Based on our business model, we anticipate that we will continue to be able to fund future growth through cash provided by our operations. We believe that our current cash, cash equivalents, and investment balances, together with income to be derived from our business, will be sufficient to meet our liquidity requirements for the foreseeable future. However, we may experience reduced cash flow from operations as a result of macroeconomic and geopolitical headwinds.
As of December 31, 2025, $1.06 billion of our cash, cash equivalents, and investments was held by foreign subsidiaries. We intend to repatriate earnings from our Swiss and Dutch subsidiaries and our joint venture in Hong Kong, as needed, since the U.S. and foreign tax implications of such repatriations are not expected to be significant. We will continue to indefinitely reinvest earnings from the rest of our foreign subsidiaries and do not expect the tax implications of repatriating these earnings to be significant.
See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for discussion on the impact of interest rate risk and market risk on our investment portfolio.

Consolidated Cash Flow Data
The following table summarizes our cash flows for the periods presented (in millions):

  Year Ended December 31,

  2025 2024 2023

Net cash provided by (used in):
Operating activities $ 3,030.5  $ 2,415.0  $ 1,813.8 
Investing activities 665.8  (3,272.8) (360.1)
Financing activities (2,364.1) 150.9  (287.6)
Effect of exchange rates on cash, cash equivalents, and restricted cash 12.8  (0.8) 3.3 
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 1,345.0  $ (707.7) $ 1,169.4 

Operating Activities
In 2025, net cash provided by operating activities of $3.03 billion exceeded our net income of $2.88 billion, primarily due to the following factors:
1. Our net income included non-cash charges of $1.43 billion, consisting primarily of share-based compensation of $788 million and depreciation expense and losses on the disposal of property, plant, and equipment of $615 million.
2. Changes in operating assets and liabilities resulted in $1.27 billion of cash used in operating activities during the year ended December 31, 2025. Inventory increased by $1.06 billion, primarily to address the growth in our business and to mitigate risks of disruption that could arise from global supply chain shortages. We also transferred systems for leasing to our customers from inventory to property, plant, and equipment of $809 million to support the expansion of our leasing business. These uses of cash were partially offset by the return to inventory of leased systems of $106 million. Refer to Note 4 to the Consolidated Financial Statements for further details regarding inventory in the supplemental cash flow information.
Cash used in operating activities was also driven by an increase in accounts receivable of $302 million, primarily due to increased sales and the timing of billings. Prepaid and other assets increased by $187 million, primarily driven by an increase in prepaid expenses due to timing, an increase in lease incentive assets associated with operating leases, and new and extended facilities leases. The unfavorable impact of these items on cash provided by operating activities was partially offset by an increase in accrued compensation and employee benefits of $113 million, primarily due to higher
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variable compensation and higher headcount; an increase in deferred revenue of $75 million, primarily due to an increased volume of sales and service contracts; and an increase in accounts payable of $58 million, primarily due to higher inventory purchases.
In 2024, net cash provided by operating activities of $2.42 billion exceeded our net income of $2.34 billion, primarily due to the following factors:
1. Our net income included non-cash charges of $997 million, consisting primarily of share-based compensation of $677 million, depreciation expense and losses on the disposal of property, plant, and equipment of $445 million, and amortization of deferred commissions of $38 million, partially offset by deferred income tax benefits of $135 million and accretion of investment discounts, net of losses on investments of $43 million.
2. The non-cash charges outlined above were partially offset by changes in operating assets and liabilities that resulted in $919 million of cash used in operating activities during the year ended December 31, 2024. Inventory, including the transfer of equipment from inventory to property, plant, and equipment of $615 million, partially offset by the transfer of property, plant, and equipment to inventory of $44 million, increased by $830 million, primarily to address the growth in our business, expand our leasing business, and mitigate risks of disruption that could arise from global supply chain shortages and manufacturing line transfers. Refer to Note 4 to the Consolidated Financial Statements for further details regarding inventory in the supplemental cash flow information.
Cash used in operating activities was also driven by an increase in prepaid and other assets of $232 million, primarily driven by new and extended lessee operating lease arrangements and deferred commissions as a result of operating leasing arrangements with customers. Accounts receivable increased by $96 million, primarily due to increased sales, as well as the timing of billings and collections. The unfavorable impact of these items on cash provided by operating activities was partially offset by an increase in other liabilities of $108 million, primarily driven by new and extended lessee operating lease arrangements. Also, accrued compensation and employee benefits increased by $99 million, primarily due to higher headcount and higher variable compensation.

Investing Activities
Net cash provided by investing activities for 2025 consisted primarily of proceeds from maturities and sales of investments, net of purchases, of $1.22 billion, partially offset by $540 million paid for the acquisition of property, plant, and equipment.
Net cash used in investing activities for 2024 consisted primarily of purchases of investments, net of proceeds from maturities and sales, of $2.16 billion and $1.11 billion paid for the acquisition of property, plant, and equipment.
Net cash used in investing activities for 2023 consisted primarily of $1.06 billion paid for the acquisition of property, plant, and equipment, partially offset by proceeds from maturities and sales of investments, net of purchases, of $0.71 billion.
We invest predominantly in high quality, fixed income securities. Our investment portfolio may, at any time, contain investments in money market funds, U.S. treasury and U.S. government agency securities, high-quality corporate notes and bonds, commercial paper, non-U.S. government agency securities, and taxable and tax-exempt municipal notes.

Financing Activities
Net cash used in financing activities for 2025 consisted primarily of cash used in the repurchase of 4.8 million shares of our common stock for $2.3 billion and taxes paid on behalf of employees related to net share settlements of vested employee equity awards of $419 million, partially offset by cash proceeds from stock option exercises and employee stock purchases of $350 million.
Net cash used in financing activities for 2024 consisted primarily of proceeds from stock option exercises and employee stock purchases of $429 million, partially offset by cash used for taxes paid on behalf of employees related to net share settlements of vested employee equity awards of $270 million.
Net cash used in financing activities for 2023 consisted primarily of cash used in the repurchase of approximately 1.7 million shares of our common stock for $416 million and taxes paid on behalf of employees related to net share settlements of vested employee equity awards of $165 million, partially offset by proceeds from stock option exercises and employee stock purchases of $296 million.
Capital Expenditures
We continue to build the infrastructure needed to scale and supply our customers with highly differentiated products manufactured in highly automated factories to facilitate outstanding performance in product quality, availability, and cost. A significant portion of our investment involves the construction of facilities to expand our manufacturing and commercial capabilities. We have also been vertically integrating key technologies to develop a more robust supply chain and bring important products to market at attractive price points. These investments include increased ownership of our imaging
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pipelines, and investments in strategic instruments and accessories technologies that allow us to serve our customers better. We intend to continue to fund our capital investments with cash generated from operations.
Intuitive Ventures
In 2020, we launched Intuitive Ventures Fund I, an inaugural $100 million fund focused on investment opportunities in companies that share Intuitive’s commitment to advancing positive outcomes in healthcare. As of December 31, 2025, we have invested $70 million of the $100 million.
In 2023, we launched Intuitive Ventures Fund II, a $150 million fund focused on investment opportunities in companies reimagining the future of minimally invasive care. As of December 31, 2025, we have invested $30 million of the $150 million.

Contractual Obligations and Commercial Commitments
Operating leases. We lease spaces for our operations in the U.S. as well as in Japan, China, Israel, Mexico, Germany, South Korea, the United Kingdom, India, and other countries. We also lease automobiles for certain sales and field service employees. These leases have varying terms of up to 20 years. Operating lease amounts include future minimum lease payments under all of our non-cancellable operating leases with an initial term in excess of one year. Refer to Note 6 to the Consolidated Financial Statements included in Part II, Item 8 for further details.
Purchase commitments and obligations. Total purchase commitments and obligations as of December 31, 2025, are estimated to be approximately $2.53 billion, of which $2.37 billion is expected to be due within a year. These amounts include an estimate of all open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers for which we have not received the goods or services, commitments for capital expenditures, including construction-related activities, for which we have not received the goods or services, and commitments for the acquisition and licensing of intellectual property. Approximately one third of our estimated purchase commitments and obligations are facilities-related. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, or adjust our requirements based on our business needs prior to the delivery of goods or performance of services. In addition to the above, we have committed to making potential future milestone payments to third parties as part of licensing, collaboration, and development arrangements. Payments under these agreements generally become due and payable only upon achievement of certain developmental, regulatory, and/or commercial milestones. For instances in which the achievement of these milestones is neither probable nor reasonably estimable, such contingencies have not been recorded on our Consolidated Balance Sheets.

Off-Balance Sheet Arrangements
As of December 31, 2025, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Exchange Act.

Critical Accounting Estimates
Our Consolidated Financial Statements are prepared in conformity with GAAP, which requires us to make judgments, estimates, and assumptions. See “Note 2. Summary of Significant Accounting Policies,” in Notes to the Consolidated Financial Statements, which is included in “Item 8. Financial Statements and Supplementary Data,” for a description of our significant accounting policies and methods used in the preparation of our Consolidated Financial Statements. The methods, estimates, and judgments that we use in applying our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Our most critical accounting estimates include:
• Standalone selling prices used to allocate the contract consideration to the individual performance obligations, which impacts revenue recognition;
• Valuation of inventory, which impacts gross profit margins;
• Valuation of and assessment of the recoverability of intangible assets and goodwill and the estimated useful lives of intangible assets, which primarily impacts gross profit margin or operating expenses when we record asset impairments or accelerate their amortization;
• Recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions), which impact our provision for taxes; and
• Estimate of probable loss associated with legal contingencies, which impacts accrued liabilities and operating expenses.
Revenue recognition. Our system sale arrangements contain multiple products and services, including system(s), system components, system accessories, instruments, accessories, and services. Other than services, we generally deliver all of the
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products upfront. Each of these products and services is a distinct performance obligation. System accessories, instruments, accessories, and services are also sold on a standalone basis.
For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which we separately sell the products or services. If a standalone selling price is not directly observable, then we estimate the standalone selling prices considering market conditions and entity-specific factors including, but not limited to, historical pricing data, features and functionality of the products and services, geographies, type of customer, and market conditions. We regularly review standalone selling prices and maintain internal controls over establishing and updating these estimates.
Our system sales arrangements generally include a five-year period of service. The first year of service is generally included in the system sale arrangement for no additional consideration, and the remaining four years are billed separately at a stated service price. Revenue that is allocated to the service obligation is deferred and recognized ratably over the service period.
Inventory valuation. Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. The cost basis of our inventory is reduced for any products that are considered excess or obsolete based on assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which could have a material adverse effect on the results of our operations.
Valuation of intangible assets and goodwill. We allocate the fair value of purchase consideration, including contingent consideration, to assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date. The excess of the fair value of the purchase consideration over the fair value of assets acquired, liabilities assumed, and any noncontrolling interest is recorded as goodwill. When determining the fair value of assets acquired, liabilities assumed, and any noncontrolling interest, management is required to make certain estimates and assumptions, especially with respect to intangible assets. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, the discount rate used to determine the present value of these cash flows, and the determination of the assets’ life cycle. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made.
Our intangible assets include identifiable intangible assets and goodwill. Identifiable intangible assets include in-process research and development, developed technology, patents, distribution rights, customer relationships, licenses, and non-competition arrangements. Our identifiable intangible assets, except for in-process research and development, have finite lives. Goodwill and intangible assets with indefinite lives are subject to an annual impairment review (or more frequent if impairment indicators arise) by applying a fair value-based test. There have been no such impairments.
Identifiable intangible assets with finite lives are subject to impairment testing and are reviewed for impairment when events or circumstances indicate that the carrying value of an asset is not recoverable and its carrying amount exceeds its fair value. We evaluate the recoverability of the carrying value of these identifiable intangible assets based on estimated undiscounted cash flows to be generated from such assets. If the cash flow estimates or the significant operating assumptions upon which they are based change in the future, we may be required to record additional impairment charges.
The valuation and classification of intangible assets and goodwill and the assignment of useful lives for purposes of amortization involves judgments and the use of estimates. The evaluation of these intangible assets and goodwill for impairment under established accounting principles is required on a recurring basis. Changes in business conditions could potentially require future adjustments to the assumptions made. When we determine that the useful lives of assets are shorter than we had originally estimated, we accelerate the rate of amortization over the assets’ new, shorter useful lives. No significant impairment charges or accelerated amortization were recorded in 2025, 2024, and 2023. A considerable amount of judgment is required in assessing impairment, which includes financial forecasts. If conditions are different from management’s current estimates, material write-downs of long-lived assets may be required, which would adversely affect our operating results.
Accounting for income taxes. Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets in accordance with GAAP. Significant changes to these estimates may result in an increase or decrease in our tax provision in the current period or subsequent periods.
We evaluate the likelihood of recovering our deferred tax assets and record a valuation allowance when it is more likely than not that some or all of these assets will not be realized. The recoverability of deferred tax assets depends on our ability to generate sufficient taxable income in the jurisdictions where those assets are recorded. In making this assessment, we consider forecasted taxable income, including income that may result from prudent and feasible tax planning strategies, as well as the expected reversal of existing taxable temporary differences. These factors are reviewed regularly to determine whether adjustments to the valuation allowance are necessary. If actual results differ from our forecasts or if tax laws change, our ability
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to realize deferred tax assets could be affected, which may result in an increase or decrease in our income tax provision in future periods.
The calculation of our tax liabilities involves significant complexity due to the application of detailed tax rules across multiple jurisdictions. We recognize liabilities for uncertain tax positions using a two-step approach. First, we determine whether it is more likely than not that a tax position will be sustained upon examination, including any appeals or litigation, based on its technical merits. If this threshold is met, we then measure the benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Estimating these amounts requires considerable judgment and is inherently subjective, as it involves assessing the probability of various possible outcomes. We review and update our uncertain tax positions on a quarterly basis, taking into account changes in facts and circumstances including, but not limited to, new tax laws, audit developments, and effective settlements. Any adjustment in recognition or measurement may result in recording an additional tax provision or recognizing a tax benefit in the period of change.
Accounting for legal contingencies .   From time to time, we are involved in a number of legal proceedings involving product liability, intellectual property, shareholder derivative actions, securities class actions, employment, and other matters. We record a liability and related charge to earnings in our Consolidated Financial Statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. Our assessment is re-evaluated each period and is based on all available information, including discussion with any outside legal counsel that represents us. If a reasonable estimate of a known or probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses is recognized if no amount within the range is a better estimate than any other. If a material loss is reasonably possible, but not probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed in the Notes to the Consolidated Financial Statements.
When determining the estimated probable loss or range of losses, significant judgment is required to be exercised in order to estimate the amount and timing of the loss to be recorded. Estimates of probable losses resulting from litigation are inherently difficult to make, particularly when the matters are in early procedural stages with incomplete facts and information. The final outcome of legal proceedings is dependent on many variables and is difficult to predict and, therefore, the ultimate cost to entirely resolve such matters may be materially different than the amount of current estimates. Consequently, new information or changes in judgments and estimates could have a material adverse effect on our business, financial condition, and results of operations or cash flows.

RECENT ACCOUNTING PRONOUNCEMENTS
See “Note 2. Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” for additional information regarding recent accounting pronouncements, including the respective expected dates of adoption and estimated effects, if any, on our Consolidated Financial Statements.
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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate and Market Risk
The primary objective of our investment activities is to preserve principal while supporting our liquidity requirements. To achieve this objective, we maintain a diversified portfolio of cash equivalents and short- and long-term investments in a variety of high-quality securities, including money market funds, U.S. treasury and U.S. government agency securities, high-quality corporate notes and bonds, commercial paper, non-U.S. government agency securities, and taxable and tax-exempt municipal notes. The securities are classified as available-for-sale and consequently are recorded at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive loss. The weighted average duration of our portfolio as of December 31, 2025, was approximately 0.9 years. If interest rates rise, the market value of our investments may decline, which could result in a realized loss if we are forced to sell an investment before its scheduled maturity. A hypothetical increase or decrease in interest rates by 25 basis points would have resulted in a decrease or increase in the fair value of our net investment position of approximately $19 million, respectively, as of December 31, 2025. We do not utilize derivative financial instruments to manage our interest rate risks.
Uncertain financial markets could result in a tightening in the credit markets, a reduced level of liquidity in many financial markets, and extreme volatility in fixed income and credit markets. The credit ratings of the securities we have invested in could deteriorate and may have an adverse impact on the carrying value of these investments.
Foreign Exchange Risk
The majority of our revenue, expense, and capital purchasing activities are transacted in U.S. dollars. However, we generally sell our products and services in local currencies where we have direct distribution channels. We operate in a number of markets on a direct sales basis and incur operating expenses in local currencies. We also purchase certain product components from non-U.S. suppliers in local currency. As a result, because a portion of our operations consists of sales activities outside of the U.S., we have foreign exchange exposures to non-U.S. dollar revenues, operating expenses, accounts receivable, accounts payable, and foreign currency bank balances.
For 2025, sales denominated in foreign currencies were approximately 24% of total revenue. The objective of our hedging program is to mitigate the impact of changes in currency exchange rates on our net cash flow from foreign currency-denominated sales and expenses. For 2025, our revenue would have decreased by approximately $140 million if the U.S. dollar exchange rate strengthened by 10% against the foreign-denominated foreign currencies in which we sell. We also hedge the net recognized non-functional currency balance sheet exposures with foreign exchange forward contracts to reduce the risk that our earnings and cash flows will be adversely affected by changes in exchange rates. A 10% strengthening of the U.S. dollar exchange rate against all currencies to which we have exposure, after considering foreign currency hedges and offsetting positions as of December 31, 2025, would have resulted in an approximately $2 million decrease in the carrying amounts of those net assets. Actual gains and losses in the future may differ materially from the hypothetical gains and losses discussed above based on changes in the timing and amount of foreign currency exchange rate movements and our actual exposure and hedging transactions. Bank counterparties to foreign exchange forward contracts expose us to credit-related losses in the event of their nonperformance. To mitigate that risk, we only contract with counterparties that meet certain minimum requirements under our counterparty risk assessment process. We monitor credit ratings and potential downgrades on at least a quarterly basis. Based on our ongoing assessment of counterparty risk, we will adjust our exposure to various counterparties.
Although we sell to distributors outside of the U.S. in U.S. dollars, strengthening of the dollar can impact our distributors’ margins and could impact the end customers’ ability to purchase our products if our distributors seek to recover the impact of the change in the dollar by increasing product and service prices. Less than 10% of our revenue is conducted through distributors outside of the U.S. Strengthening of the dollar relative to non-U.S. currencies could have an adverse impact on our business.
Our operations outside of the U.S. are subject to risks typical of operations outside of the U.S. including, but not limited to, differing economic conditions, changes in the political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility.
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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index To Consolidated Financial Statements
Page No.

Report of Independent Registered Public Accounting Firm –
PCAOB ID:
238 88

Consolidated Balance Sheets as of December 31, 2025 , and 2024
89

Consolidated Statements of Income for the years ended December 31, 2025 , 2024 , and 2023
90

Consolidated Statements of Comprehensive Income for the years ended December 31, 2025 , 2024 , and 2023
91

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 , 2024 , and 2023
92

Consolidated Statements of Cash Flows for the years ended December 31, 2025 , 2024 , and 2023
93

Notes to the Consolidated Financial Statements
94

All schedules have been omitted, because they are not applicable or the required information is shown in the Consolidated Financial Statements or the Notes thereto.

87

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Intuitive Surgical, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Intuitive Surgical, Inc. and its subsidiaries (the “Company”) as of December 31, 2025, and 2024, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. 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.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Determination of Standalone Selling Prices Related to System Sale Arrangements
As described in Notes 2 and 5 to the consolidated financial statements, the Company recognized $ 2,473.7 million of systems revenue during the year ended December 31, 2025, of which a majority relates to system sale arrangements. The Company’s system sale arrangements include a combination of the following performance obligations: system(s); system components; system accessories; instruments; accessories; and system service. For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then management estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, historical pricing data, features and functionality of the products and services, geographies, and type of customer.
The principal considerations for our determination that performing procedures relating to the determination of standalone selling prices related to system sale arrangements is a critical audit matter are the significant judgment by management when determining estimates of standalone selling prices, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to the estimates of standalone selling prices used to allocate the transaction price of an arrangement to each distinct performance obligation.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls over the revenue recognition process, including controls over the determination of the estimates of standalone selling prices. These procedures also included, among others, (i) testing management’s process for determining the estimates of standalone selling prices; (ii) evaluating the appropriateness of the overall methodology used by management to develop the estimates, including the appropriateness of the data inputs related to the systems, geographies, and type of customer used in the methodology; (iii) testing the completeness and accuracy of the data used in the methodology; and (iv) testing the accuracy of management’s calculations of estimated selling prices.

/s/ PricewaterhouseCoopers LLP
San Jose, California
February 3, 2026

We have served as the Company’s auditor since 2014.
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INTUITIVE SURGICAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PAR VALUE AMOUNTS)

December 31,

2025 2024
ASSETS
Current assets:
Cash and cash equivalents $ 3,368.0   $ 2,027.4  
Short-term investments 2,566.9   1,985.9  
Accounts receivable, net of allowances of $ 29.9 and $ 30.7 as of December 31, 2025, and 2024, respectively
1,527.3   1,225.4  
Inventory 1,840.0   1,487.2  
Prepaids and other current assets 477.3   385.1  
Total current assets 9,779.5   7,111.0  
Property, plant, and equipment, net 5,342.4   4,646.6  
Long-term investments 3,099.2   4,819.1  
Deferred tax assets 1,018.6   1,045.1  
Intangible and other assets, net 848.7   773.9  
Goodwill 370.3   347.5  
Total assets $ 20,458.7   $ 18,743.2  

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 255.1   $ 193.4  
Accrued compensation and employee benefits 648.4   535.6  
Deferred revenue 506.7   468.8  
Other accrued liabilities 596.0   547.5  
Total current liabilities 2,006.2   1,745.3  
Other long-term liabilities 510.8   468.3  
Total liabilities 2,517.0   2,213.6  
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, 2.5 shares authorized, $ 0.001 par value, issuable in series; zero shares issued and outstanding as of December 31, 2025, and 2024
—   —  
Common stock, 600.0 shares authorized, $ 0.001 par value, 355.1 shares and 356.6 shares issued and outstanding as of December 31, 2025, and 2024, respectively
0.4   0.4  
Additional paid-in capital 10,768.5   9,681.3  
Retained earnings 7,011.8   6,803.3  
Accumulated other comprehensive income (loss) 43.3   ( 51.3 )
Total Intuitive Surgical, Inc. stockholders’ equity 17,824.0   16,433.7  
Noncontrolling interest in joint venture 117.7   95.9  
Total stockholders’ equity 17,941.7   16,529.6  
Total liabilities and stockholders’ equity $ 20,458.7   $ 18,743.2  

The accompanying notes are an integral part of these Consolidated Financial Statements.
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INTUITIVE SURGICAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

  Year Ended December 31,

2025 2024 2023
Revenue:
Product $ 8,492.6   $ 7,045.0   $ 5,956.3  
Service 1,572.1   1,307.1   1,167.8  
Total revenue 10,064.7   8,352.1   7,124.1  
Cost of revenue:
Product 2,866.1   2,313.1   2,041.8  
Service 556.3   404.8   352.8  
Total cost of revenue 3,422.4   2,717.9   2,394.6  
Gross profit 6,642.3   5,634.2   4,729.5  
Operating expenses:
Selling, general and administrative 2,385.0   2,140.0   1,963.9  
Research and development 1,311.8   1,145.3   998.8  
Total operating expenses 3,696.8   3,285.3   2,962.7  
Income from operations 2,945.5   2,348.9   1,766.8  
Interest and other income, net 365.9   324.9   192.1  
Income before taxes 3,311.4   2,673.8   1,958.9  
Income tax expense 434.8   336.3   141.6  
Net income 2,876.6   2,337.5   1,817.3  
Less: net income attributable to noncontrolling interest in joint venture 20.6   14.9   19.3  
Net income attributable to Intuitive Surgical, Inc. $ 2,856.0   $ 2,322.6   $ 1,798.0  
Net income per share attributable to Intuitive Surgical, Inc.:
Basic $ 8.00   $ 6.54   $ 5.12  
Diluted $ 7.87   $ 6.42   $ 5.03  
Shares used in computing net income per share attributable to Intuitive Surgical, Inc.:
Basic 356.9   355.2   351.2  
Diluted 362.7   362.0   357.4  

The accompanying notes are an integral part of these Consolidated Financial Statements.

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INTUITIVE SURGICAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN MILLIONS)

Year Ended December 31,

2025 2024 2023
Net income $ 2,876.6   $ 2,337.5   $ 1,817.3  
Other comprehensive income (loss), net of tax:
Change in foreign currency translation gains (losses) 63.8   ( 53.2 ) 25.7  
Available-for-sale securities (net of tax):
Change in unrealized gains 44.8   15.0   124.6  
Less: Reclassification adjustment for (gains) losses on securities 0.3   0.1   ( 0.1 )
Net change 45.1   15.1   124.5  
Hedge instruments (net of tax):
Change in unrealized gains (losses) ( 6.7 ) 5.7   ( 6.6 )
Less: Reclassification adjustment for (gains) losses on hedge instruments ( 0.3 ) 7.8   7.0  
Net change ( 7.0 ) 13.5   0.4  
Employee benefit plans (net of tax):
Change in unrealized losses ( 6.7 ) ( 14.9 ) ( 0.6 )
Less: Reclassification adjustment for (gains) losses on employee benefit plans 0.6   ( 0.3 ) —  
Net change ( 6.1 ) ( 15.2 ) ( 0.6 )
Other comprehensive income (loss), net of tax 95.8   ( 39.8 ) 150.0  
Total comprehensive income 2,972.4   2,297.7   1,967.3  
Less: comprehensive income attributable to noncontrolling interest 21.8   14.2   19.0  
Total comprehensive income attributable to Intuitive Surgical, Inc. $ 2,950.6   $ 2,283.5   $ 1,948.3  

The accompanying notes are an integral part of these Consolidated Financial Statements.

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INTUITIVE SURGICAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(IN MILLIONS)

Common Stock Additional
Paid-In
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss)/Income Total Intuitive Surgical, Inc. Stockholders’ Equity Noncontrolling
Interest
in
Joint
Venture Total Stockholders’ Equity
Shares Amount
Balances as of December 31, 2022
350.0   $ 0.4   $ 7,703.9   $ 3,500.1   $ ( 162.5 ) $ 11,041.9   $ 70.7   $ 11,112.6  

Issuance of common stock through employee stock plans
4.7   —  296.3   —  —  296.3   —  296.3  
Shares withheld related to net share settlement of equity awards
( 0.7 ) —  ( 7.2 ) ( 157.5 ) —  ( 164.7 ) —  ( 164.7 )
Share-based compensation expense related to employee stock plans
—  —  602.1   —  —  602.1   —  602.1  
Repurchase and retirement of common stock
( 1.7 ) —  ( 18.7 ) ( 397.6 ) —  ( 416.3 ) —  ( 416.3 )
Net income attributable to Intuitive Surgical, Inc. —  —  —  1,798.0   —  1,798.0   —  1,798.0  
Other comprehensive income (loss)
—  —  —  —  150.3   150.3   ( 0.3 ) 150.0  
Net income attributable to noncontrolling interest in joint venture
—  —  —  —  —  —  19.3   19.3  
Balances as of December 31, 2023
352.3   $ 0.4   $ 8,576.4   $ 4,743.0   $ ( 12.2 ) $ 13,307.6   $ 89.7   $ 13,397.3  
Issuance of common stock through employee stock plans
5.0   —  429.4   —  —  429.4   —  429.4  
Shares withheld related to net share settlement of equity awards
( 0.7 ) —  ( 7.7 ) ( 262.3 ) —  ( 270.0 ) —  ( 270.0 )
Share-based compensation expense related to employee stock plans
—  —  683.2   —  —  683.2   —  683.2  

Cash dividends declared and paid by joint venture —  —  —  —  —  —  ( 8.0 ) ( 8.0 )
Net income attributable to Intuitive Surgical, Inc.
—  —  —  2,322.6   —  2,322.6   —  2,322.6  
Other comprehensive income (loss)
—  —  —  —  ( 39.1 ) ( 39.1 ) ( 0.7 ) ( 39.8 )
Net income attributable to noncontrolling interest in joint venture
—  —  —  —  —  —  14.9   14.9  
Balances as of December 31, 2024
356.6   $ 0.4   $ 9,681.3   $ 6,803.3   $ ( 51.3 ) $ 16,433.7   $ 95.9   $ 16,529.6  

Issuance of common stock
—  —  12.3   —  —  12.3   —  12.3  
Issuance of common stock through employee stock plans
4.0   —  350.3   —  —  350.3   —  350.3  
Shares withheld related to net share settlement of equity awards
( 0.7 ) —  ( 9.1 ) ( 410.0 ) —  ( 419.1 ) —  ( 419.1 )
Share-based compensation expense related to employee stock plans
—  —  797.1   —  —  797.1   —  797.1  
Repurchase and retirement of common stock
( 4.8 ) —  ( 63.4 ) ( 2,237.5 ) —  ( 2,300.9 ) —  ( 2,300.9 )
Net income attributable to Intuitive Surgical, Inc.
—  —  —  2,856.0   —  2,856.0   —  2,856.0  
Other comprehensive income (loss)
—  —  —  —  94.6   94.6   1.2   95.8  
Cash dividends declared and paid by joint venture
—  —  —  —  —  —  —   —  
Net income attributable to noncontrolling interest in joint venture
—  —  —  —  —  —  20.6   20.6  
Balances as of December 31, 2025
355.1   $ 0.4   $ 10,768.5   $ 7,011.8   $ 43.3   $ 17,824.0   $ 117.7   $ 17,941.7  

The accompanying notes are an integral part of these Consolidated Financial Statements.
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INTUITIVE SURGICAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

Year Ended December 31,

2025 2024 2023
Operating activities:
Net income $ 2,876.6   $ 2,337.5   $ 1,817.3  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and loss on disposal of property, plant, and equipment, net 614.7   445.3   401.6  
Amortization of intangible and other assets
62.4   54.4   53.2  
Gain on sale of business ( 1.0 ) ( 1.1 ) —  
(Gain) loss on investments and (accretion) amortization of investment discounts and premiums, net
( 57.2 ) ( 43.3 ) 7.3  
Deferred income taxes 19.1   ( 135.3 ) ( 280.8 )
Share-based compensation expense 788.2   676.8   592.8  

Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable ( 301.7 ) ( 95.9 ) ( 186.3 )
Inventory ( 1,063.4 ) ( 830.0 ) ( 712.5 )
Prepaids and other assets ( 187.1 ) ( 231.8 ) 24.2  
Accounts payable 57.9   ( 0.4 ) 41.7  
Accrued compensation and employee benefits 112.7   99.3   34.8  
Deferred revenue 75.2   31.2   53.4  
Other liabilities 34.1   108.3   ( 32.9 )
Net cash provided by operating activities 3,030.5   2,415.0   1,813.8  
Investing activities:
Purchases of investments
( 1,215.9 ) ( 5,139.6 ) ( 2,207.4 )
Proceeds from sales of investments 259.9   100.2   230.3  
Proceeds from maturities of investments 2,175.5   2,878.8   2,690.1  
Purchases of property, plant, and equipment
( 539.8 ) ( 1,111.2 ) ( 1,064.2 )
Acquisition of businesses, net of cash, and intellectual property and other investing activities ( 13.9 ) ( 1.0 ) ( 8.9 )
Net cash provided by (used in) investing activities 665.8   ( 3,272.8 ) ( 360.1 )
Financing activities:
Proceeds from issuance of common stock relating to employee stock plans 350.3   429.4   296.3  
Taxes paid related to net share settlement of equity awards ( 419.1 ) ( 270.0 ) ( 164.7 )
Repurchases of common stock
( 2,295.3 ) —   ( 416.3 )
Cash dividends paid by joint venture to noncontrolling interest
—   ( 8.0 ) —  
Payment of deferred purchase consideration —   ( 0.5 ) ( 2.9 )
Net cash provided by (used in) financing activities ( 2,364.1 ) 150.9   ( 287.6 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 12.8   ( 0.8 ) 3.3  
Net increase (decrease) in cash, cash equivalents, and restricted cash 1,345.0   ( 707.7 ) 1,169.4  
Cash, cash equivalents, and restricted cash, beginning of year 2,062.4   2,770.1   1,600.7  
Cash, cash equivalents, and restricted cash, end of year $ 3,407.4   $ 2,062.4   $ 2,770.1  

The accompanying notes are an integral part of these Consolidated Financial Statements.
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INTUITIVE SURGICAL, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In this report, “Intuitive,” the “Company,” “we,” “us,” and “our” refer to Intuitive Surgical, Inc. and its wholly and majority-owned subsidiaries.

NOTE 1.     DESCRIPTION OF THE BUSINESS
Intuitive develops, manufactures, and markets da Vinci surgical systems and the Ion endoluminal system. The Company’s products and related services enable physicians and healthcare providers to improve the quality of and access to minimally invasive care. The da Vinci surgical system is designed to enable surgeons to perform a wide range of surgical procedures within our targeted general surgery, urologic, gynecologic, cardiothoracic, and head and neck specialties and consists of a surgeon console or consoles, a patient-side cart, and a high-performance vision system. The Ion endoluminal system is a flexible, robotic-assisted, catheter-based platform for which the first cleared indication is minimally invasive biopsies in the lung and consists of a system cart, a controller, a catheter, and a vision probe. Both systems use software, instruments, and accessories.

NOTE 2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying Consolidated Financial Statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
The Consolidated Financial Statements include the results and balances of the Company’s majority-owned joint ventures, Intuitive Surgical-Fosun Medical Technology (Shanghai) Co., Ltd. and Intuitive Surgical-Fosun (HongKong) Co., Ltd. (collectively, the “Joint Venture”) with Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma”). The Company holds a controlling financial interest in the Joint Venture, and the noncontrolling interest is reflected as a separate component of the consolidated stockholders’ equity. The noncontrolling interest’s share of the earnings in the Joint Venture is presented separately in the Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2025, 2024, and 2023.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes to the Consolidated Financial Statements. The accounting estimates that require management’s most significant, complex, and subjective judgments include the standalone selling prices used to allocate the contract consideration to the individual performance obligations, the valuation of inventory, the valuation of and assessment of the recoverability of intangible assets and goodwill, the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, and the estimates for legal contingencies. Actual results could differ materially from these estimates.
Concentrations of Credit Risk and Other Risks and Uncertainties
The carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities. Marketable securities and derivative instruments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the agreements relating to the Company’s investment securities and derivative instruments consist of various major corporations, financial institutions, and government agencies of high credit standing.
The Company’s accounts receivable are primarily derived from billings related to revenue arrangements with customers and distributors located throughout the world. The Company performs credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers. The Company provides reserves for potential credit losses but has not experienced significant losses to date. As of December 31, 2025, and 2024, 65 % and 66 %, respectively, of accounts receivable were from domestic customers.
During the years ended December 31, 2025, 2024, and 2023, domestic revenue accounted for 68 %, 67 %, and 66 % of total revenue, respectively, while outside of the U.S. (“OUS”) revenue accounted for 32 %, 33 %, and 34 % of total revenue, respectively, for each of the years then ended.
The Company’s future results of operations and liquidity could be materially adversely affected by uncertainties surrounding macroeconomic and geopolitical factors in both the U.S. and globally. These uncertainties include any introduction or modification of tariffs or trade barriers, inflationary pressures, elevated interest rates, disruptions in commodity markets stemming from conflicts, such as those between Russia and Ukraine and conflicts in the Middle East, and supply chain challenges.
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Recent tariff changes imposed by the U.S. and other countries have created increased risks and uncertainties surrounding the Company’s future results of operations. The U.S. import tariffs, along with any reciprocal measures by other countries, are expected to continue to increase the Company’s cost of raw materials and finished goods imported from outside of the U.S. Additionally, the Company anticipates that some of its suppliers will incur incremental tariff-related costs, which may be passed on to the Company. The ultimate impact of changes to tariffs or trade barriers will depend on various factors, including the timing, amount, scope, and nature of any tariffs or trade barriers that are implemented.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments with a final maturity from the date of purchase of 90 days or less to be cash equivalents. Amounts included in restricted cash primarily relate to the Company’s insurance programs and certain employee-related benefits.
Investments
Available-for-sale debt securities. The Company’s investments may consist of money market funds, U.S. treasury and U.S. government agency securities, high-quality corporate notes and bonds, commercial paper, non-U.S. government agency securities, and taxable and tax-exempt municipal notes. The Company has designated all investments as available-for-sale and, therefore, the investments are subject to periodic impairment under the available-for-sale debt security impairment model. Available-for-sale debt securities in an unrealized loss position are written down to fair value through a charge to interest and other income, net, if the Company intends to sell the security or it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis. The Company evaluates the remaining securities to determine what amount of the excess, if any, is caused by expected credit losses. A decline in fair value attributable to expected credit losses is recorded to interest and other income, net, while any portion of the loss related to non-credit factors is recorded in accumulated other comprehensive income (loss). For securities sold prior to maturity, the cost of the securities sold is based on the specific identification method. Realized gains and losses on the sale of investments are recorded in interest and other income, net in the Consolidated Statements of Income. Investments with remaining maturities at the date of purchase greater than 90 days and remaining maturities as of the reporting period of less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments.
Equity investments. From time to time, the Company holds equity investments with readily determinable fair values and equity investments without readily determinable fair values. The Company recognizes equity investments with readily determinable fair values at the quoted market price with changes in value recorded in interest and other income, net. The Company generally recognizes equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer with changes in value recorded in interest and other income, net.
Fair Value Measurements
The Company measures the fair value of money market funds, U.S. treasury securities, and equity investments with readily determinable value based on quoted prices in active markets for identical assets as Level 1 securities. Marketable securities measured at fair value using Level 2 inputs are, or have been, primarily comprised of commercial paper, corporate notes and bonds, U.S. and non-U.S. government agencies, and municipal notes. The Company reviews trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data. This approach results in the Level 2 classification of these securities within the fair value hierarchy.
Inventory
Inventory is stated at the lower of cost or net realizable value on a first-in, first-out basis. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. Additionally, the cost basis of the Company’s inventory does not include any unallocated fixed overhead costs associated with abnormally low utilization of its factories.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, down to the estimated salvage value, if any. The salvage value of operating lease assets is estimated based on a number of factors including, but not limited to, the lease term, technological obsolescence, and the expected future demand for refurbished systems.
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Depreciation is recognized over the following estimated useful lives:

  Useful Lives
Building Up to 30 years

Building improvements Up to 15 years

Leasehold improvements Up to 15 years

Equipment and furniture 5 years

Operating lease assets 1 to 7 years

Computer and office equipment 3 to 5 years

Enterprise-wide software 5 to 8 years

Purchased software Lesser of 3 years or life of license

Depreciation expense for the years ended December 31, 2025, 2024, and 2023, was $ 600  million, $ 439 million, and $ 382 million, respectively.
Capitalized Software Costs for Internal Use
The Company capitalizes direct costs associated with developing or obtaining internal use software, including enterprise-wide business software, which are incurred during the application development stage. These capitalized costs are recorded as capitalized software within property, plant, and equipment. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Once the software is ready for its intended use, amounts capitalized are amortized over an estimated useful life of up to 8 years on a straight-line basis.
Implementation Costs in a Cloud Computing Arrangement
The Company capitalizes qualified implementation costs incurred in a hosting arrangement that is a service contract for which it is the customer in accordance with the requirements for capitalizing costs incurred to develop internal-use software. These capitalized implementation costs are recorded within intangible and other assets, net, and are generally amortized over the fixed, non-cancellable term of the associated hosting arrangement on a straight-line basis. The following table summarizes implementation costs in cloud computing arrangements as of the periods presented (in millions):

December 31,
2025 2024
Capitalized implementation costs
$ 91.9   $ 67.6  
Less: Accumulated amortization
( 42.3 ) ( 31.1 )
Total capitalized implementation costs in intangible and other assets, net
$ 49.6   $ 36.5  

During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 11.9  million, $ 10.8  million, and $ 10.2  million of amortization expense associated with capitalized implementation costs, respectively.
Business Combinations
The Company accounts for business acquisitions in accordance with ASC 805, Business Combinations . This standard requires the acquiring entity in a business combination to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree using acquisition-date fair values. Certain provisions of this standard prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination, including contingent consideration. The excess of the acquisition-date fair value of consideration paid over the fair values of the identifiable assets and liabilities is recorded as goodwill. Acquisition-related costs are recognized separately from the business combination and are expensed as incurred. The Company includes the results of operations of the businesses that are acquired as of the acquisition date.
Goodwill and Intangible Assets
Goodwill and intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually during the fourth quarter, or if circumstances indicate their value may no longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. The Company continues to operate in one segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level.
Intangible assets are carried at cost, net of accumulated amortization. Amortization is recorded on a straight-line basis over the intangible assets’ useful lives, which range from approximately 1 to 8 years.
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Impairment of Long-lived Assets
The Company evaluates long-lived assets, which include finite-lived intangible and tangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable. Recoverability is measured by comparing the net book value to the future undiscounted cash flows attributable to such assets. The Company recognizes an impairment charge equal to the amount by which the net book value exceeds its fair value. No material impairment losses were incurred in the periods presented.
Revenue Recognition
The Company’s revenue consists of product revenue, resulting from the sale of systems, system components, and instruments and accessories, and service revenue. The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and its customer, the rights of the parties are identified, the contract has commercial substance, and the collectability of the contract consideration is probable. The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any sales incentives and taxes collected from customers that are remitted to government authorities.
The Company’s system sale arrangements generally contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are a distinct product or service that is separately identifiable from other items in bundled packages and if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer. The Company’s system sale arrangements include a combination of the following performance obligations: system(s); system components; system accessories; instruments; accessories; and system service. The Company’s system sale arrangements generally include a five-year period of service. The first year of service is generally included in the system sale arrangement for no additional consideration, and the remaining four years of service are priced separately. The Company considers the service terms in the arrangements that are legally enforceable to be performance obligations. Other than service, the Company generally satisfies all of the performance obligations at a point in time. System components, system accessories, instruments, accessories, and service are also sold on a stand-alone basis.
For multiple-element arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, the Company estimates the standalone selling price considering market conditions and entity-specific factors including, but not limited to, historical pricing data, features and functionality of the products and services, geographies, and type of customer. The Company regularly reviews standalone selling prices and updates these estimates, as necessary.
The Company recognizes revenue as the performance obligations are satisfied by transferring control of the product or service to a customer. The Company generally recognizes revenue for the performance obligations in the following manner:
System sales. For systems (including system components and system accessories) sold directly to end customers, revenue is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement. For systems sold through distributors, revenue is recognized generally at the time of shipment. The Company’s system arrangements generally do not provide a right of return. The systems are generally covered by a one-year warranty, which is accounted for as a single performance obligation with the first year of service.
Instruments and accessories. Revenue from sales of instruments and accessories is recognized when control is transferred to the customers, which generally occurs at the time of shipment but could also occur at the time of delivery, depending on the customer arrangement. The Company generally allows its customers to return unused products for a limited period of time subsequent to the initial purchase in the normal course of business and records an allowance against revenue for estimated returns.
Service. Service revenue is recognized over the term of the service period, as the customer benefits from the services throughout the service period. Revenue related to services performed on a time-and-materials basis is recognized when performed.
Transactions involving system trade-ins
Customers can negotiate to trade in their older systems for a credit towards the purchase of a newer generation system. Such trade-in transactions are generally not based on any pre-existing rights granted by the Company and are generally negotiated separately based on the circumstances at the time of the trade-in and based on the then-fair value of the underlying system. Accordingly, such trade-ins are generally not considered separate performance obligations.
When a specified-price trade-in right is granted at the time of a system purchase, it generally provides for a trade-in credit that requires the customer to enter into a new purchase agreement to exercise that right. The Company accounts for such rights
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as a guarantee and reduces the total consideration by the fair value of that guarantee. The remaining consideration is allocated to each performance obligation based on their relative fair value. As of December 31, 2025, and 2024, the liability recognized for these guarantees was not material.
Traded-in systems can generally be reconditioned and resold. The Company accounts for the fair value of the traded-in system as additional consideration. When there is no market for the traded-in system, no value is assigned. The value of the traded-in system is reported as a component of inventory until resold.
Purchases of system components
Customers have the opportunity to add additional features to their systems at a price that is separately negotiated, for example, by adding a second surgeon console for use with the da Vinci surgical system. Revenue is recognized when the component level features have been provided and all revenue recognition criteria are met.
Assets Recognized from the Cost to Obtain a Contract with a Customer
The Company has determined that certain sales incentives provided to the Company’s sales team are required to be capitalized when the Company expects to generate future economic benefits from the related revenue-generating contracts subsequent to the initial sales transaction. Capitalized contract acquisition costs are recorded within intangible and other assets, net and are amortized on a systematic basis based on the timing of when the Company expects to earn the related revenue. The sales incentives allocated to system sales and sales-type leases are expensed upon the transfer of control of the systems, and the amounts allocated to service and system operating leases are amortized over their economic life on a straight-line basis. When determining the economic life of the contract acquisition assets recognized, the Company considers historical contract renewal rates, expectations of future contract renewals, and other factors that could impact the economic benefits that the Company expects to generate from that arrangement. The amounts capitalized as contract acquisition costs were $ 130 million and $ 111 million as of December 31, 2025, and 2024, respectively.
During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 38.0 million, $ 37.7 million, and $ 33.0 million of amortization expense associated with contract acquisition assets, respectively. The Company did not incur any impairment losses during the periods presented.
Intuitive System Leasing
The Company enters into lease arrangements with certain qualified customers. Leases have terms that generally range from 12 to 84 months and are usually collateralized by a security interest in the underlying assets. The Company also leases systems to certain qualified customers under usage-based arrangements that have terms of up to 84 months. 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.
Revenue related to multiple-element arrangements are allocated to lease and non-lease elements based on their relative standalone selling prices as prescribed by the Company’s revenue recognition policy. Lease elements generally include a system or system component, while non-lease elements generally include service. For some lease arrangements, customers are provided with the right to purchase the leased system at some point during and/or at the end of the lease term. Except for usage-based lease arrangements, lease arrangements generally do not provide rights for the customers to exit or terminate the lease without incurring a penalty. Certain lease arrangements may also include upgrade rights that allow customers to upgrade the leased system to newer technology at some point during the lease term. Generally, these upgrade rights do not specify the terms, including the price or structure of the future upgrade transactions and are subject to negotiation and mutual agreement of terms based on the circumstances at the time of the upgrade, including the then-fair value of the system as well as other factors. System upgrade transactions generally will result in a modification of the existing lease. The Company accounts for lease modifications at the time a new or amended contract is executed.
In determining whether a transaction should be classified as a sales-type or operating lease (whether fixed-payment or usage-based), the Company considers the following terms at lease commencement: (1) whether title of the system transfers automatically or for a nominal fee by the end of the lease term; (2) whether the present value of the minimum lease payments equals or exceeds substantially all of the fair value of the leased system; (3) whether the lease term is for the major part of the remaining economic life of the leased system; and (4) whether the lease grants the lessee an option to purchase the leased system that the lessee is reasonably certain to exercise.
The Company generally recognizes revenue from sales-type lease arrangements at the time the system is accepted by the customer, assuming all other revenue recognition criteria have been met. Revenue related to lease elements from sales-type leases is presented as product revenue. Revenue related to lease elements from fixed-payment operating lease arrangements is generally recognized on a straight-line basis over the lease term and is presented as product revenue. Revenue related to lease elements from usage-based arrangements is recognized as the customers utilize the systems and is presented as product revenue.
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We generally require customers to pay for the property taxes that are due on leased systems. The amounts invoiced to customers for property taxes are considered variable lease payments and are included in product revenue. Amounts related to property taxes were not material in any of the periods presented.
Other Leasing Arrangements
The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in intangible and other assets, net, other accrued liabilities, and other long-term liabilities on the Consolidated Balance Sheet. The Company currently does not have any finance leases.
Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities, as the Company does not have insight into the inputs necessary to calculate the implicit rate of the leases. Lease terms may include options to extend or terminate when the Company is reasonably certain the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.
The Company also has lease arrangements with lease and non-lease components. The Company elected the practical expedient not to separate non-lease components from lease components for the Company’s real estate and automobile leases. Additionally, the Company applied a portfolio approach to effectively account for the operating lease ROU assets and lease liabilities for the Company’s automobile leases. The Company also elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for leases with terms of 12 months or less.
Credit Losses
Trade accounts receivable. The allowance for doubtful accounts is based on the Company’s assessment of the collectibility of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. For the years ended December 31, 2025, and 2024, bad debt expense was not material.
Net investment in sales-type leases. The Company enters into sales-type leases with certain qualified customers to purchase its systems. Sales-type leases have terms that generally range from 24 to 84 months and are usually collateralized by a security interest in the underlying assets. The allowance for loan loss is based on the Company’s assessment of the current expected lifetime loss on lease receivables. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the lease receivable balances, and current economic conditions that may affect a customer’s ability to pay. Lease receivables are considered past due 90 days after the due date of the invoice.
The Company manages the credit risk of the net investment in sales-type leases using a number of factors relating to our customers, including, but not limited to, the following: size of operations; profitability, liquidity, and debt ratios; payment history; and past due amounts. The Company also uses credit scores obtained from external providers as a key indicator for the purposes of determining credit quality. The following table summarizes the amortized cost basis by year of origination and by credit quality for the net investment in sales-type leases as of December 31, 2025 (in millions):

2025 2024 2023 2022 2021 Prior Net Investment
Credit Rating:
High $ 48.3   $ 52.3   $ 22.6   $ 23.5   $ 12.0   $ 0.8   $ 159.5  
Moderate 20.6   62.8   13.7   25.6   11.2   2.0   135.9  
Low 0.1   4.9   0.8   1.3   0.3   —   7.4  
Total $ 69.0   $ 120.0   $ 37.1   $ 50.4   $ 23.5   $ 2.8   $ 302.8  

For the year ended December 31, 2025, and 2024, credit losses related to the net investment in sales-type leases were not material.
The Company’s exposure to credit losses may increase if its customers are adversely affected by changes in healthcare laws, procedure coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, or other customer-specific factors. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade and lease receivables as hospital cash flows are impacted by macroeconomic factors, including inflation, high interest rates, and staffing constraints.
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Available-for-sale debt securities. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, financial condition and near-term prospects of the investee, the extent of the loss related to the credit of the issuer, and the expected cash flows from the security. The Company segments its portfolio based on the underlying risk profiles of the securities and has a zero-loss expectation for U.S. treasury and U.S. government agency securities. The basis for this assumption is that these securities have consistently high credit ratings by rating agencies, have a long history with no credit losses, are explicitly guaranteed by a sovereign entity, which can print its own currency, and are denominated in a currency that is routinely held by central banks, used in international commerce, and commonly viewed as a reserve currency. Additionally, all of the Company’s investments in corporate debt securities are in securities with high-quality credit ratings, which have historically experienced low rates of default. For the years ended December 31, 2025, and 2024, credit losses related to available-for-sale debt securities were not material.
Allowance for Sales Returns
The allowance for sales returns is based on the Company’s estimates of potential future returns of certain products related to current period product revenue. The Company analyzes historical returns, current economic trends, and changes in customer demand and acceptance of the Company’s products.
Share-Based Compensation
The Company grants long-term equity awards under its stock-based compensation plans to certain employees and non-employee directors of the Company. These awards include restricted stock units, stock options, and performance stock units. The Company’s share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the requisite service period. The Company estimates expected forfeitures at the time of grant and revises the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimated.
Restricted stock units . The fair value of restricted stock units (“RSUs”) is determined based on the closing quoted price of the Company’s common stock on the date of the grant.
Stock options. The Black-Scholes-Merton option-pricing model is used to estimate the fair value of stock options granted and utilizes the following inputs: (1) closing quoted price of the Company’s common stock on the date of grant; (2) expected term; (3) expected volatility; and (4) risk-free interest rate.
Expected Term: The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The Company determines expected term based on historical exercise patterns and its expectation of the time that it will take for employees to exercise options still outstanding.
Expected Volatility: The Company uses market-based implied volatility for purposes of valuing stock options granted. Market-based implied volatility is derived based on actively traded options with expirations greater than one year on the Company’s common stock. The extent to which the Company relies on market-based volatility when valuing options depends, among other things, on the availability of traded options on the Company’s stock and the term of such options. Due to a sufficient volume of traded options, the Company used 100 % market-based implied volatility to value options granted, which the Company believes is more representative of future stock price trends than historical volatility.
Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option.
Performance stock units . Performance stock units (“PSUs”) include predefined performance and market conditions. The fair value of performance stock units with performance conditions is based on the closing quoted price of the Company’s common stock on the date of the grant. The Company estimates the number of awards with performance conditions that will ultimately vest based on the probability of achievement each quarter to determine the amount of compensation expense to recognize each reporting period. The fair value of performance stock units that include a market condition is determined using a Monte Carlo simulation model.
Employee stock purchase plan . The fair value of shares to be issued under the Company’s Employee Stock Purchase Plan (the “ESPP”) is computed using the Black-Scholes-Merton option-pricing model at the commencement of an offering period in February and August of each year utilizing the following inputs: (1) closing quoted price of the Company’s common stock on the initial date of the offering period; (2) expected term; (3) expected volatility; and (4) risk-free interest rate. Share-based compensation for the ESPP is recognized as expense on a straight-line basis over the two-year offering period.
See “Note 10. Share-Based Compensation” for a detailed discussion of the Company’s stock plans and share-based compensation expense.
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