Intuitive Surgical Beats Q3, Drops 7% on Pricing Cuts, $450M Charge

Intuitive Surgical (ISRG) beat Wall Street estimates for third-quarter revenue and adjusted profit on Tuesday, and its shares still dropped. After the company's release, the stock closed the regular session at $438 and fell 7.3% to about $406 after hours, according to Investing.com. Investors focused on two things: a $450 million pre-tax charge to settle a class-action antitrust case over da Vinci servicing and instrument remanufacturing, and management's plan to cut instrument and accessory revenue per procedure by 3% to 5% over time.

Q3 results versus expectations

Consensus figures come from published earnings coverage, which put adjusted EPS at $2.64 to $2.65, so the beat was about $0.35 a share. Adjusted EPS includes a one-time tariff refund worth $0.06 a share, according to the company, so excluding it, EPS would be about $2.94 by our calculation, still above estimates. GAAP net income fell because the $450 million charge was recorded in the quarter but excluded from adjusted results. Revenue by line: instruments and accessories $1.80 billion (up 18%), systems $769 million (from $590 million) and services $482 million (from $396 million).

Procedures and placements stayed strong

Placements rose about 28% from a year earlier, by our calculation. One call summary said U.S. da Vinci procedure growth of 10% was the weakest since the pandemic, and that analysts asked whether the slowdown is temporary, so growth strength was uneven by region. Management also said Europe placements rose 83% and Asia 30%.

Why shares fell

The $450 million charge. Intuitive recorded a $450 million pre-tax charge ($347 million after tax, or $0.99 a share) in SG&A to settle In re: da Vinci Surgical Robot Antitrust Litigation. It requires court approval, which management said is not expected until 2027, and the company described it as a no-fault settlement. The charge is excluded from adjusted EPS.

Pricing. Management expects pricing actions and a China policy change to lower da Vinci instrument and accessory revenue per procedure by about 3% to 5% on a constant-mix basis once fully in place. China pricing changes start in November, and plans to extend the life of some EndoWrist instruments and introduce volume-based pricing begin in the first half of 2027, pending FDA 510(k) clearance. Country-by-country rollouts mean the full effect is not expected until the end of 2027. CFO Jamie Samath said broader adoption creates more long-term value than near-term revenue per procedure. Management described the gross margin effect as modest and expects cost reductions to offset it.

Guidance. Intuitive narrowed 2026 da Vinci procedure growth to about 14% to 15% from 13.5% to 15.5%, and said it expects to land closer to the midpoint. By our calculation the midpoint is unchanged at 14.5%, so the narrowing trims the top and bottom of the range and does not cut the outlook. Non-GAAP gross margin guidance is 68.7% to 69.3%, including about 0.9 points of tariff impact, and non-GAAP operating expense growth guidance of 11% to 13% was maintained.

Buybacks and balance sheet

Intuitive repurchased 7.8 million shares for $2.94 billion in the quarter, an average of roughly $377 a share by our calculation. Cash and investments were $6.80 billion, down $1.83 billion from the prior quarter.

Sources: Intuitive Surgical Q3 2026 earnings release, plus published summaries of the earnings call and consensus estimates. We took the stock prices from Investing.com's report and did not verify them independently, so check live quotes. We also did not use several figures in the summary supplied for this article, including a 26.4% adjusted operating margin, a 50 times forward earnings multiple and an 18.9% earlier growth rate, because we could not match them to the release or other sources.