Key Takeaways
- ISRG shares plummeted more than 10% to $360.50 on Friday, marking the largest single-session decline since April 2022
- Second-quarter EPS of $2.80 surpassed the $2.50 consensus; revenue of $2.89B exceeded the $2.82B projection
- Domestic da Vinci procedure expansion decelerated to 12%, falling short of the anticipated 13% rate
- Company maintained its full-year outlook, anticipating growth toward the middle of the 13.5%–15.5% range
- Johnson & Johnson’s competing Ottova surgical system is expected to receive regulatory approval by the end of the year
Intuitive Surgical delivered quarterly results that exceeded Wall Street expectations on both the top and bottom lines, yet shares suffered a brutal selloff. ISRG plunged over 10% to $360.50 on Friday — representing the sharpest one-day decline since April 2022 and the lowest closing price since January 2024, according to Dow Jones Market Data.
Intuitive Surgical, Inc., ISRG
The financial performance itself looked impressive. The company posted adjusted earnings per share of $2.80, comfortably beating the analyst consensus of $2.50. Total revenue climbed to $2.89 billion, surpassing expectations of $2.82 billion.
So what triggered the dramatic selloff? Markets fixated on a single concern: decelerating procedure volume.
Domestic da Vinci procedure counts expanded by 12% during the second quarter, falling below the 13% rate that analysts had forecasted and representing a slowdown from the 14% increase recorded in the first quarter. On a worldwide basis, da Vinci procedures climbed 15% compared to the prior year.
Company executives attributed the slowdown to patients delaying elective operations due to escalating insurance premiums and some opting for weight-loss medications such as Ozempic instead of surgical interventions. Procedures deemed medically essential, they noted, maintained solid momentum.
Despite surpassing estimates, Intuitive maintained its full-year guidance — expecting worldwide da Vinci procedure expansion near the middle of its 13.5% to 15.5% projected range. The Street had anticipated a guidance increase following management’s upward revision last quarter.
The medical device company also improved its 2026 adjusted gross profit margin forecast to 68%–69% of revenue, an upgrade from the previous expectation of 67.5%–68.5%.
What RBC Is Saying
RBC Capital Markets analyst Shagun Singh challenged the market’s negative response. She maintained an Outperform rating on ISRG with a $575 price target — modestly reduced from $600 — characterizing the second-quarter performance as a “clean beat.”
Singh characterized the domestic procedure deceleration as “transient rather than a structural shift in end-market demand,” emphasizing that postponed cases should materialize later. She highlighted that international demand surged to 20% year-over-year expansion, with robust performance across Europe, Asia, and additional markets.
“We remain buyers,” Singh stated.
J&J Enters the Ring
The quarterly report arrived amid intensifying competitive pressures. Johnson & Johnson is advancing plans to introduce its proprietary surgical robot, the Ottova, engineered for soft-tissue operations in the upper abdominal region.
J&J anticipates securing regulatory approval before the close of 2026. This initiative presents a direct challenge to Intuitive’s commanding market leadership, though the company presently faces no approved competitor operating at comparable scale.
HCA Healthcare highlighted softer surgical procedure volumes and an uptick in uninsured patient populations earlier this week, providing additional industry-wide perspective. Pandemic-era ACA subsidies have now lapsed, prompting increasing numbers of Americans to discontinue coverage — a challenge Intuitive’s leadership team openly recognized.
Intuitive’s revised gross margin projection of 68%–69% for 2026 represents the most current forecast issued by the organization.
