Categories Analysis, Health Care

Intuitive Surgical stock dips after mixed Q3 earnings. What’s in store?

Da Vinci procedures continued to grow amid stable demand for general surgery both in the US and other regions like Germany, UK and Japan

Intuitive Surgical, Inc. (NASDAQ: ISRG) produces and sells some of the most advanced robotic surgical systems that make medical procedures simpler and less strenuous for surgeons. The company’s recent earnings announcement was a closely followed event, with investors looking for updates on the management’s strategy to deal with competition and threat from weight-loss drugs.

The Sunnyvale-based healthcare company’s main growth driver is the strong adoption of its successful da Vinci robotic surgical system. Exploring new indications for da Vinci is a key priority for the management while maintaining quality and seamless supply. Last week, Intuitive’s stock dropped after it reported mixed third-quarter results. After a positive start to 2023 and making steady gains, ISRG changed course mid-year and has returned to where it was at the beginning of the year. Now, prospective investors should like the stock more because it has become less expensive.


Of late, new weight-loss drugs have been posing a threat to da Vinci, which is widely used in bariatric surgery. However, demand trends indicate that the da Vinci-assisted procedure is still popular as it is considered one of the most effective weight loss treatments. It is believed that patients would still prefer bariatric surgery due to the high costs and side effects associated with modern weight loss drugs.

There has been a steady uptick in Intuitive’s recurring revenues. With cost pressures easing, aided by improvements in the supply chain, the company is once again pivoting its attention to making the products less expensive.

In the third quarter, earnings beat estimates for the third time in a row, while revenues missed after two consecutive beats. At $1.46 per share, adjusted profit was up 23% year-over-year and revenues moved up 12% to $1.74 billion. The top-line growth was driven mainly by a double-digit increase in revenues in the core Instruments and Accessories segment.

Sales Trend

Meanwhile, lower demand in China, where market reopening is delayed due to COVID-19 resurgence and homegrown surgical robots are gaining popularity, will be a drag on overall revenue performance in the near term. Sales are also affected by an increase in the leasing of robotic systems by hospitals and healthcare facilities, rather than purchasing them.

From Intuitive Surgical’s Q3 2023 earnings call:

“In June 2021, Intuitive launched an FDA-approved clinical study focused on complex colorectal procedures, such as low anterior resection or right colectomy, performed using the SP platform. Currently, enrollment is complete with 60 patients across 9 sites in the US and Korea. Another FDA-approved trial for rapid procedures in pulmonary lobectomy and thymectomy performed using SP completed enrollment in June of this year with 32 subjects enrolled across 6 centers in the US.”

Da Vinci Leads

There was continued strong growth in worldwide da Vinci procedures in Q3, though at a slower pace than in the second quarter and prior-year quarter. A total of 312 systems were placed, which is higher than the prior year’s number. Installation of other robotic-assisted platforms like the Ion endoluminal system and da Vinci SP, the single-port version, also increased during the quarter. The clinical installed base reached 8,127 multiport da Vinci systems, 490 Ion systems, and 158 single-port da Vinci systems in Q3.

On Monday, shares of Intuitive Surgical traded below their 52-week average. The stock has gained 12% in the past twelve months.

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