ISRG Stock Gains on Q3 Earnings & Revenue Beat, Gross Margin Declines

Intuitive Surgical ISRG reported third-quarter 2025 adjusted earnings per share (EPS) of $2.40, which beat the Zacks Consensus Estimate of $1.99 by 20.6%. The bottom line improved 30.4% year over year.

GAAP EPS in the quarter was $1.95, up 25% from the year-ago quarter’s level.

Revenue Details

This Zacks Rank #3 (Hold) company reported revenues of $2.51 billion, up 23% year over year, as well as at constant currency (cc). A higher number of installed systems and growth in the da Vinci procedure volume contributed to the improvement. The top line beat the Zacks Consensus Estimate by 3.9%.

Segmental Details

Instruments & Accessories

Revenues from this segment totaled $1.52 billion, indicating a year-over-year improvement of 20.1%. This can be attributed to the da Vinci procedure’s 19% volume growth. The sales growth also reflects approximately 52% growth in Ion procedures and 91% for the SP platform. The top-line improvement was also aided by higher system utilization, partially offset by a lower mix of bariatric procedures and a higher mix of cholecystectomy procedures.

Systems

This segment’s revenues totaled $590.4 million, up 32.7% year over year. The robust growth was driven by a higher system placement and a rise in average selling price. Intuitive Surgical shipped 427 da Vinci Surgical Systems compared with 379 in the prior-year quarter. The company placed 263 systems in the United States and 164 in international markets. During the third quarter, ISRG placed 240 of its latest da Vinci 5 systems compared with 180 during the second quarter of 2025.

Services

Revenues from this segment amounted to $395.9 million, up 20.4% from the year-ago quarter’s level.

Intuitive Surgical, Inc. Price, Consensus and EPS Surprise

Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote

Margins

Adjusted gross profit was $1.70 billion, up 21% year over year. As a percentage of revenues, the gross margin was 68%, down approximately 110 bps from the prior-year quarter’s figure.

Selling, general and administrative expenses totaled $573.3 million, up 12.3% year over year.

Research and development expenses totaled $329.4 million, up 15.2% on a year-over-year basis.

Adjusted operating income totaled $975.9 million, up 29.2% year over year. As a percentage of revenues, the operating margin was 38.9%, up approximately 190 bps from the prior-year quarter’s figure.

Financial Position

Intuitive Surgical exited the third quarter with cash, cash equivalents and investments of $8.43 billion compared with $9.53 billion in the previous quarter.

Wrapping Up

ISRG ended the third quarter on a strong note, with earnings and revenues beating their respective estimates. Following this robust quarterly performance, the stock was up 17.1% during after-hours trading on Oct. 21.

Shares of Intuitive Surgical have lost 11.3% so far this year compared with the industry’s 6.6% decline. The S&P 500 Index has increased 15.6% during the same time frame.

The da Vinci 5 (dV5) system continued to gain traction in its first full quarter of broad U.S. availability, with 240 placements, bringing its installed base to 929 systems. Intuitive Surgical also placed its first dV5 systems in Japan and Europe following recent regulatory clearances, marking early international expansion. The utilization of dV5 remained higher than the legacy Xi platform, reflecting its improved surgeon autonomy, efficiency and integrated digital tools like Force Feedback and Case Insights. Trade-in transactions surged to 141, up from 38 a year ago, underscoring strong customer appetite for upgrades.

Global da Vinci procedures increased 19% year over year, driven by 16% growth in the United States and 24% growth internationally. Procedure momentum was fueled by robust, benign general surgery volumes domestically and broad-based strength in general surgery and gynecology overseas, particularly in India, Korea, Taiwan and Brazil. Utilization rose across platforms, 4% for multiport, 35% for SP and 14% for Ion, validating demand across the portfolio.

System placements reached 427, up 13% year over year, led by strong U.S. demand for dV5, while international markets faced continued budget constraints in Japan, China, and the U.K. Gross margin stood at 68%, down 110 basis points year over year due to tariffs and product mix, but pro forma operating margin remained robust at 39%, supported by cost control and higher mix of advanced systems. Tariff impact for the year is now expected at approximately 70 basis points, lower than prior forecasts.

Looking ahead, Intuitive Surgical raised its 2025 da Vinci procedure growth guidance to 17–17.5% and gross margin outlook to 67–67.5%, reflecting cost efficiencies and strong operating leverage. The company remains focused on scaling the dV5 rollout, expanding Ion and SP adoption, and advancing its AI-driven digital ecosystem to enhance surgical precision, efficiency and long-term enterprise value.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Phibro Animal Health PAHC, Veracyte VCYT and Insulet PODD.

Phibro Animal Health reported a fourth-quarter fiscal 2025 EPS of 57 cents, which beat the Zacks Consensus Estimate by 9.62%. Net sales of $378.7 million topped the consensus estimate by 4.86%. PAHC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Phibro has an estimated earnings growth rate of 21.1% in fiscal 2026 compared with the industry’s 12.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 27.88%.

Veracyte, sporting a Zacks Rank #1, reported second-quarter 2025 adjusted EPS of 44 cents, which beat the Zacks Consensus Estimate by 41.9%. Revenues of $130.2 million topped the Zacks Consensus Estimate by 7.1%. 

VCYT has an estimated earnings growth rate of 19.3% for 2025 compared with the industry’s 12.9%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 242.77%.

Insulet, sporting a Zacks Rank #1, reported a second-quarter 2025 adjusted EPS of $1.17, which outperformed the Zacks Consensus Estimate by 25.81%. Revenues of $649.1 million exceeded the Zacks Consensus Estimate by 5.46%.

PODD has an estimated earnings growth rate of 42.3% for 2025 compared with the industry’s 12.7%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 19.54%.

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This article originally published on Zacks Investment Research (zacks.com).

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