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Intuitive Surgical ISRG reported first-quarter 2025 adjusted earnings per share (EPS) of $1.81, which beat the Zacks Consensus Estimate of $1.71 by 5.9%. The bottom line improved 20.7% year over year.
GAAP EPS in the quarter was $1.92, up 27.2% from the year-ago quarter’s level.
This Zacks Rank #3 (Hold) company reported revenues of $2.25 billion, up 19.2% year over year reportedly and up 20% 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 3.3%.
Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote
Instruments & Accessories
Revenues from this segment totaled $1.37 billion, indicating a year-over-year improvement of 18%. This can be attributed to the da Vinci procedure’s 17% volume growth. The sales growth also reflects approximately 58% growth in Ion procedures and 94% for the SP platform. ISRG completed 32,000 procedures globally using its latest da Vinci 5 system in the first quarter. The figure was on par with the full-year 2024 numbers. 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 $523 million, up 25% year over year. The robust growth was driven by a higher system placement and a rise in average selling price. Intuitive Surgical shipped 367 da Vinci Surgical Systems compared with 313 in the prior-year quarter. The company placed 204 systems in the United States and 163 in international markets. During the first quarter, ISRG placed 147 of its latest da Vinci 5 systems compared with 174 during the fourth quarter of 2024.
Services
Revenues from this segment amounted to $363 million, up 15.8% from the year-ago quarter’s level.
Adjusted gross profit was $1.5 billion, up 17% year over year. As a percentage of revenues, the gross margin was 66.4%, down approximately 120 bps from the prior-year quarter’s figure.
Selling, general and administrative expenses totaled $563.4 million, up 14.6% year over year.
Research and development expenses totaled $316.2 million, up 11.1% on a year-over-year basis.
Adjusted operating income totaled $767.5 million, up 21.8% year over year. As a percentage of revenues, the operating margin was 34.1%, up approximately 70 bps from the prior-year quarter’s figure.
Intuitive Surgical exited the first quarter with cash, cash equivalents and investments of $9.1 billion compared with $8.83 billion in the previous quarter.
Total assets increased to $19.22 billion from $18.74 billion a year ago.
ISRG ended the first quarter on a strong note, with earnings and revenues beating their respective estimates. Despite this robust quarterly performance, the stock was down 0.8% during after-hours trading on April 22, likely due to contraction of gross margin and lowered outlook for the same.
Shares of Intuitive Surgical have lost 8.2% so far this year compared with the industry’s 13.7% decline. The S&P 500 Index has decreased 12.6% during the same time frame.
In 2025, Intutitive Surgical expects gross margin to reflect 170 bps headwind due to newly implemented global tariffs. These costs primarily stem from three key areas — U.S.-China trade friction, European retaliatory tariffs and a small subset of Mexican exports that do not meet USMCA certification. Specifically, ISRG will incur steep tariffs on components imported from China and on finished products entering the country, with U.S. tariffs also applied to Chinese-sourced components and subassemblies for the Ion platform. The company expects the impact of tariffs to increase each quarter over the remainder of the year.
In response to these developments, ISRG has lowered its pro forma gross margin guidance for the year to 65-66.5% from 67-68%. The rise in tariffs will also hurt ISRG’s potential to win future tenders in China.
During the first quarter, revenues were primarily driven by continued improvement in the company’s da Vinci procedure volume, coupled with strong Ion and SP procedure growth. Intuitive Surgical has also been increasing the pricing of procedures to fight inflationary pressure, which has also aided sales growth.
Moreover, the rising adoption of da Vinci 5 aided the top line further. The company plans to launch da Vinci 5 broadly in the second half, which should drive system revenues. However, weakness in Germany, the U.K. and Japan may lead to slower adoption.
However, the continued slowdown in bariatric procedures is likely to continue in 2025 amid the rise of GLP-1 medications, hurting top-line growth. ISRG also expects a slow, gradual decline in Instruments & Accessories revenues per procedure over the next few years due to growth in benign procedures, which require less instrumentation than complex cancer surgeries.
Meanwhile, the clearance of the Ion platform in Australia and its launch in China should drive system placements and procedure volume. The clearance for the da Vinci SP SureForm 45 stapler in the United States, which will expand the use of SP in thoracic and colorectal indications, looks promising.
Improving operating margins during the first quarter buoy optimism. However, operating expenses are likely to be on the higher side in 2025 due to increased depreciation costs associated with new facilities.
Stocks to Consider
Some better-ranked stocks from the same medical industry are Fresenius Medical Care FMS, Masimo MASI and Glaukos GKOS.
Fresenius Medical, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 28.9% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
FMS’ earnings beat estimates in three of the trailing four quarters and met in one, delivering an average surprise of 15.67%. The company is expected to release first-quarter results next month.
FMS’ shares have gained 6% so far this year.
Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 20% for 2025.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 14.41%. Its shares have risen 58.5% compared with the industry’s 3.9% growth year to date. The company is expected to relase first-quarter results in May.
MASI’s shares have declined 8% so far this year.
Glaukos, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 48.9% for 2025. It delivered a trailing four-quarter average earnings surprise of 8.11%. The company’s earnings beat estimates in two of the trailing four quarters, met in one and missed in the other, delivering an average surprise of 8.11%. The company is expected to release first-quarter results on April 30.
GKOS’ shares have declined 40.1% so far this year.
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This article originally published on Zacks Investment Research (zacks.com).
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