Hand of Da Vinci

Intuitive Surgical, a California-based medical equipment company, specializes in developing advanced surgical instruments designed for minimally invasive procedures. Its flagship product, the da Vinci Surgical System, has become a cornerstone of modern robotic-assisted surgery. These systems range in price from $500,000 to $2.5 million each. In the most recent quarter, the company placed 427 da Vinci systems, generating $590 million in system sales. 

The company operates on a razor-and-blades business model. While system sales contribute significantly to revenue, the bulk of its income comes from selling instruments and accessories that must be replaced after each surgical procedure. In Q3 2025, Intuitive Surgical reported total revenue of $2.51 billion, with instruments and accessories accounting for nearly 61% of that figure. Service revenue contributed just under 16%, meaning that approximately 77% of total revenue is tied to maintaining and operating the da Vinci systems. 

Founded in 1995, Intuitive Surgical has established itself as the industry standard. Many surgeons are trained on the da Vinci system, creating a strong incentive to continue using it and adopt newer versions. This entrenched user base reinforces the company’s competitive position.  

Over the past decade, Intuitive Surgical has delivered impressive financial performance, with revenue growing at an annualized rate of 15.5% and diluted EPS increasing at 16.7%. In the latest quarter, the company posted a gross margin of 66.4% and a net margin of 28%. The U.S. remains its primary market, accounting for just over 68% of total revenue. 

However, the company’s valuation reflects high expectations. With a price-to-earnings ratio exceeding 70, investors are paying a very high premium for future growth. At current earnings levels, it would take over 70 years to recoup their investment. This leaves little room for error. Any delays in surgical procedures, whether due to patient choice or broader healthcare trends, could significantly impact revenue. Moreover, despite its strong market position, Intuitive Surgical faces competition from well-funded rivals in a dynamic and evolving medical technology landscape.