Conference Transcript - ISRG 2026-09-09

Larry Beigelson, Analyst — Wells Fargo

Okay, welcome back. I'm Larry Beiglson, the MedTech Analyst at Wells Fargo, and it's my pleasure to host this session with the management team from Intuitive Surgical. With us, we have Jamie Simath, Executive Vice President, CFO, and Enterprise Technology Leader, and Dan Connolly, Head of Investor Relations. The format is Fireside Chat. Jamie, oh, and Dan is going to read the Safe Harbor statement first.

Dan Connolly, Head of Investor Relations

Just real quick, comments in today's session may contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in our Securities and Exchange Commission filings, including our most recent forms, 10K and 10Q, which you can find through our website at intuitive.com or at the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements.

Larry Beigelson, Analyst — Wells Fargo

Thanks, Dan. And thank you for being here. Yeah, happy to be here. So, Jamie, I wanted to start with procedures, with the focus on the U.S. And, you know, we've seen U.S. procedure growth slow recently. And, you know, your comment about, you know, law of large numbers, I think, you know, concerns some investors, to be candid. So my question is, you know, what framework would you use to help people, you know, estimate U.S. procedure growth going forward?

Jamie Samath, CFO

Yeah, I appreciate the question and I know there's a lot of focus on the US business right now. Let me zoom out for a second. So I'd say our focus first is on global procedure growth and on all procedure types, so including ION. And that's how we think about how we do capital allocation, how we incent our sales force. And we have significant opportunities to drive the global. US about 60% of our business and it's decelerated as you've described we said on the Q2 earnings call there was a modest impact from lower ACA subsidies but the way we think about the US business is procedure by procedure and so and we draw adoption curves for each of them and so if I think about that business you have prostate in the fourth quarter of adoption you have cholecystectomy the largest procedure category in the US in the second quartile you have appendectomy in the first quartile and so we model each procedure on an adoption curve and it also then ties to how we focus and how we invest where they are relative to the size of the market and the total US procedure growth then is a summation of each of those procedures and where they are. We think that we have a significant opportunity in the US, particularly benign general surgery. We have a couple of procedures that are early and have just been put on the beginning points of adoption in cardiac and nipple sparing mastectomy and over time we think we have the opportunity to add additional procedures to the beginning of the funnel. And so the way that we think about the market is is a significant and attractive opportunity for us and we think that we can continue to bring procedures to the beginning of that of that funnel of course there are some dynamics in the marketplace right now ACA as I described that's helpful so which are the procedures that are going to drive the most growth in the US let's just say over the next two to three years?

Dan Connolly, Head of Investor Relations

Yeah, I think broadly, just thinking about 2026, expect the growth drivers to be consistent year over year. So like Jamie mentioned, general surgery and specifically continued growth in after hours procedures. So coli, hernia repair.

Jamie Samath, CFO

And then in addition to that, obviously we have some procedures at earlier stage opportunities like Jamie mentioned, cardiac and nipple sparing mastectomy as well as significant opportunity remaining in general surgery I guess could we see you know let me just ask a blunt question can we see us procedure growth you know dip below 10 percent in the second half you know given the tougher comps and the ACA subsidies expiring I just say obviously we don't guide at the regional level what we did in our last earnings call was provide the the guidance range of 13 and a half to 15 and a half percent again that's global and we said it's likely to be towards the midpoint of that range um that range does reflect uh more more difficult uh second half comps compared to to the prior year and obviously we incorporated our best estimate of the kind of aca dynamic that we described on the q2 call and so again And we're focused on the global total, and the U.S. component is reflected in that range.

Larry Beigelson, Analyst — Wells Fargo

I was surprised when you talked about U.S. procedures. You didn't mention the ASC opportunity. I mean, I know that's not a specific procedure, but it seems like a big opportunity for intuitive.

Dan Connolly, Head of Investor Relations

Yeah, I think we described that starting in January of this year on the fourth quarter call as an opportunity over the long run. It's not going to be linear. But I think that's a significant opportunity, kind of enabled by growth and reconditioned XI, right? And so we've had two quarters of that thus far. And I think in Q2, we placed 27 systems into ASCs, which was more than, you know, cumulatively over the prior couple of years. 20 of those were XIRs. So certainly supportive of growth in the mid to long term in that side of care.

Larry Beigelson, Analyst — Wells Fargo

That's helpful. Okay. Okay. We'll probably come back to procedures in the context of the extended use program, but I wanted to ask about capital equipment. There's obviously concerns about the capital equipment environment, just given the profitability issues at hospitals today, given some of the policy changes. So what's kind of your view of the state of the capital equipment environment, maybe U.S. and globally, and how are you thinking about the outlook?

Dan Connolly, Head of Investor Relations

Yeah. So through Q2, U.S. capital has been stable and relatively strong. I think OUS has been a little bit more mixed and kind of market by market. In Q2 in the U.S., we placed 267 systems. That was up 24 percent year over year. I'd say enabled by continued adoption of DaVinci 5 and also system upgrades. You know, we had 28 XI reconditioned in the U.S., 20 of those into ASCs. I think, you know, some customers looking back have expressed concern or caution over ACA enrollment. That's not new. We've been describing that as potentially having some impact, but we have not seen that, again, through Q2 in the U.S. I'd say, you know, part of that is as a result of only a small portion of customers in the U.S. acquire their systems outright via purchase arrangements, so roughly 70 to 75 percent of the systems that are going out in the U.S. typically happen on a non-purchase arrangement. Outside the U.S., you know, is more market-by-market. So in Q2, I think we placed 201 systems. That was up 12 percent year-over-year. Asia was up 9 percent. Europe up 8 percent. The rest of the world up 27 percent. So fairly broad-based. It's early outside the U.S. on DaVinci 5, but customers are responding. They're also responding, let's say, to increased availability and, you know, around XIR and X. And so getting the opportunity to have Gen 4 capabilities in their technology as they start programs.

Larry Beigelson, Analyst — Wells Fargo

What about this 340B program? It's not super familiar to medtech investors, but it's kind of been bubbling up as a concern. Is that something, you know, when you think about changes to that program that you feel it could have an impact on capital?

Jamie Samath, CFO

I think it's early. We've been obviously reading everything the same as you all. I think there's kind of two schools of thought the first is the related to pharma there'll be less funding that has an impact on hospital financials and therefore perhaps indirectly on what they put in their capital budgets on the flip side of that it's likely that outpatient surgical reimbursements go up for CMS and so obviously that could have a beneficial effect for intuitive and those in the surgery business. I think it's too early to really kind of say what the dynamics may be in terms of an impact. And then, of course, we're also watching what happens to Medicaid funding over time. But we're not making any specific comments about how that might impact our business, because it's just too early.

Larry Beigelson, Analyst — Wells Fargo

That's understandable. Let me switch gears to competition. And just we've had, you know, some recent news give you a chance to respond Otava obviously got cleared in the US just I guess two questions one is just reaction to kind of their feature set do you think it'll resonate with some customers and in terms of pausing you've always talked about competition could you know elongate the selling cycle what are your expectations yeah I just say first the basis of competition from our perspective is not just the robot it's the full ecosystem it's your software capability and the ability to update the software over time it's the ai feature set and so it's the fully integrated product portfolio that's the basis of competition in terms of that

Jamie Samath, CFO

architecture we've looked at many architectures including table mounted over the years and we've made conscious choices with respect to the trade-offs between the various architectures. I think we feel good about our product portfolio. We have a segmented system portfolio that I think gives us some advantages. In the U.S., DaVinci 5 has resonated strongly, and DaVinci 5 gets better over time. We do about a major software update once a year, and so I think we're competitively positioned, again, both with DaVinci 5 and its capability and the full ecosystem, and so I think we feel good about our ability to be successful in the U.S.

Larry Beigelson, Analyst — Wells Fargo

And so what is it about table-mounted that you said you've looked at it that you think might be a disadvantage versus what you offer, the boom-based?

Jamie Samath, CFO

Yeah, the physics of it, at least from what we've looked at, is the way in which the arms deploy and get configured can give you restrictions on patient size and on the breadth of procedures you can do. And the boom-mounted architecture that Exai and DaVinci 5 have, we think there's an advantage there. That's helpful.

Larry Beigelson, Analyst — Wells Fargo

And then reaction to the Medtronic Cornerstone Agreement, which is more international.

Jamie Samath, CFO

Yeah, I'd say we, in conjunction with our JV in China, we've looked at basically all of the competitive systems in China. Many of them are X or XI kind of look-alikes in terms of their form. I think we feel good about our product portfolio and our ability to compete economically and feature-wise.

Larry Beigelson, Analyst — Wells Fargo

I just say for an arrangement like that yeah you have to think through how do profits get shared how do the ecosystem converge how do you do product development jointly I think those can be challenging attributes of an arrangement like that makes sense Jamie in international I know we focused a lot so far on the US international has been strong as you mentioned but there is like increasing competition outside the US as well and you can kind of add up the placements from some of these companies it's pretty pretty significant in the aggregate so the question is can you continue to drive strong growth outside the US in light of this?

Jamie Samath, CFO

OUS is a significant focus for us we think the opportunity is also significant it has obviously lower relative penetration from a procedure perspective I think we have a number of competitive advantages internationally the segmented system portfolio with X and XIR is a good fit for many of those markets because they're cost constrained. A number of them are government funded healthcare systems where obviously there are budget pressures and we have DaVinci 5 for the premium accounts. Extended Use Instruments 2.0 that we're going to talk about I think also gives us an opportunity along with XIR to compete effectively where there are cost constraints, where economics are a greater proportion of how they make the decisions there are obviously a number of players internationally many of them are let's call them local players there's some desire locally for those companies to succeed so you have to compete with with that competition is intensest in in China which we've talked about and is obviously to some extent manifested therefore in our capital placements along with just much slower tender activity we have the full ecosystem many of those players do not and so I think we're well positioned back to the Otava question I asked about elongation in the selling cycle is it just too early obviously 27 is going to be a kind of a limited launch for them in in the US obviously we've seen Medtronic launch with a urology clearance and we haven't yet seen any change in selling cycles and obviously we'll see what happens with Otava okay it could it could you think 27 would be too early just given limited launch or I think they'll do it sounds like they'll do a measured launch they don't have the full ecosystem so it sounds like it will be a couple of years for them to get going right okay all right so the extended use program I guess

Larry Beigelson, Analyst — Wells Fargo

there's really two questions one is you know any framework anything you could you know offer i know you it was too early on the q2 call anything you can offer to size it relative to the last one you did which we know number one and number two help us understand the return on investment and why it's going to be positive and it's going to stimulate i assume procedures and offset some of the costs yeah i i just maybe zoom out to the strategy for a second And so we talk often about the quintuple aim, and that's, from our perspective, an expression of our customers' objectives, and we integrate that into our strategy and how we allocate

Jamie Samath, CFO

capital. And one of the elements of the quintuple aim is that you lower total cost of tree over time, and obviously that's a function of the financial pressures broadly in healthcare systems. And so we invest there, and we look to lower total cost of tree through many ways. you can do it by lowering complication rates by saving on finite resources through innovation in your products and you can do it through price and we'll do any combination of those the extended use instruments have been investments from our engineering teams over a number of years and we generally apply the experience curve theory to how we think about product costs as volumes grow and we've been growing every year basically except covid in 2020 as volumes grow you should get benefits from economies of scale and through the accumulated experience of manufacturing your products to allow you to lower product cost and so then for us that gives us an opportunity to pass it on to customers particularly where there's elasticity and so that's a core part of our strategy and i think that's a tried and true strategy across many industry segments and so we think it's in many regards an obvious thing to do because you pass on a competitive advantage to your customer in places where it where it really matters. The 2027 program is directionally similar to the 2020 program. It will lower INA per use cost for our customers that will be mostly targeted at those procedures and markets where they're more cost sensitive and therefore where we think we can get an elasticity response and so then in terms of the 2020 program how do we judge success we look at three things what happened to procedure trends before and after second is the actual economics of those procedures post the change and third customer feedback and so we kind of put that together you don't have obviously a B testing so you can't do a perfect ROI analysis but the combination of those data points gives us pretty high confidence that it was the right decision and I think from a strategic perspective the the virtuous cycle is is a is an obvious strategic opportunity to follow just to clarify directionally similar to 2020 you're saying basically that in terms of in terms of construct to the program I'm glad you asked that quantification we haven't provided yet and we'll do so on the on the Q3 call when I say similar it's in terms of construct the impact we'll talk about in Q3 okay so you did not mean the directionally similar to 2020 did not mean the quantification yes correct maybe you can tell us what maybe then you can answer that one so it's too early you'll say it's too early we're gonna do three call Q3 call okay and the reason for that is as you know we did a press release with an integrated set of capabilities that were coming to customers and that press release was targeted at customers just given the size of the number of customers that we have and we included extended use instruments in there knowing it was coming in 27 because that then gives us the opportunity to engage customers in how that program is going to work we wanted to make sure we had the opportunity to engage and reflect their feedback in the ultimate exact kind of prescription of how it would operate including the benefit to customers and back to so the procedure growth question earlier is this could the extended use program be you know stimulate stimulate you know procedure

Larry Beigelson, Analyst — Wells Fargo

growth in the u.s could could this accelerate procedure growth that's the intention of it and that's why we focus it on those areas where we think there's elasticity and not just in the u.s but globally right so people who may be concerned and you know a lot of investors are about the deceleration of u.s growth this could be a tailwind this is one of the opportunities to have an elasticity response that has a benefit to procedure growth yes okay I got it and then sticking with INA remanufactured instruments you know what what are you seeing in the field you know I think at SRS in the video we did some of you know Dave your CEO's commentary suggested look there is some you know, cost matters. There's some interest in this.

Jamie Samath, CFO

What can you say about what you're seeing in the field? Yeah, for the data that we have, usage is growing. I'd say it's growing from a relatively small number to still a small number. From our perspective, we think that the reliability, product quality, the product safety embedded in our products matters, and customers value that. and and we have and will continue to innovate and I think that that gives us a good basis to compete effectively.

Larry Beigelson, Analyst — Wells Fargo

Does the extended use program change the attractiveness of third-party alternatives?

Jamie Samath, CFO

I think to the extent the economics are a dimension of the relative decision making between the two then it must have some impact yes.

Larry Beigelson, Analyst — Wells Fargo

And you know we've gotten asked this question I'm curious to hear your view could intuitive because we've seen it I think in other industries could intuitive come out with its own remanufactured instruments there's there's no plans that I'd highlight at this point I mean we think the product set that we we have allows us to compete effectively okay all right switching gears to the end of luminal GI system the FDA summary has been posted so we know a little bit more I guess my question is kind of what's next in terms of the process and the timeline that what you can what can you share yeah really it's around remaining engineering

Jamie Samath, CFO

work what the associated regulatory pathway would be once we start to get through that you have to develop clinical evidence in programs like that you may also have to do work on reimbursement and so we're not we're not being specific about timelines yet because it's too early I think as we knock down our internal milestones and make progress we'll provide updates accordingly so it doesn't it doesn't have instruments yet or any kind of disposables that we're aware of is there going is it going to be like a razor razor blade model like you have with other systems you should expect it to have some similarity in that but I wouldn't go beyond that okay some similarity yeah and and you took this approach with SP and I think you know where you had a system cleared but the system you launched was four years later you told me that that wasn't a good analog because it's too long or too short I I would go back to what I said it's not a good analog it's a it's an n of one and really it's a function of product specific characteristics that define the timeline and for the for the buckets they described how much engineering work is left to do and what regulatory pathway do you go through and so and and part of the work on SP was to bring it into the da Vinci family so that SP that was cleared had its own surgeon and vision console we wanted to harmonize it with XI and so I see an example of a different a product specific difference that impacts the timeline when do you think you'll be in a position to give us more clarity on the timeline obviously people care about that yeah I'm not going to give a specific quarter or date at this point as we make the progress I would take a year okay I'll take your input but but seriously as you when when can we get a little bit more clarity yeah we don't have anything specific in terms of when you'll get the next update.

Larry Beigelson, Analyst — Wells Fargo

Okay. And I mean, just last one, I think on this, you know, how would you frame the long-term opportunity for this new system? You know, is it small, medium, large?

Jamie Samath, CFO

Yeah, it's too early for us to give any sizing. I just say we invest to be differentiated, to make an impact in the targeted disease states. And obviously, we want to make an attractive return.

Larry Beigelson, Analyst — Wells Fargo

And one more on new systems. Is it not this one? But, you know, people have speculated that Intuitive is going to come out with other new systems. Is that reasonable that there's more, you know, would you expect more platforms over time for different, you know, therapeutic areas?

Jamie Samath, CFO

We're always investing in next generation systems, including for the existing systems we've got in multiple SP and ION. in terms of new platforms obviously ion was our first departure from surgery back in 2019 now there's this GI robot we have investments in additional platforms yes that's helpful we didn't talk about China just I think in the last call you said China was actually in line with or slightly above global procedure growth but there's a lot of dynamics there new pricing model for procedures, I think, like a DRG system or something.

Larry Beigelson, Analyst — Wells Fargo

But what's the outlook for China?

Jamie Samath, CFO

Yeah, I'd just say first, it continues to be a large and strategic market from our perspective. Obviously, it's faced headwinds over the last couple of years. That's both been intense competition, given the number of local players that have emerged. And we've seen slower tenders. There's about 250 systems left in the existing quota. and really as a consequence of that our system placements have been muted relative to prior previous periods and given the high utilization in China to the extent that you're placing lower systems you're then constraining the capacity for procedure growth there is a new centralized tender process coming that's largely intended to remove waste from the kind of the disparate tender processes that operate today and we think that there are new charge codes coming we think we get clarity on both of those in 27 so we still don't yet have great visibility as to when kind of the the momentum in that business shifts but we think we get a lot of a lot of insights in 27 from those two things so you you have some sense of optimism for the market in China is that what I'm hearing I'd say been a tough market for most med tech companies I'd say we'll judge the degree of optimism when we get clarity on the charge codes and on how the centralized tender process works relative to tenders speeding up and being issued at a greater rate.

Larry Beigelson, Analyst — Wells Fargo

And just while we're on Asia, Japan, you've talked about the new reimbursement there benefiting 2027. Could we see an impact sooner than that given those go into effect I think in June?

Jamie Samath, CFO

You'll see, you'll start to see uptakes in those procedures that got the incremental reimbursement. The largest procedure that got reimbursement was inguinal hernia, but the rate at which they grow from basically zero means the impact actually on the total isn't that large. It isn't until you get into 27 when you've been able to do the work to train the surgeons and ramp the business that you don't really see it become large enough until 27.

Larry Beigelson, Analyst — Wells Fargo

And sorry to jump around but on bariatric are we starting to see a trough? It's surprising how long it's just been continuing in a similar rate declining at a similar rate in the u.s. yeah not not based on the procedure trends we've seen through q2 it's a stable decline but the decline hasn't yet approached zero because I mean you can do the math on that that you know was a growth driver for you and now it's a headwind so the you know it's had a meaningful impact on your u.s. procedure growth yeah u.s. bariatrics is a little bit over two percent of total global da Vinci procedures.

Dan Connolly, Head of Investor Relations

So the incremental impact has definitely moderated a little bit over time.

Larry Beigelson, Analyst — Wells Fargo

It started, when the decline started, it was a higher percent, I believe.

Dan Connolly, Head of Investor Relations

Close to a little over 5%.

Larry Beigelson, Analyst — Wells Fargo

Right. That's a big change. AI and digital. I guess, Jamie, you know, talk about how you're monetizing AI, you know, the case insight subscriptions. I guess, can you offer any insight to help investors, you know, try to, you know, model this and give you more credit for it? Because the service line, that's where it's booked, and that's been accelerating.

Jamie Samath, CFO

Yeah, I'll let Dan take the first part of that, and I'll add some comments.

Dan Connolly, Head of Investor Relations

Yeah, so our first presentation, My Intuitive Plus, bundles three components, intuitive telepresence, simulation, and case insights. Case insights, I think we've been pleased with the response thus far. I think there's an opportunity to bring more value, enhance the performance of that, especially as we get deeper with forced feedback instrumentation. So that forced data ultimately will flow back into Case Insights. I think we expect broader availability of the forced feedback instrumentation here in the second half of 2026. Mechanically, it's included complementary in the acquisition of a DaVinci 5, right, for the first year. I think we're, you know, in Q2 of this year. We anniversary the first year of those evaluations. No customers opted out to start. I think we'll get a little bit more data on the experience as we go into the second half of the year. The list price on that is about $40,000 per system per year, and, you know, we'll ultimately assess kind of the, you know, the recognized pricing and the renewal rate as we have some more experience. And so that will show up in the service line, as you mentioned. I think more broadly, you know, think of the capability on Case Insights as sitting, you know, in the second layer of our kind of five-layer AI stack, right? so that's good data meaningful insights intraoperative guidance augmented dexterity and then ultimately surgeon supervised autonomy so I just say from a strategic perspective over over time AI will be a core value driver in kind of robotic assisted surgery and other robotic intervention platforms but at least that's intuitives believe and and we think we have some competitive advantages in AI.

Jamie Samath, CFO

Obviously the accumulated size of the data set that we have, but we also have unique data streams that on an interconnected basis then provide an advantage relative to what you can do with AI. I think we're excited with what our research teams are doing and what's in our engineering labs in terms of the work that's being done. With respect to monetization, there's really three ways they get monetized. You can charge the customer for it as we do with MI plus as Dan just described you can have it be integrated into your products and capabilities so that your win rates and stick rates are higher and you can also use it to actually increase our own efficiency of how we engage with customers and so that's the way we think about it in terms of value creation that's helpful Jamie turning now to everybody's favorite topic 2027 puts and takes just maybe on the revenue side start with maybe some of the tailwinds and headwinds to consider please yeah in terms of our focus for growth revenue growth maybe four buckets so first of course core to us is procedure growth that's US benign general surgery OUS procedures broadly and ION. Second bucket is DaVinci 5 upgrades which have increased quite a bit in recent periods. Third is the opportunity for adoption of force feedback DaVinci 5 and SP instruments each of which carry a creep each of which were created to INA per procedure and then the fourth bucket I'd call kind of the new so new sites of care like ASC's expansion to ASC's new indications ramping cardiac and nipple sparing mastectomy and then we've been adding countries and we'll continue to do that in terms of countries we serve and so for example the last couple of years we added Croatia Peru Morocco and we'll continue to bring da Vinci to countries that we've not been in in terms of revenue headwinds I think the only thing I'd really highlight is one we expect OUS leasing rates for systems to progressively increase over time is relatively lower as compared to the US and second just if you look at where growth will come from on an increasing basis for procedures it will increasingly be benign procedures and OUS procedure growth. Benign procedures typically carry lower INA revenue per procedure or US geographies a subset of them are cost constrained and so that just has a mixed effect in terms of what INA per procedure will be over time you mentioned the extended use program I don't think yeah the extended use program will have some impact in 27 that will detail in the q3 cool okay is it possible that I guess just to follow up on that is it possible that you know the force feedback and SP accretion accretiveness you know aspect offsets the EUP is that why you didn't mention it um I think there's a mixed dynamic there along with growth in benign procedures which probably net to INA revenue per procedure coming down slowly over time okay that's helpful and P&L you know puts and takes please yeah obviously obviously we'll give our guidance in January. I think the only thing I would say is, and this isn't a 27 comment per se, but given where our operating margin is, 41% for the first half, we have the room to invest in innovation and to drive growth. And so we retain that optionality as we complete our planning process. But we think that there are cases where it makes sense to incrementally invest if you can drive those, if you can accelerate your programs, or if you can drive growth in a different trajectory.

Larry Beigelson, Analyst — Wells Fargo

I mean, historically, you've said 35% to 40%. Is the target, is that still intact? And, okay. And one procedure question, cardiac. In the past, you've defined it at least, please correct me if I'm wrong, about 160,000 globally.

Jamie Samath, CFO

Is that still the case? because we get a lot of questions on cardiac and the perception is it's really big by 160,000 globally I wouldn't say is one of your bigger procedures yeah I'd analogize it to how we do the line-of-sight framing right in the line-of-sight framing we say we've got the products and the rest of the ecosystem that allows us to pursue X number of procedures and that's how we framed it today but that we look to expand line of sight each year and if you look at the nine million that we talked about we've expanded that each of the last three years we have the opportunity to expand the line of sight opportunity 160,000 in cardiac over time but it takes work including product development okay but today one one six yeah and just to be clear that's only on cleared indications in US Korea and Japan so there are opportunities over time as Jamie described as we invest to expand that got it Jamie capital allocation you know we've typically seen intuitive do large accelerated buybacks when the stock is under pressure we have not seen you do one I don't think this year any reaction I just say last year we spent 2.3 billion on buybacks in in first half we spent a billion five and we didn't use ASRs to do that I think there are different tools that you can use to do the do the buyback and so I

Larry Beigelson, Analyst — Wells Fargo

think we feel good about the tools we're using all right we covered a lot of ground we even though it says we're almost out of time you can take another minute or two but I really do want to give you an opportunity to kind of make closing remarks I mean obviously you know we covered some of the areas of concern and I mean to be honest I don't think I've seen you know you remember when you had some of the issues for hysterectomy in like 2014 2015 probably haven't seen as many concerns around intuitive surgical since that investor standpoint so just want to give you an opportunity to kind of highlight you know some of the positive things well I just say the quintuple aim has

Jamie Samath, CFO

significance in terms of how we operate and an innovation is called to our success and I'm gonna reflect on history for a little bit for a second if you look at first-half revenue growth 21 percent last year's revenue growth 21 percent our long-term average has been 14 to 15 percent at that 21 percent in last year in the first half is largely a function of innovation innovation that leads to higher prices for all the revenue line items in DaVinci 5 for example if you look at operating margin last couple of years 37 percent first half 41 percent and our long-term average for operating margin has been about 37 percent our earnings per share growth in in the first half was uh something like is above 30 percent last year we grew 22 percent in 2024 we we grew earnings per share 28 and so on the on the financial measures what you're seeing is performance that's actually above our our long-term average even if you look at free cash flow margin first half free cash flow margin was 31 that's about as high as we've done in our history our long-term averages is more like 22 percent and so on the on the financial metrics I think what you're seeing is the impact of the strategy and the innovation that drives some power in the P&L I understand the the concern and the focus on on US procedure deceleration but I think I just emphasize the what you're seeing in the financial profile of the company which I think reflects a differentiated portfolio and a differentiated differentiated position in the marketplace where we're creating value for our customers perfect thank you for being here