Intuitive Surgical (ISRG) shares fell early Friday as growth in the company's da Vinci robotic surgery procedures in the US moderated due in part to changes in Affordable Care Act premium subsidies, even as it reported better-than-expected quarterly results.
Worldwide procedures rose 16% year over year in the June quarter, reflecting gains of 15% and 36% in da Vinci and Ion procedures, the robotic surgical systems firm said late Thursday.
However, in the US, da Vinci procedures increased 12%, with growth moderating from "recent trends and our expectations at the start of the year, predominantly in procedures that can be deferred," Chief Executive David Rosa said during an earnings call, according to a FactSet transcript. In the first quarter, da Vinci procedures in the US were up 14% year over year.
"Based on customer feedback, we believe there was a modest adverse impact to (second-quarter) US da Vinci procedure growth from those patients impacted by the expiration of subsidies for ACA enhanced premiums," Chief Financial Officer Jamie Samath said on the call. "Looking at benign procedures, a subset of which can be deferred, we saw a slight moderation in procedure growth rate that started in (the first quarter)."
Increasing patient usage of glucagon-like peptide-1, or GLP-1, weight-loss drugs also weighed on US da Vinci bariatric cases, which declined by a high single digit in the second quarter, according to Samath. The stock fell 11.9% in the most recent premarket activity.
"Importantly, the underlying disease burden is unchanged and deferred conditions typically progress and will ultimately require treatment," CEO Rosa told analysts. "As patients return to care, we expect da Vinci will remain a clear choice for their surgeons and care teams."
For 2026, Intuitive said it expects to be closer to the midpoint of its previously issued worldwide da Vinci procedure growth range of 13.5% to 15.5%. The guidance takes into account the impact of changes to ACA premium subsidies and patient behavior in the US, among other factors, Dan Connally, head of investor relations, said on the call.
"No rebound is contemplated for (the second half) in deferred procedures within 2026 at the guidance midpoint," Truist Securities said in an emailed client note on Thursday. "Thus if that were to play out it could be a source of upside."
The company posted adjusted earnings of $2.80 a share for the second quarter, up from $2.19 the year before, ahead of the FactSet-polled consensus of $2.51. Revenue climbed 19% to $2.89 billion, topping the Street's view of $2.83 billion.
Revenue in the instruments and accessories segment advanced 18% to $1.73 billion, while systems revenue amounted to $685 million, up from $574.7 million a year ago. The firm placed 468 da Vinci surgical systems during the quarter, up from 395 last year. Services revenue increased to $472.4 million from $391.2 million.
