Medical technology company Intuitive Surgical (NASDAQ: ISRG) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 18.5% year on year to $2.89 billion. Its non-GAAP profit of $2.80 per share was 11.9% above analysts’ consensus estimates. Stock drop is primarily driven by recent declines in overall surgery volumes, which were reported by major healthcare providers, as well as a recent Class II recall of certain da Vinci surgical components. 

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Company Overview

Pioneering minimally invasive surgery since its first da Vinci system was FDA-cleared in 2000, Intuitive Surgical (NASDAQ: ISRG) develops and manufactures robotic-assisted surgical systems that enable minimally invasive procedures across various medical specialties.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Intuitive Surgical’s 16.4% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Intuitive Surgical’s annualized revenue growth of 20.7% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

This quarter, Intuitive Surgical reported year-on-year revenue growth of 18.5%, and its $2.89 billion of revenue exceeded Wall Street’s estimates by 2.6%.

Looking ahead, sell-side analysts expect revenue to grow 12.5% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and suggests the market is forecasting success for its products and services.

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Adjusted Operating Margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

Intuitive Surgical has been a well-oiled machine over the last five years. It demonstrated elite profitability for a healthcare business, boasting an average adjusted operating margin of 36.6%.

Looking at the trend in its profitability, Intuitive Surgical’s adjusted operating margin rose by 1.8 percentage points over the last five years, as its sales growth gave it operating leverage. This performance was mostly driven by its recent improvements as the company’s margin has increased by 4.3 percentage points on a two-year basis. These data points are very encouraging and show momentum is on its side.

In Q2, Intuitive Surgical generated an adjusted operating margin profit margin of 40.9%, up 2.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Intuitive Surgical’s astounding 17.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

In Q2, Intuitive Surgical reported adjusted EPS of $2.80, up from $2.19 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Intuitive Surgical’s full-year EPS to grow 7.7% from $10.23 to $11.01.

Key Takeaways from Intuitive Surgical’s Q2 Results

We enjoyed seeing Intuitive Surgical beat analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. Investors were likely hoping for more, and shares traded down 7.2% to $373.70 immediately after reporting.

So should you invest in Intuitive Surgical right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).