Intuitive Surgical Inc (ISRG)

“Internationally, the stapler is now in broad launch across Europe and Korea with positive early adoption and we expect availability to extend to Japan in Q3.”

“With regard to income tax, we continue to expect our non GAAP income tax rate to be between 22%-23% of pretax income.”

“We continue to forecast other income, which is comprised mostly of interest income, to total between $315 million and $335 million.”

“We now estimate noncash stock compensation expense between $880 million and $900 million.”

“We do not expect to make a contribution to the foundation in 2026.”

“In recent periods, R&D has grown faster than SG&A. We expect that trend to continue over the remainder of 2026.”

“In regard to operating expenses, we now expect non GAAP operating expense growth to be between 11%-13%.”

“We continue to expect higher input costs in certain areas including freight and semiconductor memory.”

“We are updating our estimate for non GAAP gross profit margin to be within a range of 68%-69% of revenue.”

“In April, we forecast full year 2026 da Vinci procedure growth to be within a range of 13.5% to 15.5%. We are maintaining our forecast to be within this range with an expectation to be closer to the midpoint.”

“Beginning in the first half of 27, we plan to introduce an updated subset of ENDORIST instruments for use with our fourth and fifth generation da Vinci platforms that feature increased useful lives and lower customer cost per use.”

“In the first half of 27, we expect to increase the number of uses on a subset of ENDORIST instruments with the benefit targeted to reduce costs in a set of benign procedures.”

“We are engaging with provincial governments on the charge code policy and are progressing through the green channel process for both SP and da Vinci 5. When cleared, these platforms will bring additional differentiated capabilities to Chinese customers and their patients.”

“I think that, that then continues over some period. It's not that it suddenly inflects and accelerates from where it is. I think we continue that kind of progression on some reasonable pace.”

“With regard to income tax, we continue to expect our non-GAAP income tax rate to be between 22% and 23% of pretax income.”

“We now forecast other income, which is comprised mostly of interest income, to total between $315 million and $335 million due primarily to lower average cash balances following share repurchase activity in Q1.”

“We continue to estimate noncash stock compensation expense between $890 million and $920 million.”

“We are increasing our forecast and now expect full year da Vinci procedure growth within a range of 13.5% to 15.5%.”

“While Q1 results were not significantly impacted by higher oil and memory prices, we do expect those to have a greater unfavorable impact in the remainder of the year.”

“Combined with multiyear investments in supply chain and manufacturing, this clearance supports broader availability in Q2 that will increase over the rest of the year.”

“I'd just say you should expect a higher da Vinci 5 mix in '26 versus '25.”

“We estimate our 2026 pro forma income tax rate to be within a range of 22% and 23% of pretax income.”

“We estimate noncash stock compensation expense between $890 million and $920 million.”

“We anticipate primary growth drivers in 2026 to be generally consistent with those in 2025, including general surgery in the U.S. and procedures outside of urology internationally.”

“However, over time, we continue to expect the proportion of systems placed under operating lease arrangements to increase, primarily driven by OUS customers.”

“In 2026, da Vinci 5 capabilities will continue to grow as we introduce additional products and features.”

“With respect to going direct in Italy, Spain, Portugal, we continue to expect that to be slightly accretive to pro forma EPS upon going direct.”

“We expect capital expenditures to range between $625 million and $675 million, which reflects planned facility construction activity.”

“We forecast other income, comprised mostly of interest income, to total between $350 million and $360 million.”

“We estimate non-cash stock compensation to be between $785 million and $795 million.”

“We expect pro forma operating expense growth to be between 11-13%, which includes increased depreciation from new facilities and investments to drive our growth objectives.”

“We are updating our estimate of pro forma gross margin to be within a range of 67-67.5% of revenue.”

“So in the US, we are on the pathway to continue to add more clearances to SP, and that will be a part of how that grows and continues to grow in the future.”

“We continue to expect that rates of leasing will increase over time, primarily driven by OUS markets.”

“But I would consider it to be a measured rollout through the second half as we like to do that the right way with building the infrastructure that drives long-term success.”

“With regard to income tax, we continue to estimate our 2025 pro forma income tax rate to be between 22% and 23% of pretax income.”

“We continue to expect our noncash stock compensation expense to range between $770 million and $790 million.”

“In regards to operating expenses, we continue to expect pro forma operating expense growth to be between 10% and 14%, which includes increased depreciation from new facilities and investments to drive our growth objectives.”

“We do not expect any positive impact this year from incremental NHS investments in robotics.”

“We are at the early stages of evaluating recent U.S. tax reform. And at this point, we do not anticipate a material impact to our 2025 tax rate.”

“As a reminder, we expect the impact of tariffs to increase each quarter this year as tariff expense rolls through inventory into cost of sales.”

“While leasing rates may vary from quarter-to-quarter, we continue to expect the trend toward leasing to increase over time, driven primarily by a higher mix of leasing by OUS customers.”

“I would say that Force Feedback instruments for Europe is not yet cleared. And actually, we don't expect that before the end of next year.”

“Over time, we expect to further increase our manufacturing footprint in Germany and Mexico, given our midterm needs for additional capacity to support revenue growth and our strategy to operate at industrial scale.”

“The high end of the range assumes China procedure growth improves relative to 2024, the CapEx environment improves in key OUS markets and bariatric procedure declines moderate.”

“Consistent with last quarter, the low end of the range assumes growth in China is impacted by trade, environmental and competitive dynamics.”

“We are assuming in the 1.7% estimate for 2025 that the retaliatory tariffs go into effect once the 90-day pause period has elapsed.”

“With regard to income tax, we continue to estimate our 2025 pro forma income tax rate to be between 22% and 23% of pre-tax income.”

“With regard to capital expenditures, we now estimate a range of $650 million to $750 million, primarily for planned facility construction activity.”

“We continue to expect other income, which is comprised mostly of interest income, to total between $370 million and $400 million in 2025.”

“In regards to operating expenses, we now expect pro forma operating expense growth to between 10% and 14%.”

“Looking ahead to the rest of the year, we continue to expect to open new manufacturing facilities in Germany and Bulgaria and expand instrument manufacturing capacity in Mexico.”

“We expect utilization in the U.S. to increase as we expand indications.”

“And then looking ahead, an increasing proportion of our focus will be helping customers convert Transthoracic needle aspiration biopsies to Ion, while driving increases in utilization of the existing capacity.”

“Looking forward to the second half of 2025 following broad launch of da Vinci 5, to the extent that we see higher trading volumes, you should expect that such transactions reflect significantly higher trading credits relative to recent periods.”

“While leasing may fluctuate quarter-to-quarter, we continue to expect the rate of leasing to increase overtime.”

“However, we do not expect any such measures to have a significant beneficial impact in 2025.”

“Given that tariff costs are capitalized into inventory and then recognized in cost of sales as products are sold, we would expect the impact of tariffs to increase each quarter over the remainder of the year.”

“Force feedback instruments are in limited supply and we expect broad availability near the end of 2025.”

“As we've discussed previously, we remain in the regulatory process in Japan and expect clearance in Europe near the end of 2025.”

“We continue to ramp our manufacturing operations and supply chain capabilities to support broad launch of da Vinci 5 midyear.”

“Our second priority will be to optimize our production costs and rebalance product flows within our existing manufacturing and supply chain footprint as policies begin to stabilize.”

“Given potential changes in our costs and our customers' costs across their enterprise, we do not plan reflexive changes to our pricing in the dynamic near-term environment.”

“The high end of the range assumes China procedure growth improves relative to 2024, the CapEx environment improves in key OUS markets and procedure declines in bariatrics moderate.”

“Given the trade environment, financial pressures faced by hospitals and risks to the macro, we may see customers globally reprioritize capital budgets or extend timelines to invest in robotic programs.”

“Our commercialization efforts in these indications will be measured as we look to establish first access sites and develop key opinion leaders in the coming quarters.”

“da Vinci 5 customers will receive hardware and software upgrades going forward starting this year.”

“Force feedback, we don't expect to be kind of at a broad supply until the end of '25.”

“While we don't have a specific percentage, the impact of moving to broad launch, the impact of getting additional geographical clearances, obviously then says, directionally, over time, the proportion of placements that are DV5 generally should increase.”

“With respect to trade-ins, you don't really see trading start to pick up until you get to broad launch, which is the middle of the year, and it's going to be a function of the dynamics that Gary indicated.”

“I think in the US, over time, you're going to see utilization growth rates in multiport start to settle a little bit. I don't think they'll keep galloping. At the same time, I think SP utilization has room to run and Ion utilization has room to run.”

“The lower estimate of pro forma gross profit margin in 2025 reflects significant incremental depreciation as we bring on new facilities, the impact of growth in newer products and the impact of the stronger US dollar.”

“Second, as we move into broad launch of da Vinci 5 in the middle of the year and customers have the opportunity to upgrade their fleets, we would expect trading credits for [Xi] (ph) to be significantly higher than recent periods adversely impacting system ASPs.”

“Second, we anticipate significantly higher depreciation expense given recent capital expenditures.”

“Looking ahead to 2025, we anticipate pro forma operating margins in 2025 to be lower than Q4 due to several dynamics.”

“While our primary motivation is to develop closer relationships with customers serving a combined population of approximately 118 million people, we do expect this transaction, which we estimate to close in the first half of 2026, to be slightly accretive to pro forma EPS.”

“While we will continue to look for opportunities within SG&A to leverage as we grow, we would highlight that in 2025, we expect increased depreciation expenses given recent capital expenditures and higher legal expenses given ongoing litigation.”

“Given these activities, we expect elevated inventory levels during 2025.”

“As a result, and as we have previously indicated, we expect a significant increase in depreciation expense in 2025.”

“With respect to our manufacturing expansion and capital investment plans, in 2025, we anticipate opening new facilities the da Vinci 5 and Ion system manufacturing in California and new endoscope manufacturing facilities in Germany and Bulgaria.”

“However, as we look forward, we continue to expect that leasing rates will increase over time.”

“But when you think about cholecystectomy and other benign procedures, you'll have a procedure mix dynamic that means that we think, at least over the next couple of years, I&A per procedure drifts down slowly over time.”

“I think what we've said with respect to gross margin is over the midterm, we think we can get back beyond 70%.”

“As we complete this cycle of manufacturing expansion that is driven by our strategy to operate at industrial scale, we anticipate lower levels of capital expenditures in 2025 and 2026 as compared to recent periods.”

“We can say that the significant portion of our instruments are currently manufactured in Mexico. And so to the extent there are significant tariffs implemented there that could have a material impact for us.”

“At the high end, we assume China procedure growth recovers relative to 2024, the CapEx environment improves in Europe and bariatric procedure declines moderate.”

“The low end of the range assumes growth in China continues to be impacted by environmental and competitive dynamics. European governments continue to constrain hospital CapEx budgets limiting the expansion of capacity in the field and bariatric procedure declines continue at rates similar to 2024.”

“Finally, given the increasing choice customers have, as competitors bring robotic systems to the market and seek geographical clearances, we may see capital selling cycles lengthen as customers evaluate alternatives.”

“As robot assisted surgery moves to the back half of adoption curves in some procedures, utilization growth rates may differ from prior year trends.”

“We do have supply to be able to support Korea demand and so that is true.”

“I would expect it to continue to grow, but it's relatively highly penetrated in the U.S. and so that the rate of growth will likely moderate.”

“We've also said that we don't have a management expectation to have our op margins above 40%.”

“What I would expect is for 2025 on the gross margin front just given the significant incremental depreciation that we've described, you should expect gross margins to be a little lower next year as we start to take on board that incremental depreciation expense.”

“And then with respect to CE mark in Europe, it's no different from last quarter where we expect that near the end of next year 2025.”

“For the supply side of DV5, we expect that to increase modestly quarter-over-quarter as we get into next year and into broad launch.”

“With regard to capital expenditures, we continue to estimate a range of $1 billion to $1.2 billion, primarily for planned facility construction activities.”

“We are increasing our estimate for other income, which is comprised mostly of interest income, to total between $325 million and $345 million in 2024.”

“We expect non-cash stock compensation expense to range between $670 million and $690 million in 2024.”

“Turning to gross profit, we continue to expect pro forma gross profit margin to be within a range of 68.5% and 69% of net revenue.”

“The low-end of the range assumes further softening and bariatric procedures along with increasing headwinds in Asia from physician strikes in Korea and from delayed tenders in domestic robotic systems in China impacting capital placements and therefore procedure growth.”

“Given the interest rate environment, we expect that the average interest yield on our cushion investments will decline going into 2025.”

“As a reminder, given recent and ongoing capital investments, we expect a significant increase in depreciation expense in 2025 as we bring online additional facilities.”

“We expect more publications over the coming quarters, and our teams continue working hard to improve product margin and increase supply of force feedback instruments.”

“We are driving toward broad launch mid-year of 2025 when we expect to be at scale on our manufacturing operations and will have released a software update enabling the integrated hub and simulator along with various digital and imaging features.”

“I wouldn't anticipate a significant forecast model change one way or another. I think as we go to broad launch and the pipe opens up, we will seek to serve all those customers. I don't think it inflects procedure growth rate one way or another because of dual console and large versus small.”

“At the high end of the range, we assume bariatric stabilizes at current quarter growth rates and headwinds in Korea and China do not get worse.”

“I would just say if we -- as we look at the second half, you will see increased depreciation, as I described. You will see a high proportion of the revenue be new products, da Vinci 5 and Ion and SP.”

“It is not - the impact of GLP-1s on the bariatric surgery market from our perspective in aggregate has not bottomed yet.”

“In talking to our teams, we don't see that it's going to have a material impact on the placements of systems or an impact on the quota.”

“With regard to income tax, there is no change to our guidance of 2024 pro forma income tax rate to be between 22% and 24% of pretax income.”

“With regard to capital expenditures, we continue to estimate a range of $1 billion to $1.2 billion, primarily for planned facility construction activities.”

“We are refining our non-cash stock compensation expense to range between $680 million to $700 million in 2024.”

“However, given customer preference for our usage based models in the U.S. and the launch of da Vinci 5, we continue to expect the proportion of systems placed under lease arrangements to grow over time.”

“We expect our measured rollout to continue through the first half of 2025.”

“I wouldn't expect big changes from our plan, and if there are changes in the future, then we'll be sure to talk about them.”

“Yes, there's three things that are going on for us. One of them is optimizing the supply chain, get -- making sure that we have the quality that we want that will for sure go through all of ‘24 in some part of the early part of ’25, so that's one.”

“As I look forward to the rest of the year, I'd expect some levels of utilization growth that let's say are closer to our long-term averages.”

“Yes, I think as we add capabilities and time, we have some imaging things that we want to do. We have some things in terms of software upgrades and analytics power and some things we want to do in terms of integration. That's much more likely to be ‘25 and later than ‘24.”

“So we do expect trading volumes to be down quite a bit in ‘24.”

“We will remain in our measured rollout as we stabilize supply and respond to customer input.”

“Given customer preference for our usage-based models in the U.S. and the launch of da Vinci 5, we continue to expect the proportion of systems placed under lease arrangements to grow over time.”

“With regard to income tax, there is no change to our guidance of 2024 pro forma income tax rate to be between 22% and 24% of pre-tax income.”

“With regard to capital expenditures, we continue to estimate a range of $1 billion to $1.2 billion, primarily for plan facility construction activities.”

“We are holding our guidance for other income, which is comprised mostly of interest income, to total between $290 million and $320 million in 2024.”

“We continue to expect our non-cash stock compensation expense to range between $680 million to $710 million in 2024.”

“Turning to operating expenses, we are holding our guidance for performance operating expense growth to be between 11% and 15%.”

“We continue to expect our pro forma gross profit margin to be within 67% and 68% of net revenue.”

“There's still some patient backlog benefit in the year-ago quarters, even in Q2 and Q3. So it's not perfectly matched, but I think there's room for normalization over time.”

“Given constrained supply of da Vinci 5, system placements may be choppy this year as some customers that are interested in da Vinci 5 decide whether to acquire a fourth generation system with an upgrade rate or wait for adequate supply.”

“At the high-end of the range, we assume bariatrics continues at flat to slightly positive growth rates, and factors in China don't have a significant impact on our business.”

“The low-end of the range assumes further weakness in bariatrics procedures, along with challenges in China from increasing provincial robotic competition and delayed tenders impacting capital placements and therefore procedure growth.”

“Over the next 18 months, we expect to open new manufacturing facilities for da Vinci 5 and Ion system manufacturing in California and to complete line transfers for Ion and SP I&A to our Mexicali facility.”

“With regard to capital expenditures, we expect the range to total between $1 billion to $1.2 billion, primarily for planned facility construction activities.”

“In 2024, we expect our pro forma gross profit margin to be within 67% and 68% of net revenue.”

“Finally, we would expect that procedure seasonality will follow normalized historical patterns, resulting in a tough comparison for the first half of 2024, given the strong procedure growth in the first half of last year.”

“We expect operating margins to be under pressure in 2024, given the anticipated launch of da Vinci 5, increased depreciation expense and an adverse mix impact to gross margin from the growth in new platforms.”

“As a result of the phased rollout of da Vinci 5, we expect a higher proportion of Gen 4 systems will be leased as customers seek flexibility to upgrade to da Vinci 5 when supply allows.”

“Given that, and our procedure guidance of 13% to 16% growth, we also expect total system placements for 2024 to be lower than 2023.”

“Noting that we are at the end of the Si trading cycle and that da Vinci 5 will be in a phased rollout, we expect total trading volumes to be lower in 2024 than the prior year.”

“We expect system placements in China to be at lower levels at least through the first half of 2024.”

“We plan a phased launch in the first several quarters after clearance, giving us time to mature our supply and manufacturing processes for the new system.”

“We have a breast oncology trial that's ongoing that we're excited about also that will not make a big impact in '24, but starts to open additional opportunity for narrow access surgery thereafter.”

“It is our hope that it is a ‘24 launch.”

“At the high end of the range, we assume bariatrics continues at current growth rates, and factors in China do not have a significant impact on our business.”

“The low end of the range assumes a modest decline in bariatric procedures along with challenges in China from increasing competition and anticorruption activities impacting capital placements, and therefore, procedure growth.”

“We have very well detailed plans for each of the areas that we're focused on. The teams have the capability and skill. It's going to take some time. I think the best way I would answer the question is we see a path of overtime probably in the midterm to get back above 70% gross margin.”

“So, you can expect submissions in the first half of '24 and then response thereafter.”

“While we do have some revenue for it, we don't expect it to be a serious revenue driver.”

“On a global basis, we expect the proportion of placements that are leased to continue to find.”

“With regard to capital expenditures, we are narrowing our estimate to range between $900 million to $1 billion, primarily for planned facility construction activities.”

“We are increasing our estimate for other income, which is comprised mostly of interest income, to total between $190 million and $200 million in 2023, an increase from our previous estimate of $160 million and $180 million.”

“We are also refining our estimate for noncash stock compensation expense to range between $600 million to $610 million in 2023, lowering the range from our previous estimates of $600 million to $620 million.”

“We expect tender delays to continue to impact system placements in China in Q4.”

“As a result, we expect higher levels of inventory relative to historical norms into 2025.”

“While leasing may fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will increase over time.”

“Given the timing of facilities completion, manufacturing efficiency improvements for new products and other complex projects, we expect variability in gross margin over the coming quarters as we work through these programs.”

“But even in the U.S., I think there's some room for that to continue to creep up a little bit, obviously, running out of room.”

“On the bariatric side, I think we'll find a new normal in the next few quarters.”

“At the high end of the range, we assume macroeconomic challenges do not have a significant impact on hospital procedure volumes, and bariatric growth rates in the U.S. continue at the rate we experienced in Q3.”

“The low end of the range reflects uncertainty around the duration of elevated procedure volumes with patients returning to health care, a continued slowing of bariatric growth rates in the U.S. and macroeconomic challenges that could impact hospitals and patient spending.”

“Again, you get kind of half an impact in Q2 and the full impact in Q3 and Q4.”

“Our estimate for the impact of the price increase is consistent with what we said last quarter, roughly about $100 million impact to revenue and profit for the year.”

“With regard to income tax, we continue to estimate our 2023 pro forma tax rate to be between 22% and 24% of pretax income.”

“With regard to capital expenditures, we continue to estimate a range of $800 million to $1 billion, primarily for planned facility construction activities.”

“We continue to expect our 2023 full year pro forma gross profit margin to be within 68% and 69%.”

“As a result of these dynamics and the earlier stage of our leasing program with OUS customers, we continue to expect that the proportion of placements under operating leases will increase over time.”

“We do not expect material revenue from CASE insights for the next several quarters.”

“We think the bulk of the subset of that quota, our JV wins will be in '24 through '27.”

“For those systems awarded to our JV under the new quota, we expect a significant majority to be placed in 2024 through 2027.”

“So what we did for our guidance was we just said at the high end for the remainder of the year, the bariatrics growth rate in the U.S. is consistent with what we saw in Q2. And at the low end, we said that the growth rate continues to slow a little bit over the course of the year as patients become increasingly educated about the weight loss drugs.”

“At the high end of the range, we assume macroeconomic challenges do not have a significant impact on hospital procedure volumes, and bariatric growth rates in the U.S. continue at the rate we saw in Q2.”

“On Europe, this first year, as we go in, we'll be relatively modest in terms of revenue and installs.”

“Yes. I would say roughly, depending on where you are in the range, Q2 and Q3 operating expenses should be roughly similar to Q1, and you start to see a less of effect just from the payroll tax reset in Q2 and Q3 as those max out, and you should see Q4 seasonally higher.”

“As a result of this trend and the earlier stage of our leasing program with OUS customers, we continue to expect that the proportion of placements under operating leases will increase over time.”

“Customers, particularly in the U.S. and Europe, continue to be challenged by staffing, inflation, debt servicing costs and other financial pressures. And as a result, we expect customers to continue to be cautious in their overall capital spending.”

“Reviewing the capital performance in the quarter, we do not expect the strength in U.K. and India to repeat in the remainder of the year.”

“We expect the impact of this decision to be an increase in revenue and operating profit of approximately $100 million in 2023.”

“However, given the durability of component cost increases throughout the pandemic, we are executing an increase to the list price of da Vinci I&A from approximately 5% over the next couple of months.”

“With regard to income tax, we continue to estimate our 2023 pro forma tax rate to be between 22% and 24% of pretax income.”

“With regard to capital expenditures, we continue to estimate a range of $800 million to $1 billion for planned facility construction activities.”

“We continue to expect other income, which is comprised mostly of interest income, to total between $140 million and $160 million in 2023.”

“We continue to expect our 2023 full year pro forma gross profit margin to be within 68% and 69%.”

“When it becomes a bigger portion of the total, maybe a year from now, we would look to do some guidance and give greater disclosure.”

“The low end of the range still assumes continued choppiness with COVID hospitalizations, uncertainty with the timing of the capital quota in China for the remainder of the year, macroeconomic challenges that could impact hospitals and patient spending and a moderation in procedures from elevated levels experienced in January and February this year.”

“And so therefore, there's nothing reflected in the 12% to 16% guidance that we provided, and I wouldn't expect it to move that quickly.”

“What we're seeing is core costs in our supply chain, the prices we pay our suppliers, the wage costs we pay our production staff. They have gone up, and that looks sticky.”

“We continue to add capabilities into Gen 4. We expect to do so this year as well.”

“If I look at R&D and SG&A kind of in aggregate, they're likely to grow at relatively similar rates next year.”

“The lower estimate of pro forma gross profit margin in 2023 reflects the impact of higher infrastructure investment costs, higher supply chain costs, and a greater mix of new products, in particular, from our Ion platform.”

“As a result, we expect depreciation expense to increase in 2023 and increase more significantly in 2024.”

“In 2023, we expect a significant increase in expenses related to clinical trials.”

“While we are slowing our hiring pace and pursuing leverage in our enabling functions, we are planning for balanced growth in operating expenses in 2023 given the opportunity to advance our next-generation robotics capabilities and the relatively earlier stage of our investments in Ion, SP and digital.”

“Delays in the granting of a new quota in China will constrain our ability to further grow the installed base and limit capacity for procedure growth.”

“While leasing will fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will increase over time.”

“We expect pro forma operating margins to fluctuate in the next several quarters and then improve over the mid-term.”

“Recognizing economic conditions for 2023 are hard to forecast, we're targeting a deceleration of fixed cost growth rate in 2023 relative to 2022.”

“Our capital investments will increase to support supply chain robustness, product cost reduction and global industrial scale.”

“We're pursuing additional indications for SP beyond these two, and we'll share more information on these indications in 2023 as the requirements for our regulatory pathway for them are established.”

“We expect to launch additional Gen 4 compatible products and operating system software this year.”

“On the capital funnel side, what I'd say is, given the macro inputs from customers are our sense is that they are still relatively cautious.”

“At the high end of the range, we assume no new significant impact from COVID throughout 2023, and assume continued growth in general surgery in the US and diversified growth beyond urology outside of the US.”

“The low end of the range assumes continued choppiness with COVID hospitalizations and staffing pressure at hospitals globally throughout the year.”

“I think what we have said with respect to operating expenses in 2023 for the reasons Gary described, the growth rate for that spending will be lower than the growth rate that we experienced in 2022 and a significant component of that is the number of people that we will hire next year.”

“There are some infrastructure investments that we have been making that start to complete and that creates the opportunity for us to spend at a lower growth rate, and given the work that we have done and the investments that we have made, we are going to look for some leverage in our enabling functions, particularly as we get into next year.”

“But outside the United States and Europe and Asia, we are still relatively early and we think that in those two categories we will continue to see growth.”

“With regard to income tax, we continue to estimate our 2022 pro forma tax rate to be between 22% and 24% of pre-tax income.”

“We are also updating our estimate for other income which is comprised mostly of interest income to total between $40 million and $50 million in 2022, a decrease from our previous estimate of $60 million and $70 million.”

“We are narrowing our estimate for non-cash stock compensation expense to range between $520 million to $530 million in 2022.”

“As we look forward to 2023, we expect our operating expense growth will be lower than the growth for this year.”

“Lease buyout revenue has varied significantly quarter-to-quarter and will likely continue to do so.”

“The lower lease mix is a function of customer and regional mix, and while leasing will fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will increase over time.”

“Going into 2023, we expect the rate of growth in fixed expenses to slow as we pursue leverage in our enabling functions and sequence some of our forward investments.”

“At the high end of the range, we assume COVID-19-related hospitalizations around the world continue to decline throughout the remainder of 2022, and there are no additional significant impacts from further resurgences.”

“The low end of the range still assumes increasing COVID hospitalizations, regional lockdowns and staffing pressure at hospitals for the remainder of the year.”

“While we have not experienced a significant impact so far, the strengthening of the U.S. dollar reduces distributor margins and may cause delays in capital purchases.”

“You can expect that we will improve the Gen 4 product that's out there.”

“And so I'd expect that to continue to climb over time.”

“I do think that will slowly continue to tick up just based on what we hear from customers.”

“I don't think this is a one or two quarter resolution. It's certainly going to be something longer than that.”

“So we'll start to see some of that expense start to titrate into next year.”

“What we've said is we look to be at the high end of our medtech peer set.”

“That continues to be choppy, and we expect, certainly for Q3 and perhaps forward that we'll continue to fight those fights in terms of timing of supply.”

“We continue to estimate our 2022 pro forma tax rate to be between 22% and 24% of pretax income.”

“We are also refining our estimate for other income, which is comprised mostly of interest income, to total between $60 million and $70 million in 2022, an increase from our previous estimate of $50 million and $60 million.”

“We are refining our estimate for noncash stock compensation expense to range between $520 million to $540 million in 2022.”

“Given the ongoing impact of higher input costs related to supply chain and the impact from a stronger U.S. dollar, we would expect to be towards the lower end of that range.”

“As we look ahead, we expect these capital dynamics to continue for the foreseeable future.”

“Spending in SG&A will be more closely linked to our procedure and revenue performance, and we will continue to pursue plans to invest in infrastructure and business process automation to ensure we can efficiently and effectively scale.”

“Given the early stages of our newer platforms, Ion and SP and our digital ecosystem, we expect to continue to invest in R&D, given the return profile of these investments.”

“While leasing will fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will increase over time.”

“As we have previously indicated, given the lower number of older generation systems in the field, we expect the volume of trade-ins to be significantly lower in 2022, as compared to last year.”

“We expected demand for capital, particularly in the U.S., will be impacted while macro conditions remain challenging.”

“We are also planning for decelerating spend growth after we complete some infrastructure projects, we need to support the company's expansion.”

“The leading indicator of the health of our business, procedure demand, remains healthy.”

“The low end of the range assumes increasing COVID hospitalization and staffing pressure at hospitals for the remainder of the year.”

“We know for sure that we're getting toward the end of the SI trade-in cycle in the United States. So that will soften some of the US capital.”

“With regard to income tax, we continue to estimate our 2022 pro forma tax rate to be between 22% and 24% of pre-tax income.”

“We continue to expect our non-cash stock compensation expense to range between $510 million and $550 million in 2022.”

“We are now slightly expanding the range of our pro forma, gross profit margin to be within 69% and 70.5% of net revenue.”

“In the second quarter of 2022, our year-over-year procedure growth rate will likely be lower than recent quarters, as Q2 2021 results reflected a strong recovery in procedures as COVID began to subside.”

“Growth of the SP platform will continue to be gated by additional clinical indications and clearances in market beyond the U.S. and Korea.”

“While leasing will fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will increase over time.”

“In addition, as competition progresses in various markets, we will likely experience longer selling cycles and price pressure.”

“Given the lower number of older-generation systems in the field, we expect the volume of trade-ins to be significantly lower in 2022 as compared to 2021.”

“We do not expect to place similar levels of systems in the remainder of 2022 in the UK.”

“I think that there's risk in procedures in Q2 relative to what you would expect without COVID and those lockdowns.”

“We don't anticipate it completing in 2022. That's just -- it's a little bit of what's the odds game, but we think it's several quarters to finish, mostly because it's new for the regulators and it's new for us.”

“We believe the opportunity in robotic-assisted interventions to be significant and are planning to increase our investments significantly in 2022.”

“for '22, given that SP and Ion are newer products, the gross margins there are dilutive as you'd expect.”

“So I would expect that the recurring revenue portion of our business keeps creeping up as a percentage of total revenue over time.”

“In 2022, we expect pro forma operating expense growth to be between 21% and 27%.”

“The slightly lower gross profit margin anticipated in 2022 reflects higher fixed costs from investments to drive growth of the business, strengthen our operating capabilities and also reflects the impact of higher supply chain costs.”

“we expect that da Vinci procedures will be significantly adversely impacted in Q1.”

“We expect similar seasonal timing of procedures in 2022 as we have experienced in previous years prior to COVID, with Q1 being seasonally -- the seasonally weakest quarter as patient deductibles are reset.”

“We expect that our pro forma tax rate will increase in 2022 and due to a previous change in U.S. tax law that became effective on January 1, 2022.”

“We continue to be encouraged by customer feedback and look forward to the completion of our next major milestone, the full results from the PRECIsE study, which is expected in the second half of 2022.”

“Growth of the SP platform will continue to be gated by additional clinical indications and clearances in markets beyond the U.S. and Korea.”

“While leasing will fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will continue to increase over time.”

“In addition, as competition progresses in various markets, we will likely experience longer selling cycles and price pressure.”

“We expect the volume of trade-ins to be significantly lower in 2022 as compared to 2021.”

“These projects have been planned over the past couple of years and will start amortizing first moderately in 2022 and more substantially in 2023 and '24, then normalizing over the next few years.”

“we look at those architectures. And we think based on our experiences, understanding our supply chains, understanding what iterations and engineering and manufacturing look like that both of those platforms should be able to hit historical norms in the future years, and not forever in future years.”

“Over time, we plan for total Ion program profitability to approach that of our corporate average as we execute against our volume, design and process improvement goals.”

“I kind of start with a normal quarter would be flat sequentially and then model the rest of Q1 based on just hospitalization rates.”

“As you look forward, I'd say that at this point, visibility is still not great, kind of the best that we have is the Q1 will be similar to Q4, but I think we have to see -- wait and see what the impact of Omicron might be on our suppliers and just broadly.”

“With regard to pro forma other income which is comprised mostly of interest income, we expect a range of between 50, 55 million in 2021.”

“Finally, we expect to continue to invest in expanding and accelerating our ecosystem of products and capabilities.”

“We also expect spending to increase as a percentage of revenue as investments in headcount infrastructure and other support area s catch-up to the growth of the business.”

“We expect spending on activities restricted by COVID to increase as the impacts of the pandemic decline.”

“Leasing as a percentage of total sales has and will continue to fluctuate with customer and geographic mix. However, we anticipate more customers will seek leasing or alternative financing arrangements than reflected in historical run rates.”

“This procedure outlook does not reflect a significant impact from a stopping shortages or a resurgence of COVID-19. The high-end of the range assumes the COVID-19 related hospitalizations in the U.S. continued the recovery that began in September, and the COVID -related mitigation measures in OUS markets continued to ease.”

“These initial outcomes regarding the performance of the Ion system are encouraging and we look forward to the full study being published in the second half of 2022.”

“Macroeconomic conditions created by COVID could regionally impact hospital capital spending, and as competition progresses in various markets, we will likely experience longer selling cycles and price pressure.”

“Looking forward, we see the following capital revenue dynamics. Procedure growth drives capital purchases in many of our markets, to the extent that COVID impacts procedures, it will also impact capital purchases.”