Intuitive Surgical is evaluating what impact possible tariffs imposed by the Trump administration could have on its business and how it might respond, company executives said Thursday.
President Donald Trump this week said tariffs of 10% on imports from China and 25% on goods from Mexico and Canada could come as soon as Feb. 1. He told business leaders at the World Economic Forum in Davos, Switzerland, Thursday to expect to pay tariffs if they choose to make their products outside the U.S.
“Obviously, we see a lot in the news, and we’re monitoring those events closely,” said CFO Jamie Samath, responding to a question about potential tariffs on Intuitive’s fourth-quarter earnings call. “A significant portion of our instruments are currently manufactured in Mexico, so to the extent there are significant tariffs implemented there, that could have a material impact for us.”
Like other manufacturers, the robotic surgery leader could choose to pass along higher tariff costs to customers through price increases.
“One response then, that any company might consider is, what would you do with pricing?” Samath said. “Nothing that we've decided there, and obviously we're balancing the needs of our customers and their objectives with the needs of our own business.”
Still, Intuitive did not factor new tariffs into its profit margin forecast for 2025. The company expects non-GAAP gross profit margin within a range of 67% to 68% of net revenue this year, down from 69.1% in 2024.
Intuitive is in the midst of launching its latest multiport robotic platform, da Vinci 5, which has seen robust early adoption, CEO Gary Guthart said on the call. Da Vinci 5 incorporates new features such as force feedback tissue-sensing technology, better imaging and ergonomics and stronger analytics capabilities.
The company last week gave an initial look at fourth-quarter results, including the placement of 174 new da Vinci 5 systems and a 25% year-over-year rise in revenue to $2.41 billion, exceeding analysts’ expectations.
Strong global procedure growth and da Vinci 5 placements that drove a 12% increase in average selling prices boosted revenue, while earnings per share, released Thursday, also topped expectations, William Blair analyst Brandon Vazquez wrote in a Friday note to clients.
“Altogether, Intuitive Surgical exited 2024 with strong momentum across the board and plenty to be excited about,” the analyst said.
Samath noted that the company will face more competition going forward, including an increasing number of domestic competitors in China and other robot developers getting clearances in various markets, including the U.S. “We're just acknowledging that as competition increases, there is the possibility, outside of China, the selling cycles could lengthen,” the CFO said.
Intuitive forecast 2025 procedure growth in a range of from 13% to 16%, with the low end assuming a continued slowdown in China, constrained European hospital budgets and bariatric procedure declines. The high end of the range assumes procedure growth recovers in China, the capital equipment environment improves in Europe and bariatric procedures moderate.
