Company: ISRG
Filing Date: 2025-07-23
Form Type: 10-Q
Source: 0001035267-25-000192
Chunk: 96

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-07-23
Form: 10-Q
Item: Item 2
Chunk 96
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 outlay. However, because the number of procedures performed in any given period can vary significantly for many reasons, including but not limited to healthcare emergencies, alternative treatment options, and patient preferences, revenue recognized from these arrangements can be highly volatile.

Customers generally do not have the right to exit or terminate a fixed-payment lease without incurring a penalty. Generally, lease transactions generate similar gross profit margins as our sale transactions. However, because of the variability in revenue recognized for usage-based lease arrangements, including our customers’ ability to exit or cancel those arrangements prior to the end of the lease term, there is no guarantee that we will recuperate the cost of the leased system, which, in turn, could adversely impact our gross profit margins if utilization of those systems are different than our expectations.

The following table summarizes our systems installed at customers under operating leasing arrangements:

Year Ended December 31,202420232022Da Vinci System Installed Base under Operating Leasing ArrangementsFixed-payment operating lease arrangements1,307 1,204 1,018 Usage-based operating lease arrangements1,492 1,023 665 Total da Vinci system installed base under operating lease arrangements2,799 2,227 1,683 Ion System Installed Base under Operating Leasing ArrangementsFixed-payment operating lease arrangements126 96 72 Usage-based operating lease arrangements193 118 60 Total Ion system installed base under operating lease arrangements319 214 132 

Our exposure to the credit risks relating to our lease financing arrangements may increase if our customers are adversely affected by economic pressures or uncertainty, changes in healthcare laws, coverage and reimbursement, or other customer-specific factors. As a result of these macroeconomic factors impacting our customers, we may be exposed to defaults under our lease financing arrangements. Moreover, usage-based operating lease arrangements generally contain no minimum payments; therefore, customers may exit such arrangements without paying a financial penalty to us.

For some operating lease arrangements, our customers are provided with the right to purchase the leased system at certain points during and/or at the end of the lease term. Revenue generated from customer purchases of systems under operating lease arrangements (“Lease Buyouts”) was $109 million, $74 million, and $72 million for the years ended December 31, 2024, 2023, and 2022, respectively. We expect that revenue recognized from customer exercises of buyout options will fluctuate based on the timing of when, and if, customers choose to exercise such buyout options.

Systems Revenue

System