Company: ISRG
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0001035267-25-000109
Chunk: 76

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Item 2
Chunk 76
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 Vinci Xi surgical system manufacturing. Additionally, we sell U.S.-manufactured da Vinci Xi surgical systems into China. Both imports are subject to the Chinese tariff. We expect these tariffs to have a significant impact on the product cost of our da Vinci Xi surgical system in China, potentially hindering our competitiveness in securing future tenders in the region.

Based on these recently announced and implemented global tariffs, and assuming such tariffs remain in place, we anticipate a significant increase in our cost of revenues for the second half of 2025, which will impact our results of operation. The ultimate impact of changes to tariffs and trade barriers will depend on various factors, including the timing, amount, scope, and nature of any tariffs and trade barriers that are implemented.

Macroeconomic Environment

Our future results of operations and liquidity could be materially adversely affected by uncertainties surrounding macroeconomic and geopolitical factors both in the U.S. and globally. These uncertainties include any introduction or modification of tariffs or trade barriers, supply chain challenges, inflationary pressures, elevated interest rates, and disruptions in commodity markets stemming from conflicts, such as those between Russia and Ukraine and conflicts in the Middle East, including Israel and Iran.

During the first quarter of 2025, we continued to experience isolated stresses to supply, particularly for specific component materials and at certain subcontract suppliers that were operationally challenged to meet our production requirements. These isolated instances did not have a material impact on our business during the first quarter of 2025. As a result of the escalation in tariffs, import restrictions, and retaliatory measures between major economies, we may experience tariff-related inflation in raw materials costs as well as supply shortages as companies seek alternative sources of supply of critical materials and navigate adjustments in logistics and transportation routes.

Elevated interest rates have made access to credit more difficult, and the ability of certain suppliers to fund investments in capacity and infrastructure as well as any insolvency of certain suppliers, including sole- and single-sourced suppliers, may present heightened continuity risks. Additionally, although incidents of cybersecurity breaches have not significantly impacted our supply chain to date, they continue to be actively monitored to protect supply continuity. We are actively engaged in activities that seek to mitigate the impact of any supply chain risks and disruptions on our operations.

Some hospitals continue to experience challenges with staffing and cost pressures that could affect their ability to provide patient care. Additionally, certain hospitals are facing significant financial pressure as supply chain constraints and inflation have driven up operating costs and elevated interest rates have made access to credit more expensive. Hospitals may also be adversely affected