While Intuitive is still reporting steady growth in the placement of its da Vinci surgical robots—as well as the number of procedures they have performed—the company said it expects to take a hit from new tariffs in the U.S. and abroad as it manages its worldwide supply chain.
As part of its quarterly earnings report, Intuitive said it expects tariffs to increase its cost of sales by about 1.7% of its annual revenue before the end of this year. Based on last year’s total haul of about $8.35 billion, that would equate to at least $140 million, though the company expects revenues to continue growing throughout 2025.
The current 10% duties levied on goods by the Trump administration—and their potential to increase worldwide after a 90-day pause, plus the retaliatory tariffs from China and Europe—are also predicted to shrink Intuitive’s gross margin: to a range between 65% and 66.5%, down from 69.1% in the last calendar year.
“In 2024, Intuitive manufactured 98% of our robotic systems in the United States, 70% of our endoscopes in Europe, and approximately 80% of our instruments and accessories in Mexico,” Chief Financial Officer Jamie Samath said on the company’s earnings call.
“We source raw materials and other components that go into these finished products from suppliers around the world. The net result of our manufacturing footprint and global customer demand is that Intuitive is both a significant U.S. manufacturer and has become a significant net U.S. exporter,” Samath said.
“We import into China subassemblies for domestic da Vinci Xi production, as well as completely finished Xi’s, both of which are expected to incur Chinese tariffs of 125%,” he said. “We also import components from Chinese-based suppliers into the U.S. to be incorporated into the manufacture of our products, which incur U.S. tariffs of 145%. In addition, our China joint venture manufactures certain products for our Ion platform, which are subject to U.S. tariffs when imported.”
Samath also noted that most, but not all, of the products made in Mexico would be exempt from the 25% tariffs on the country, due to being certified under the USMCA trade deal signed during Trump’s first term.
“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,” he said, pointing to little to no impact in this year’s first three months—but adding that the company’s financial predictions for 2025 cannot account for the possible effects that tariffs may have on worldwide inflation.
“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,” he said.
Breaking down the 1.7% figure, Samath said about half of the tariffs’ total impact will come from trade between the U.S. and China, across both directions. About 40% will lie with imports of raw materials and components into the U.S. from China, Mexico and Canada, as well as incoming endoscope hardware from Europe.
For the first quarter of this year, Intuitive logged 147 new placements of its latest da Vinci 5 systems—compared to eight during the same period last year, following its market debut in mid-March 2024. In total, the company’s da Vinci installed base grew 15%, to 10,189 systems worldwide.
Revenues, meanwhile, increased 19% to $2.25 billion, up from $1.89 billion—while da Vinci procedure counts grew about 17%—to push net income to $689 million, compared with last year’s $545 million.
Following the company’s earnings release, Intuitive’s stock price initially dipped about 7% in the late afternoon, before rebounding the following morning to close the gap and add an additional 7%, to land around $505 per share.
“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,” said CEO Gary Guthart, adding that Intuitive will instead aim to “optimize production costs and rebalance product flows within our existing manufacturing and supply chain footprint, as policies begin to stabilize.”
“Finally, we will adjust our supply chain strategy and assess adjustments to our pricing when we see the signs of a durable planning environment for trade,” Guthart said.