Intuitive Surgical Inc. (NASDAQ:ISRG)

An analysis of the presented financial ratios reveals several trends over the five-year period. Generally, adjusted ratios demonstrate slight variations compared to their reported counterparts, suggesting the impact of accounting adjustments on key performance indicators. Asset turnover, liquidity, leverage, profitability, and returns are all examined below.

Asset Turnover

The reported total asset turnover ratio fluctuates between 0.42 and 0.49, showing an initial increase from 2021 to 2022, followed by a slight decline, and then a return to near the 2022 level in the final year. The adjusted total asset turnover ratio mirrors this trend, ranging from 0.44 to 0.52. The adjusted ratio consistently exceeds the reported ratio, indicating that adjustments tend to increase the calculated turnover.

Liquidity

The reported current ratio experiences a decrease from 5.08 in 2021 to 4.07 in 2024, before recovering to 4.87 in 2025. The adjusted current ratio exhibits a similar pattern, but at higher values, starting at 7.59 and ending at 6.54. Adjustments significantly improve the reported liquidity position. The consistent difference between reported and adjusted values suggests systematic adjustments impacting current asset or liability classifications.

Leverage

Both the adjusted debt to equity and adjusted debt to capital ratios remain consistently low at 0.01 throughout the period, indicating minimal reliance on debt financing. Reported values for these ratios are unavailable. The adjusted financial leverage ratio remains relatively stable, fluctuating between 1.10 and 1.13, with a slight increase to 1.11 in the final year. The reported financial leverage ratio shows a similar pattern, ranging from 1.14 to 1.17.

Profitability

The reported net profit margin declines from 29.85% in 2021 to 21.25% in 2022, then recovers to 28.38% in 2025. The adjusted net profit margin demonstrates a more pronounced decrease in 2022 (to 16.71%) and a stronger recovery in subsequent years, reaching 30.25% in 2025. Adjustments appear to have a substantial impact on reported profitability, particularly during periods of change.

Returns

Reported return on equity (ROE) follows a similar trend to the net profit margin, decreasing in 2022 and then increasing through 2025, reaching 16.02%. The adjusted ROE mirrors this pattern, but with lower values overall, ending at 17.48%. The reported return on assets (ROA) also exhibits a similar trend, increasing from 10.19% to 13.96%. The adjusted ROA shows a more significant decline in 2022 (to 8.46%) and a stronger recovery, reaching 15.75% in 2025. As with the net profit margin, adjustments have a notable effect on the calculated returns.

In summary, the adjusted ratios generally show a more pronounced fluctuation than the reported ratios, particularly in profitability and returns. The adjustments consistently increase the current ratio and asset turnover, while decreasing ROE and ROA in some years. The debt ratios remain consistently low regardless of whether reported or adjusted.

The adjusted total asset turnover ratio for the period demonstrates fluctuations alongside overall growth in revenue and total assets. An initial increase is followed by a period of relative stability, culminating in a final increase. Revenue consistently increased year-over-year, while total assets also exhibited a general upward trend, though with some variation.

Adjusted Total Asset Turnover Trend

The adjusted total asset turnover ratio began at 0.44 in 2021, increasing to 0.51 in 2022. This represents a notable improvement in the efficiency with which assets are used to generate revenue. A subsequent decrease to 0.49 in 2023 suggests a slight reduction in asset utilization efficiency. The ratio then decreased further to 0.47 in 2024 before recovering to 0.52 in 2025, reaching its highest point in the observed period.

Revenue and Asset Relationship

Adjusted revenue increased from US$5,741.8 million in 2021 to US$10,139.9 million in 2025. Adjusted total assets increased from US$13,133.8 million in 2021 to US$19,470.0 million in 2025. The increases in both metrics generally align, contributing to the observed fluctuations in the adjusted total asset turnover ratio.

Comparison to Reported Ratio

The adjusted total asset turnover ratio consistently exceeds the reported total asset turnover ratio across all observed years. The difference between the two ratios varies slightly year to year, but the adjusted ratio consistently presents a higher value, indicating that the adjustments made to revenue and assets result in a more favorable assessment of asset utilization.

The observed trend suggests a dynamic relationship between asset deployment and revenue generation. While the company demonstrates an ability to increase revenue alongside asset growth, the efficiency of asset utilization, as measured by the adjusted total asset turnover ratio, experiences periodic variations. The final year shows a return to improved efficiency, potentially indicating successful strategic adjustments or operational improvements.

The adjusted current ratio demonstrates a fluctuating pattern over the five-year period. While generally higher than the reported current ratio, the adjusted metric also exhibits periods of decline and stabilization.

Overall Trend

The adjusted current ratio began at 7.59 in 2021 and experienced a decrease to 6.12 in 2022. It then increased to 6.53 in 2023, followed by a decline to 5.59 in 2024, and a subsequent rise to 6.54 in 2025. This suggests a period of initial weakening in short-term liquidity, followed by improvement, then further weakening, and finally, a return to a stronger position.

Comparison to Reported Current Ratio

The adjusted current ratio consistently exceeds the reported current ratio across all observed years. This indicates that the adjustments made to current assets and liabilities result in a more favorable liquidity position than initially presented by the standard calculation. The difference between the adjusted and reported ratios varies, but generally remains substantial.

Adjusted Current Assets Trend

Adjusted current assets increased from US$5,865.1 million in 2021 to US$9,809.4 million in 2025. Growth was observed between 2021 and 2023, a slight decrease in 2024, and then significant growth in 2025. This suggests a general trend of increasing liquid assets, with some short-term fluctuations.

Adjusted Current Liabilities Trend

Adjusted current liabilities increased steadily from US$772.6 million in 2021 to US$1,499.5 million in 2025. The rate of increase appears relatively consistent year-over-year, indicating a predictable growth in short-term obligations.

The interplay between the growth of adjusted current assets and adjusted current liabilities influences the adjusted current ratio. While both components increased over the period, the ratio’s fluctuations suggest that the growth rate of assets and liabilities was not constant, leading to the observed changes in liquidity.

The adjusted debt to equity ratio remained consistently low and stable over the observed five-year period. While total stockholders’ equity exhibited fluctuations, and adjusted total debt increased, the resulting ratio remained at 0.01 for each year presented.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio held constant at 0.01 from December 31, 2021, through December 31, 2025. This indicates that for every dollar of adjusted equity, the company has one cent of adjusted debt. The stability suggests a consistent capital structure from a debt perspective, despite changes in the underlying components.

Total stockholders’ equity decreased from US$11,901,100 thousand in 2021 to US$11,041,900 thousand in 2022, before increasing to US$13,307,600 thousand in 2023, US$16,433,700 thousand in 2024, and finally reaching US$17,824,000 thousand in 2025. This represents an overall upward trend in equity over the period, despite the initial decline.

Adjusted Total Debt

Adjusted total debt showed an increasing trend over the five-year period. Starting at US$87,000 thousand in 2021, it rose to US$93,800 thousand in 2022, decreased slightly to US$89,800 thousand in 2023, and then increased significantly to US$146,000 thousand in 2024 and US$170,900 thousand in 2025. The growth in adjusted debt did not impact the debt to equity ratio due to the larger increases in adjusted equity.

Adjusted total stockholders’ equity mirrored the trend of total stockholders’ equity, decreasing in 2022, then increasing through 2025. The adjusted equity values were consistently higher than the adjusted total debt, reinforcing the low debt to equity ratio.

Overall Assessment

The company maintains a very conservative capital structure, as evidenced by the consistently low adjusted debt to equity ratio. The increasing trend in both adjusted debt and adjusted equity suggests growth, but the ratio’s stability indicates that the company is managing its debt levels in relation to its equity base.

The adjusted debt to capital ratio remained consistently low and stable over the observed period, from 2021 through 2025. While total capital exhibited an overall increasing trend, the adjusted debt levels also increased, maintaining a constant ratio. A more detailed examination of the underlying components reveals further insights.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio held steady at 0.01 for each year presented, indicating that adjusted debt represents approximately 1% of adjusted capital. This suggests a very conservative capital structure, with a minimal reliance on debt financing relative to equity and other capital sources.

Adjusted Total Debt

Adjusted total debt increased from US$87,000 thousand in 2021 to US$170,900 thousand in 2025. The increase was not linear, with a more substantial rise observed between 2022 and 2024. This suggests a deliberate, though measured, increase in debt utilization over time.

Adjusted Total Capital

Adjusted total capital demonstrated a consistent upward trend, growing from US$12,031,900 thousand in 2021 to US$17,722,000 thousand in 2025. This growth in capital base likely reflects retained earnings and potentially new equity infusions, supporting the company’s operational expansion and investment activities.

The parallel increases in both adjusted debt and adjusted capital, while maintaining a constant ratio, indicate a balanced approach to financing growth. The company appears to be strategically increasing its debt levels in proportion to its overall capital base, avoiding a significant shift in its financial leverage.

An examination of the financial information reveals trends in adjusted financial leverage over a five-year period. Total assets exhibited an increasing trend, rising from US$13,555,000 thousand in 2021 to US$20,458,700 thousand in 2025. Simultaneously, total stockholders’ equity also increased, moving from US$11,901,100 thousand to US$17,824,000 thousand over the same timeframe. The adjusted figures for both assets and equity generally mirrored these trends, though with slight variations in magnitude.

Adjusted Financial Leverage – Overall Trend

Adjusted financial leverage demonstrated relative stability throughout the period. It began at 1.10 in 2021, increased to 1.13 in 2022, and then fluctuated between 1.11 and 1.12 for the subsequent years, concluding at 1.11 in 2025. This suggests a consistent capital structure from a leverage perspective.

Adjusted Financial Leverage – Comparison to Reported Leverage

Reported financial leverage also showed stability, ranging from 1.14 to 1.17 over the five years. The adjusted financial leverage consistently reported lower values than the reported financial leverage across all years. The difference between the reported and adjusted leverage remained relatively consistent, indicating a systematic adjustment is being applied.

Asset and Equity Growth

The growth in adjusted total assets was consistent, with increases observed each year. Adjusted total stockholders’ equity also increased annually, though the rate of growth varied. The combination of increasing assets and equity contributed to the stable adjusted financial leverage ratio.

In summary, the adjusted financial leverage remained relatively constant despite growth in both assets and equity. The consistent difference between reported and adjusted leverage suggests a specific accounting adjustment is being made, which results in a lower leverage ratio when adjusted.

The adjusted net profit margin exhibited fluctuations over the five-year period. Initial values decreased significantly before demonstrating a recovery towards the end of the observed timeframe. A detailed examination of the trends is presented below.

Adjusted Net Profit Margin - Overall Trend

The adjusted net profit margin began at 28.70% in 2021. A substantial decline was observed in 2022, falling to 16.71%. Subsequent years showed improvement, with the margin increasing to 24.30% in 2023, 26.20% in 2024, and reaching a peak of 30.25% in 2025. This indicates a period of profitability challenges followed by a strong recovery and expansion.

Adjusted Net Income and Revenue Relationship

Adjusted net income increased from US$1,647,800 thousand in 2021 to US$3,067,100 thousand in 2025. Adjusted revenue also increased consistently over the same period, moving from US$5,741,800 thousand to US$10,139,900 thousand. The growth in adjusted net income, while not perfectly linear, generally tracked the growth in adjusted revenue, contributing to the observed margin improvements in later years.

Comparison to Reported Net Profit Margin

The adjusted net profit margin consistently remained below the reported net profit margin throughout the period. The difference between the two margins suggests the presence of items impacting reported net income that are excluded in the adjusted figures. The largest disparity occurred in 2022, where the adjusted margin was significantly lower than the reported margin, indicating a substantial impact from these excluded items during that year.

The recovery in the adjusted net profit margin from 2023 to 2025 suggests successful implementation of strategies to improve profitability or a reduction in the impact of the items excluded from the adjusted net income calculation. The increasing trend in both adjusted net income and adjusted revenue supports a positive outlook regarding the company’s financial performance.

The adjusted return on equity (ROE) exhibited fluctuations over the five-year period. While net income attributable to Intuitive Surgical, Inc. and total stockholders’ equity both generally increased, the adjusted ROE presented a more nuanced picture. A review of the adjusted ROE alongside its components reveals key trends in profitability and equity structure.

Adjusted ROE Trend

The adjusted ROE decreased from 13.80% in 2021 to 9.57% in 2022, representing a substantial decline. It then recovered to 13.41% in 2023 and 13.70% in 2024, before increasing significantly to 17.48% in 2025. This suggests a period of initial underperformance followed by a strengthening of returns.

Relationship to Adjusted Net Income

Adjusted net income decreased notably from 2021 to 2022, coinciding with the initial drop in adjusted ROE. Subsequent increases in adjusted net income in 2023 and 2024 were accompanied by modest improvements in adjusted ROE. The largest increase in adjusted net income occurred between 2024 and 2025, driving the substantial rise in adjusted ROE during that period.

Relationship to Adjusted Stockholders’ Equity

Adjusted total stockholders’ equity followed a similar pattern to net income, decreasing in 2022 and then increasing through 2025. However, the growth rate of equity was generally slower than the growth rate of adjusted net income, particularly in 2025. This disparity contributed to the higher adjusted ROE observed in the most recent year.

Comparison to Reported ROE

The reported ROE generally tracked the adjusted ROE, but remained consistently higher throughout the period. The difference between the reported and adjusted ROE suggests that adjustments were made to net income and/or equity that lowered the calculated return. The magnitude of this difference varied year to year, but was most pronounced in 2022 and 2025.

In summary, the adjusted ROE demonstrates a recovery following a dip in 2022, largely driven by increases in adjusted net income and, to a lesser extent, growth in adjusted stockholders’ equity. The significant increase in adjusted ROE in 2025 indicates improved profitability relative to equity.

The adjusted return on assets (ROA) exhibited fluctuations over the five-year period. While generally maintaining a level around 12%, notable shifts occurred in 2022 and 2025. A review of the underlying components reveals insights into these movements.

Adjusted ROA Trend

The adjusted ROA began at 12.55% in 2021, decreased significantly to 8.46% in 2022, recovered to 11.98% in 2023, remained stable at 12.39% in 2024, and then increased substantially to 15.75% in 2025. This indicates a period of reduced profitability relative to assets in 2022, followed by a recovery and subsequent improvement through 2025.

Adjusted Net Income

Adjusted net income followed a similar pattern to the adjusted ROA. It decreased from US$1,647.8 million in 2021 to US$1,043.7 million in 2022, increased to US$1,744.3 million in 2023, rose to US$2,196.5 million in 2024, and reached US$3,067.1 million in 2025. The largest absolute increase occurred between 2024 and 2025.

Adjusted Total Assets

Adjusted total assets demonstrated a consistent upward trend throughout the period. Starting at US$13,133.8 million in 2021, they increased to US$12,331.8 million in 2022, then continued to rise to US$14,558.1 million in 2023, US$17,728.8 million in 2024, and finally reached US$19,470.0 million in 2025. The growth in assets appears to have accelerated in the later years.

Relationship between Components

The decline in adjusted ROA in 2022 was primarily driven by a more substantial decrease in adjusted net income compared to the change in adjusted total assets. Conversely, the increase in adjusted ROA in 2025 was fueled by a significant rise in adjusted net income, outpacing the growth in adjusted total assets. The relative stability in 2023 and 2024 suggests a more balanced relationship between profitability and asset utilization during those years.

The reported ROA generally tracked the adjusted ROA, though minor differences were present each year. The trends observed in the adjusted ROA provide a refined view of the company’s profitability relative to its asset base, accounting for potential adjustments to net income and total assets.