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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Intuitive Surgical Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	1,596,933)	1,187,823)	1,700,018)	1,149,207)	1,415,357)
Cost of capital²	17.04%	17.03%	17.04%	17.04%	17.03%
Invested capital³	7,159,800)	5,396,200)	4,517,800)	4,486,200)	3,346,500)

Economic profit⁴	376,933)	268,675)	930,346)	384,904)	845,349)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,596,933 – 17.04% × 7,159,800 = 376,933

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Intuitive Surgical Inc. economic profit decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Intuitive Surgical Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to Intuitive Surgical, Inc.	1,798,000)	1,322,300)	1,704,600)	1,060,600)	1,379,300)
Deferred income tax expense (benefit)¹	(280,800)	(185,300)	(64,000)	57,600)	(6,100)
Increase (decrease) in allowances²	4,700)	2,200)	2,500)	9,400)	100)
Increase (decrease) in deferred revenue³	53,400)	24,300)	31,700)	17,100)	37,900)
Increase (decrease) in equity equivalents⁴	(222,700)	(158,800)	(29,800)	84,100)	31,900)
Interest expense	—)	—)	—)	—)	—)
Interest expense, operating lease liability⁵	3,053)	2,814)	2,175)	2,557)	2,598)
Adjusted interest expense	3,053)	2,814)	2,175)	2,557)	2,598)
Tax benefit of interest expense⁶	(641)	(591)	(457)	(537)	(545)
Adjusted interest expense, after taxes⁷	2,412)	2,223)	1,718)	2,020)	2,052)
(Gain) loss on marketable securities	(100)	—)	—)	(4,700)	(500)
Investment income, before taxes	(100)	—)	—)	(4,700)	(500)
Tax expense (benefit) of investment income⁸	21)	—)	—)	987)	105)
Investment income, after taxes⁹	(79)	—)	—)	(3,713)	(395)
Net income (loss) attributable to noncontrolling interest	19,300)	22,100)	23,500)	6,200)	2,500)
Net operating profit after taxes (NOPAT)	1,596,933)	1,187,823)	1,700,018)	1,149,207)	1,415,357)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowances.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to Intuitive Surgical, Inc..

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 89,800 × 3.40% = 3,053

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 3,053 × 21.00% = 641

⁷ Addition of after taxes interest expense to net income attributable to Intuitive Surgical, Inc..

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 100 × 21.00% = 21

⁹ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Intuitive Surgical Inc. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Intuitive Surgical Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax expense	141,600)	262,400)	162,200)	140,200)	120,400)
Less: Deferred income tax expense (benefit)	(280,800)	(185,300)	(64,000)	57,600)	(6,100)
Add: Tax savings from interest expense	641)	591)	457)	537)	545)
Less: Tax imposed on investment income	21)	—)	—)	987)	105)
Cash operating taxes	423,020)	448,291)	226,657)	82,150)	126,940)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Intuitive Surgical Inc. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Intuitive Surgical Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Operating lease liability¹	89,800)	93,800)	87,000)	79,900)	76,400)
Total reported debt & leases	89,800)	93,800)	87,000)	79,900)	76,400)
Total Intuitive Surgical, Inc. stockholders’ equity	13,307,600)	11,041,900)	11,901,100)	9,731,500)	8,263,800)
Net deferred tax (assets) liabilities²	(910,500)	(664,500)	(440,800)	(364,000)	(425,600)
Allowances³	27,100)	22,400)	20,200)	17,700)	8,300)
Deferred revenue⁴	491,700)	438,300)	414,000)	382,300)	365,200)
Equity equivalents⁵	(391,700)	(203,800)	(6,600)	36,000)	(52,100)
Accumulated other comprehensive (income) loss, net of tax⁶	12,200)	162,500)	24,200)	(24,900)	(12,400)
Noncontrolling interest in joint venture	89,700)	70,700)	50,400)	27,600)	20,900)
Adjusted total Intuitive Surgical, Inc. stockholders’ equity	13,017,800)	11,071,300)	11,969,100)	9,770,200)	8,220,200)
Construction-in-process⁷	(1,354,700)	(608,600)	(209,700)	(117,400)	(272,500)
Available-for-sale marketable securities⁸	(4,593,100)	(5,160,300)	(7,328,600)	(5,246,500)	(4,677,600)
Invested capital	7,159,800)	5,396,200)	4,517,800)	4,486,200)	3,346,500)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenue.

⁵ Addition of equity equivalents to total Intuitive Surgical, Inc. stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction-in-process.

⁸ Subtraction of available-for-sale marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Intuitive Surgical Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Intuitive Surgical Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	133,256,688)	133,256,688)	÷	133,346,488)	=	1.00	1.00	×	17.05%	=	17.04%
Operating lease liability³	89,800)	89,800)	÷	133,346,488)	=	0.00	0.00	×	3.40% × (1 – 21.00%)	=	0.00%
Total:	133,346,488)					1.00					17.04%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	85,940,077)	85,940,077)	÷	86,033,877)	=	1.00	1.00	×	17.05%	=	17.03%
Operating lease liability³	93,800)	93,800)	÷	86,033,877)	=	0.00	0.00	×	3.00% × (1 – 21.00%)	=	0.00%
Total:	86,033,877)					1.00					17.03%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	102,171,695)	102,171,695)	÷	102,258,695)	=	1.00	1.00	×	17.05%	=	17.03%
Operating lease liability³	87,000)	87,000)	÷	102,258,695)	=	0.00	0.00	×	2.50% × (1 – 21.00%)	=	0.00%
Total:	102,258,695)					1.00					17.04%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	92,773,791)	92,773,791)	÷	92,853,691)	=	1.00	1.00	×	17.05%	=	17.03%
Operating lease liability³	79,900)	79,900)	÷	92,853,691)	=	0.00	0.00	×	3.20% × (1 – 21.00%)	=	0.00%
Total:	92,853,691)					1.00					17.04%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	67,203,475)	67,203,475)	÷	67,279,875)	=	1.00	1.00	×	17.05%	=	17.03%
Operating lease liability³	76,400)	76,400)	÷	67,279,875)	=	0.00	0.00	×	3.40% × (1 – 21.00%)	=	0.00%
Total:	67,279,875)					1.00					17.03%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Operating lease liability. See details »

Intuitive Surgical Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	376,933)	268,675)	930,346)	384,904)	845,349)
Invested capital²	7,159,800)	5,396,200)	4,517,800)	4,486,200)	3,346,500)
Performance Ratio
Economic spread ratio³	5.26%	4.98%	20.59%	8.58%	25.26%
Benchmarks
Economic Spread Ratio, Competitors⁴
Abbott Laboratories	-1.99%	0.22%	0.66%	-2.60%	-3.92%
Cigna Group	-2.26%	0.78%	-0.20%	2.69%	-0.52%
CVS Health Corp.	0.45%	-4.00%	-0.02%	0.43%	-0.35%
Elevance Health Inc.	-1.02%	-0.20%	1.08%	-0.90%	-0.07%
Humana Inc.	1.14%	2.36%	2.70%	9.56%	7.70%
Medtronic PLC	-4.12%	-2.88%	-4.48%	-3.60%	-2.51%
UnitedHealth Group Inc.	5.68%	4.72%	4.58%	5.15%	5.18%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 376,933 ÷ 7,159,800 = 5.26%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Intuitive Surgical Inc. economic spread ratio deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

Intuitive Surgical Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	376,933)	268,675)	930,346)	384,904)	845,349)

Revenue	7,124,100)	6,222,200)	5,710,100)	4,358,400)	4,478,500)
Add: Increase (decrease) in deferred revenue	53,400)	24,300)	31,700)	17,100)	37,900)
Adjusted revenue	7,177,500)	6,246,500)	5,741,800)	4,375,500)	4,516,400)
Performance Ratio
Economic profit margin²	5.25%	4.30%	16.20%	8.80%	18.72%
Benchmarks
Economic Profit Margin, Competitors³
Abbott Laboratories	-2.96%	0.31%	0.96%	-4.54%	-7.15%
Cigna Group	-1.00%	0.37%	-0.11%	1.58%	-0.32%
CVS Health Corp.	0.17%	-1.54%	-0.01%	0.22%	-0.19%
Elevance Health Inc.	-0.42%	-0.09%	0.51%	-0.42%	-0.04%
Humana Inc.	0.33%	0.74%	1.00%	2.75%	2.26%
Medtronic PLC	-9.30%	-6.33%	-10.75%	-8.86%	-5.97%
UnitedHealth Group Inc.	2.82%	2.42%	2.25%	2.63%	2.53%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 376,933 ÷ 7,177,500 = 5.25%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Intuitive Surgical Inc. economic profit margin deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

Intuitive Surgical Inc. (NASDAQ:ISRG)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin