Intuitive (ISRG) Q3 2026 Earnings: EPS Down 24%, Charge Cost $0.99
By Chad Hartman
Published · Last updated
Intuitive (ISRG) reported Q3 FY2026 revenue of $3.05 billion, up 21.7%, and GAAP diluted EPS of $1.49, down 23.6%, for the quarter ended September 30, 2026. A $450 million antitrust settlement charge, recorded in selling, general and administrative expense, took $0.99 off per-share earnings; without it EPS would have been $2.48, up 27% from $1.95. The company released results on October 20, 2026 and filed its 10-Q on October 21, 2026. Operating cash flow of $1.22 billion was the highest of the last 16 quarters, so the earnings decline is an accrual that has not yet left the bank.
| Field | Value |
|---|---|
| Company | Intuitive ($ISRG) |
| Quarter | Q3 FY2026, period ended September 30, 2026 |
| Earnings release | October 20, 2026 (Form 8-K) |
| 10-Q filed | October 21, 2026 |
| Revenue | $3.05 Billion (+21.7% YoY) |
| Diluted EPS | $1.49 (-23.6% YoY) |
| Operating margin | 19.4% (-10.9 pts YoY) |
| Operating cash flow (TTM) | $4.09 Billion |
| Antitrust settlement charge (Q3 SG&A) | $450.0 Million ($0.99 per diluted share) |
Intuitive Q3 2026 Revenue, EPS and Margins
Intuitive's Q3 2026 diluted EPS was $1.49, down 23.6% from $1.95 a year earlier and the sixth-lowest of the last 16 quarters. Revenue of $3.05 billion and a 68.4% gross margin were both the highest of those 16 quarters, so falling EPS beside record sales invites the assumption that operating costs ran away.
The Data: Operating income was $592.6 million, down 39.0% from $971.9 million in Q2 and 22.0% from a year earlier. Operating margin fell to 19.4% from 33.6% in Q2, the lowest of the last 16 quarters and the third-lowest of 70 since 2009. Gross margin rose 2.0 points year over year.
Why: Gross margin gained while operating margin collapsed, which places the cause below gross profit. The $450 million charge landed in selling, general and administrative expense: $347 million after tax, or $0.99 per share. Add it back and operating income is about $1.04 billion, a 34.2% margin against 30.3% a year ago and 33.6% in Q2. Of the 27% EPS growth that results, about three points came from a diluted share count 2.8% lower. One entry moved operating margin 14 points; nothing in revenue or gross margin moved with it.
What Intuitive's 10-Q Shows Beyond the Press Release
The release led with non-GAAP EPS of $3.00, up from $2.40, while the 10-Q filed October 21, 2026 carries GAAP EPS of $1.49. The $1.51 gap is mostly one item: the $0.99 settlement is 66% of it, and the other $0.52 is share-based compensation, amortization and other items the 8-K's reconciliation excludes.
A reader who saw $3.00 would expect the GAAP shortfall to come from recurring costs. Instead the largest piece is a one-off the company says it agreed in October 2026, after the quarter closed, yet booked in full in Q3.
The Data: The company agreed to a one-time payment of $450 million plus injunctive relief, subject to preliminary and final court approval. Share-based compensation, by contrast, ran $213 million in the quarter. The 10-Q also records $27.8 million of IEEPA tariff refunds as a reduction of cost of revenue, about 0.9 points of Q3 revenue, which supports the record 68.4% gross margin.
Why: The charge is an accrual: it reduced Q3 net income but not Q3 operating cash flow, which was 2.3 times net income. The company attributes the timing to the October mediation, and the 8-K says approval could still be contested by class members.
Intuitive Q3 2026 Free Cash Flow, Buybacks and Debt
Intuitive's Q3 2026 free cash flow was $1.11 billion, up 51.0% from $735.6 million a year earlier and the highest of the last 16 quarters. Buybacks took it further than that.
The Data: The company repurchased 7.8 million shares for $2.98 billion, 2.7 times free cash flow. Cash, cash equivalents and investments fell $1.83 billion to $6.80 billion, per the 8-K. Diluted shares were 351.6 million, the lowest of the last 16 quarters and 2.8% below a year earlier. The Q3 repurchases were 14.0 times share-based compensation expense.
Why: Share-based compensation was $213 million, so these buybacks did more than offset issuance; the share count actually fell. The funding came from the balance sheet, not the quarter's cash flow. Net debt to EBITDA was -0.92x, a net cash position, but the current ratio fell to 3.33x from 4.73x a year earlier. The $450 million settlement equals roughly 41% of the quarter's free cash flow when it is paid.
Intuitive's 2026 Guidance After Q3
The 8-K's 2026 outlook raised the non-GAAP gross margin range to 68.7%–69.3% from 68.0%–69.0%, moving the midpoint to 69.0% from 68.5%.
The Data: The company guided worldwide da Vinci procedure growth of 14%–15%, narrowed from 13.5%–15.5%, and still expects to land closer to the midpoint. Q3 da Vinci procedures grew about 14%. Non-GAAP operating expense growth of 11%–13% was unchanged, and the tariff estimate of 0.9% of revenue, down from 1.0%, now excludes recognized refunds.
Why: The raised floor (up 0.7 points) moved more than the ceiling (up 0.3), so the company removed downside rather than adding upside. The outlook is non-GAAP and, per the 8-K, excludes unpredictable items such as legal proceedings, so the settlement is not in it. The 10-Q adds that price reductions on instruments sold in China begin in Q4 2026, which the company expects to lower instruments and accessories revenue per procedure.
How ISRG Stock Has Moved After Past Earnings Reports
The Earnings Reaction Heat Map for the last 12 filings with completed windows, filed October 20, 2023 to July 21, 2026, shows a median one-month return of +3.7%, positive after 10 of 12. The three-month median was +3.8%, positive after 8 of 12.
The Data: The weakest window followed the FY2026 Q1 filing on April 22, 2026: -12.9% at one month and -15.9% at three. The best one-month return was +21.3%. The three prior Q3 filings were followed by one-month returns of +4.0%, +2.9% and +4.3%. This filing's window has not elapsed. These figures describe how Intuitive's stock moved after its past filings; they are a historical association, not a forecast. GeminIQ's earnings reaction studies cover the pattern across companies.
Why: Institutions held 82.13% of shares at June 30, 2026, up from 77.64% a year earlier and the highest of the last 16 quarters. Form 4 filings from September 15, 2025 to September 15, 2026 show 69 sales totaling $90.4 million and no purchases, with Gary Guthart at 51% of the dollars; the last purchase in the record was in November 2010.
Any company that books a settlement in one quarter and pays it in another has earnings and cash flow describing different periods, and only a reader who matches them sees the real quarter.
Frequently Asked Questions
Is Intuitive doing well financially?
Intuitive generated $4.09 billion of trailing-twelve-month operating cash flow and $3.60 billion of free cash flow, up 58.4%, as of Q3 2026. Net profit margin was 25.49% against 28.58% a year earlier, reflecting the settlement charge. GeminIQ's pre-calculated Return on Invested Capital was 19.64%, up 1.86 points, and Net Debt to EBITDA was -0.92x.
When does Intuitive report earnings?
Intuitive released Q3 2026 results on October 20, 2026 and filed its 10-Q on October 21, 2026. Last year it filed fourth-quarter results on February 3, 2026, a pattern from the filing record, not a forecast of the next date.
Does Intuitive pay a dividend?
Intuitive paid no dividend in Q3 2026 or the trailing twelve months. It returns capital through repurchases: the 10-Q shows 11.0 million shares retired for $4.45 billion in the first nine months of 2026, against 4.4 million shares and $2.10 billion in the same period of 2025.
Where can I verify Intuitive's Q3 2026 figures?
The figures come from the 10-Q filed October 21, 2026 and the 8-K earnings release of October 20, 2026 on SEC EDGAR. The settlement charge and the tariff refunds appear in the 10-Q's MD&A and the 8-K's reconciliation.
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All financial figures cited in this article reference Intuitive Surgical, Inc.'s Q3 2026 10-Q (filed October 21, 2026, period ending September 30, 2026), with guidance and management commentary drawn from the company's Form 8-K earnings release (filed October 20, 2026). All SEC filings are publicly available at SEC EDGAR and SEC EDGAR.
Disclaimer: The content in this blog is for educational and entertainment purposes only and does not constitute financial, legal, or tax advice. Investing involves risk, including the loss of principal. The views expressed are my own and not intended as financial advice or a guarantee of future performance.