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Robotic surgery equipment maker Intuitive Surgical (ISRG) is soaring to all-time highs after delivering an impressive beat-and-raise Q3 earnings report, fueled by a combination of strong procedure growth and robust demand for its systems -- notably including its new da Vinci 5 system. The da Vinci 5 system, which was launched in 1Q24 and features several key upgrades, such as Force Feedback technology, is viewed as a major growth catalyst for FY25.

• After some significant supply chain issues prevented ISRG from fully rolling out da Vinci 5 earlier this year, those bottlenecks appear to be dissipating. In Q3, ISRG placed 110 da Vinci 5 robots, up from 70 placements last quarter. During the earnings call, the company reiterated that it expects to be fully ramping the system by mid-2025.
• Overall, ISRG placed 379 surgical systems during the quarter, up from 312 last quarter. System placements are viewed as a key metric because they lead to more procedures, which, in turn, generates more revenue from instruments and accessories.
• On that note, worldwide da Vinci procedures grew by approximately 18% yr/yr, remaining steady relative to Q2 and Q1, when procedures increased by 18% and 19% respectively. Meanwhile, instruments and accessories revenue jumped by 18% to $1.26 bln, bolstered by a 73% rise in Ion procedure volume. The Ion system is used to perform lung biopsies.
• The one main soft spot for ISRG continues to be bariatric producers, which declined by mid-single-digits in the U.S. As has been the case over the past several quarters, the soaring popularity of new GLP-1 weight loss drugs has created a headwind for these procedures. However, strength in other procedure categories, such as general surgery, gynecology, and thoracic, are offsetting this weakness.
• Looking ahead, ISRG remains bullish about its prospects, nudging the low end of its FY24 procedure growth outlook higher to +16.0-17.0% from its prior guidance of +15.5-17.0%. The high end of this range assumes that bariatric stabilizes at current growth rates, while headwinds in China and Korea don't worsen. 

The main takeaway is that ISRG is still contending with some challenges, particularly in China and Europe where capital issues linger, but momentum is on its side as the da Vinci 5 rollout gains steam.