Image source: Intuitive Surgical.

Shareholders of Intuitive Surgical (ISRG 8.64%) -- myself included -- have had a great run over the past two-plus years, with the stock more than doubling. The maker of the daVinci robotic surgical system has seen the number of operations performed using its machines grow far faster than anyone imagined back in 2014.

But that's in the past, and the market is a forward-looking entity. When the company reports earnings on Tuesday afternoon, here's what Wall Street is looking for.



Assumed Growth


$651 million





Data source: S&P Global Market Intelligence.

But those are very short-term figures. And while they might explain any knee-jerk moves the stock has immediately following earnings, they are hardly the most important things for long-term investors to watch.

As someone who has owned Intuitive shares for six years, here are the three biggest factors that I'll be watching.

1. Procedure growth

This is by far the biggest reason that Intuitive shares have enjoyed the run-up that they have over the past two years. While gynecological and prostate operation growth stalled back in 2013, operations in the U.S. general surgery segment have boomed. Though management doesn't provide specific numbers, this has mostly been due to growth in hernia operations.

Data source: SEC filings.

Heading into 2016, management had called for growth of between 9% and 12%. However, after the first and second quarters showed growth of 17% and 16%, respectively, management upped its full-year guidance to a range of 14% to 15%.

I'll be paying special attention to any comments on hernia and/or colorectal operations within the U.S. general surgery category.

2. That growing cash stash

In a very short amount of time, Intuitive management has found itself with a problem -- albeit a good one -- on its hands: a huge pile of cash. CEO Dr. Gary Guthart has already signaled that some of that cash will be plowed back into R&D as the company looks for ways to make surgical outcomes even better.

But he also hinted that the company might buy back shares, look to make strategic acquisitions, or even consider paying a dividend. At the end of last quarter, Intuitive had $4.2 billion on hand. Here's how that broke down.


Q2 2016

Cash and Equivalents

$1.19 billion

Short-term investments

$0.99 billion

Long-term investments

$2.04 billion


$4.22 billion

Data source: S&P Global Market Intelligence.

When the company reports, I'll be interested in how these levels may have changed, and anything management has to say about how it is thinking about spending that extra cash.

3. International traction

Finally, I will be paying close attention to how the company performs abroad. Though Intuitive is definitely a global company, it still generates a lot of its revenue (and experiences most of its procedure-based innovation) stateside.

The two variables worth paying attention to here are system sales and procedure growth. Here's how both have fared over the past two-plus years.

Data source: SEC filings.

As results here can be lumpy, I won't be putting too much weight behind one single quarter's results. However, I'll be using it to help envision a broader picture of whether or not international doctors believe that daVinci is really worth getting trained in, and whether or not it can truly make a difference in patient outcomes.

Regardless of how the company does, it's important for investors to remember that we are likely still in the early innings of using robots to help make surgery safer. As such, it's important to take the long-term view after results are released on Tuesday.