Intuitive Surgical (ISRG 0.15%) hit a rough patch earlier this year, with its shares plunging more than 40% in late March. The stock has been on a roll since then, though, despite continued headwinds from the COVID-19 pandemic.

The robotic surgical systems maker announced its third-quarter results after the market closed on Thursday. Investors weren't pleased, and the healthcare stock fell close to 4% in after-hours trading. But Intuitive Surgical had some good news. Here are the highlights from the company's Q3 update.

Surgical team using da Vinci robotic surgical system

Image source: Intuitive Surgical. 

By the numbers

Intuitive Surgical reported Q3 revenue of $1.1 billion, down 4% year over year. However, this result easily topped the average analysts' revenue estimate of nearly $971 million.

The company announced net income in the third quarter of $314 million, or $2.60 per share, based on generally accepted accounting principles (GAAP). This reflected deterioration from GAAP earnings of $397 million, or $3.33 per share, in the prior-year period.

Intuitive's non-GAAP bottom line also worsened. The company posted adjusted earnings in Q3 of $334 million, or $2.77 per share, compared to $409 million, or $3.43 per share, in the same period of 2019. Again, though, Intuitive beat Wall Street estimates, with analysts looking for adjusted earnings of $2.07 per share.

Behind the numbers

There's no surprise about what caused Intuitive's revenue to slip in the third quarter. The COVID-19 pandemic continued to negatively impact the company's business. Intuitive shipped 195 da Vinci surgical systems, a 29% decline from the prior-year period. In addition, the company's Q3 revenue was lower due to service fee credits provided as part of Intuitive's customer relief program.

It wasn't all bad news for Intuitive Surgical, though. The company's Q3 results reflected significant improvement from the previous quarter. Revenue jumped nearly 37% quarter over quarter, while earnings were more than 4.5 times higher in Q3 than in Q2.

Despite ongoing challenges caused by the pandemic, da Vinci procedure volume still grew 7% year over year. While system placements were lower than desired, Intuitive's installed base increased to 5,865 systems -- 8% higher than the total at the end of the prior-year period.

Looking ahead

Intuitive Surgical remains reluctant to provide any revenue or earnings guidance. That's understandable considering the uncertainties related to the COVID-19 pandemic. Although the company saw improvement in the third quarter, several states have experienced a resurgence in COVID-19 cases. It's possible that more elective procedures using da Vinci could be pushed back if the coronavirus outbreak worsens.

However, it's important for investors to realize that these are only temporary issues for Intuitive. The company's long-term prospects are very good. Intuitive's financial position is strong, with a cash stockpile totaling nearly $6.4 billion at the end of Q3. The pandemic might weigh on Intuitive over the short term, but this stock should be unstoppable over the long run.