Intuitive Surgical (ISRG) 10-K risk factor changes: FY2023 vs FY2022

In addition, the global economic environment and additional or unforeseen effects from [removed: the] COVID-19 [removed: pandemic] amplify many of these risks.

MACROECONOMIC CONDITIONS COULD [removed: HAVE A] MATERIALLY [removed: ADVERSE IMPACT ON] [added: ADVERSELY AFFECT] OUR BUSINESS, FINANCIAL CONDITION, OR RESULTS OF OPERATIONS.

Macroeconomic conditions, such as high [removed: inflation,] [added: inflationary pressure,] changes to monetary policy, [removed: increasing] [added: high] interest rates, volatile currency exchange rates, credit and sovereign debt [removed: concerns in certain European countries,] [added: concerns,] concerns about slowed growth in China and other OUS markets, decreasing consumer confidence and spending, including capital spending, [added: concerns about the stability] and [added: liquidity of certain financial institutions, the introduction of or changes in tariffs or trade barriers, and] global or local recessions can adversely impact demand for our products, which could negatively impact our business, financial condition, or results of operations.

Recent macroeconomic conditions have been adversely impacted by [removed: political] [added: geopolitical] instability and military hostilities in multiple geographies (including the conflict between Ukraine and [removed: Russia),] [added: Russia and the conflict between Israel and Hamas),] monetary and financial uncertainties, and the [removed: ongoing] COVID-19 pandemic.

The results of these macroeconomic conditions, and the actions taken by governments, central banks, companies, and consumers in response, have [added: resulted in,] and may continue to result [removed: in] [added: in,] higher inflation in the U.S. and globally, which is likely, in turn, to lead to an increase in costs and may cause changes in fiscal and monetary policy, including [removed: increased interest rates.][added: additional increases in]

Other adverse impacts of recent macroeconomic conditions have [removed: been] [added: been,] and may continue to [removed: be] [added: be,] supply chain constraints, logistics challenges, [added: liquidity concerns in the broader financial services industry,] and fluctuations in labor availability.

Hospitals, in particular, are experiencing and may continue to experience financial and operational pressures as a result of staffing shortages, the supply chain environment, and [removed: increased] [added: high] inflation, which could impact their ability to access capital markets and other funding sources, increase the cost of funding, or impede their ability to comply with debt covenants, all of which could impede their ability to provide patient care, defer elective surgeries, and impact their profitability.

To the extent that hospitals face financial pressures, [added: delayed access or loss of access to uninsured deposits, delayed access or loss of ability to draw on existing credit facilities,] reductions in government spending, or higher interest rates, hospitals’ ability or willingness to spend on capital equipment may be adversely impacted, all of which could have a material adverse effect on our business, financial condition, or results of operations.

Also, we [removed: have] [added: have,] and may continue [removed: to] [added: to,] experience supply chain constraints due to the current supply chain [removed: environment and logistic challenges,] [added: environment,] including difficulties obtaining a sufficient supply of component materials used in our products.

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

OUR RELIANCE ON [removed: SOLE] [added: SOLE-] AND [removed: SINGLE SOURCE] [added: SINGLE-SOURCED] SUPPLIERS AND ABILITY TO PURCHASE AT ACCEPTABLE PRICES A SUFFICIENT SUPPLY OF [removed: MATERIALS, PARTS, AND COMPONENTS] [added: MATERIALS] COULD HARM OUR ABILITY TO MEET PRODUCT DEMAND IN A TIMELY MANNER OR WITHIN BUDGET.

Prices of such materials have also increased, and global supply has become [removed: significantly] constrained due to the increased demand for materials, including semiconductors, to support expansion of server and cloud networks as a greater proportion of the global population worked remotely, the introduction of 5G, and the continued electrification of vehicles.

Due to these impacts and measures, we have [removed: experienced] [added: experienced,] and may continue to [removed: experience] [added: experience,] significant and unpredictable reductions in the demand for our products as healthcare customers divert medical resources and priorities towards the treatment of that disease.

[removed: Also, our customers have delayed, cancelled, or redirected and, in the future, may delay,] cancel, or redirect, planned capital expenditures in order to focus resources on COVID-19 or in response to economic disruption related to COVID-19.

Also, as we are conducting IDE studies to support 510(k) submission for da Vinci platforms and for seeking new indications, we may experience delays in obtaining new product approvals, [removed: or] clearances from the [removed: FDA] [added: FDA,] or [removed: foreign] approvals or certifications from foreign authorities or notified [removed: bodies] [added: bodies,] or [added: we may experience] delays in recruiting patients in our ongoing and planned clinical studies.

[added: These unprecedented measures to slow the spread of the virus taken by local governments and healthcare] authorities globally, including the deferral of elective medical procedures and social distancing measures, had, and may continue to have, a negative impact on our operations and financial results.

COVID-19 and the current financial, economic, and capital markets environment, and future developments in these and other [removed: areas] [added: areas,] present material uncertainty and risk with respect to our performance, financial condition, volume of business, or results of operations.

WE ARE SUBJECT TO LITIGATION, INVESTIGATIONS, AND OTHER LEGAL PROCEEDINGS RELATING TO OUR PRODUCTS, [removed: OUR] CUSTOMERS, [removed: OUR] COMPETITORS, AND GOVERNMENT REGULATORS THAT COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL CONDITION, DIVERT MANAGEMENT’S ATTENTION, AND HARM OUR BUSINESS.

[removed: BECAUSE OUR] [added: OUR] MARKETS ARE HIGHLY COMPETITIVE, [added: AND] CUSTOMERS MAY CHOOSE TO PURCHASE OUR COMPETITORS’ PRODUCTS OR SERVICES OR MAY NOT ACCEPT ROBOTIC-ASSISTED MEDICAL PROCEDURES, WHICH COULD RESULT IN REDUCED REVENUE AND LOSS OF MARKET SHARE.

Robotic-assisted surgery with a da Vinci [removed: Surgical System] [added: surgical system] or robotic-assisted bronchoscopy [removed: using] [added: with] an Ion endoluminal system are technologies that compete with established and emerging treatment options in reconstructive medical procedures or [added: disease management.]

Companies have introduced products in the field of robotic medical procedures or have made explicit statements about their efforts to enter the field including, but not limited to, the following companies: Asensus Surgical, Inc.; [removed: avateramedical GmbH;] [added: Beijing Surgerii Robotics Company Limited;] CMR Surgical Ltd.; Johnson & Johnson; Medicaroid Corporation; [removed: Medrobotics Corporation;] Medtronic plc; meerecompany Inc.; [removed: Olympus Corporation; Samsung Electronics Co., Ltd;] [added: Noah Medical;] Shandong Weigao Group Medical Polymer Company Ltd.; Shanghai Microport Medbot (Group) Co., Ltd.; and [removed: Titan] [added: Shenzhen Edge] Medical [removed: Inc.] [added: Co., Ltd.] Other companies with substantial experience in industrial robotics could potentially expand into the field of medical robotics and become competitors.

In addition, third-party service providers that [removed: provide services to] [added: service] da Vinci [removed: Surgical System] [added: surgical system] and Ion endoluminal system operators may emerge and compete with us on price or offerings.

In addition, to the extent that there is a shift from an inpatient setting to outpatient settings, we may [added: experience pricing pressure and a reduction in the number of procedures performed.]

In China, [added: since 2022, several provinces, including] the Hunan Provincial Healthcare Security [removed: Administration] [added: Administration, have] implemented significant limits on what hospitals can charge patients for surgeries using robotic surgical technology, including soft tissue surgery and orthopedics.

IF OUR PRODUCTS CONTAIN DEFECTS OR ENCOUNTER PERFORMANCE PROBLEMS, WE MAY HAVE TO RECALL OUR PRODUCTS [removed: AND, AS A RESULT, INCUR ADDITIONAL UNFORESEEN COSTS,] AND OUR REPUTATION MAY SUFFER.

- product recalls, [removed: which can include,] [added: including,] but not be limited to, product withdrawals from the market, labeling changes, design changes, customer notifications, and notifications to global regulatory bodies;

[removed: IF WE LOSE KEY PERSONNEL OR ARE UNABLE] [added: THE FAILURE] TO ATTRACT AND RETAIN [removed: OTHER PERSONNEL,] [added: KEY PERSONNEL COULD HARM] OUR ABILITY TO [removed: COMPETE WILL BE HARMED,] [added: COMPETE,] AND [removed: INCREASES] [added: CHANGES] IN [added: OUR EXISTING] LABOR [removed: COSTS] [added: RELATIONSHIPS] COULD MATERIALLY ADVERSELY IMPACT OUR BUSINESS, FINANCIAL CONDITION, OR RESULTS OF OPERATIONS.

Attracting and retaining qualified personnel [removed: will be] [added: is] critical to our success, and competition for qualified personnel is intense.

We may not be able to attract and retain personnel on acceptable terms given the constrained labor market and competition for such [removed: personnel among technology and healthcare companies.][added: personnel.]

Additionally, as a result of [removed: recent declines] [added: the volatility] in our stock price, certain long-term incentive benefits, such as [removed: recently issued stock options,] [added: equity grants,] may be viewed as having less value and, accordingly, could lead to higher attrition.

The extent and duration of the impact of labor market challenges are subject to numerous factors, including the [removed: continuing] [added: remaining] impact of [removed: the COVID-19 pandemic,] [added: COVID-19,] availability of qualified and highly skilled persons in the markets where we operate and unemployment levels within these markets, behavioral changes, such as fully engaging [removed: employees and earning loyalty,] [added: employees, including those working from home or in a hybrid fashion,] prevailing wage rates, health and other insurance and benefit costs, inflation, adoption of new or revised employment and labor laws and regulations or government programs, safety levels of our operations, and our reputation within the labor market.

Further, IDN groups are creating larger networks of system users with increasing purchasing power and are increasingly evaluating their robotic-assisted surgery programs to optimize the efficiency of surgeries using da Vinci [removed: Surgical Systems.][added: *s*urgical systems.]

We have experienced procedure growth for a number of benign conditions, including [removed: hysterectomies, sacrocolpopexies,] hernia repairs, [added: hysterectomies,] cholecystectomies, bariatrics, and certain other surgeries.

[added: Historically, we have experienced lower procedure volume in] the first and third quarters of the year and higher procedure volume in the second and fourth quarters of the year.

The success of new product introductions depends on a number of factors including, but not limited to, timely and successful research and development, regulatory clearances, approvals, or certifications, [added: establishment or maintenance of intellectual property rights,] pricing, competition, market and consumer acceptance, the effective forecasting and management of product demand, inventory levels, the management of manufacturing [added: costs] and [added: capacity, the management of] supply costs, [added: including mitigation of unforeseen supply chain disruptions for materials] and [added: components, and] the risk that new products may have quality or other defects in the early stages of introduction.

[removed: In addition, the introduction or announcement of new products or product] enhancements may shorten the life cycle of our existing products or reduce demand for our current products, thereby offsetting any benefits of successful product introductions and potentially leading to challenges in managing inventory of existing products.

Revenue from OUS markets accounted for approximately [removed: 33%,] [added: 34%,] 33%, and [removed: 32%] [added: 33%] of our revenue for the years ended December 31, [added: 2023,] 2022, [removed: 2021,] and [removed: 2020,] [added: 2021,] respectively.

- anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), and other local laws prohibiting corrupt payments to [removed: governmental] [added: government] officials;

[removed: We] [added: Also, we] have increased, and will continue to increase, our operations in China.

Regulations implementing the new regime were originally scheduled to come into force in July 2023 but [removed: have recently been postponed] [added: the MHRA has confirmed that it is aiming for the core aspects of the new regime] to [added: apply from] July [removed: 2024.]

For example, in 2023, certain drugs initially approved for use in diabetes patients gained market acceptance for use in weight loss following FDA approvals for weight loss indications.

The availability and effectiveness of weight loss drugs have adversely impacted our da Vinci surgical system bariatric procedures by causing some patients to reconsider the surgical option.

At this time, it is difficult to predict the long-term market impact of these drugs, including their long-term efficacy and potential drawbacks.

interest rates.

Adverse developments that affect financial institutions, transactional counterparties, or other third parties, or concerns or rumors about these events, have in the past led to, and may in the future lead to, market-wide liquidity problems.

For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the U.S. Federal Deposit Insurance Corporation (“FDIC”) as receiver.

Similarly, other institutions have been, and may continue to be, swept into receivership.

Uncertainty may remain over liquidity concerns in the broader financial services industry, and there may be unpredictable impacts to our business and our industry.

Hospitals and distributors may also be adversely affected by the liquidity concerns in the broader financial services industry, as described above, that could result in delayed access or loss of access to uninsured deposits or loss of their ability to draw on existing credit facilities involving a troubled or failed financial institution.

Additionally, with economic uncertainty, an increase in unemployment rates, and increasing health insurance premiums, co-payments and deductibles may result in cost-conscious consumers pursuing fewer elective surgical procedures, which, in turn, could adversely affect procedure volumes and system demand.

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

For example, in Israel, we have certain research and development operations primarily related to digital products.

Depending on the length and extent of the conflict between Israel and Hamas, there may be adverse impacts to certain research and development timelines.

Additionally, in July 2023, the Chinese government launched a one-year anti-corruption campaign targeting the healthcare sector.

The efforts of this campaign largely aim to curb kickbacks and corruption among individuals who have exploited their positions within medical institutions.

As a result of this anti-corruption campaign, the medical institutions have heightened their scrutiny with respect to initiating tenders.

Therefore, some tenders were cancelled or delayed without an updated timeline.

In the third and fourth quarters of 2023, the effect of this anti-corruption campaign contributed to fewer systems being placed in China.

Currently, the extent of the impact of this anti-corruption campaign on our business remains uncertain.

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

2025.

The Government has confirmed that general medical devices compliant with the EU Medical Devices Directive with a valid declaration and CE marking can be placed on the Great Britain market up until the sooner of expiry of certificate or June 30, 2028.

Medical devices, including custom-made devices, compliant with the EU Medical Devices Regulation can be placed on the Great Britain market up until June 30, 2030.

However, from July 2025, products that do not have existing and valid CE certification under the EU Medical Devices Directive or EU Medical Devices Regulation and are therefore not subject to the transitional arrangements will be required to carry the UKCA mark if they are to be sold into the market in Great Britain.

The rules for placing medical devices on the market in Northern Ireland, which is part of the UK, differ from those in Great Britain (England, Scotland and Wales) and continue to be based on EU law.

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

Certain of our sole-sourced suppliers or single-sourced suppliers could be adversely affected by the macroeconomic conditions, such as liquidity concerns in the broader financial services industry, that could result in delayed access or loss of access to their uninsured deposits or loss of their ability to draw on existing credit facilities involving a troubled or failed financial institution.

In addition, the introduction or announcement of new products or product

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

In addition, as we build new facilities for manufacturing capacity, the development of these facilities is subject to risks relating to our ability to complete our projects on schedule or within budget.

Refer to our risk factor titled “We are subject to risks associated with real estate construction and development” for additional risks related to building our new manufacturing facilities.

Also, after new manufacturing facilities are completed, we may encounter difficulties transferring our production lines from our existing facilities to the new facilities, which require qualification, validation, and regulatory approval and is subject to all of the risks highlighted above.

Moreover, certain new manufacturing facilities are in foreign countries and in locations where we have not previously had manufacturing sites, both of which could increase the risks related to transferring our production lines.

The facility transfers may require an increase in safety stock inventory to support the production line transfers, create a substantial backlog of customer orders, or increase costs while the production lines mature, all of which may have a material adverse impact on our business, financial condition, or results of operations.

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

These limits have significantly impacted the number of procedures performed and have impacted our instruments and accessories revenue in those provinces.

Companies providing robotic surgical technology,

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

including our joint venture in China, have been meeting with Chinese government healthcare agencies to discuss these developments and to provide feedback.

We cannot assure you that additional provincial or national healthcare agencies and administrations will not impose similar limits, and we expect to continue to face increased pricing pressure, both of which could further impact the number of procedures performed and our instruments and accessories revenue in China.

Recently, the costs of raw materials, transportation, construction, services, and energy necessary for the production and distribution of our products have increased significantly.

In addition, in early 2023, the U.S. Government reached its existing statutory limit on the amount of permissible federal debt, and this limit must be raised in order for the U.S. Government to continue to pay its obligations on a timely basis.

If the debt ceiling is not raised, it is unclear how the U.S. Government would prioritize its payments towards its various programs, which could have a significant impact on the overall economy as well as on medical procedures performed.

These unprecedented measures to slow the spread of the virus taken by local governments and healthcare

disease management.

experience pricing pressure and a reduction in the number of procedures performed.

This rule has had and may continue to have a material negative impact on our procedures performed in the Hunan province.

In addition to the Hunan province, the Hainan province (an island province of China) recently announced a policy to implement almost identical limits on what hospitals can charge patients for surgeries using robotic surgical technology.

We cannot assure you that other provincial healthcare administrations will not impose similar limits.

Moreover, we may encounter higher recruiting expenses, wage rates, and retention benefits, which may result from higher inflationary environments.

Many of our employees have worked remotely during the COVID-19 pandemic, which makes it challenging to maintain or enhance our culture.

While we are exploring ways to improve the employee experience, regardless of whether an employee is working from home, fully on-site, or in a hybrid fashion, the impact this will have on our corporate culture, innovation, collaboration, and ability to attract and retain talent is uncertain.

Historically, we have experienced lower procedure volume in

Following the transitional period, compliance with the UK legislation will be a prerequisite to be able to affix the UKCA mark to our products, without which they cannot be sold or marketed in Great Britain.

Such tariffs and, if enacted, any further legislation or actions taken by the U.S. federal

Our information

We also use encryption and authentication technologies to secure the transmission and storage of data.

In addition, unauthorized persons may attempt to hack into our products or systems to obtain personal data relating to patients or employees, our confidential or proprietary information, or confidential information we hold on behalf of third parties.

However, because the techniques used to obtain unauthorized access to or steal personal information or intellectual property, or sabotage systems containing personal information or intellectual property, change frequently and may originate from less regulated and remote areas of the world and be difficult to detect, we may not be able to anticipate and prevent these intrusions or mitigate them when and if they occur.

Globally, attacks are expected to continue accelerating in both frequency and sophistication with increasing use of tools and techniques that are designed to circumvent controls, avoid detection, and remove or obfuscate forensic evidence, all of which hinders our ability to identify, investigate, and recover from incidents.

Furthermore, due to the political uncertainty involving Russia and Ukraine, there is also an increased likelihood that the tensions could result in cyberattacks or cybersecurity incidents that could either directly or indirectly impact our operations.

Any attempts by cyber-attackers to disrupt our services or information technology systems or the services or information technology systems of our third-party service providers, strategic partners, and other contractors or consultants, if successful, could harm our business, result in the misappropriation of funds, be expensive to remedy, and damage our reputation or brand.

Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EEA member states may result in fines of up to 4% of the total worldwide annual turnover of the preceding financial year and other administrative penalties.

The UK GDPR mirrors the fines under the GDPR, e.g., fines up to 4% of worldwide annual turnover of the preceding financial year.

The enactment of the CCPA is prompting a wave of similar legislative developments in other U.S. states and creating the potential for a patchwork of overlapping but different state laws.

Additionally, a new California ballot initiative, the California Privacy Rights Act (the “CPRA”) recently passed in California.

The CPRA will substantially expand the requirements of the CCPA and will impose additional data protection obligations on companies doing business in California.

The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.

Similar laws have passed in Virginia, Colorado, Connecticut, and Utah and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the U.S.

For example, on July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-U.S. Privacy Shield Framework (“Privacy Shield”) under which personal data could be transferred from the EU to U.S. entities who had self-certified under the Privacy Shield scheme.

European court and regulatory decisions subsequent to the CJEU decision of July 16, 2020, have taken a restrictive approach to international data transfers.

Therefore, we cannot assure you that we can successfully integrate this acquisition or realize the expected benefits from this acquisition.

Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including, among others:

Regulatory authorities outside the United States have adopted similar restrictions or other policy measures in response to the COVID-19 pandemic.

While several notified bodies have been designated, the COVID-19 pandemic has significantly slowed down their designation process, and the current designated notified bodies are facing a large number of requests with the new regulation, as a consequence of which review times have lengthened.

We may be found non-compliant as a result

Moreover, the disruptions caused by the COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting, or completing our planned and ongoing clinical trials.

In particular, the certificate in question must still be valid.

However, under recently proposed draft legislation issued by the European Commission, this date could be extended to December 2027 for higher classification devices (Class III and certain Class IIb implantable devices) and to December 2028 for medium- and lower-risk devices (for the other Class IIb devices, Class IIa devices, and some Class I devices).

After an adjustment notice was published in the third quarter of 2020 (ref.

We are in the early stages of launching our da Vinci SP [removed: Surgical System,] [added: surgical system,] and we have an installed base of [removed: 121] [added: 177] da Vinci SP [removed: Surgical Systems] [added: surgical systems] as of December 31, [removed: 2022.][added: 2023.]

In September 2022, we [removed: also] received regulatory clearance for the da Vinci SP [removed: Surgical System] [added: surgical system] in Japan for the same set of procedures as can be performed on the da Vinci Xi [removed: Surgical System] [added: surgical system] in Japan.

We plan to seek FDA clearances for additional indications for [added: the] da Vinci SP [added: surgical system] over time.

We also plan to seek clearances [added: (including for additional indications)] in other OUS markets over time.

[removed: Da] [added: The da] Vinci X and da Vinci Xi [removed: Surgical Systems] [added: surgical systems] share the same instruments, whereas the da Vinci Si [removed: Surgical System] [added: surgical system] uses instruments that are not [removed: compatible with da Vinci X or da Vinci Xi systems.]

We plan to expand the [added: da Vinci] SP instrument offering over time.

In 2019, the FDA cleared our Ion endoluminal [removed: system to enable] [added: system, which is a flexible, robotic-assisted, catheter-based platform that utilizes instruments and accessories for which the first cleared indication is] minimally invasive biopsies in the lung.

Our Ion system extends our commercial offering beyond surgery into diagnostic [removed: procedures with this first application.][added: endoluminal procedures.]

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

We plan to seek additional [removed: clearances] [added: clearances, approvals, and certifications] for the Ion [added: endoluminal] system in OUS markets over time.

Uncertainty surrounding macroeconomic [added: and geopolitical] factors in the U.S. and globally characterized by the supply chain environment, inflationary pressure, [removed: rising] [added: higher] interest rates, [removed: labor shortages, and] [added: instability in the global financial markets,] significant [removed: disruption] [added: disruptions] in the commodities’ markets as a result of the [added: conflict between] Russia and Ukraine [added: and the] conflict [added: between Israel and Hamas, labor shortages, and the introduction of or changes in tariffs or trade barriers] may result in a recession, which could have a material adverse effect on our [removed: long-term] business.

With [removed: rising] [added: higher] interest rates, access to credit may become more [removed: difficult,] [added: difficult] and any insolvency of [removed: key] [added: certain] suppliers, including [removed: sole-source] [added: sole-] and [removed: single-source] [added: single-sourced] suppliers, may [removed: exacerbate current supply chain challenges.][added: have heightened continuity risks.]

[removed: Such global] [added: Global] shortages in important components [removed: as well as certain logistics challenges] have resulted in, and will continue to cause, inflationary cost pressure in our supply chain.

[removed: If] [added: Additionally, if] inflationary pressures in [removed: logistics or] component costs persist, we may not be able to [added: quickly or easily] adjust pricing, reduce costs, or implement countermeasures.

[removed: Additionally,] [added: Also,] there is [added: continued] uncertainty surrounding the impact of any monetary policy changes taken by the U.S. Federal Reserve and other central banks to address the structural risks associated with inflation.

Additionally, hospitals are facing significant financial pressure as supply chain constraints and inflation drive up operating costs, [removed: rising] [added: higher] interest rates make access to credit more expensive, unrealized losses decrease available cash reserves, and fiscal stimulus programs enacted during the COVID-19 pandemic wind down.

In addition, as [added: overall] competition [added: for medical technologies, including robotic-assisted devices and treatment options,] progresses in various markets, we will likely experience longer selling cycles and pricing pressures.

[removed: Any or all of these factors could negatively impact the number of da] Vinci procedures performed or the number of system placements and have a material adverse effect on our business, financial condition, or results of operations resulting in [added: the] failure to achieve our anticipated financial results.

[removed: *Procedures*][added: Da Vinci Procedures]

In 2021, [removed: COVID-19] resurgences [added: of the outbreak of a novel strain of coronavirus (COVID-19)] affected da Vinci procedure volumes at various times throughout the year in most of the markets that we operate in.

After each resurgence, as COVID-19 cases and hospitalizations subsided, we saw procedure [added: volumes recover.]

[removed: The] [added: We expect the] depth and extent to which [removed: the] COVID-19 [removed: pandemic will impact] [added: impacts] individual markets [removed: will] [added: to] vary based on the availability of vaccinations, personal protective equipment, intensive care units and operating rooms, and medical staff, as well as [added: other] government interventions.

When COVID-19 infection rates [removed: spike] [added: have spiked] in a particular [removed: region,] [added: region in the past,] procedure volumes [removed: have been] [added: were often] negatively impacted and the diagnoses of new conditions and their related treatments [removed: have been] [added: were sometimes] deferred.

While [added: we believe that] there [removed: is] [added: has been] a backlog of [removed: patients,] [added: patients that remains to be treated, and that such a backlog has positively contributed to 2023 procedure volumes,] it is [removed: unpredictable] [added: difficult to determine if and] when [removed: those] [added: any remaining backlog of] patients will ultimately seek diagnosis and treatment and whether they will be treated through surgery.

[removed: In addition,] [added: Additionally,] COVID-19 [removed: has contributed] [added: has, and may continue to, contribute] to [removed: the] [added: hospital] staffing [removed: shortages experienced by hospitals,] [added: shortages,] which impacts hospitals’ ability to provide patient care and, in some cases, results in the deferral of elective surgeries.

We generate revenue from the placement of da Vinci [removed: Surgical Systems,] [added: surgical systems,] in sales or sales-type lease arrangements where revenue is recognized up-front or in [added: fixed-payment or usage-based] operating lease [removed: and usage-based] arrangements where revenue is recognized over time.

We earn recurring revenue from the sales of instruments, accessories, and services, as well as [removed: the] revenue from operating leases.

The da Vinci [removed: Surgical System] [added: surgical system] generally sells for between [removed: $0.5] [added: $0.7] million and $2.5 million, depending [removed: upon] [added: on] the model, configuration, and geography, and represents a significant capital equipment investment for our customers when purchased.

We generally earn between [removed: $600] [added: $700] and [removed: $3,500] [added: $3,600] of instruments and accessories revenue per surgical procedure performed, depending on the type and complexity of the specific procedures performed and the number and type of instruments used.

We typically enter into service contracts at the time systems are sold or leased at an annual fee between $80,000 and [removed: $190,000,] [added: $200,000,] depending [removed: upon] [added: on] the configuration of the underlying system and the composition of the services offered under the contract.

We generate revenue from the placement of Ion systems, in sales or sales-type lease arrangements where revenue is recognized up-front or in [added: fixed-payment or usage-based] operating lease [removed: and usage-based] arrangements where revenue is [removed: recognized over time.]

Recurring revenue increased to [removed: $4.9] [added: $5.94] billion, or [removed: 79%] [added: 83%] of total revenue in [removed: 2022,] [added: 2023,] compared to [removed: $4.3] [added: $4.92] billion, or [removed: 75%] [added: 79%] of total revenue in [removed: 2021,] [added: 2022,] and [removed: $3.4] [added: $4.29] billion, or [removed: 77%] [added: 75%] of total revenue in [removed: 2020.][added: 2021.]

Instruments and accessories revenue increased to [removed: $3.52] [added: $4.28] billion in [removed: 2022,] [added: 2023,] compared to [removed: $3.10] [added: $3.52] billion in [removed: 2021] [added: 2022] and [removed: $2.46] [added: $3.10] billion in [removed: 2020.][added: 2021.]

Service revenue was [removed: $1.02] [added: $1.17] billion in [removed: 2022,] [added: 2023,] compared to [removed: $0.92] [added: $1.02] billion in [removed: 2021] [added: 2022] and [removed: $0.72] [added: $0.92] billion in [removed: 2020.][added: 2021.]

The increase in service revenue was primarily driven by the growth of the base of installed da Vinci [removed: Surgical Systems] [added: surgical systems] producing service [removed: revenue, as well as the effects of the Customer Relief Program in 2020, which resulted in an $80 million decrease in service] revenue.

The installed base of da Vinci [removed: Surgical Systems] [added: surgical systems] grew [removed: 12%] [added: 14%] to approximately [removed: 7,544] [added: 8,606] as of December 31, [removed: 2022;] [added: 2023;] 12% to approximately [removed: 6,730] [added: 7,544] as of December 31, [removed: 2021;] [added: 2022;] and [removed: 7%] [added: 12%] to approximately [removed: 5,989] [added: 6,730] as of December 31, [removed: 2020.][added: 2021.]

Management believes that the installed base, number of placements, and utilization of systems provide meaningful supplemental information regarding our performance, as management believes that the installed base, number of placements, and utilization of systems are an indicator of the rate of adoption of [added: our] robotic-assisted [removed: surgery or bronchoscopy] [added: medical procedures] as well as an indicator of future recurring revenue.

Since 2013, we have entered into sales-type and [added: fixed-payment] operating lease arrangements directly with certain qualified customers as a way to offer customers flexibility in how they acquire systems and expand their robotic-assisted programs while leveraging our balance sheet.

We have also entered into usage-based [added: operating lease] arrangements with qualified customers that have committed da Vinci programs where we charge for the system and service as the systems are utilized.

We include [removed: operating and sales-type leases, and] systems placed under [added: fixed-payment and] usage-based [added: operating lease] arrangements, [added: as well as sales-type lease arrangements,] in our system placement and installed base disclosures.

In January 2024, we obtained the European certification in accordance with 2017/745 EU MDR (Medical Devices Regulation) for our da Vinci SP surgical system for use in endoscopic abdominopelvic, thoracoscopic, transoral otolaryngology, transanal colorectal, and breast surgical procedures.

We plan to commercialize the da Vinci SP surgical system in select major European countries throughout 2024 as part of a measured rollout strategy.

In addition, we have submitted regulatory filings in the U.S., Japan, and South Korea for our fifth-generation multi-port platform, da Vinci 5.

If we obtain the required regulatory clearances, we plan a phased launch over several quarters after clearance, giving us time to mature our supply and manufacturing processes for the new system.

compatible with the da Vinci X or da Vinci Xi systems.

The system features an ultra-thin, ultra-maneuverable catheter that can articulate 180 degrees in all directions and allows navigation far into the peripheral lung and provides the stability necessary for precision in a biopsy.

Many suspicious lesions found in the lung may be small and difficult to access, which can make diagnosis challenging, and Ion helps physicians obtain tissue samples from deep within the lung, which could help enable earlier diagnosis.

In March 2023, we obtained the European certification in accordance with 2017/745 EU MDR (Medical Devices Regulation) for our Ion endoluminal system and, in September 2023, we received regulatory clearance for our Ion endoluminal system in South Korea.

Supply chain constraints continued to show improvement as 2023 progressed, relative to 2022, based on fewer market constraints.

Notably, supply of semiconductor materials rebounded, while certain residual stresses remain.

Additionally, prices of such materials remain elevated due to either market demand or production-related cost inflation.

We are actively engaged in activities to seek to mitigate the impact of any supply chain disruptions on our operations.

However, supply constraints with certain materials, which may be unavoidable, could delay the timing of finished product deliveries, which could result in deferred or canceled procedures.

A number of hospitals continue to experience challenges with staffing and cost pressures that could affect their ability to provide patient care; however, the staffing challenges have shown signs of improvement during the second half of 2023, relative to the first half of 2023 and to the prior year.

Hospitals may also be adversely affected by the liquidity concerns in the broader financial services industry that could result in delayed access or loss of access to uninsured deposits or loss of their ability to draw on existing credit facilities involving a troubled or failed financial institution.

Any or all of these factors could negatively impact the number of da

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We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits exceed insured limits.

Market conditions could impact the viability of these institutions.

To date, these market conditions and liquidity concerns have not impacted our results of operations.

However, in the event of the failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.

Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

In 2023, COVID-19 resurgences in China continued to negatively impact our procedure volumes in January.

However, in February and March, as infections and hospitalization started to decrease, we saw a recovery of procedure volumes.

During the remainder of 2023, we did not experience significant disruptions from COVID-19.

Our system sale arrangements generally include a five-year period of service, with the first year of service provided for free.

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recognized over time.

The Ion system generally sells for between $500,000 and $650,000.

Our instruments and accessories have limited lives and will either expire or wear out as they are used in procedures, at which point they need to be replaced.

We typically enter into service contracts at the time systems are sold or leased at an annual fee between $55,000 and $65,000.

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The following table summarizes our system placements under leasing arrangements for the years ended December 31, 2023, 2022, and 2021:

| | | | Year Ended December 31, | | | | | | | | | | | | | | |

| Da Vinci System Placements Under Leasing Arrangements | | | | | | | | | | | | | | | | | |

| Fixed-payment operating lease arrangements | | | 304 | | | | | | 276 | | | | | | 333 | | |

| Usage-based operating lease arrangements | | | 355 | | | | | | 216 | | | | | | 184 | | |

| Total da Vinci system placements under operating lease arrangements | | | 659 | | | | | | 492 | | | | | | 517 | | |

| % of Total da Vinci system placements | | | 48 | | % | | | | 39 | | % | | | | 38 | | % |

| Sales-type lease arrangements | | | 45 | | | | | | 99 | | | | | | 151 | | |

Our rollout of the Ion

system is progressing well, and we are continuing to gather additional clinical evidence.

We have experienced increased difficulties in obtaining a sufficient supply of a number of component materials used in our products, such as semiconductor components as well as a range of other materials, including, but not limited to, metals and polymers, as global supply has become significantly constrained due to increased demand for certain materials.

Additionally, prices of such materials have increased due to the increased demand and supply shortage.

We are engaged in activities to seek to mitigate supply disruptions, but the global supply chain shortages will remain a challenge for the foreseeable future.

However, if shortages in important supply chain materials in the semiconductor or other markets or logistics challenges continue, we could fail to meet product demand, which could result in deferred or canceled procedures.

The current macroeconomic environment is impacting our customers financially and operationally as well.

Hospitals are experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care.

In 2020, as a result of the outbreak of a novel strain of coronavirus (COVID-19), we saw a substantial reduction in da Vinci procedures.

The initial decline in procedures in the first quarter of 2020 was significant, most notably in China and then later in Western Europe and the U.S. as the pandemic spread.

The second quarter of 2020 saw a further significant decline in procedures, followed by a period of recovery and new resurgences.

In the U.S., procedures initially continued to decline, before starting a recovery as COVID-19 cases dropped and elective procedures were permitted.

In China, procedure volumes recovered strongly, while the impact on procedure volumes of other countries varied.

The third and fourth quarters of 2020 were characterized by the continued recovery of procedure volumes in the U.S. and China, while the procedure volumes of other countries, such as Japan, continued to vary depending on the spread and/or resurgence of COVID-19.

volumes recover.

The impact of COVID-19 on our procedure volumes varies widely by country, region, and type.

Based on our experience during the last three years, we do not expect all markets, regions, and procedure types to recover at the same time or at the same pace.

*System Demand*

As the impact of the COVID-19 pandemic progressed throughout 2020, customers in affected regions deferred decisions to purchase or lease systems into future quarters and, in some cases, indefinitely.

In addition, the year-over-year stagnation in procedures during 2020 and, in turn, reduced utilization of our systems had resulted in unused capacity in the existing installed base.

On the other hand, throughout 2021, we experienced strong system demand, as utilization levels recovered.

In general, we believe that the COVID-19 pandemic had less of an impact on hospital spending capacity and that customers recognize that surgery meets their quadruple aim objectives better than other surgical approaches.

This system demand continued during 2022; however, in 2022, our system demand was also impacted by macroeconomic challenges impacting our customers, primarily in the U.S. Refer to the factors outlined in the *Macroeconomic Environment* section above.

*Customer Relief Program*

In April 2020, we announced a program to provide financial relief to our customers.

The program consisted of three main elements.

The first element provided credits against service fees otherwise due in the six-month period from April 1 through September 30, 2020, which generally reflected the underutilization of the system during that period.

Those credits were offered to most customers worldwide.

The second element of the program deferred certain lease payments, and the third element extended certain payment terms.

Service fee credits resulted in an $80 million decrease in service revenue in 2020.

While the short-term payment relief offered did not have a material impact on the results of operations, we deferred $15 million of lease billings and extended payment terms associated with $181 million of trade receivables during the program, of which $19 million remained outstanding as of December 31, 2020.

All of the trade receivables with extended payment terms were collected as of December 31, 2021.

We may be subject to increased credit risks resulting in collection delinquencies and defaults, which could materially impact our bad debt write-offs and provisions for credit losses.

Although we have programs in place that are designed to monitor and mitigate the associated risks, there can be no assurance that such programs will be effective in reducing credit risks relating to these lease financing arrangements and extended payment terms.

There was no similar customer relief program offered in 2021 or 2022.

*General Increase in Risks*

The COVID-19 pandemic and local actions, such as “shelter-in-place” orders and restrictions on our ability to travel and access our customers or temporary closures of our facilities, including our training and manufacturing operations, or the facilities of our suppliers and their contract manufacturers, could further significantly impact our sales and our ability to produce and ship our products and supply our customers.

*Our Response*

Our priorities and actions during the COVID-19 pandemic have been and remain as follows.

First, we are focused on the health and safety of all those we serve—patients, customers, our communities, and our employees—implementing continuous updates to our health and safety policies and processes.

The weighted average duration of our portfolio as of December 31, [removed: 2022,] [added: 2023,] was approximately 0.8 years.

A hypothetical increase or decrease in interest rates by 25 basis points would have resulted in a decrease or increase in the fair value of our net investment position of approximately [removed: $12] [added: $14] million, respectively, as of December 31, [removed: 2022.][added: 2023.]

For the year ended December 31, [removed: 2022,] [added: 2023,] sales denominated in foreign currencies were approximately [removed: 24%] [added: 25%] of total revenue.

For the year ended December 31, [removed: 2022,] [added: 2023,] our revenue would have decreased by approximately [removed: $100] [added: $121] million if the U.S. dollar exchange rate strengthened by 10%.

A 10% strengthening of the U.S. dollar exchange rate against all currencies to which we have exposure, after considering foreign currency hedges and offsetting positions as of December 31, [removed: 2022,] [added: 2023,] would have resulted in an approximately [removed: $2.7] [added: $1] million increase in the carrying amounts of those net assets.

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Intuitive®, Intuitive Surgical*®*, da Vinci®, da Vinci S®, da Vinci Si®, da Vinci X®, da Vinci Xi®, da Vinci [added: 5™, da Vinci] SP®, EndoWrist®, Firefly®, [added: Intuitive 3D Models™, Intuitive Hub™,] Ion®, [removed: Iris®,] [added: My Intuitive™,] OnSite®, SimNow®, SureForm®, and SynchroSeal® are trademarks or registered trademarks of the Company.

The current healthcare environment continues to stress critical resources, including the professionals who staff care [removed: teams: surgeons, anesthesiologists, nurses, and other staff.][added: teams.]

[removed: *Surgeon’s] [added: *Surgeon] Console*.

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On most of our current systems (da Vinci X*,* da Vinci Xi, da Vinci SP, and da Vinci Si), a second [removed: surgeon’s] [added: surgeon] console may be used in two ways: to provide assistance to the primary surgeon during surgery or to act as an active aid during surgeon-proctor training sessions.

The da Vinci [removed: Surgical System’s] [added: surgical system’s] design provides natural hand-eye alignment at the [removed: surgeon’s] [added: surgeon] console.

[removed: Up] [added: For our da Vinci Xi, da Vinci X, and da Vinci Si surgical systems, up] to four arms attached to the cart can be positioned, as appropriate, and then locked into place.

Our da Vinci [removed: SP Surgical System] [added: single-port (“SP”) surgical system] includes a single arm with three multi-jointed, wristed instruments and the first da Vinci fully wristed, 3DHD camera.

Firefly is a standard feature of the da Vinci X, da Vinci Xi, and da Vinci SP [removed: Surgical Systems] [added: *s*urgical systems] and is available as an upgrade on our da Vinci Si [removed: Surgical System.][added: surgical system.]

[removed: Instruments] [added: Surgical Instruments] and Accessories

We offer a comprehensive suite of stapling, energy, and core instrumentation for our [added: multi-port da Vinci] surgical systems.

Most of the various instruments that we manufacture incorporate [removed: EndoWrist technology with] wristed joints for natural dexterity and tips customized for various surgical procedures.

In 2020, we announced our “Extended Use Program,” which consists of select da Vinci Xi and da Vinci X instruments possessing 12 to 18 uses (“Extended Use Instruments”) compared to the [removed: previously] [added: previous] 10 uses.

Extended Use Instruments were introduced in the U.S. and Europe in the fourth quarter of 2020 and were launched in most other countries around the world during the first half of 2021, except [removed: China due to regulatory timelines.][added: China, where they were launched in the second half of 2023.]

These instruments enable [removed: operators] [added: surgeons] to precisely position and fire the stapler.

We have various clearances for five staplers that can be used with the da Vinci X and da Vinci Xi [removed: Surgical Systems:] [added: surgical systems:] the EndoWrist [removed: Stapler] 30 and 45 [added: staplers] and the SureForm [removed: Stapler] 30, 45, and [removed: 60,] [added: 60 staplers,] where the numeric designation indicates the length of the staple line.

The EndoWrist [removed: Stapler] 30 [added: stapler] is intended to deliver particular utility with fine tissue interaction in lobectomy and other thoracic procedures.

The EndoWrist [removed: Stapler] 45 [added: stapler] is used in general surgery, gynecologic, thoracic, and urologic procedures.

The SureForm [removed: Staplers] 30, 45, and 60 [added: staplers] are single-use, fully wristed, stapling instruments intended to be used in general surgery, thoracic, gynecologic, urologic, and pediatric surgery procedures.

The SureForm [removed: Stapler] 30 [added: stapler] may deliver particular utility in thoracic procedures.

The SureForm 45 [added: stapler] may [removed: deliver] [added: receive] particular [removed: utility] [added: use] in thoracic and colorectal procedures where maneuverability and visualization are limited.

The SureForm [removed: Stapler] 60 [added: stapler] is intended to deliver particular [removed: utility] [added: value] in bariatric procedures.

[removed: The EndoWrist One Vessel Sealer] [added: It] is [removed: a wristed, single-use instrument] intended for [added: grasping and blunt dissection of tissue,] bipolar [removed: coagulation] [added: coagulation,] and mechanical transection of vessels up to [removed: 7mm] [added: 7 mm] in diameter and tissue bundles that fit in the jaws of the instrument.

This instrument enables surgeons to [removed: fully] control vessel sealing, while providing the benefits of robotic-assisted [removed: surgery.][added: surgery, and is designed to enhance surgical efficiency and autonomy in a variety of general surgery and gynecologic procedures.]

[removed: The da Vinci] Vessel Sealer Extend is a single-use, fully [removed: wristed] [added: wristed, advanced] bipolar [removed: electrosurgical] instrument [added: that is] compatible with our fourth-generation [removed: multiport] [added: multi-port surgical] systems.

Intuitive provides [added: a] progressive learning [removed: pathways] [added: journey] to support the [removed: safe and effective] use of our technology.

These [added: training] pathways leverage both learning engagements and learning technologies.

[removed: Specific] [added: Learning] technology solutions include Intuitive Learning, SimNow, customized training models, remote case observations, and remote proctoring.

Two of the technology solutions most [removed: heavily utilized] [added: often used] by customers are Intuitive Learning and SimNow.

It includes [removed: services] [added: service] care plans, support teams, OnSite monitoring, software upgrades and updates, as well as a customer portal.

*3D Modeling Services.* [removed: Iris] [added: Intuitive 3D Models] is our augmented reality imaging product for use in [removed: kidney] [added: kidney, prostate, lung, and rectal] procedures.

The service extracts CT [added: and MR] scans, runs them through [removed: machine-learning] [added: segmentation] algorithms and, after technicians’ revision and radiologists’ review, returns a 3D segmented model of the [removed: kidney] [added: organ] for use in planning for a [removed: procedure and for] [added: procedure,] intraoperative [removed: visualization of the area.][added: visualization, and surgical education.]

The tool uses augmented reality to give surgeons an image with details of [removed: the kidney] [added: organ] anatomy – blood vessels, tumor shape, and size – that they may not be able to see well with other imaging.

Intuitive designed this to help with pre-operative planning and intraoperative guidance [added: to let surgeons know where critical anatomy sits] as [added: they work through a procedure, as] well as to be shared as a teaching tool for other physicians and patients.

[removed: The most recent version] [added: It] enables mobile access to Intuitive’s Learning platform, case reports generated automatically for the surgeon, and an ability for surgeons to publish their practice information online for patients seeking local physicians.

For the care team, Intuitive Hub acts as a point-of-care device that automates tasks, such as video recording and bookmarking, and can be used to facilitate peer-to-peer collaboration [added: by] utilizing [removed: our Telepresence offering.][added: the telepresence feature.]

For [removed: physicians,] [added: surgeons,] Intuitive Hub connects video and other data that can be accessed after a [removed: medical] [added: surgical] procedure to help facilitate personalized learning and increased efficiency.

Through the use of [added: Intuitive’s] smart, connected systems, robotic technologies, advanced imaging, and informatics, our objective is to create value for patients, [removed: surgeons,] [added: physicians,] and hospitals, as summarized below.

We define *procedure efficacy* as a measure of the success of the procedure in helping resolve the underlying [removed: disease] [added: disease,] and *invasiveness* as a measure of patient pain and disruption of regular activities.

When the patient value of a procedure using an Intuitive product is greater than that of alternative [removed: treatment] [added: intervention] options, patients may benefit from seeking out [removed: surgeons] [added: physicians] and hospitals that offer those products, which could potentially result in a local market share shift.

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Vessel Sealer Extend is also compatible with certain third-party electrosurgical generators.

*Training Pathways.* Intuitive’s training pathways provide a systematic learning journey that helps customers build technical proficiency.

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Many of these programs take place at Intuitive training centers and are taught by experienced Intuitive staff, while our advanced courses are taught by surgeon and physician instructors.

*Learning Technology.* Learning technologies are designed to help customers access training.

Enabling technology helps bring innovative offerings to the customer.

*Intuitive Learning.* Intuitive Learning enables customers to complete technology and procedure education, while also being able to view, assign, and track technology and simulation learning.

Intuitive Learning’s user roles include surgeons/physicians, residents/fellows, care teams, patient side assists, robotic coordinators, and sterile reprocessing staff.

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The product has recently been launched, and we are in the process of bringing the first sites onboard.

Ion brings physicians an immersive bronchoscopy experience from visualizing the lung anatomy and planning each patient’s procedure to navigating and biopsying small nodules in the peripheral lung.

Results from early studies have demonstrated relatively low occurrence of pneumothorax requiring intervention.

Using

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Some of these procedures are widely accepted in the medical community and, in many cases, have a long history of use.

Additionally, we face or expect to face competition from companies that have developed or may develop wristed, robotic- or computer-assisted medical systems and products.

We may not be able to maintain or improve our competitive position against current or potential competitors, especially those with greater resources.

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*FDA*

All clinical investigations designed to determine the safety and effectiveness of a medical device must be conducted in accordance

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*Other Healthcare Regulatory Laws*

We are subject to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our products.

Restrictions under applicable federal and state healthcare laws and regulations, include the following:

- the federal Anti-Kickback Statute, which prohibits, among other things, individuals and entities from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal and state healthcare program such as Medicare and Medicaid.

A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

- the federal criminal and civil false claims laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions against individuals or entities, and the Federal Civil Monetary Penalties Laws, which prohibit, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.

In addition, certain marketing practices, including off-label promotion, may also violate false claims laws.

Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act;

- the Health Insurance Portability and Accountability Act (“HIPAA”), which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

- the Physician Payments Sunshine Act, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to the Centers for Medicare & Medicaid Services (“CMS”) information on certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), teaching hospitals, and certain other health care providers (such as physician assistants and nurse practitioners), as well as ownership and investment interests held by physicians and their immediate family members;

- analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, that may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; and

- certain state laws that require medical device manufacturers to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring such manufacturers to report information related to payments to clinicians and other healthcare providers or marketing expenditures.

Violations of any of these laws may result in significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, the curtailment or restructuring of operations, loss of eligibility to obtain approvals from the FDA, exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, integrity oversight and reporting obligations, or reputational harm.

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Da Vinci instruments are offered in a variety of diameters, of which 8mm and 12mm diameter sizes are the most commonly sold.

This instrument is designed to enhance surgical efficiency and autonomy in a variety of general surgery and gynecologic procedures.

The da Vinci Vessel Sealer Extend is our newest instrument in the Vessel Sealing family of products.

It is intended for grasping and blunt dissection of tissue and for bipolar coagulation and mechanical transection of vessels up to 7mm in diameter and tissue bundles that fit in the jaws of the instrument.

They are structured and measured training pathways for surgeons, physicians, and care teams.

*Training Pathways.* Intuitive Training Pathways are progressive learning journeys that help our customers achieve proficiency using Intuitive technology.

Many of these programs take place at established Intuitive training centers and include instruction by expert surgeons and physicians.

*Learning Technology.* Learning Technologies include solutions that provide education and training directly to the customer as well as the enabling technologies that make provision possible.

*Intuitive Learning.* Intuitive Learning provides our customers with access to the technology, procedure, and simulation materials essential to their specific learning journeys.

Both assignment of learning materials and tracking of learning progress occur seamlessly within the platform.

While Intuitive Learning plans guide learners through each step in their pathways, customers are also able to search the platform independently for additional materials that may be relevant to their area of focus.

This platform also provides customers with immediate access to their various training certificates.

It can also be part of the viewing experience inside of the da Vinci surgeon console to enhance information and let surgeons know where critical anatomy sits as they work through a procedure.

We have completed several pilot studies with Iris to obtain customer feedback, which is currently being incorporated to support a future product launch.

Using this data, administrators, chiefs of surgery, and surgeons can gain

Through ingenuity and intelligent technology, we

our products.

consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements.

Over the last several years, the FDA has proposed reforms to its 510(k) clearance process, and such proposals could include increased requirements for clinical data and a longer review period and make it more difficult for manufacturers to utilize the 510(k) clearance process for their products.

For example, in September 2019, the FDA issued revised final guidance describing an optional “safety and performance based” premarket review pathway for manufacturers of “certain, well-understood device types” to demonstrate substantial equivalence under the 510(k) clearance pathway by showing that such device meets objective safety and performance criteria established by the FDA, thereby obviating the need for manufacturers to compare the safety and performance of their medical devices to specific predicate devices in the clearance process.

The FDA maintains a list of device types appropriate for the “safety and performance based” pathway and continues to develop product-specific guidance documents that identify the performance criteria for each such device type, as well as the recommended testing methods, where feasible.

Cybersecurity

In the normal course of business, we may collect and store personal information and other sensitive information, including proprietary and confidential business information, trade secrets, intellectual property, patient information, sensitive third-party information, and employee information.

To protect this information, our existing cybersecurity policies require continuous monitoring and detection programs, network security precautions, encryption of critical data, and in-depth security assessments of vendors.

We maintain various protections designed to safeguard against cyberattacks, including firewalls and virus detection software.

We have established and regularly test our disaster recovery plan, and we protect against business interruption by backing up our major systems.

In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing, and engage third parties to assess the effectiveness of our data security practices.

In addition, we maintain insurance that includes cybersecurity coverage.

Our cybersecurity program is executed by a team of highly skilled cybersecurity professionals, including, but not limited to, risk and threat analysts, penetration testers, security operations center analysts, cyber regulatory analysts, and risk/threat modelers.

Team members maintain certification(s) and practical application of skills through organizations, such as ISC2 (Certified Information Security Systems Professional or CISSP), Global Information Assurance (GIAC), EC-Council, the Committee on National Security Systems (CNSS), and the National Security Agency (NSA).

The program incorporates industry-standard frameworks, policies, and practices designed to protect the privacy and security of our sensitive information.

Our cybersecurity team reports to the Board of Directors on a quarterly basis on information security and cybersecurity matters or more frequently as needed.

Our Audit Committee, which is comprised of several members of our Board of Directors, has oversight responsibility for our data security practices, and we believe that the committee has the requisite skills and visibility into the design and operation of our data security practices to fulfill this responsibility effectively.

Five members of our Board

of Directors have enhanced information security expertise, including Gary S.

Guthart, Ph.D., Joseph C.

Beery, Amal M.

Johnson, Keith R.

Leonard Jr., and Mark J.

Rubash.

The information included in [Note 8 to the Consolidated Financial [removed: Statements](#i025de1eec32044f5a30c5872569f0e8d_250)] [added: Statements](#idedd11384ae3443fb7ca452b61ce97d8_250)] included in Part II, Item 8 of this report is incorporated herein by reference.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

[removed: ][added: ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, [removed: 2022,] [added: 2023,] based upon the closing price of Common Stock on such date as reported on The Nasdaq Global Select Market, was approximately [removed: $71.4] [added: $119.6] billion.

The number of outstanding shares of the registrant’s common stock as of [removed: February 7, 2023,] [added: January 25, 2024,] was [removed: 350,389,679.][added: 352,325,863.]

Part III incorporates information by reference to the definitive proxy statement for the Company’s Annual Meeting of Stockholders to be held on or about April [removed: 27, 2023,] [added: 25, 2024,] to be filed within 120 days of the registrant’s fiscal year ended December 31, [removed: 2022.][added: 2023.]

| [Item [removed: 1.](#i025de1eec32044f5a30c5872569f0e8d_19)] [added: 1.](#idedd11384ae3443fb7ca452b61ce97d8_19)] | | | [removed: [Business](#i025de1eec32044f5a30c5872569f0e8d_19)] [added: [Business](#idedd11384ae3443fb7ca452b61ce97d8_19)] | | | [removed: [6](#i025de1eec32044f5a30c5872569f0e8d_19)] [added: [6](#idedd11384ae3443fb7ca452b61ce97d8_19)] | | |

| [Item [removed: 1A.](#i025de1eec32044f5a30c5872569f0e8d_61)] [added: 1A.](#idedd11384ae3443fb7ca452b61ce97d8_64)] | | | [Risk [removed: Factors](#i025de1eec32044f5a30c5872569f0e8d_61)] [added: Factors](#idedd11384ae3443fb7ca452b61ce97d8_64)] | | | [removed: [26](#i025de1eec32044f5a30c5872569f0e8d_61)] [added: [26](#idedd11384ae3443fb7ca452b61ce97d8_64)] | | |

| [Item [removed: 1B.](#i025de1eec32044f5a30c5872569f0e8d_76)] [added: 1B.](#idedd11384ae3443fb7ca452b61ce97d8_79)] | | | [Unresolved Staff [removed: Comments](#i025de1eec32044f5a30c5872569f0e8d_76)] [added: Comments](#idedd11384ae3443fb7ca452b61ce97d8_79)] | | | [removed: [54](#i025de1eec32044f5a30c5872569f0e8d_76)] [added: [57](#idedd11384ae3443fb7ca452b61ce97d8_79)] | | |

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| [Item [removed: 4.](#i025de1eec32044f5a30c5872569f0e8d_85)] [added: 4.](#idedd11384ae3443fb7ca452b61ce97d8_88)] | | | [Mine Safety [removed: Disclosures](#i025de1eec32044f5a30c5872569f0e8d_85)] [added: Disclosures](#idedd11384ae3443fb7ca452b61ce97d8_88)] | | | [removed: [55](#i025de1eec32044f5a30c5872569f0e8d_85)] [added: [59](#idedd11384ae3443fb7ca452b61ce97d8_88)] | | |

| [Item [removed: 5.](#i025de1eec32044f5a30c5872569f0e8d_91)] [added: 5.](#idedd11384ae3443fb7ca452b61ce97d8_94)] | | | [Market [removed: for](#i025de1eec32044f5a30c5872569f0e8d_91) [Registrant’s] [added: for Registrant’s] Common Equity, Related Stockholder [removed: Matters](#i025de1eec32044f5a30c5872569f0e8d_91)[,](#i025de1eec32044f5a30c5872569f0e8d_91) [and](#i025de1eec32044f5a30c5872569f0e8d_91) [](#i025de1eec32044f5a30c5872569f0e8d_91)[Issuer] [added: Matters, and Issuer] Purchases of Equity [removed: Securities](#i025de1eec32044f5a30c5872569f0e8d_91)] [added: Securities](#idedd11384ae3443fb7ca452b61ce97d8_94)] | | | [removed: [56](#i025de1eec32044f5a30c5872569f0e8d_91)] [added: [60](#idedd11384ae3443fb7ca452b61ce97d8_94)] | | |

| [Item [removed: 6.](#i025de1eec32044f5a30c5872569f0e8d_94)] [added: 6.](#idedd11384ae3443fb7ca452b61ce97d8_97)] | | | \[RESERVED\] | | | [removed: [57](#i025de1eec32044f5a30c5872569f0e8d_94)] [added: [61](#idedd11384ae3443fb7ca452b61ce97d8_97)] | | |

| [Item [removed: 7.](#i025de1eec32044f5a30c5872569f0e8d_97)] [added: 7.](#idedd11384ae3443fb7ca452b61ce97d8_100)] | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i025de1eec32044f5a30c5872569f0e8d_97)] [added: Operations](#idedd11384ae3443fb7ca452b61ce97d8_100)] | | | [removed: [58](#i025de1eec32044f5a30c5872569f0e8d_97)] [added: [62](#idedd11384ae3443fb7ca452b61ce97d8_100)] | | |

| [Item [removed: 7A.](#i025de1eec32044f5a30c5872569f0e8d_199)] [added: 7A.](#idedd11384ae3443fb7ca452b61ce97d8_202)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i025de1eec32044f5a30c5872569f0e8d_199)] [added: Risk](#idedd11384ae3443fb7ca452b61ce97d8_202)] | | | [removed: [82](#i025de1eec32044f5a30c5872569f0e8d_199)] [added: [87](#idedd11384ae3443fb7ca452b61ce97d8_202)] | | |

| [Item [removed: 8.](#i025de1eec32044f5a30c5872569f0e8d_202)] [added: 8.](#idedd11384ae3443fb7ca452b61ce97d8_205)] | | | [Financial Statements and Supplementary [removed: Data](#i025de1eec32044f5a30c5872569f0e8d_202)] [added: Data](#idedd11384ae3443fb7ca452b61ce97d8_205)] | | | [removed: [83](#i025de1eec32044f5a30c5872569f0e8d_202)] [added: [88](#idedd11384ae3443fb7ca452b61ce97d8_205)] | | |

| [Item [removed: 9.](#i025de1eec32044f5a30c5872569f0e8d_280)] [added: 9.](#idedd11384ae3443fb7ca452b61ce97d8_280)] | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i025de1eec32044f5a30c5872569f0e8d_280)] [added: Disclosure](#idedd11384ae3443fb7ca452b61ce97d8_280)] | | | [removed: [122](#i025de1eec32044f5a30c5872569f0e8d_280)] [added: [126](#idedd11384ae3443fb7ca452b61ce97d8_280)] | | |

| [Item [removed: 9A.](#i025de1eec32044f5a30c5872569f0e8d_283)] [added: 9A.](#idedd11384ae3443fb7ca452b61ce97d8_283)] | | | [Controls and [removed: Procedures](#i025de1eec32044f5a30c5872569f0e8d_283)] [added: Procedures](#idedd11384ae3443fb7ca452b61ce97d8_283)] | | | [removed: [122](#i025de1eec32044f5a30c5872569f0e8d_283)] [added: [126](#idedd11384ae3443fb7ca452b61ce97d8_283)] | | |

| [Item [removed: 9B.](#i025de1eec32044f5a30c5872569f0e8d_286)] [added: 9B.](#idedd11384ae3443fb7ca452b61ce97d8_286)] | | | [Other [removed: Information](#i025de1eec32044f5a30c5872569f0e8d_286)] [added: Information](#idedd11384ae3443fb7ca452b61ce97d8_286)] | | | [removed: [122](#i025de1eec32044f5a30c5872569f0e8d_286)] [added: [127](#idedd11384ae3443fb7ca452b61ce97d8_286)] | | |

| [Item [removed: 9C.](#i025de1eec32044f5a30c5872569f0e8d_289)] [added: 9C.](#idedd11384ae3443fb7ca452b61ce97d8_289)] | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i025de1eec32044f5a30c5872569f0e8d_289)] [added: Inspections](#idedd11384ae3443fb7ca452b61ce97d8_289)] | | | [removed: [123](#i025de1eec32044f5a30c5872569f0e8d_289)] [added: [127](#idedd11384ae3443fb7ca452b61ce97d8_289)] | | |

| [PART [removed: III](#i025de1eec32044f5a30c5872569f0e8d_292)] [added: III](#idedd11384ae3443fb7ca452b61ce97d8_292)] | | | | | | | | |

| [Item [removed: 10.](#i025de1eec32044f5a30c5872569f0e8d_295)] [added: 10.](#idedd11384ae3443fb7ca452b61ce97d8_295)] | | | [Directors, Executive [removed: Officers](#i025de1eec32044f5a30c5872569f0e8d_295)[,](#i025de1eec32044f5a30c5872569f0e8d_295)] [added: Officers](#idedd11384ae3443fb7ca452b61ce97d8_295)[,](#idedd11384ae3443fb7ca452b61ce97d8_295)] [and Corporate [removed: Governance](#i025de1eec32044f5a30c5872569f0e8d_295)] [added: Governance](#idedd11384ae3443fb7ca452b61ce97d8_295)] | | | [removed: [124](#i025de1eec32044f5a30c5872569f0e8d_295)] [added: [128](#idedd11384ae3443fb7ca452b61ce97d8_295)] | | |

| [Item [removed: 11.](#i025de1eec32044f5a30c5872569f0e8d_298)] [added: 11.](#idedd11384ae3443fb7ca452b61ce97d8_298)] | | | [Executive [removed: Compensation](#i025de1eec32044f5a30c5872569f0e8d_298)] [added: Compensation](#idedd11384ae3443fb7ca452b61ce97d8_298)] | | | [removed: [124](#i025de1eec32044f5a30c5872569f0e8d_298)] [added: [128](#idedd11384ae3443fb7ca452b61ce97d8_298)] | | |

| [Item [removed: 12.](#i025de1eec32044f5a30c5872569f0e8d_301)] [added: 12.](#idedd11384ae3443fb7ca452b61ce97d8_301)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i025de1eec32044f5a30c5872569f0e8d_301)] [added: Matters](#idedd11384ae3443fb7ca452b61ce97d8_301)] | | | [removed: [124](#i025de1eec32044f5a30c5872569f0e8d_301)] [added: [128](#idedd11384ae3443fb7ca452b61ce97d8_301)] | | |

| [Item [removed: 13.](#i025de1eec32044f5a30c5872569f0e8d_304)] [added: 13.](#idedd11384ae3443fb7ca452b61ce97d8_304)] | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i025de1eec32044f5a30c5872569f0e8d_304)] [added: Independence](#idedd11384ae3443fb7ca452b61ce97d8_304)] | | | [removed: [124](#i025de1eec32044f5a30c5872569f0e8d_304)] [added: [128](#idedd11384ae3443fb7ca452b61ce97d8_304)] | | |

| [Item [removed: 14.](#i025de1eec32044f5a30c5872569f0e8d_307)] [added: 14.](#idedd11384ae3443fb7ca452b61ce97d8_307)] | | | [Principal Accountant Fees and [removed: Services](#i025de1eec32044f5a30c5872569f0e8d_307)] [added: Services](#idedd11384ae3443fb7ca452b61ce97d8_307)] | | | [removed: [124](#i025de1eec32044f5a30c5872569f0e8d_307)] [added: [128](#idedd11384ae3443fb7ca452b61ce97d8_307)] | | |

| [PART [removed: IV](#i025de1eec32044f5a30c5872569f0e8d_310)] [added: IV](#idedd11384ae3443fb7ca452b61ce97d8_310)] | | | | | | | | |

| [Item [removed: 15.](#i025de1eec32044f5a30c5872569f0e8d_313)] [added: 15.](#idedd11384ae3443fb7ca452b61ce97d8_313)] | | | [Exhibits and Financial Statement [removed: Schedules](#i025de1eec32044f5a30c5872569f0e8d_313)] [added: Schedules](#idedd11384ae3443fb7ca452b61ce97d8_313)] | | | [removed: [125](#i025de1eec32044f5a30c5872569f0e8d_313)] [added: [129](#idedd11384ae3443fb7ca452b61ce97d8_313)] | | |

| [Item [removed: 16.](#i025de1eec32044f5a30c5872569f0e8d_319)] [added: 16.](#idedd11384ae3443fb7ca452b61ce97d8_319)] | | | [Form 10-K [removed: Summary](#i025de1eec32044f5a30c5872569f0e8d_319)] [added: Summary](#idedd11384ae3443fb7ca452b61ce97d8_319)] | | | [removed: [126](#i025de1eec32044f5a30c5872569f0e8d_319)] [added: [130](#idedd11384ae3443fb7ca452b61ce97d8_319)] | | |

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

These forward-looking statements include, but are not limited to, statements related to [added: future results of operations, future financial condition,] the expected impacts of [removed: the] COVID-19 [removed: pandemic] on our business, financial condition, and results of operations, [removed: future results of operations, future financial condition,] our financing plans and future capital requirements, our potential tax assets or liabilities, and statements based on current expectations, estimates, forecasts, and projections about the economies and markets in which we operate and our beliefs and assumptions regarding these economies and markets.

These forward-looking statements should be considered in light of various important factors, including, but not limited to, the following: the overall macroeconomic environment, which [removed: impacts] [added: may impact] customer spending and our costs, including [removed: increased] [added: the levels of] inflation and interest rates; the conflict in Ukraine; [added: the conflict between Israel and Hamas;] disruption to our supply chain, including increased difficulties in obtaining a sufficient supply of materials in the semiconductor and other markets; [added: curtailed or delayed capital spending by hospitals;] the [added: impact of global and regional economic and credit market conditions on healthcare spending; the] risk that [removed: the] COVID-19 [removed: pandemic] could lead to material delays and cancellations of, or reduced demand for, procedures; [removed: curtailed or delayed capital spending by hospitals;] closures of our facilities; delays in surgeon training; delays in gathering clinical evidence; delays in obtaining new product approvals, clearances, or certifications from the U.S. Food and Drug Administration (“FDA”), comparable regulatory authorities, or notified bodies; diversion of resources to respond to COVID-19 outbreaks; the [removed: impact of global and regional economic and credit market conditions on healthcare spending; the] risk of our inability to comply with complex FDA and other regulations, which may result in significant enforcement actions; regulatory approvals, clearances, certifications, and restrictions or any dispute that may occur with any regulatory body; guidelines and recommendations in the healthcare and patient communities; healthcare reform legislation in the U.S. and its impact on hospital spending, reimbursement, and fees levied on certain medical device revenues; changes in hospital admissions and actions by payers to limit or manage surgical procedures; the timing and success of product development and market acceptance of developed products; the results of any collaborations, in-licensing arrangements, joint ventures, strategic alliances, or partnerships, including the joint venture with Shanghai Fosun Pharmaceutical (Group) Co., Ltd.; our completion of and ability to successfully integrate [removed: acquisitions, including Orpheus Medical;] [added: acquisitions;] procedure counts; intellectual property positions and litigation; competition in the medical device industry and in the specific markets of surgery in which we operate; risks associated with our operations and any expansion outside of the United States; unanticipated manufacturing disruptions or the inability to meet demand for products; our reliance on [removed: sole] [added: sole-] and [removed: single source] [added: single-sourced] suppliers; the results of legal proceedings to which we are or may become a party, including, but not limited to, product liability claims; adverse publicity regarding us and the safety of our products and adequacy of training; the impact of changes to tax legislation, guidance, and interpretations; changes in tariffs, trade barriers, and regulatory requirements; and other risks and uncertainties, including those listed under the caption “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report and which are based on current expectations and are subject to risks, uncertainties, and assumptions that are difficult to predict.

- Macroeconomic conditions could [removed: have a] materially [removed: adverse impact on] [added: adversely affect] our business, financial condition, or results of operations.

- Our reliance on [removed: sole] [added: sole-] and [removed: single source] [added: single-sourced] suppliers and ability to purchase at acceptable prices a sufficient supply of [removed: materials, parts, and components] [added: materials] could harm our ability to meet product demand in a timely manner or within budget.

- We are subject to litigation, investigations, and other legal proceedings relating to our products, [removed: our] customers, [removed: our] competitors, and government regulators that could materially adversely affect our financial condition, divert management’s attention, and harm our business.

- [removed: Because our] [added: Our] markets are highly competitive, [added: and] customers may choose to purchase our competitors’ products or services or may not accept robotic-assisted medical procedures, which could result in reduced revenue and loss of market share.

- If our products contain defects or encounter performance problems, we may have to recall our products [removed: and, as a result, incur additional unforeseen costs,] and our reputation may suffer.

- [removed: If we lose key personnel or are unable] [added: The failure] to attract and retain [removed: other personnel,] [added: key personnel could harm] our ability to [removed: compete will be harmed,] [added: compete,] and [removed: increases] [added: changes] in [added: our existing] labor [removed: costs] [added: relationships] could materially adversely impact our business, financial condition, or results of operations.

- [removed: Our customers] [added: Third parties] may [removed: use] [added: offer to sell to our customers] remanufactured and/or unauthorized [removed: third-party] instruments and [removed: accessories,] [added: accessories or to service our systems,] which could [removed: result in reduced revenue and] negatively impact [added: safety,] our [added: financial results, and our] reputation.

- If we do not successfully manage our [removed: collaboration arrangements, licensing arrangements,] [added: collaboration, licensing,] joint [removed: ventures,] [added: venture,] strategic [removed: alliances,] [added: alliance,] or [removed: partnerships] [added: partnership arrangements] with third parties, we may not realize the expected benefits from such [removed: alliances,] [added: arrangements,] which may have a material adverse effect on our business, financial condition, or results of operations.

| [PART I](#idedd11384ae3443fb7ca452b61ce97d8_16) | | | | | | | | |

| [Item 1C.](#idedd11384ae3443fb7ca452b61ce97d8_549755816273) | | | [Cybersecurity](#idedd11384ae3443fb7ca452b61ce97d8_549755816273) | | | [57](#idedd11384ae3443fb7ca452b61ce97d8_549755816273) | | |

| [PART II](#idedd11384ae3443fb7ca452b61ce97d8_91) | | | | | | | | |

| | | | | | | | | |

| [SIGNATURES](#idedd11384ae3443fb7ca452b61ce97d8_322) | | | | | | [131](#idedd11384ae3443fb7ca452b61ce97d8_322) | | |

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

- Incorporating artificial intelligence into our products, services, and operations may result in legal and regulatory risks or reputational harm or have other adverse consequences to our business, financial condition, or results of operations.

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

| [PART I](#i025de1eec32044f5a30c5872569f0e8d_16) | | | | | | | | |

| [PART II](#i025de1eec32044f5a30c5872569f0e8d_88) | | | | | | | | |

| [SIGNATURES](#i025de1eec32044f5a30c5872569f0e8d_322) | | | | | | [127](#i025de1eec32044f5a30c5872569f0e8d_322) | | |

CYBERSECURITY RISK MANAGEMENT AND STRATEGY

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.

Our cybersecurity risk management program includes a cybersecurity incident response plan.

We design and assess our program based on various cybersecurity frameworks, such as the National Institute of Standards and Technology (“NIST”) and the Center for Internet Security (“CIS”), as well as information security standards issued by the International Organization for Standardization, including ISO 27001 and ISO 27002.

In 2022, our cybersecurity systems and processes achieved ISO 27001 certification.

We use these cybersecurity frameworks and information security standards as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.

[Table](#idedd11384ae3443fb7ca452b61ce97d8_7) [of Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)

Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies, reporting channels, and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.

Our cybersecurity risk management program includes:

- risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology (“IT”) environment;

- a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents;

- the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls;

- cybersecurity awareness training for our employees, incident response personnel, and senior management;

- a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and

- a third-party risk management process for service providers, suppliers, and vendors.

We have not identified any risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

CYBERSECURITY GOVERNANCE

Our Board considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risks to the Audit Committee.

The Audit Committee oversees management’s implementation of the cybersecurity risk management program.

The Audit Committee receives quarterly reports from management on our cybersecurity risks.

In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser potential impact.

The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity.

The full Board also receives briefings from management on our cybersecurity risk management program.

Board members receive presentations on cybersecurity topics from our IT management team, internal security staff, or external experts as part of the Board’s continuing education.

Six members of our Board of Directors have information security expertise, including Joseph C.

Beery, Gary S.

Guthart, Ph.D., Amal M.

Johnson, Sreelakshmi Kolli, Keith R.

Leonard, Jr., and Mark J.

Rubash.

Our management team, including our IT management team, is responsible for assessing and managing our material risks from cybersecurity threats.

The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.

Our management team has certifications from various organizations, such as ISC2 (Certified Information Security Systems Professional or “CISSP”), Global Information Assurance (“GIAC”), and the EC-Council.

Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the information technology environment.

As of December 31, [removed: 2022,] [added: 2023,] we own approximately 2.0 million square feet of space on [removed: 112] [added: 142] acres of land in Sunnyvale, California, where we house our principal headquarters, research and development, service, and support functions, as well as certain of our manufacturing operations.

Outside of Sunnyvale, California, we own facilities in other U.S. locations that are used for sales, training, manufacturing, engineering, and administrative functions, including approximately [removed: 530,000] [added: 520,000] square feet of space on [removed: 60] [added: 69] acres of land in Peachtree Corners, Georgia.

We also lease approximately [removed: 750,000] [added: 830,000] square feet of space for certain engineering, warehousing, and support functions at various locations in the U.S. [removed: Outside of the U.S., we own properties in Mexicali, Mexico, primarily for manufacturing operations, and Aubonne, Switzerland, primarily for our international headquarters.]

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

Outside of the U.S., we own and/or lease properties in Mexicali, Mexico, and Germany, primarily for manufacturing operations, and Aubonne, Switzerland, primarily for our international headquarters.

In Israel, we lease facilities for research and development.

In Germany, we own and lease facilities for manufacturing operations, as we build out operations of our acquisition of certain assets and operations from Schölly Fiberoptic GmbH.

In Israel, we lease facilities, including space for the operations of our subsidiary, Orpheus Medical.

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

As of [removed: February 7, 2023,] [added: January 25, 2024,] there were [removed: 130] [added: 132] stockholders of record of our common stock, although there are a significantly larger number of beneficial owners of our common stock.

The table below summarizes our stock repurchase activity for the quarter ended December 31, [removed: 2022.][added: 2023.]

[removed: (1) Since] [added: (1)Since] March 2009, we have had an active stock repurchase program (the “Repurchase Program”).

As of December 31, [removed: 2022,] [added: 2023,] our Board of Directors (our “Board”) had authorized an aggregate amount of up to $10.0 billion for stock repurchases, of which the most recent authorization occurred in July 2022, when our Board increased the authorized amount available under our Repurchase Program to $3.5 billion.

The remaining amount available to repurchase shares under the authorized Repurchase Program as of December 31, [removed: 2022,] [added: 2023,] is [removed: $1.5] [added: $1.1] billion.

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

*This graph is not “soliciting material” or deemed “filed” with the SEC [added: or subject to Regulation 14A or 14C (17 CFR 240.14a-1–240.14a-104 or 240.14c-1–240.14c-101)] for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that Section, and shall not be deemed incorporated by reference into any filings of Intuitive Surgical, Inc. under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.*

The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, [removed: 2017,] [added: 2018,] and December 31, [removed: 2022,] [added: 2023,] with the cumulative total return of (i) the Nasdaq Composite Index, (ii) the S&P 500 Healthcare Index, and (iii) the S&P 500 Index over the same period.

This graph assumes an investment of $100.00 on December 31, [removed: 2017,] [added: 2018,] in our common stock, the Nasdaq Composite Index, the S&P Healthcare Index, and the S&P 500 Index and assumes the re-investment of dividends, if any.

[removed: ][added: ]

| | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2022] [added: 2023] | | |

| October 1 to October 31, 2023 | | | 232,332 | | | | | | $ | 259.56 | | | | | 232,332 | | | | | | $ | 1.1 | billion |

| November 1 to November 30, 2023 | | | 22,585 | | | | | | $ | 265.01 | | | | | 22,585 | | | | | | $ | 1.1 | billion |

| December 1 to December 31, 2023 | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1.1 | billion |

| Total during quarter ended December 31, 2023 | | | 254,917 | | | | | | $ | 260.04 | | | | | 254,917 | | | | | | | | |

| Intuitive Surgical, Inc. | | | $ | 100.00 | | | | | $ | 123.43 | | | | | $ | 170.82 | | | | | $ | 225.07 | | | | | $ | 166.22 | | | | | $ | 211.33 | |

| Nasdaq Composite | | | $ | 100.00 | | | | | $ | 136.69 | | | | | $ | 198.10 | | | | | $ | 242.03 | | | | | $ | 163.28 | | | | | $ | 236.17 | |

| S&P 500 Healthcare Index | | | $ | 100.00 | | | | | $ | 118.68 | | | | | $ | 132.24 | | | | | $ | 164.20 | | | | | $ | 158.37 | | | | | $ | 158.85 | |

| S&P 500 Index | | | $ | 100.00 | | | | | $ | 131.49 | | | | | $ | 155.68 | | | | | $ | 200.37 | | | | | $ | 164.08 | | | | | $ | 207.21 | |

All share and per-share information presented have been retroactively adjusted to reflect the three-for-one stock split of our issued and outstanding common stock in October 2021.

| October 1 to October 31, 2022 | | | 3,635,474 | | | | | | $ | 254.46 | | | | | 3,635,474 | | | | | | $ | 1.6 | billion |

| November 1 to November 30, 2022 | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 1.6 | billion |

| December 1 to December 31, 2022 | | | 298,017 | | | | | | $ | 254.48 | | | | | 298,017 | | | | | | $ | 1.5 | billion |

| Total during quarter ended December 31, 2022 | | | 3,933,491 | | | | | | $ | 254.46 | | | | | 3,933,491 | | | | | | | | |

| Intuitive Surgical, Inc. | | | $ | 100.00 | | | | | $ | 131.23 | | | | | $ | 163.08 | | | | | $ | 224.17 | | | | | $ | 295.36 | | | | | $ | 218.13 | |

| Nasdaq Composite | | | $ | 100.00 | | | | | $ | 97.16 | | | | | $ | 132.81 | | | | | $ | 192.47 | | | | | $ | 235.15 | | | | | $ | 158.65 | |

| S&P 500 Healthcare Index | | | $ | 100.00 | | | | | $ | 104.69 | | | | | $ | 124.25 | | | | | $ | 138.45 | | | | | $ | 171.90 | | | | | $ | 165.80 | |

| S&P 500 Index | | | $ | 100.00 | | | | | $ | 95.62 | | | | | $ | 125.72 | | | | | $ | 148.85 | | | | | $ | 191.58 | | | | | $ | 156.88 | |

[removed: [Table](#i025de1eec32044f5a30c5872569f0e8d_7)] [added: [Table](#idedd11384ae3443fb7ca452b61ce97d8_7)] [of [removed: Contents](#i025de1eec32044f5a30c5872569f0e8d_7)][added: Contents](#idedd11384ae3443fb7ca452b61ce97d8_7)]

| [Report of Independent Registered Public Accounting [removed: Firm](#i025de1eec32044f5a30c5872569f0e8d_205)] [added: Firm](#idedd11384ae3443fb7ca452b61ce97d8_208)] – | | | PCAOB ID: | | | 238 | | | [removed: [84](#i025de1eec32044f5a30c5872569f0e8d_205)] [added: [89](#idedd11384ae3443fb7ca452b61ce97d8_208)] | | |

| [Consolidated Balance Sheets as of December [removed: 31,](#i025de1eec32044f5a30c5872569f0e8d_208) 2022[, and](#i025de1eec32044f5a30c5872569f0e8d_208) 2021] [added: 31,](#idedd11384ae3443fb7ca452b61ce97d8_211) 2023[, and](#idedd11384ae3443fb7ca452b61ce97d8_211) 2022] | | | | | | | | | [removed: [85](#i025de1eec32044f5a30c5872569f0e8d_208)] [added: [90](#idedd11384ae3443fb7ca452b61ce97d8_211)] | | |

| [Consolidated Statements of Income for the years ended December [removed: 31,](#i025de1eec32044f5a30c5872569f0e8d_211) 2022[,](#i025de1eec32044f5a30c5872569f0e8d_211) 2021[, and](#i025de1eec32044f5a30c5872569f0e8d_211) 2020] [added: 31,](#idedd11384ae3443fb7ca452b61ce97d8_214) 2023[,](#idedd11384ae3443fb7ca452b61ce97d8_214) 2022[, and](#idedd11384ae3443fb7ca452b61ce97d8_214) 2021] | | | | | | | | | [removed: [86](#i025de1eec32044f5a30c5872569f0e8d_211)] [added: [91](#idedd11384ae3443fb7ca452b61ce97d8_214)] | | |

| [Consolidated Statements of Comprehensive Income for the years ended December [removed: 31,](#i025de1eec32044f5a30c5872569f0e8d_214) 2022[,](#i025de1eec32044f5a30c5872569f0e8d_214) 2021[, and](#i025de1eec32044f5a30c5872569f0e8d_214) 2020] [added: 31,](#idedd11384ae3443fb7ca452b61ce97d8_217) 2023[,](#idedd11384ae3443fb7ca452b61ce97d8_217) 2022[, and](#idedd11384ae3443fb7ca452b61ce97d8_217) 2021] | | | | | | | | | [removed: [87](#i025de1eec32044f5a30c5872569f0e8d_214)] [added: [92](#idedd11384ae3443fb7ca452b61ce97d8_217)] | | |

| [Consolidated Statements of Stockholders’ Equity for the years ended December [removed: 31,](#i025de1eec32044f5a30c5872569f0e8d_217) 2022[,](#i025de1eec32044f5a30c5872569f0e8d_217) 2021[, and](#i025de1eec32044f5a30c5872569f0e8d_217) 2020] [added: 31,](#idedd11384ae3443fb7ca452b61ce97d8_220) 2023[,](#idedd11384ae3443fb7ca452b61ce97d8_220) 2022[, and](#idedd11384ae3443fb7ca452b61ce97d8_220) 2021] | | | | | | | | | [removed: [88](#i025de1eec32044f5a30c5872569f0e8d_217)] [added: [93](#idedd11384ae3443fb7ca452b61ce97d8_220)] | | |

| [Consolidated Statements of Cash Flows for the years ended December [removed: 31,](#i025de1eec32044f5a30c5872569f0e8d_220) 2022[,](#i025de1eec32044f5a30c5872569f0e8d_220) 2021[, and](#i025de1eec32044f5a30c5872569f0e8d_220) 2020] [added: 31,](#idedd11384ae3443fb7ca452b61ce97d8_223) 2023[,](#idedd11384ae3443fb7ca452b61ce97d8_223) 2022[, and](#idedd11384ae3443fb7ca452b61ce97d8_223) 2021] | | | | | | | | | [removed: [89](#i025de1eec32044f5a30c5872569f0e8d_220)] [added: [94](#idedd11384ae3443fb7ca452b61ce97d8_223)] | | |

| [Notes to the Consolidated Financial [removed: Statements](#i025de1eec32044f5a30c5872569f0e8d_223)] [added: Statements](#idedd11384ae3443fb7ca452b61ce97d8_226)] | | | | | | | | | [removed: [90](#i025de1eec32044f5a30c5872569f0e8d_223)] [added: [95](#idedd11384ae3443fb7ca452b61ce97d8_226)] | | |

| [Schedule II—Valuation and Qualifying [removed: Accounts](#i025de1eec32044f5a30c5872569f0e8d_277)] [added: Accounts](#idedd11384ae3443fb7ca452b61ce97d8_277)] | | | | | | | | | [removed: [121](#i025de1eec32044f5a30c5872569f0e8d_277)] [added: [125](#idedd11384ae3443fb7ca452b61ce97d8_277)] | | |

We have audited the accompanying consolidated balance sheets of Intuitive Surgical, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022] [added: 2023] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

As described in Notes 2 and 5 to the consolidated financial statements, the Company recognized [removed: $1,680.1] [added: $1,679.7] million of systems revenue, during the year ended December 31, [removed: 2022.][added: 2023.]

| | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Cash and cash equivalents | | | $ | [removed: 1,581.2] [added: 2,750.1] | | | | | $ | [removed: 1,290.9] [added: 1,581.2] | |

| Short-term investments | | | [removed: 2,536.7] [added: 2,473.1] | | | | | | [removed: 2,913.1] [added: 2,536.7] | | |

| Accounts receivable, net of allowances of [removed: $22.4] [added: $27.1] and [removed: $20.2] [added: $22.4] as of December 31, [removed: 2022,] [added: 2023,] and [removed: 2021,] [added: 2022,] respectively | | | [removed: 942.1] [added: 1,130.2] | | | | | | [removed: 782.7] [added: 942.1] | | |

| Inventory | | | [removed: 893.2] [added: 1,220.6] | | | | | | [removed: 587.1] [added: 893.2] | | |

| Prepaids and other current assets | | | [removed: 299.8] [added: 314.0] | | | | | | [removed: 271.1] [added: 299.8] | | |

| Total current assets | | | [removed: 6,253.0] [added: 7,888.0] | | | | | | [removed: 5,844.9] [added: 6,253.0] | | |

| Property, plant, and equipment, net | | | [removed: 2,374.2] [added: 3,537.6] | | | | | | [removed: 1,876.4] [added: 2,374.2] | | |

| Long-term investments | | | [removed: 2,623.6] [added: 2,120.0] | | | | | | [removed: 4,415.5] [added: 2,623.6] | | |

| Deferred tax assets | | | [removed: 664.6] [added: 910.5] | | | | | | [removed: 441.4] [added: 664.6] | | |

| Intangible and other assets, net | | | [removed: 710.1] [added: 636.7] | | | | | | [removed: 633.2] [added: 710.1] | | |

| Goodwill | | | [removed: 348.5] [added: 348.7] | | | | | | [removed: 343.6] [added: 348.5] | | |

| Total assets | | | $ | [removed: 12,974.0] [added: 15,441.5] | | | | | $ | [removed: 13,555.0] [added: 12,974.0] | |

| Accounts payable | | | $ | [removed: 147.0] [added: 188.7] | | | | | $ | [removed: 121.2] [added: 147.0] | |

| Accrued compensation and employee benefits | | | [removed: 401.6] [added: 436.4] | | | | | | [removed: 350.1] [added: 401.6] | | |

| Deferred revenue | | | [removed: 397.3] [added: 446.1] | | | | | | [removed: 377.2] [added: 397.3] | | |

| Other accrued liabilities | | | [removed: 476.2] [added: 587.5] | | | | | | [removed: 301.3] [added: 476.2] | | |

| Total current liabilities | | | [removed: 1,422.1] [added: 1,658.7] | | | | | | [removed: 1,149.8] [added: 1,422.1] | | |

| Other long-term liabilities | | | [removed: 439.3] [added: 385.5] | | | | | | [removed: 453.7] [added: 439.3] | | |

| Total liabilities | | | [removed: 1,861.4] [added: 2,044.2] | | | | | | [removed: 1,603.5] [added: 1,861.4] | | |

| Preferred stock, 2.5 shares authorized, $0.001 par value, issuable in series; [removed: no] [added: zero] shares issued and outstanding as of December 31, [removed: 2022,] [added: 2023,] and [removed: 2021] [added: 2022] | | | — | | | | | | — | | |

| Common stock, 600.0 shares authorized, $0.001 par value, [removed: 350.0] [added: 352.3] shares and [removed: 357.7] [added: 350.0] shares issued and outstanding as of December 31, [removed: 2022,] [added: 2023,] and [removed: 2021,] [added: 2022,] respectively | | | 0.4 | | | | | | 0.4 | | |

| Additional paid-in capital | | | [removed: 7,703.9] [added: 8,576.4] | | | | | | [removed: 7,164.0] [added: 7,703.9] | | |

| Retained earnings | | | [removed: 3,500.1] [added: 4,743.0] | | | | | | [removed: 4,760.9] [added: 3,500.1] | | |

| Accumulated other comprehensive loss | | | [removed: (162.5)] [added: (12.2)] | | | | | | [removed: (24.2)] [added: (162.5)] | | |

| Total Intuitive Surgical, Inc. stockholders’ equity | | | [removed: 11,041.9] [added: 13,307.6] | | | | | | [removed: 11,901.1] [added: 11,041.9] | | |

| Noncontrolling interest in joint venture | | | [removed: 70.7] [added: 89.7] | | | | | | [removed: 50.4] [added: 70.7] | | |

January 31, 2024

| | | | 2023 | | | | | | 2022 | | |

| Repurchase and retirement of common stock | | | (1.7) | | | | | | — | | | | | | (18.7) | | | | | | (397.6) | | | | | | — | | | | | | (416.3) | | | | | | — | | | | | | (416.3) | | |

| Other comprehensive income (loss) | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 150.3 | | | | | | 150.3 | | | | | | (0.3) | | | | | | 150.0 | | |

| Balances as of December 31, 2023 | | | 352.3 | | | | | | $ | 0.4 | | | | | $ | 8,576.4 | | | | | $ | 4,743.0 | | | | | $ | (12.2) | | | | | $ | 13,307.6 | | | | | $ | 89.7 | | | | | $ | 13,397.3 | |

| Net income | | | $ | 1,817.3 | | | | | $ | 1,344.4 | | | | | $ | 1,728.1 | |

The Ion endoluminal system consists of a system cart, a controller, a catheter, and a vision probe.

Both systems use software, instruments, and accessories.

The Company’s future results of operations and liquidity could be materially adversely affected by macroeconomic and geopolitical factors in the U.S. and globally, including the supply chain environment, inflationary pressure, higher interest rates, instability in the global financial markets, significant disruptions in the commodities’ markets as a result of the conflict between Russia and Ukraine and the conflict between Israel and Hamas, labor shortages, the introduction of or changes in tariffs, trade

Supply chain constraints continued to show improvement through 2023 based on fewer market constraints.

Notably, supply of semiconductor materials rebounded while certain residual stresses remain.

Additionally, prices of such materials remain elevated due to either market demand or production-related cost inflation.

The Company is actively engaged in activities to seek to mitigate the impact of any supply chain disruptions on the Company’s operations.

However, supply constraints with certain materials, which may be unavoidable, could delay the timing of our product deliveries, which could result in deferred or canceled procedures.

A number of hospitals continue to experience challenges with staffing and cost pressures that could affect their ability to provide patient care; however, the staffing challenges have shown signs of improvement during the second half of 2023, relative to the first half of 2023 and to the prior year.

Hospitals may also be adversely affected by the liquidity concerns in the broader financial services industry that could result in delayed access or loss of access to uninsured deposits or loss of their ability to draw on existing credit facilities involving a troubled or failed financial institution.

The Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits exceed insured limits.

Market conditions could impact the viability of these institutions.

To date, these market conditions and liquidity concerns have not impacted our results of operations.

However, in the event of the failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all.

Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

When COVID-19 infection rates have spiked in a particular region in the past, procedure volumes were often negatively impacted and the diagnoses of new conditions and their related treatments were sometimes deferred.

During the years ended December 31, 2023, 2022, and 2021, the Company recognized $10.2 million, $6.4 million, and $2.9 million of amortization expense associated with capitalized implementation costs, respectively.

legally enforceable to be performance obligations.

The Company generally does not provide specified-price trade-in rights or upgrade rights at the time of a system purchase; however, when they are provided, it is typically a specified trade-in credit that declines over time and requires the customer to enter into a new purchase agreement to exercise the right.

The Company accounts for such rights as guarantees and, first, reduces the total consideration by the fair value of the guarantee; the remaining consideration is then allocated to each performance obligation.

The liability associated with these guarantees was not material for any of the years presented.

The Company regularly reviews the allowance by considering factors such as historical

| High | | | $ | 39.6 | | | | | $ | 70.2 | | | | | $ | 60.3 | | | | | $ | 24.4 | | | | | $ | 6.5 | | | | | | | | $ | 0.2 | | | | | $ | 201.2 | |

| Moderate | | | 37.6 | | | | | | 51.4 | | | | | | 43.1 | | | | | | 22.2 | | | | | | 4.5 | | | | | | | | | 1.0 | | | | | | 159.8 | | |

| Low | | | 1.5 | | | | | | 4.6 | | | | | | 3.5 | | | | | | 0.8 | | | | | | — | | | | | | | | | 0.2 | | | | | | 10.6 | | |

| Total | | | $ | 78.7 | | | | | $ | 126.2 | | | | | $ | 106.9 | | | | | $ | 47.4 | | | | | $ | 11.0 | | | | | | | | $ | 1.4 | | | | | $ | 371.6 | |

In December 2023, the FASB issued ASU 2023-07, *Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures* (“ASU 2023-07”), which requires all public entities, including public entities with a single reportable segment, to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance.

Additionally, the standard requires disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures.

The guidance in this update is effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024.

The Company is currently in the process of evaluating the effects of this pronouncement on our related disclosures.

In December 2023, the FASB issued ASU 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures* (“ASU 2023-09”), which requires enhanced income tax disclosures, including specific categories and disaggregation of information in the effective tax rate reconciliation, disaggregated information related to income taxes paid, income or loss from continuing operations before income tax expense or benefit, and income tax expense or benefit from continuing operations.

The requirements of the ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently in the process of evaluating the impact of this pronouncement on our related disclosures.

The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any accounting pronouncements issued through the date of this report will have a material impact on the Company’s Financial Statements.

February 10, 2023

| Balances as of December 31, 2019 | | | 347.9 | | | | | | $ | 0.3 | | | | | $ | 5,756.6 | | | | | $ | 2,494.5 | | | | | $ | 12.4 | | | | | $ | 8,263.8 | | | | | $ | 20.9 | | | | | $ | 8,284.7 | |

| Adoption of new accounting standards (1) | | | — | | | | | | — | | | | | | — | | | | | | (0.1) | | | | | | — | | | | | | (0.1) | | | | | | — | | | | | | (0.1) | | |

| Repurchase and retirement of common stock | | | (0.7) | | | | | | — | | | | | | (7.9) | | | | | | (126.4) | | | | | | — | | | | | | (134.3) | | | | | | — | | | | | | (134.3) | | |

| Other comprehensive income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (49.1) | | | | | | (49.1) | | | | | | (0.7) | | | | | | (49.8) | | |

| (1) Represents the adjustment related to the adoption of Accounting Standards Update (“ASU”) 2016-13, C*redit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Chindex Medical Limited (“Chindex”), a subsidiary of Fosun Pharma, has been its distribution partner for da Vinci Surgical Systems in China.

In particular, the Company has experienced increased difficulties in obtaining a sufficient supply of a number of component materials used in its products, such as semiconductor components as well as a range of other materials including, but not limited to, metals and polymers, as global supply has become significantly constrained due to increased demand for certain materials.

Additionally, prices of such materials have increased due to the increased demand and supply shortage.

The Company is engaged in activities to seek to mitigate supply disruptions by, for example, increasing its communications with its suppliers and modifying its purchase order coverage and inventory levels.

However, the global supply chain shortages will remain a challenge for the foreseeable future.

However, if shortages in important supply chain materials in the semiconductor or other markets or logistics challenges continue, the Company could fail to meet product demand, which could result in deferred or canceled procedures.

Hospitals are also experiencing staffing shortages and supply chain issues that could affect their ability to provide patient care.

The extent of the impact on the Company’s business is highly uncertain and difficult to predict.

Customer Relief Program

During the second quarter of 2020, the Company introduced a series of programs to provide financial relief to customers (the “Customer Relief Program”).

As part of the Customer Relief Program, the Company provided its customers service fee credits, extended payment terms, and deferred payments related to Intuitive System Leasing arrangements.

The Customer Relief Program ended at the end of the third quarter of 2020.

There was no similar customer relief program offered in 2021 or 2022.

*Service fee credits*.

As part of the Customer Relief Program, the Company provided service fee credits to customers based on the reduction in the utilization of their systems during the second and third quarters of 2020 relative to a pre-COVID-19 level baseline.

The Company reflected the service fee credits as a reduction of service revenue and accounts receivable in the quarter they were earned by its customers.

The service fee credit program resulted in an $80 million decrease in service revenue in 2020.

*Short-term payment relief*.

In response to the COVID-19 pandemic, the Company introduced a payment deferral program to provide financial relief to qualified customers.

This relief extended payment terms up to 180 days for qualified and creditworthy customers.

The Company also introduced a lease payment deferral program in which creditworthy customers with active Intuitive system leasing arrangements could elect to defer lease payments up to five months that are payable at the end of the lease by extending the lease term.

This program did not result in substantial increases in the rights of the lessor or the obligations of the

lessee, and the Company elected to apply the relief provided by the Financial Accounting Standards Board (“FASB”) FAQ on accounting for COVID-19 and market volatility by not applying the lease modification guidance in ASC 842 to the lease arrangements affected by the deferrals and lease extensions.

For operating lease arrangements where the lease term was extended by adding the deferred period to the end of the contract, the Company recalculated the straight-line revenue based on the revised terms, consistent with the treatment accepted by the FASB FAQ on accounting for COVID-19.

For its sales-type lease arrangements impacted, the Company accounted for the deferral in the timing of lease payments as if there were no changes in the lease contract, consistent with the treatment accepted by the FASB FAQ on accounting for COVID-19.

While the short-term payment relief offered did not have a material impact on the results of operations, the Company deferred $15 million of lease billings and extended payment terms associated with $181 million of billings during the program, of which $19 million remained outstanding as of December 31, 2020.

All of the trade receivables with extended payment terms have been collected as of December 31, 2021.

The Company generally does not provide specified price trade-in rights or upgrade rights at the time of system purchase.

The value of the traded-in system is determined as the amount, after reconditioning costs are added, that will allow a normal profit margin on the sale of the reconditioned unit to be generated.

Such upgrades are performed by completing component level upgrades at the customer’s site.

services.

| High | | | $ | 67.3 | | | | | $ | 86.7 | | | | | $ | 42.6 | | | | | $ | 14.5 | | | | | $ | 2.2 | | | | | | | | $ | 0.4 | | | | | $ | 213.7 | |

| Moderate | | | 98.4 | | | | | | 69.6 | | | | | | 34.1 | | | | | | 7.7 | | | | | | 4.1 | | | | | | | | | 0.3 | | | | | | 214.2 | | |

| Low | | | 2.6 | | | | | | 1.6 | | | | | | 2.9 | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | 7.1 | | |

Based on the results of our assessment under the framework in the Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2022.][added: 2023.]

The effectiveness of our internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included under “Item 8.

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2022,] [added: 2023,] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Rule 10b5-1 Plans

On November 8, 2023, David J.

Rosa, the Company’s President, adopted a Rule 10b5-1 trading plan.

Mr. Rosa’s trading plan provides for the potential exercise and sale of up to 140,850 shares of the Company’s common stock subject to stock options, until February 14, 2025.

This trading plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in the Company’s securities.

On November 15, 2023, Marshall L.

Mohr, the Company’s Executive Vice President, Global Business Services, adopted a Rule 10b5-1 trading plan.

Mr. Mohr’s trading plan provides for the potential exercise and sale of up to 129,810 shares of the Company’s common stock subject to stock options, until November 15, 2024.

This trading plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in the Company’s securities.

On December 8, 2023, Bob DeSantis, the Company’s Executive Vice President and Chief Strategy and Corporate Operations Officer, adopted a Rule 10b5-1 trading plan.

Mr. DeSantis’s trading plan provides for the potential sale of up to 29,868 shares of the Company’s common stock, including the potential exercise and sale of up to 24,106 shares of the Company’s common stock subject to stock options, until December 9, 2024.

This trading plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in the Company’s securities.

On December 15, 2023, Frederik C.

Widman, the Company’s Vice President, Corporate Controller, and Principal Accounting Officer, adopted a Rule 10b5-1 trading plan.

Mr. Widman’s trading plan provides for the potential sale of up to 7,593 shares of the Company’s common stock, including the potential exercise and sale of up to 1,224 shares of the Company’s common stock subject to stock options, until March 7, 2025.

This trading plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in the Company’s securities.

None.

Certain information required by Part III is omitted from this report on Form 10-K and is incorporated herein by reference to our definitive Proxy Statement for our next Annual Meeting of Stockholders (the “Proxy Statement”), which we intend to file pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, within 120 days after December 31, [removed: 2022.][added: 2023.]

The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in our Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, [removed: 2022.][added: 2023.]

2)The following financial statement schedule of Intuitive Surgical, Inc. for [added: 2023,] 2022, [removed: 2021,] and [removed: 2020] [added: 2021] is filed as part of this report and should be read in conjunction with the Consolidated Financial Statements of Intuitive Surgical, Inc.:

| [Schedule II - Valuation and Qualifying [removed: Accounts](#i025de1eec32044f5a30c5872569f0e8d_277)] [added: Accounts](#idedd11384ae3443fb7ca452b61ce97d8_277)] | | | [removed: [121](#i025de1eec32044f5a30c5872569f0e8d_277)] [added: [125](#idedd11384ae3443fb7ca452b61ce97d8_277)] | | |

| [removed: 10.9] [added: 10.9(14)] | | | | | | [Form of Amended and Restated Intuitive Surgical, Inc. 2010 Incentive Award Plan Global Stock Option Grant Notice.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-109xfy23optionagree.htm) * | | |

| [removed: 10.10] [added: 10.10(15)] | | | | | | [Form of Amended and Restated Intuitive Surgical, Inc. 2010 Incentive Award Plan Global Restricted Stock Unit Grant Notice.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-1010xfy23rsuagreeme.htm) * | | |

| [removed: 10.11] [added: 10.11(16)] | | | | | | [Form of Amended and Restated Intuitive Surgical, Inc. 2010 Incentive Award Plan Global Performance Stock Unit Grant Notice](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-1011xfy23psuagreeme.htm). * | | |

| 21.1 | | | | | | [Intuitive Surgical, Inc. [removed: Subsidiaries.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-211xsubsidiariesq4o.htm)] [added: Subsidiaries.](https://www.sec.gov/Archives/edgar/data/1035267/000103526724000021/q423ex-211xsubsidiariesq4o.htm)] | | |

| 23.1 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-231xauditorconsentq.htm)] [added: Firm.](https://www.sec.gov/Archives/edgar/data/1035267/000103526724000021/q423ex-231xauditorconsentq.htm)] | | |

| 31.1 | | | | | | [Certification of Principal Executive [removed: Officer.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-311xceocertofsoxsec.htm)] [added: Officer.](https://www.sec.gov/Archives/edgar/data/1035267/000103526724000021/q423ex-311xceocertofsoxsec.htm)] | | |

| 31.2 | | | | | | [Certification of Principal Financial [removed: Officer.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-312xcfocertofsoxsec.htm)] [added: Officer.](https://www.sec.gov/Archives/edgar/data/1035267/000103526724000021/q423ex-312xcfocertofsoxsec.htm)] | | |

| 32.1 | | | | | | [Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/1035267/000103526723000019/q422ex-3212xceoandcfocerto.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1035267/000103526724000021/q423ex-3212xceoandcfocerto.htm)] | | |

| 101 | | | | | | The following materials from Intuitive Surgical, Inc.’s Annual Report on Form 10-K for the year ended December 31, [removed: 2022,] [added: 2023,] formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged at Level I through IV. | | |

| 104 | | | | | | The cover page from Intuitive Surgical, Inc.’s Annual Report on Form 10-K for the year ended December 31, [removed: 2022,] [added: 2023,] formatted in Inline XBRL and contained in Exhibit 101. | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| 97.1 | | | | | | [Policy for Recovery of Erroneously Awarded Compensation](https://www.sec.gov/Archives/edgar/data/1035267/000103526724000021/q423ex-971xsecclawbackpoli.htm). | | |

| | | | | | | | | |

| | | | | | | | | |

14.Incorporated by reference to Exhibit 10.9 filed with the Company’s 2022 Annual Report on Form 10-K filed on February 10, 2023 (File No. 000-30713).

15.Incorporated by reference to Exhibit 10.10 filed with the Company’s 2022 Annual Report on Form 10-K filed on February 10, 2023 (File No. 000-30713).

16.Incorporated by reference to Exhibit 10.11 filed with the Company’s 2022 Annual Report on Form 10-K filed on February 10, 2023 (File No. 000-30713).

| | | | | | | Gary S. Guthart, [removed: Ph.D. President and Chief] [added: Ph.D. Chief] Executive Officer | | |

| /S/ GARY S. GUTHART | | | | | | [removed: President,] Chief Executive [removed: Officer,] [added: Officer] and Director (Principal Executive Officer) | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ JAMIE E. SAMATH | | | | | | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ FREDRIK C. WIDMAN | | | | | | Vice President, Corporate Controller (Principal Accounting Officer) | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ CRAIG H. BARRATT | | | | | | Chairman of the Board of Directors | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ JOSEPH C. BEERY | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ AMAL M. JOHNSON | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ DON R. KANIA | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ AMY L. LADD | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ KEITH R. LEONARD JR. | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ ALAN J. LEVY | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ JAMI DOVER NACHTSHEIM | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ MONICA P. REED | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

| /S/ MARK J. RUBASH | | | | | | Director | | | | | | [removed: February 10, 2023] [added: January 31, 2024] | | |

Date: January 31, 2024

| /S/ SREELAKSHMI KOLLI | | | | | | Director | | | | | | January 31, 2024 | | |

| Sreelakshmi Kolli | | | | | | | | | | | | | | |

Date: February 10, 2023