Intuitive Surgical (ISRG) Risk Factor Changes

The market price of our common stock has experienced fluctuations and may fluctuate significantly in the future.

•the extent to which our products achieve and maintain acceptance;

The medical device industry has experienced extensive intellectual property litigation and administrative proceedings.

As we continue to introduce and commercialize new products and technologies, there may be U.S.

In addition to patents, we also rely on other intellectual property rights, such as trade secret, copyright, and trademark laws to protect proprietary technologies.

IF WE ARE UNABLE TO FULLY PROTECT AND SUCCESSFULLY DEFEND OUR INTELLECTUAL PROPERTY FROM USE BY THIRD PARTIES, OUR ABILITY TO COMPETE MAY BE HARMED.

Our global customers are subject to periodic inspection by regulatory authorities.

Additionally, we are subject to the risk that a person or government could allege fraud or other misconduct, even if none occurred.

The federal Physicians Payments Sunshine Act imposes reporting and disclosure requirements on certain device manufacturers for any “transfer of value” made or distributed to physicians (including family members), as d…

These laws may affect our sales, marketing, and other promotional activities by limiting the kinds of financial arrangements that we may have with hospitals, physicians, or other potential purchasers of our products.

For instance, in December 2021, the EU Regulation No.

In addition, other legislative changes have been proposed and adopted since the ACA became law.

In China, our capital sales are subject to importation authorizations and purchasing tender processes.

We have gained certification under the EU MDR and, where appropriate, maintained our certificates granted under the former EU MDD for all medical devices that we intend to continue to market in the EU and EEA.

In the EU, the EU MDR, which repealed and replaced the MDD, became applicable on May 26, 2021.

In order to conduct a clinical investigation involving human subjects for the purpose of demonstrating the safety and effectiveness of a medical device, a company must, among other things, apply for and obtain IRB app…

All medical devices placed on the market in the EU must meet the general safety and performance requirements laid down in Annex I to the EU MDR, including the requirement that a medical device must be designed and man…

these changes or modifications, then the FDA could impose enforcement sanctions, require the recall of any modified products, and/or require us to obtain 510(k) clearance or other FDA marketing authorization before pe…

procedures performed, or the installed base of our systems do not have an impact on our results of operations but are used to estimate the progress of our business.

We utilize methods for determining surgical opportunity sizes, the number and type (cancerous or benign) of certain procedures performed, and the installed base of our systems that involve estimates and judgments, whi…

Physical risks associated with climate change are subject to shifting societal, regulatory, and political focus in the U.S., the EU, and globally.

•changes in tax laws or the interpretation of such tax laws.

•changes in the availability of tax credits and tax deductions;

We are subject to taxes in the U.S.

CHANGES IN TAX LAWS OR EXPOSURE TO ADDITIONAL TAX LIABILITIES MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION, OR RESULTS OF OPERATIONS.

There can be no assurance that we will realize a positive return on our strategic investments.

Integrating an acquisition can also be expensive and time-consuming and may strain our resources.

Identifying suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to identify appropriate candidates or successfully complete identified acquisitions.

These alliances may also involve significant costs and divert the focus and attention of our management and other key personnel.

(MERS), Severe Acute Respiratory Syndrome (SARS), and the H1N1 virus.

Our global operations expose us to risks arising from public health crises and outbreaks of epidemic, pandemic, or contagious diseases, such as, historically, the COVID-19 pandemic, the Ebola virus, Middle East Respir…

In addition, the ability of the FDA, foreign authorities, and notified bodies to review and clear, approve, or certify new products can be affected by a variety of factors, including government budget and funding leve…

DISRUPTIONS AT THE FDA AND OTHER GOVERNMENT AGENCIES OR NOTIFIED BODIES COULD PREVENT OUR PRODUCTS FROM BEING CLEARED, CERTIFIED, APPROVED, OR COMMERCIALIZED IN A TIMELY MANNER OR AT ALL, OR COULD HINDER THEIR ABILITY…

Additionally, in February 2022, armed conflict escalated between Russia and Ukraine.

The European Strategy for Data includes a collection of laws focused on ensuring fundamental principles (including doing business in an ethical way, respecting fundamental rights of individuals, not exploiting individ…

In the U.S., HIPAA imposes privacy, security, and breach notification obligations on covered entities and their business associates to ensure the confidentiality, integrity, and availability of individually identifiab…

For example, in the EU, the GDPR requires controllers and processors of data relating to an identifiable living individual or “personal data” to adhere to certain key principles whenever accessing or processing person…

In connection with running our business, we receive, store, use, and otherwise process information that relates to individuals and/or constitutes “personal data,” “personal information,” “personally identifiable infor…

While we generally do not approve the use by our customers of unauthorized and unapproved instruments and accessories that lack FDA clearance or other applicable regulatory approval or certification with our systems o…

The contracting cycle of our systems is lengthy, because the systems are major capital items and their purchase generally requires the approval of senior management of hospitals, their parent organizations, purchasing…

A breach or failure in our security measures could occur from a variety of circumstances and events, including third-party action, employee negligence or error, malfeasance, computer viruses, cyberattacks, or ransom-r…

Apart from the U.S., policymakers in key jurisdictions, such as the EU, are actively working on legislation and regulations to encourage the development and use of ethical and safe AI technologies.

Our current operations, products, and services use AI technologies, including proprietary machine learning and AI algorithms and models.

The extent and duration of the impact of labor market challenges are subject to numerous factors, including the availability of qualified and highly skilled persons in the markets where we operate and unemployment lev…

Additionally, as a result of any volatility in our stock price, certain long-term incentive benefits, such as stock-based compensation, may be viewed as having less value and, accordingly, could lead to higher attrition.

We have strategic relationships with several key distributors for the sale and service of our products in certain countries.

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

IF OUR PRODUCTS DO NOT ACHIEVE AND MAINTAIN CUSTOMER ACCEPTANCE, WE WILL NOT BE ABLE TO GENERATE THE REVENUE NECESSARY TO SUPPORT OUR BUSINESS.

While, to date, no cyberattacks or security breaches and incidents have had a material impact on our operations or financial results, if such an event were to occur, it could impair our ability to attract and retain c…

these third parties to deploy appropriate security programs to protect their systems.

Our business requires us to use and store confidential information, including customer, employee, and business partner personal information, as well as other proprietary information and business data.

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-w…

and generally do not maintain large volumes of components within our inventory.

In particular, our business exposes us to significant risks of patent claims, product liability claims, and competition claims (including antitrust claims), many of which are common in the medical device industry.

WE ARE SUBJECT TO LITIGATION, INVESTIGATIONS, AND OTHER LEGAL PROCEEDINGS RELATING TO OUR PRODUCTS, CUSTOMERS, COMPETITORS, AND GOVERNMENT REGULATORS THAT MAY ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION, OR RES…

The U.S.

In China, we have seen increasing competition in the robotic-assisted surgical system industry from domestic companies as well as a sustained broader central government focus on anti-corruption and systematic governance.

For example, in 2020, the U.S.

We have increased, and will continue to increase, our operations in China.

•the difficulty in establishing, staffing, and managing OUS operations, including appropriate business procedures and controls and differing labor relations;

Additionally, we currently face, or anticipate facing, competition from companies with products used in open or MIS surgeries, including laparoscopy and alternative multi-port, single-port, or endoluminal systems.

OUR COMMERCIAL LANDSCAPE IS HIGHLY COMPETITIVE, AND CUSTOMERS MAY CHOOSE OUR COMPETITORS’ PRODUCTS OR SERVICES OR MAY NOT ACCEPT ROBOTIC-ASSISTED MEDICAL PROCEDURES, WHICH COULD RESULT IN REDUCED REVENUE AND LOSS OF C…

•changes in earnings estimates or recommendations by analysts;

The medical device industry has experienced extensive intellectual property litigation and administrative proceedings.

We cannot be certain that a court or administrative body would agree with any arguments or defenses that we may have concerning invalidity, unenforceability, or non-infringement of any third-party patent.

and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations.

imprisonment, and exclusion from government healthcare programs.

For instance, in December 2021, the EU Regulation No.

system requirements of ISO 13485:2016.

In addition, the FDA or other regulatory agencies may change their policies, adopt additional regulations, revise existing regulations, or take other actions that may prevent or delay approval or clearance of our prod…

In addition, the increasing concern over climate change has resulted, and may continue to result, in more legal and regulatory requirements designed to mitigate the effects of climate change on the environment, includ…

from production and shipping delays to lost revenues and increased costs, which could harm our business.

•changes in generally accepted accounting principles.

•increases in expenses not deductible for tax purposes, including write-offs of acquired intangibles and impairment of goodwill in connection with acquisitions;

difficult, expensive, and time-consuming for us to re-establish market access, regulatory compliance, or cure such deficiencies in product quality or intellectual property protection in such cases, which may have a ma…

We attempt to mitigate a portion of these risks through foreign currency hedging, based on our judgment of the appropriate trade-offs among risk, opportunity, and expense.

markets that are not priced in U.S.

Our operating results are subject to volatility due to fluctuations in foreign currency exchange rates.

WE MAY INCUR LOSSES ASSOCIATED WITH CURRENCY FLUCTUATIONS AND MAY NOT BE ABLE TO EFFECTIVELY HEDGE OUR EXPOSURE.

If a prolonged government shutdown occurs, or if global health concerns prevent the FDA, other regulatory authorities, or notified bodies from conducting their regular inspections, reviews, or other regulatory activit…

effect on our business, financial condition, or results of operations.

Other jurisdictions where we operate have already or are also expected to introduce guidelines and regulations around the use of AI within the next few years.

In the U.S., an executive order was issued in October 2023 on the Safe, Secure and Trustworthy Development and Use of AI, emphasizing the need for transparency, accountability, and fairness in the development and use…

As with many technological innovations, there are significant risks and challenges involved in maintaining and deploying these technologies, and there can be no assurance that the usage of such technologies will enhan…

We are actively monitoring the situation in Ukraine and Russia and the conflict between Israel and Hamas and assessing the impacts on our business, including our business partners and customers.

Additionally, in October 2023, armed conflict escalated between Israel and Hamas.

In response, the Russian authorities also imposed significant currency control measures, restrictions on transacting with non-Russian parties, export controls, and other economic and financial restrictions.

obligations may be interpreted in ways that require us to modify our business practices and products to maintain compliance, potentially increasing costs and operational complexity.

Further, in the U.S., when HIPAA does not apply, according to the Federal Trade Commission (the “FTC”), violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information…

OUR BUSINESS IS SUBJECT TO COMPLEX AND EVOLVING LAWS AND REGULATIONS REGARDING DATA PRIVACY, DATA PROTECTION, ARTIFICIAL INTELLIGENCE, AND RESPONSIBLE USE OF DATA.

benefits and costs of such products.

Moreover, if we fail to attract, motivate, or retain personnel or if we relax our standards in order to meet the demands of our growth, our corporate culture, our ability to achieve our strategic objectives, and our c…

In addition, our ability to meet customers’ demands depends, in part, on our ability to timely obtain an adequate delivery of quality materials, parts, and components from our suppliers.

In particular, our business exposes us to significant risks of patent claims, product liability claims, and competition claims (including antitrust claims), many of which are common in the medical device industry.

Pending such reform of the UK regulatory framework, 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 th…

In the UK, following a national referendum and enactment of legislation by the government, the UK formally withdrew from the EU and ratified a trade and cooperation agreement governing its relationship with the EU.

In Israel, we have certain research and development operations primarily related to digital products.

•business interruptions due to natural disasters, outbreak of disease, climate change, and other events beyond our control.

•the building and maintenance of an organization capable of supporting geographically dispersed operations, including appropriate business procedures and controls;

•changes in recommendations regarding our stock or more favorable relative recommendations about our competitors by industry or securities analysts;