Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Intuitive Surgical Inc. pages available for free this week:
- Statement of Comprehensive Income
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
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Economic Profit
Intuitive Surgical Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The period under review demonstrates fluctuating economic performance. Net operating profit after taxes (NOPAT) initially decreased before exhibiting substantial growth. Invested capital consistently increased throughout the period, while the cost of capital remained stable. Consequently, economic profit experienced significant volatility, transitioning from positive values to negative values and back to positive values.
- NOPAT Trend
- NOPAT decreased from US$1,700,018 thousand in 2021 to US$1,187,823 thousand in 2022, representing a decline. A subsequent recovery was observed, with NOPAT reaching US$1,596,933 thousand in 2023. Further growth occurred in 2024, reaching US$2,242,154 thousand, and continued into 2025, culminating in US$2,976,548 thousand. This indicates a strong upward trend in profitability following the initial decrease.
- Cost of Capital
- The cost of capital remained remarkably consistent at 25.38% across all years examined. This stability suggests no significant changes in the risk profile of the company or broader market conditions affecting its funding costs during the period.
- Invested Capital Trend
- Invested capital exhibited a consistent upward trend. It increased from US$4,517,800 thousand in 2021 to US$5,396,200 thousand in 2022, US$7,159,800 thousand in 2023, US$7,798,800 thousand in 2024, and reached US$11,374,500 thousand in 2025. This indicates a continuous reinvestment of capital into the business.
- Economic Profit Analysis
- Economic profit was positive in 2021 at US$553,520 thousand. However, it turned negative in 2022, reaching -US$181,311 thousand, and remained negative in 2023 at -US$220,367 thousand. A turnaround occurred in 2024, with economic profit becoming positive again at US$262,693 thousand. While remaining positive, economic profit decreased to US$90,218 thousand in 2025. The fluctuations in economic profit are directly related to the interplay between NOPAT and invested capital, given the stable cost of capital.
The initial decline in NOPAT coupled with increasing invested capital resulted in negative economic profit in 2022 and 2023. The subsequent increase in NOPAT, exceeding the growth in invested capital, drove the return to positive economic profit in 2024. The slower growth in economic profit in 2025 suggests that the rate of NOPAT growth may be decelerating relative to the continued expansion of invested capital.
Net Operating Profit after Taxes (NOPAT)
Intuitive Surgical Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Intuitive Surgical, Inc..
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income attributable to Intuitive Surgical, Inc..
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
Net income attributable to Intuitive Surgical, Inc. and Net Operating Profit After Taxes (NOPAT) both demonstrate fluctuating performance over the five-year period. While both metrics generally trend upwards, significant variations are observed, particularly in 2022.
- NOPAT Trend
- NOPAT experienced a notable decrease from US$1,700,018 thousand in 2021 to US$1,187,823 thousand in 2022, representing a substantial decline. A subsequent recovery is evident in 2023, with NOPAT reaching US$1,596,933 thousand. Continued growth is observed in 2024 and 2025, with NOPAT increasing to US$2,242,154 thousand and US$2,976,548 thousand respectively. This indicates a strong upward trajectory in recent years following the 2022 dip.
- Relationship between Net Income and NOPAT
- The values for Net Income and NOPAT are closely aligned throughout the period. The difference between the two metrics remains relatively consistent, suggesting minimal adjustments are being made between net income and operating profit after taxes. This consistency implies that non-operating items or accounting adjustments have a limited impact on the overall profitability picture.
- Growth Rates
- The largest percentage increase in NOPAT occurred between 2024 and 2025, with a growth rate of approximately 32.7%. The decline in 2022 represents the most significant percentage decrease in NOPAT over the observed period. The recovery from 2022 to 2023 shows a growth rate of approximately 34.4%.
Overall, the observed trends suggest a period of disruption in 2022 followed by a robust recovery and continued expansion in subsequent years. The strong correlation between net income and NOPAT indicates that core operating performance is the primary driver of overall profitability.
Cash Operating Taxes
Intuitive Surgical Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The reported income tax expense and cash operating taxes demonstrate distinct patterns over the five-year period. Income tax expense fluctuates, while cash operating taxes exhibit a more complex trend with an initial increase followed by stabilization and a slight decline.
- Income Tax Expense
- Income tax expense increased significantly from 2021 to 2022, rising from US$162.2 million to US$262.4 million. A substantial decrease was then observed in 2023, with expense falling to US$141.6 million. This was followed by increases in both 2024 and 2025, reaching US$336.3 million and US$434.8 million respectively. The overall trend indicates volatility, with a clear upward movement in the latter two years of the observed period.
- Cash Operating Taxes
- Cash operating taxes show a pronounced increase from 2021 to 2022, moving from US$226.7 million to US$448.3 million. The rate of increase slowed in 2023, with taxes reported at US$423.0 million. Values for 2024 and 2025 are US$472.97 million and US$417.4 million, respectively. While remaining relatively high, the 2025 figure represents a slight decrease from the 2024 level, suggesting a potential stabilization or minor reduction in cash tax outflows.
The difference between income tax expense and cash operating taxes is notable throughout the period. Cash operating taxes consistently exceed income tax expense, indicating the presence of timing differences or non-cash tax effects. The magnitude of this difference varies annually, potentially impacting the calculation of economic value added (EVA) and requiring further investigation into the underlying causes of these discrepancies.
- Relationship between Income Tax Expense and Cash Taxes
- The consistent difference between the two measures suggests the influence of deferred tax assets or liabilities. The larger cash tax payments relative to reported income tax expense could be due to factors such as accelerated depreciation for tax purposes, or the recognition of taxable temporary differences. Understanding these factors is crucial for accurate EVA calculation and financial performance assessment.
The observed trends in both income tax expense and cash operating taxes warrant continued monitoring to assess their impact on future financial performance and the company’s ability to generate economic value.
Invested Capital
Intuitive Surgical Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to total Intuitive Surgical, Inc. stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction-in-process.
8 Subtraction of available-for-sale marketable securities.
The invested capital of the company demonstrates a consistent upward trend over the five-year period. Simultaneously, the composition of capital sources has shifted, with a notable increase in reported debt and leases alongside growth in stockholders’ equity.
- Invested Capital Trend
- Invested capital increased from US$4,517.8 million in 2021 to US$11,374.5 million in 2025. This represents a cumulative increase of 151.8% over the period. The growth rate appears to be accelerating, with larger absolute increases observed in the later years of the period, particularly between 2023 and 2025.
- Debt & Leases
- Total reported debt and leases exhibited an overall increasing trend. While a slight decrease was observed between 2022 and 2023, the amount rose significantly from US$87.0 million in 2021 to US$170.9 million in 2025, representing a 96.4% increase. The most substantial increase occurred between 2023 and 2024, jumping from US$89.8 million to US$146.0 million.
- Stockholders’ Equity
- Total stockholders’ equity also increased over the period, moving from US$11,901.1 million in 2021 to US$17,824.0 million in 2025, a 49.8% increase. There was a decrease between 2021 and 2022, but equity then increased consistently through 2025. The rate of increase in equity appears to be relatively stable compared to the more volatile changes in debt.
- Capital Structure Shift
- The relative contribution of debt to invested capital has increased. In 2021, debt and leases represented approximately 2.0% of invested capital. By 2025, this proportion had risen to approximately 1.5%. While the percentage appears small, the absolute increase in debt suggests a growing reliance on debt financing to fund growth, despite a larger overall increase in equity.
The observed trends suggest the company is actively investing in its operations and expansion, funded by a combination of debt and equity. The increasing reliance on debt warrants further investigation to assess associated financial risks and sustainability.
Cost of Capital
Intuitive Surgical Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
Economic Spread Ratio
Intuitive Surgical Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited significant fluctuations over the five-year period. Initially positive, it transitioned to negative values before recovering, indicating a dynamic relationship between economic profit and invested capital.
- Economic Spread Ratio Trend
- In 2021, the economic spread ratio stood at 12.25%. This represents a substantial spread, suggesting the company generated returns significantly exceeding its cost of capital. A sharp decline followed in 2022, with the ratio falling to -3.36%, indicating returns fell below the cost of capital. This negative trend continued into 2023, reaching -3.08%. A notable reversal occurred in 2024, as the ratio rebounded to 3.37%, signaling a return to positive value creation. However, this improvement moderated in 2025, with the ratio decreasing to 0.79%, suggesting a narrowing of the spread between returns and the cost of capital.
The economic spread ratio’s movement closely mirrors the changes in economic profit. The negative economic profit values in 2022 and 2023 directly correlate with the negative economic spread ratios observed during those years. The return to positive economic profit in 2024 and 2025 is reflected in the corresponding positive, albeit diminishing, economic spread ratios.
- Invested Capital and Economic Spread
- Invested capital consistently increased throughout the period, rising from US$4,517,800 thousand in 2021 to US$11,374,500 thousand in 2025. Despite this substantial growth in invested capital, the economic spread ratio did not consistently increase. The ratio’s fluctuations suggest that the growth in invested capital was not always effectively translated into proportional increases in economic profit, particularly in 2022 and 2023. The 2024 recovery indicates improved efficiency in utilizing the larger capital base, but the 2025 decline suggests potential challenges in maintaining that efficiency as invested capital continued to grow.
The observed pattern suggests a sensitivity of the economic spread ratio to both economic profit and the level of invested capital. While increases in invested capital are expected, maintaining a positive and stable economic spread ratio requires a corresponding ability to generate sufficient economic profit to justify those investments.
Economic Profit Margin
Intuitive Surgical Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited significant fluctuation over the five-year period. Initial profitability declined, followed by a return to positive margins, and then a subsequent decrease. A detailed examination of the trends is presented below.
- Economic Profit Margin Trend
- In 2021, the economic profit margin stood at 9.64%. This represents a substantial level of economic value creation relative to adjusted revenue. However, the margin experienced a sharp decline in 2022, falling to -2.90%, indicating economic loss. This negative trend continued into 2023, with the margin reaching -3.07%, the lowest point in the observed period.
- A notable reversal occurred in 2024, as the economic profit margin rebounded to 3.13%, signifying a return to economic profit. However, this improvement was not sustained, as the margin decreased to 0.89% in 2025. While still positive, the 2025 margin represents a considerable reduction from the 2024 level.
- Relationship to Adjusted Revenue
- Adjusted revenue consistently increased throughout the period, moving from US$5,741.8 million in 2021 to US$10,139.9 million in 2025. Despite this revenue growth, the economic profit margin did not consistently benefit. The initial revenue increase in 2022 was accompanied by a decline into negative economic profit, and while revenue continued to grow in subsequent years, the economic profit margin fluctuated.
- The disparity between revenue growth and margin performance suggests that factors beyond revenue generation, such as cost of capital or operational expenses, significantly impacted economic profitability.
Overall, the economic profit margin demonstrates a volatile pattern. While revenue consistently increased, the ability to translate that revenue into economic profit was inconsistent. The decline in margin from 2021 to 2023, followed by a partial recovery in 2024 and subsequent decline in 2025, warrants further investigation into the underlying drivers of profitability.