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.
Economic Profit
Intuitive Surgical Inc., economic profit 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 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
= 2,976,548 – 25.00% × 11,374,500 = 132,502
The analysis of economic value added reveals a period of volatility in value creation, characterized by a transition from positive economic profit to a period of value destruction, followed by a recovery and subsequent moderation.
- Net Operating Profit After Taxes (NOPAT)
- A fluctuation is observed in NOPAT, which decreased from US$ 1,700,018 thousand in 2021 to US$ 1,187,823 thousand in 2022. Following this decline, a consistent upward trajectory was established, with profits growing annually to reach US$ 2,976,548 thousand by December 31, 2025, indicating strong operational growth in the latter part of the period.
- Invested Capital and Cost of Capital
- Invested capital shows a sustained and aggressive expansion, increasing from US$ 4,517,800 thousand in 2021 to US$ 11,374,500 thousand in 2025. Throughout this five-year window, the cost of capital remained remarkably stable, fluctuating minimally between 25.00% and 25.01%.
- Economic Profit Trends
- Economic profit shifted from a positive US$ 570,317 thousand in 2021 to negative values in 2022 and 2023, reaching a nadir of -US$ 193,742 thousand. A return to positive value creation occurred in 2024 with an economic profit of US$ 291,693 thousand. However, despite the peak NOPAT achieved in 2025, economic profit declined to US$ 132,502 thousand. This suggests that the substantial surge in invested capital during 2025 increased the capital charge beyond the rate of operating profit growth, thereby compressing the overall economic profit.
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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
= 170,900 × 4.60% = 7,861
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 7,861 × 21.00% = 1,651
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
= -300 × 21.00% = -63
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$2,976,548 thousand respectively. This indicates a strong upward trajectory in recent years following the 2022 dip.
- Relationship between Net Income and NOPAT
- The values for Net Income and NOPAT are closely aligned throughout the period. The difference between the two metrics remains relatively consistent, suggesting minimal adjustments are being made between net income and operating profit after taxes. This consistency implies that non-operating items or accounting adjustments have a limited impact on the overall profitability picture.
- Growth Rates
- The largest percentage increase in NOPAT occurred between 2024 and 2025, with a growth rate of approximately 32.7%. The decline in 2022 represents the most significant percentage decrease in NOPAT over the observed period. The recovery from 2022 to 2023 shows a growth rate of approximately 34.4%.
Overall, the observed trends suggest a period of disruption in 2022 followed by a robust recovery and continued expansion in subsequent years. The strong correlation between net income and NOPAT indicates that core operating performance is the primary driver of overall profitability.
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Cash Operating Taxes
Intuitive Surgical Inc., cash operating taxes calculation
US$ 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$417.4 million, respectively. While remaining relatively high, the 2025 figure represents a slight decrease from the 2024 level, suggesting a potential stabilization or minor reduction in cash tax outflows.
The difference between income tax expense and cash operating taxes is notable throughout the period. Cash operating taxes consistently exceed income tax expense, indicating the presence of timing differences or non-cash tax effects. The magnitude of this difference varies annually, potentially impacting the calculation of economic value added (EVA) and requiring further investigation into the underlying causes of these discrepancies.
- Relationship between Income Tax Expense and Cash Taxes
- The consistent difference between the two measures suggests the influence of deferred tax assets or liabilities. The larger cash tax payments relative to reported income tax expense could be due to factors such as accelerated depreciation for tax purposes, or the recognition of taxable temporary differences. Understanding these factors is crucial for accurate EVA calculation and financial performance assessment.
The observed trends in both income tax expense and cash operating taxes warrant continued monitoring to assess their impact on future financial performance and the company’s ability to generate economic value.
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Invested Capital
Intuitive Surgical Inc., invested capital calculation (financing approach)
US$ 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.
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Cost of Capital
Intuitive Surgical Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 170,064,768) | 170,064,768) | ÷ | 170,235,668) | = | 1.00 | 1.00 | × | 25.03% | = | 25.00% | ||
| Operating lease liability3 | 170,900) | 170,900) | ÷ | 170,235,668) | = | 0.00 | 0.00 | × | 4.60% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 170,235,668) | 1.00 | 25.00% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 203,964,985) | 203,964,985) | ÷ | 204,110,985) | = | 1.00 | 1.00 | × | 25.03% | = | 25.01% | ||
| Operating lease liability3 | 146,000) | 146,000) | ÷ | 204,110,985) | = | 0.00 | 0.00 | × | 4.40% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 204,110,985) | 1.00 | 25.01% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 133,256,688) | 133,256,688) | ÷ | 133,346,488) | = | 1.00 | 1.00 | × | 25.03% | = | 25.01% | ||
| Operating lease liability3 | 89,800) | 89,800) | ÷ | 133,346,488) | = | 0.00 | 0.00 | × | 3.40% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 133,346,488) | 1.00 | 25.01% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 85,940,077) | 85,940,077) | ÷ | 86,033,877) | = | 1.00 | 1.00 | × | 25.03% | = | 25.00% | ||
| Operating lease liability3 | 93,800) | 93,800) | ÷ | 86,033,877) | = | 0.00 | 0.00 | × | 3.00% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 86,033,877) | 1.00 | 25.00% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 102,171,695) | 102,171,695) | ÷ | 102,258,695) | = | 1.00 | 1.00 | × | 25.03% | = | 25.00% | ||
| Operating lease liability3 | 87,000) | 87,000) | ÷ | 102,258,695) | = | 0.00 | 0.00 | × | 2.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 102,258,695) | 1.00 | 25.01% | ||||||||||
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 | 132,502) | 291,693) | (193,742) | (161,252) | 570,317) | |
| Invested capital2 | 11,374,500) | 7,798,800) | 7,159,800) | 5,396,200) | 4,517,800) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 1.16% | 3.74% | -2.71% | -2.99% | 12.62% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -2.33% | -4.57% | -4.75% | -2.51% | -2.02% | |
| Elevance Health Inc. | -1.08% | -0.68% | -1.03% | 0.01% | 1.33% | |
| Medtronic PLC | -4.80% | -6.60% | -6.38% | -5.14% | -6.78% | |
| UnitedHealth Group Inc. | -1.14% | -0.04% | 4.85% | 3.88% | 3.74% | |
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 × 132,502 ÷ 11,374,500 = 1.16%
4 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by a consistent expansion of the capital base contrasted with significant volatility in value creation. While the company aggressively increased its invested capital throughout the period, the ability to generate returns exceeding the cost of capital fluctuated, leading to periods of both economic value creation and destruction.
- Invested Capital Growth
- A sustained upward trend in invested capital is observed, rising from 4,517,800 thousand US dollars in 2021 to 11,374,500 thousand US dollars by 2025. This represents a substantial increase in the scale of operations and asset deployment, with the most significant jump occurring between 2024 and 2025.
- Economic Profit Volatility
- Economic profit exhibited a non-linear trajectory. After a strong start in 2021 with 570,317 thousand US dollars, the figure transitioned into negative territory for two consecutive years, reaching a low of -193,742 thousand US dollars in 2023. A recovery occurred in 2024 with a return to positive economic profit of 291,693 thousand US dollars, before declining again to 132,502 thousand US dollars in 2025.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of economic profit. A peak of 12.62% in 2021 plummeted to -2.99% in 2022 and -2.71% in 2023, indicating that the return on invested capital was insufficient to cover the cost of capital during those years. Although the ratio rebounded to 3.74% in 2024, it contracted to 1.16% by 2025, suggesting a narrowing margin of value creation relative to the expanding capital base.
Overall, the data indicates a period of heavy capital investment that did not immediately yield proportional economic gains. The transition from negative to positive economic spread in 2024 suggests a recovery in operational efficiency, although the subsequent decline in 2025 indicates a potential struggle to maintain high spreads as the total invested capital continues to grow rapidly.
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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 | 132,502) | 291,693) | (193,742) | (161,252) | 570,317) | |
| Revenue | 10,064,700) | 8,352,100) | 7,124,100) | 6,222,200) | 5,710,100) | |
| Add: Increase (decrease) in deferred revenue | 75,200) | 31,200) | 53,400) | 24,300) | 31,700) | |
| Adjusted revenue | 10,139,900) | 8,383,300) | 7,177,500) | 6,246,500) | 5,741,800) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 1.31% | 3.48% | -2.70% | -2.58% | 9.93% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -3.28% | -6.55% | -7.06% | -3.52% | -2.92% | |
| Elevance Health Inc. | -0.44% | -0.30% | -0.42% | 0.00% | 0.62% | |
| Medtronic PLC | -10.08% | -13.98% | -14.41% | -11.28% | -16.28% | |
| UnitedHealth Group Inc. | -0.51% | -0.02% | 2.41% | 1.99% | 1.83% | |
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 × 132,502 ÷ 10,139,900 = 1.31%
3 Click competitor name to see calculations.
The financial performance regarding economic value added exhibits a distinct divergence between revenue growth and economic profitability. While adjusted revenue demonstrated consistent year-over-year expansion, economic profit experienced significant volatility, including a two-year deficit before returning to positive levels.
- Adjusted Revenue Growth
- A continuous upward trajectory is observed in adjusted revenue, which increased from US$ 5,741,800 thousand in 2021 to US$ 10,139,900 thousand by 2025. This consistent growth indicates a steady expansion in the scale of operations over the analyzed period.
- Economic Profit Fluctuations
- Economic profit shifted from a high of US$ 570,317 thousand in 2021 to negative values in 2022 and 2023, reaching a trough of negative US$ 193,742 thousand. A recovery was observed in 2024, with profit returning to US$ 291,693 thousand, before moderating to US$ 132,502 thousand in 2025.
- Economic Profit Margin Performance
- The economic profit margin mirrored the volatility of absolute economic profit, declining sharply from 9.93% in 2021 to -2.70% in 2023. Although a recovery to 3.48% occurred in 2024, the margin contracted to 1.31% in 2025. This pattern suggests that while the entity has returned to generating economic value, the efficiency of value creation relative to revenue has not recovered to 2021 levels despite the substantial increase in total revenue.
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