Inside the wrist of certain robotic surgical instruments sits a chip with one job: counting. Each time a surgeon uses the instrument, the count ticks up. When it reaches a prescribed number, the instrument stops working and the hospital buys another one. The company’s own annual report describes it in nearly those terms: the chip generally will not allow use beyond the prescribed number of procedures.
That single design choice is why one of the best businesses in medical technology doesn’t behave like a normal device maker. The robot is the razor. The instruments, accessories and service contracts are the blades, and they get bought again with every operation. In the latest quarter, 84% of the company’s revenue was recurring, according to management’s call.
Hospitals eventually asked what the counter meant for their budgets. In March 2025, a federal judge in California certified a class of hospitals and surgery centers suing the maker. The allegation was specific: that the company forced them to buy far more instruments than medically necessary, at prices above what a competitive market would bear. The plaintiffs say the typical limit was ten uses. The company has never admitted wrongdoing.
On Tuesday, that fight ended with a check. The same earnings release carried a second surprise, a plan to make the blades cheaper, and the conference call carried a third: growth in the company’s home market had cooled to its slowest pace in years.
Most coverage treated these as three separate pieces of bad news stapled to a good quarter, and the stock slid about 8% in pre-market trading on Wednesday. That is a reasonable first reaction. It is also the kind of reaction that misses the point when three announcements are one strategy wearing three outfits.
The backdrop makes the question sharper. The S&P 500 closed Tuesday at 7,712.57 and the Nasdaq Composite at 26,424.82, while the Russell 2000 jumped 1.7% as the rally broadened beyond big tech. A week earlier, worries about how the AI buildout is being financed had hit the Nasdaq hard. The 10-year Treasury has been trading around or above 5% this fall. In that kind of market, every premium-priced growth stock gets the same cross-examination: how long can this growth last, and what will it cost to protect it?
For years this company never had to answer the second half of that question. Tuesday is the first time management put a number on it.
So here is the question worth sitting with before the numbers: what does it mean when a business running 40%-plus operating margins and growing revenue 22% decides, voluntarily, to charge less?
The answer says a lot about who is coming for it.
