Welcome to the Intuitive Surgical Q3 2023 earnings release. Now, at this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to place yourself in queue for questions at any time, please press 1, then 0 on your telephone keypad. To remove yourself from that queue, you may repeat the 1, then 0 command. I will now turn the conference over to your host, Head of Investor Relations, Intuitive Surgical, Brian King. Please go ahead. Good afternoon, and welcome to Intuitive's third quarter earnings conference call. With me today, we have Gary Guthart, our CEO, Jamie Samath, our CFO, and Dr. Myriam Curet, our Chief Medical Officer. Before we begin, I would like to inform you that comments mentioned on today's call may be deemed to contain forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties. These risks and uncertainties are described in detail in our Securities and Exchange Commission filings, including our most recent Form 10-K, filed on February 10, 2023, and Form 10-Q, filed on July 24, 2023. Our SEC filings can be found through our website or at the SEC's website. Investors are cautioned not to place undue reliance on such forward-looking statements. Please note that this conference call will be available for audio replay on our website at intuitive.com on the Events section under our Investor Relations page. Today's press release and supplementary financial data tables have been posted to our website. Today's format will consist of providing you with highlights of our third quarter results, as described in our press release announced earlier today, followed by a question-and-answer session. Gary will present the quarter's business and operational highlights. Jamie will provide a review of our financial results. Myriam will present clinical highlights, and I will discuss procedure details and provide our updated financial outlook for 2023. Finally, we will host a question-and-answer session. With that, I will turn it over to Gary. Thank you for joining us today. In this third quarter, we saw strong growth in procedures performed by our customers, solid new system placements, and healthy growth in utilization amid market conditions that remain largely consistent with Q2. Our new platforms continue to gain ground, with Ion installs and procedure growth continuing, SP installs and procedure growth modestly accelerating, and healthy growth in customer use of our digital tools. Turning first to procedures, da Vinci procedure growth in the quarter was 19%. Areas of strength included general surgery for benign conditions, particularly in the United States, and broad regional growth, with Germany, Japan, the UK, and India as standouts. China procedure growth was in line with our global average in the quarter. US general surgery procedure growth was led by cholecystectomy and colon resection. Ion procedures showed continued strength with 125% growth in the quarter. SP procedure growth accelerated with 54% global growth in the quarter, driven by strength in the United States. On the capital front, we placed 312 systems in Q3, compared with 305 systems in Q3 of last year. Our clinical install base now stands at 8,127 multi-port da Vinci systems, 490 Ion systems, and 158 single-port da Vinci systems. Overall, our capital placement trends reflect demand for additional capacity in multi-port, continued greenfield interest in our Ion system, and a modest acceleration for placements of SP. The proportion of leases for new capital placements accelerated in the quarter, with the US using the highest leasing rates. We think the acceleration in leasing reflects the convenience of our leasing program and the maturity of our Generation 4 multi-port systems. While leasing reduces in-quarter revenue relative to capital purchase, total economics are healthy for our customer and for US Leasing allows our customers to build clinical capacity when and where they need it and provides predefined pathways for our new technology as it enters the market. The growth rate in system utilization, defined as procedures per installed system per quarter, was 6%, down from 9% last quarter, while still above historical growth rates. Strong procedure growth and an increased proportion of use in benign indications shortens average procedure times and eases scheduling. Higher utilization increases our customers' return on invested capital and is economically healthy for US Turning to our finances, our revenue grew 12% in the quarter, and our operating expenses were within our spend guidance. Our spending reflects continued investments in research and development to support the growth of our platforms and digital tools, expansion of our manufacturing and commercial footprints, and capital amortization. Looking at the broader picture, our 4th-generation da Vinci platform is operating at global scale and embedded in a robust ecosystem of instruments, accessories, training, and services. Customer acceptance of our Ion platform is strong. Acceptance of our da Vinci SP is accelerating, with new indications in the pipeline, and our digital tools are building momentum through their early stages. We welcome Dr. Myriam Curet, Intuitive's Chief Medical Officer, to this call, and she will take us through our clinical perspective and some of the work we're doing to expand indications. Our operations teams did a fantastic job supporting our customers through the supply chain shocks of the past several years. This unavoidable effort diverted resources away from product cost reduction, and as supply chain stresses ease, we're now pivoting our attention to once again lowering our product costs. Areas of opportunity include our Ion program, our SP accessories portfolio, and our multi-port accessories and advanced instrument lines. Given the timing of facilities completion, manufacturing efficiency improvements for new products, and other complex projects, we expect variability in gross margin over the coming quarters as we work through these programs. Turning to our digital offerings, customer use of our digital tools and channels is growing nicely. Our SimNow surgical simulators are installed at the majority of our customer sites, and subscription renewal rates are outstanding. Routine use of myIntuitive app by over 10,000 da Vinci surgeons grew by 140% year-over-year, and is receiving strong Net Promoter Scores that continue improving over time. Our Intuitive Hub media management and telepresence system installations grew 58% in the quarter, and the Hub-captured surgical cases grew 61%. In closing, core demand is healthy. We're focused on extending our ecosystem internationally and driving our product costs down, particularly for our newer platforms. We are dogged in pursuit of significant long-term opportunity to improve the Quadruple Aim, using our integrated ecosystem powered by analytics, and we are pacing our investments to catalyze that opportunity. I'll now turn the time over to Jamie, who will take you through our finances in greater detail. Good afternoon. I will describe the highlights of our performance on a non-GAAP or pro forma basis. I will also summarize our GAAP performance later in my prepared remarks. A reconciliation between our pro forma and GAAP results is posted on our website. Core metrics continued to be healthy in Q3, with global procedure growth of 19%, an increase in the installed base of da Vinci systems of 13%, and an increase in average system utilization of 6%. Our key financial indicators were also healthy. Third quarter recurring revenue grew 21%, pro forma operating margin was 36%, and pro forma earnings per share increased 23% over last year. Procedures in the US grew 17%, reflecting a lower benefit from patient backlogs as compared to the first half of 2023. Last quarter, we highlighted that our growth rate in bariatrics procedures in the US had slowed, given patient interest in weight loss drugs. In Q3, we continued to see double-digit growth, albeit at a modestly lower growth rate as compared to Q2. Bariatrics procedures represent between 4% and 5% of total global procedures. Based on third-party data, we believe we continue to gain market share in the bariatric surgical segment. OUS procedures grew 24%, with relative strength in India, Germany, the UK, and Japan. Procedure growth in China was consistent with our expectations, lower than last quarter due to a strong base period, given a recovery from COVID-related lockdowns in the year-ago quarter. Consistent with recent trends, growth in non-urology procedures outside of the United States was accretive, growing at approximately 31%. Within the larger cancer categories, our fastest-growing OUS procedure is colon resection, a high-value procedure led by adoption in Japan, Germany, and the UK With respect to capital performance, we placed 312 systems in the third quarter, as compared to 305 systems last year. As a reminder, system placements in Q3 of last year benefited from a delay in the shipment of approximately 15 systems from June into July as a result of supply chain challenges we encountered in June of last year. Late in Q3, we started to see delays in tender processes in China, primarily as a result of anti-corruption efforts by the central government, resulting in lower system placements in China in Q3. We expect tender delays to continue to impact system placements in China in Q4. Q3 revenue was $1.7 billion, an increase of 12% year-over-year. Q3 revenue growth was driven by procedure growth, partially offset by an 11% decline in systems revenue, due to the significant increase in the mix of operating lease arrangements. On a constant currency basis, third quarter revenue growth was also 12%. Given recent movements in exchange rates, at current rates, the US dollar is approximately 3% stronger on a revenue-weighted basis as compared to the average rates realized in Q3. Revenue denominated in non-USD currencies represent approximately 24% of total revenue. Additional revenue statistics and trends are as follows: In the US, we placed 159 systems in the third quarter, compared to 175 systems placed last year. Outside the US, we placed 153 systems in Q3, compared with 130 systems last year. Current quarter system placements included 60 into Europe, 32 into Japan, and 10 into China, compared with 54 into Europe, 32 into Japan, and 15 into China in Q3 of last year. 62 of the 312 systems placed in Q3 were trade-in transactions, compared to 71 trade-in transactions in the third quarter of last year. As of the end of Q3, there are approximately 440 Si systems remaining in the installed base, of which 85 are in the US Operating leases represented 52% of third quarter placements, compared with 37% last year. In the US, 70% of system placements in Q3 were under operating lease arrangements, compared to 48% last year. Of the 163 operating lease placements in the quarter, 93 were usage-based arrangements, an increase compared to 54 last year, reflecting customer preferences, particularly in the US While leasing may fluctuate from quarter-to-quarter, we continue to expect that the proportion of placements under operating leases will increase over time. Q3 system average selling prices were $1.4 million, as compared to $1.39 million last quarter, and $1.5 million last year. The year-over-year decrease in system ASPs was primarily driven by lower pricing and geographical mix. We recognized $17 million of lease buyout revenue in the third quarter, compared with $12 million last quarter, and $17 million in Q3 of 2022. da Vinci instrument and accessory revenue per procedure, approximately $1,830, compared with approximately $1,840 last quarter, and $1,800 last year. On a sequential basis, lower I&A per procedure reflected the impact of customer ordering patterns, partially offset by a full quarter impact from the I&A price increase that went into effect halfway through last quarter. Turning to our Ion platform. In Q3, we placed 55 Ion systems, as compared to 50 in Q3 of 2022. Third quarter Ion procedures of approximately 14,500, increased 125% as compared to last year. 16 of the systems placed in the third quarter were SP systems, 12 into the US, and four into Korea. SP procedures grew by 54%, and average system utilization growth continued to accelerate, growing 21% compared to Q3 of last year. Moving on to the rest of the P&L. Pro forma gross margin for the third quarter was 68.8%, compared with 68.5% last quarter, and 69.8% last year. As a reminder, pro forma gross margin in Q3 of last year included a one-time benefit of approximately 50 basis points, relating to the favorable conclusion of certain indirect tax matters. The remaining year-over-year difference in pro forma gross margin is primarily due to a higher mix of Ion revenue, which currently carries significantly lower margins as compared to the da Vinci business, and lower system ASP, partially offset by the I&A price increase. Inventory increased to approximately 180 days in Q3, higher than historical averages, driven by two factors. First, we have modestly increased our inventory targets, given supply chain stresses over the last couple of years. Secondly, given significant capital investments we are making in manufacturing facilities and capacity, we are building bridge inventory to facilitate an elevated number of line transfers to new locations. As a result, we expect higher levels of inventory relative to historical norms into 2025. Third quarter pro forma operating expenses increased 8% year-over-year, driven primarily by higher headcount-related costs. During the quarter, our headcount increased by 489 employees, of which approximately 275 were for our manufacturing operations in support of revenue growth. SG&A expenses as a percentage of revenue were lower by 100 basis points as compared to Q3 of last year, and largely reflected planned leverage in our enabling functions. Pro forma other income in Q3 was $58 million, compared to $42 million last quarter, and $7 million last year. Other income primarily consists of interest income, and the increase, as compared to last quarter, was driven by higher interest rates and higher average cash and investment balances. Pro forma other income in Q3 of last year also reflected higher than typical foreign exchange losses, resulting from remeasurement of the balance sheet as a result of the strengthening US dollar. Capital expenditures in Q3 were $256 million, primarily comprised of infrastructure investments to expand our facilities footprint and increase manufacturing capacity. Our pro forma effective tax rate for the third quarter was 22.5%, consistent with our expectations. Third quarter pro forma net income was $524 million or $1.46 per share, compared with $429 million or $1.19 per share for Q3 of last year. I will now summarize our GAAP results. GAAP net income was $416 million or $1.16 per share for the third quarter of 2023, compared with GAAP net income of $324 million or $0.90 per share for the third quarter of 2022. The adjustments between pro forma and GAAP net income are outlined and quantified on our website and include excess tax benefits associated with employee stock awards, employee stock-based compensation, amortization of intangibles, and gains and losses on strategic investments. We ended the quarter with cash and investments of $7.5 billion, compared with $7.1 billion last quarter. The sequential increase in cash and investments reflected cash from operating activities and proceeds from employee stock exercises, partially offset by capital expenditures. With that, I would like to turn it over to Myriam, who will discuss clinical highlights. Thank you. Now turning to the clinical side for our business. Each quarter on these calls, we highlight certain studies that we deem to be notable. However, to gain a more complete understanding of the body of evidence, we encourage all stakeholders to thoroughly review the extensive detail of scientific studies that have been published over the years. In addition to relaying the results of one of these studies, I'd like to start by describing the status of some important Intuitive research projects underway that support our company's belief in the potential value of da Vinci systems, specifically our single port system, for procedures requiring refined access to tight or difficult-to-reach anatomical areas. In June 2021, Intuitive launched an FDA-approved clinical study focused on complex colorectal procedures, such as low anterior resection or right colectomy, performed using the SP platform. Currently, enrollment is complete, with 60 patients across nine sites in the US and Korea. Another FDA-approved clinical trial of thoracic procedures, including pulmonary lobectomy and thymectomy, performed using SP, completed enrollment in June of this year, with 32 subjects enrolled across six centers in the US We believe that Intuitive's single port technology will enable thoracic surgeons to perform uniportal lobectomy, something that may be difficult using a VATS approach. Intuitive intends to submit data from these two studies to the FDA after the patient follow-ups outlined in the study plan and the data analysis has been completed. Now, I'll turn to a notable study published in the Annals of Surgery this past August. This study was not sponsored by Intuitive. Dr. Yogita Patel of McMaster University in Canada published early results from the RAVAL trial in a manuscript titled Robotic Lobectomy is Cost Effective and Provides Comparable Health Utility Scores to Video-Assisted Lobectomy. The study describes results from a multicenter, multinational, blinded, randomized controlled study comparing the da Vinci and VATS approach to pulmonary lobectomy. It analyzed 164 subjects, 81 in the robotic-assisted group and 82 in the VATS group, and all robotic-assisted lobectomies were performed with a da Vinci multiport platform. Notably, the health utility score was significantly higher in the da Vinci arm at seven weeks and 12 weeks post-procedure, which suggests the quality of life for patients who underwent a da Vinci lobectomy was better than for patients undergoing the VATS procedure. Interestingly, and related to quality of life outcomes, the authors analyzed the incremental cost-effective ratio, or ICER, for the robotic group relative to VATS and reported the robotic group was associated with a gain of approximately $11,000 per quality-adjusted life year. In addition, the median number of lymph nodes examined and sampled were significantly higher in the da Vinci group. To summarize, the authors conclude that, quote, "Early results from the RAVAL trial suggest that robotic pulmonary lobectomy is a cost-effective intervention, which is associated with comparable patient-reported health utility scores when compared to VATS lobectomy," end quote. With that, I would like to turn it over to Brian, who will discuss additional procedure highlights and provide our updated outlook for 2020. Thank you, Myriam. Our overall third quarter procedure growth was 19% year-over-year, compared to 20% for the third quarter of 2022, and 22% last quarter. In the US, third quarter 2023 procedure growth was 17% year-over-year, compared to 18% for the third quarter of 2022, and 19% last quarter. Q3 growth was led by procedure strength within general surgery, with particular strength in cholecystectomy and colon resection. Outside of the US, third quarter procedure volume grew 24%, compared with 24% for the third quarter of 2022, and 28% last quarter. OUS growth was led by procedures beyond urology, which now make up approximately 50% of total OUS procedures. General surgery growth was strong, primarily in colorectal procedures, followed by growth in gynecology procedures. Growth in urology continued to be healthy, led by kidney procedures, along with continued double-digit growth in prostatectomy. In Europe, we experienced strong growth in Germany, the UK, and Spain. In each of the regions noted, procedure growth was led by general surgery, primarily from colorectal procedures, and specifically in Germany and the UK, hysterectomy procedures also contributed to strong growth. In Asia, growth was led by Japan. More than half of the incremental procedure growth in the country was led by strong growth in general surgery procedures, consisting largely of colorectal and gastrectomy procedures. In China, procedure growth was consistent with our expectations for the quarter. Growth was driven primarily in urology, notably by prostatectomy and kidney procedures. In India, while in the early stage of adoption, saw strong growth in general surgery procedures, namely cholecystectomy and hernia repair, and growth in gynecology procedures. I will now turn to our financial outlook for 2023. Starting with procedures. On our last call, we forecasted full year 2023 procedure growth within a range of 20%-22%. We are now raising the low end from 20% to 21% and expect full year 2023 procedure growth of 21%-22%. The low end of the range reflects uncertainty around the duration of elevated procedure volumes, with patients returning to healthcare, a continued slowing of bariatric growth rates in the US, and macroeconomic challenges that could impact hospitals and patient spending. At the high end of the range, we assume macroeconomic challenges do not have a significant impact on hospital procedure volumes, and bariatric growth rates in the US continue at the rate we experienced in Q3. The range does not reflect significant material supply chain disruptions or hospital capacity constraints. Turning to gross profit. On our last call, we forecast our 2023 full year Pro Forma gross profit margin to be within 68% and 69%. We are now refining our estimate of Pro Forma gross profit margin to be within 68% and 68.5%. Our actual gross profit margin will vary quarter-to-quarter, depending largely on product, regional, and trade-in mix, and the impact of new product introductions. With respect to operating expenses, on our last call, we forecast Pro Forma operating expense growth to be between 12% and 15%. We are adjusting our estimate and now expect our full year Pro Forma operating expense growth to be between 12% and 14%. We are also refining our estimate for non-cash stock compensation expense to range between $600 million-$610 million in 2023, lowering the range from our previous estimate of $600 million-$620 million. We are increasing our estimate for other income, which is comprised mostly of interest income, to total between $190 million and $200 million in 2023, an increase from our previous estimate of $160 million and $180 million. The increase primarily reflects the rise in interest rates. With regard to capital expenditures, we are narrowing our estimate to range between $900 million-$1 billion, primarily for planned facility construction activities. With regard to income tax, we are also refining our estimate for the 2023 Pro Forma tax rate to be between 22% and 23% of pre-tax income, reducing the previous estimate of the upper end of the range from 24% to 23%. That concludes our prepared comments. We will now open the call to your questions. Thank you. If you have not already done so, you may press 1, then 0 on your telephone keypad for Q&A. Please stand by. We go to the first question from the line of Robbie Marcus, JPMorgan. Please go ahead. Oh, great. Congrats on a good quarter. Thanks for taking the question. Maybe to start, you know, it's hard to escape it. GLP-1 is becoming a very big topic in medtech, and it's impacting bariatric surgery here. It doesn't seem to be impacting anything else, particularly in the pipeline. Just wondering your thoughts overall, you know, could GLP-1s ultimately be a positive as more people try weight loss surgery and come in the funnel? Any other impacts, good or bad, that you foresee on the business? Thanks, Robbie. I'm going to ask Dr. Curet, as a bariatric surgeon, to go ahead and weigh in on that first part of your question, and we'll talk about the broader implications after that. Yeah, I think you are correct. I think in the short term, we will see patients who are considering or are in the pipeline for bariatric surgery going to try the drug. However, given compliance issues, costs, side effects, we expect that many of them will not stay on the drugs for longer than a year or two, and at that time, we'll consider bariatric surgery. I think overall, we'll see an increased interest in bariatric surgery, but that will get delayed in the short term. Robbie, any follow-up you wanted on GLP-1s? No, I had a financial question for Jamie, if that's okay, after. Okay. Please. Jamie, it looks like fourth quarter gross margin is ticking down a bit, and you're talking about the increased depreciation cost and some of these new investments here. I was wondering if you could size the amount, and I'm really looking for how to think about into next year with depreciation, so we could get our gross margin set based on whatever expansion or contraction we're all forecasting. Thanks a lot. Yeah, for Q4, you're not really seeing significant depreciation expense reflected in the range that we provided. That's really more next year as some of the manufacturing capacity and facilities come online. What you're seeing in Q4 really is a little bit of FX, given how the rates have moved, a little bit of slower progress in some of the line transfers and product cost reduction plans that we have. That's not a large delay. It's just slightly slower than we had planned. There's some mixed dynamics reflected in Q4. They net out to be relatively small, but those are the dynamics as to why that gross margin range for the year is at the midpoint, slightly lower than what we had previously. With respect to how 2024 is shaping up, what I would just say is, as Gary said in his prepared remarks, we'll see some variability in gross margin over the next several quarters. It is the depreciation expense and the ongoing efforts to improve our product costs, particularly on the Ion side. Frankly, there are some accumulated inefficiencies just in our global manufacturing operations. They built up over COVID and because of the supply chain issues that we encountered that we're addressing. A number of those will take time for us to resolve. I'd say let us give you 2024 guidance for gross margin when we get to January, because I think we still have to work through those plans. Great. Thanks a lot. We'll go to the next line. Travis Steed, Bank of America, please go ahead. Yes, thanks for taking the question. I guess to follow up on that, I know on those prepared remarks, it sounded like Gary said manufacturing improvements for new products and other complex projects. Just curious if you could elaborate on some of those new products and complex projects and what those are that's impacting the gross margin. Yeah, on the product side, we have real work to do on Ion. Ion is well accepted by the customer base, growing quickly. We need to iterate and drive manufacturability and manufacturing costs on Ion. That was mainly what I was referring to. Some of the accessories in the SP line are real opportunities. We want to be assertive there. On the product side, that's most of what the reference is. Right. There's just one other element. We are insourcing a high-volume accessory on the multi-port side. As part of insourcing that, there's some differential automation in the line there, and so ramping that, you know, there's some work together to be at our targets. Great, helpful. Coming into this year on the procedures, you know, some of the swing factors were China, staffing pressures, and COVID. I imagine, like, going into 2024, you know, there's bariatrics in China are some of the swing factors. Maybe just talk about some of the swing factors on 2024 procedures, you know, pluses and minuses. Do you think China and bariatrics are still going to be growing and, you know, adding to the growth in procedures in 2024? Travis, this is Brian. I guess thinking of 2024, nothing really to share at this point. You know, clearly, I think when we get into January, we'll be able to give you a bit more insight. I guess I'll just leave it at that for now. Let me just pick up two topics you hit. You know, on the China side, I think the procedure demand side remains robust. I think there's some government policy activity that's putting a little bit of a chill on the market. Some of that is economic, so price caps and value-based pricing, and some of it is an anti-corruption probe that is giving hospitals some pause at moving forward with other new programs. We'll see. I think some pressure on the China side is likely to persist for several quarters. On the bariatric side, I think we'll find a new normal in the next few quarters. It's hard to predict exactly when that will happen. You know, we'll see that play out in the marketplace. Great, thanks alot. We'll go to the next line. Larry Biegelsen, Wells Fargo, please go ahead. Good afternoon. Thanks for taking the question. Gary, your usage-based leasing program's gotten some scale. Can you talk about the utilization rates on those systems relative to the average and any other themes you could share? Sure. I will turn to Jamie here on kind of utilization rates. Why don't you kick that off? Yeah, there's two ways to look at it, Larry. What is the absolute utilization rate compared to a regular leasing, compared to a purchase arrangement? They are very similar. Actually, the tightness on the mean between those three structures is very tight. Within those arrangements, you generally have a target procedure level that reflects success of the program for the customer and the economic objectives that we have. If you accumulate, again, the portfolio, they run at slightly above the targeted procedure levels that we have embedded in the contracts. They have run very well so far, and it's one of the reasons why we and the customer have expanded those so quickly in recent times. That's helpful. Leasing in the US, you know, where do you see that going? I mean, it was, you know, over 70 this quarter and last quarter. Have we plateaued, or does that continue to go higher? Thanks for taking the questions. On a global basis, we expect the proportion of placements that are leased to continue to climb. US is pretty high, as you pointed out, Larry, 70% this quarter, 78% last quarter. There will be some larger IDNs that just routinely prefer to purchase just because of how that affects the metrics that are important to them. Even in the US, I think there's some room for that to continue to creep up a little bit, obviously running out of room. We've found a number of US customers who really appreciate that as a way to manage through what are tightly managed capital budgets. Thank you. Next, we have Brandon Vazquez, William Blair. Please go ahead. Hi, everyone. Thanks for taking the question. Maybe my first one, wanted to talk a little bit about general surgery. That's obviously been a nice growth path for you here in the US. M y understanding is it's a little less penetrated international. What do you think needs to happen in the international markets to kind of get on that steep part of the adoption curve for general surgery as well? Are they kind of same timelines and catalysts as the US? Sure. Thank you for the question. One way to think about it is that general surgery comprises both procedures that are done where cancer is the underlying cause and others that are benign indication. On the cancer as an underlying cause, we're seeing nice early growth in several OUS markets. There, I think that's healthy, and we're enthused. I think reimbursements are generally in place in many of the places that we are operating. I think that's looked good, and clinical data coming out has been supportive. I think that as you think about benign indications, we're seeing some of the beginnings of benign indications in some markets. There may be reimbursement work or education of insurers that has to be done for those to progress further. In that setting, we'll have additional work to do as it plays out. Great. Maybe last one for me as a follow-up. I think last quarter you guys were talking a little bit about launching, I believe it was called Case Insights, kind of a software A.I. platform. Any kind of updates on that end? How are things going so far? Maybe what's in the future for that program? Thanks. Yeah, thank you for the reference. Case Insights is our machine learning A.I. program that looks at surgical science. We have our first installs and first cases going. We had talked about it with you last quarter. So far, early feedback, and it's super early, we're really in the early innings here, is very good. Case Insights builds on some prior research that we had done with academic centers on something that we had described as a computational observer. We have some pretty good scientific underpinnings for it. We expect over time that that program will feed insights into different parts of the hospital's analytics system, from giving specific guidance to learning surgeons and care teams about where they might improve their technique and skills, to giving suggestions to programmatics about efficiency and total cost management, to giving other insights for the company about how to improve procedures in the O.R. We think it's a long-term set of investments around really the science of surgery. We remain extremely excited about it. While we do have some revenue for it, we don't expect it to be a serious revenue driver. We think it is ecosystem complementor, and we look forward to describing it more to you as time goes on. Thanks alot. We'll go next to Matt Miksik, Barclays. Please go ahead. Hi. Thanks so much for taking the question. I had one just question on a follow-up on kind of the bariatric trends and one on sort of the system leasing effect on pricing. Bariatric, if you could maybe talk about, you mentioned the global% of procedures that bariatric represents, maybe just the growth trajectory of that business in the second quarter and the third quarter, and, you know, whether that's something you expect to, you know, grow at a similar trajectory or bottom out, given your comments on, you know, folks getting on the drug for, but getting off, say, in a year or two, kind of suggests maybe a longer path to s tabilization in that business line within, I mean, and then I'll just follow up briefly with a question on ASPs, if I could. Thank you. Yeah. Jamie, you might speak to kind of what the size or% of that business is for us, and a little bit of the acceleration or deceleration trend. Yeah, and I wanna make sure I got it right, Matt, so come back to me if I have the wrong questions, but our total bariatric business represents about 4%-5% of global procedures. What you saw in Q2 was in the US, which is where the majority of our bariatric procedure volumes are. In the US, the growth rate declined to about the US average, and then what we saw in Q3 was it modestly declined a little further in Q3. Were those your questions? Yeah. No, that's very helpful. I guess just your expectation you framed out in terms of your guidance, but I mean, is this... I mention it just because one of the other competitors actually saw a decline, I guess, in laparoscopic bariatric or some combination of lap and open in the third quarter, single-digit decline, but it didn't seem like you're in that zone, right? You're still at or slightly below your average growth rate in the US Am I hearing your answer correctly? Well, if you take our procedure growth in bariatrics relative to market, we're taking share and have been for some time. The fact that we had double-digit growth in Q3 relative to another company that had a decline, that's just a reflection in part of the fact that we are taking share in bariatrics and continue to do so, even though there's an impact to overall bariatric surgery because of GLP-1s. Got it. That's very helpful. The other, on just ASP, I understand the system ASP you give is not, you know, does not, you know, as your US leasing goes up, as I understand it, you know, those leased systems in the US are not included in that ASP calculation. If you could maybe just speak to, I don't know, the way in which the increased leases have affected ASP or whether this is, you know, straight up year-over-year, the decline that's suggested in sort of the overall numbers that you provide, if that's a clear question? Yeah. Everything you described is correct. Generally, although there can be exceptions for mixed effect, generally, US system ASPs, when purchased, are accretive to the global average. In effect, as leasing has grown significantly in the US, that in and of itself has an adverse effect for calculated system ASP. The other thing that you see then, with now a greater proportion of systems used to calculate that system ASP being international, F.X. can have an effect if you look on a two-year horizon. For example, the exchange rate in Japan, based on how the US dollar has strengthened, there's a 30%-40% impact over a two-year basis on system ASP in Japan as translated. There is a geographical effect, and if you look at a long enough horizon, there's an F.X. effect in there. What we described in Q3 was in terms of the year-over-year decline in ASP, also a dynamic relative to pricing. That's really just as we expand our existing customers who are looking for a third, fourth, fifth system, those tend to be slightly lower ASPs than you've seen previously when they were greenfield accounts. I would say that in China, we do see some competitive dynamics with respect to pricing, just given the number of lower local players, and so there's been some competitive effect on system ASPs in China, specifically. We don't really see that in other markets to this point. Thanks so much for the color. We'll go to the next slide. Jason Bedford, Raymond James, please go ahead. Hi, good afternoon. Gary, I think you've expressed your views on the role of bariatric surgery in a GLP world. I'm just wondering if these views have changed in any way over the last quarter or two. I know it's not a lot of time, but the adoption of this class of drugs is obviously ramping quickly. Just as kind of a related follow-up, getting back to Robbie's question on the potential impact of GLPs beyond bariatrics, do you expect an impact on some of your other procedure categories as GLPs get adopted? Okay. On the first one, I think Myriam described it well, our position on GLP-1s as it relates to bariatric surgery. I think she hit it well at the start of the call. No reason to reiterate it here. On the issue of potential impact beyond bariatrics, there may be some, although I think as you think through the analysis, I think it will be modest. Here's how we think about it. If you look at obesity and diabetes as risk factors in other domains, in other diseases for which surgery is performed, they are sometimes positive correlated risk factors for that disease. In some weird cases, they're negative in cases that it's actually protective against disease, so it's not entirely obvioUS In most of the diseases that we treat as we look at it, it is not the dominant risk factor. As we look out and think about what could it be like in our TAM, we can kind of do a back-of-the-envelope analysis. It is really early. I don't think anybody knows the exact number. What I can say is that it's not the dominant risk factor in most things that we look at, and we have a very large unpenetrated TAM. I think we're still in the early innings of what we're trying to work on. If these drugs are highly effective at avoiding other types of diseases, we will cheer. I still think we have a lot of upside opportunity to pursue. Fair enough. Thank you. We'll go to the next line. Ryan Zimmerman, BTIG, please go ahead. Thanks for taking the questions. I think you spoke about some of the new indications in SP, and if I'm not mistaken, I think there's a 30-day follow-up on the thoracic trial. I'm curious if you could expand, maybe when, you know, complex colorectal and thoracic cases potentially could become growth drivers for SP adoption, and when you expect those, not just those trials to wrap up, but potentially clearances in the US with that? Sure. Myriam, I think you're best to answer. Yes. We are hoping to submit everything in the foreseeable future. After that, as you know, there's at least a 90-day turnaround for the IDEs, and then, excuse me, for the clearances. After that, you know, we will have to put training together and the launches together. I can't really give you a timeline for when that would be, but we know what the work is that needs to be done, and we are starting and moving forward on that. Okay. Our biggest. Thank you. Sorry. Our biggest steps are get the data range, get it into FDA, and work with them to get the clearances. Then, as Myriam says, we'll go through a staged commercialization. You can expect submissions in the first half of 2024, and then response thereafter. Thank you, Gary. One of the other things, and this, I don't know if this is directed at you, Gary or Jamie, but you did talk about an opportunity to lower product costs as supply chain stresses ease. I know there's, you know, there was some comments earlier about, you know, 2024 gross margins, but stepping aside from that, can you quantify the opportunity potentially for what that looks like? Have you gotten your arms around, I know Marshall's been kind of shepherding these processes, but at what point can you give the Street more color on what that opportunity looks like to drive gross margin gains? We have very well-detailed plans for each of the areas that we're focused on. The teams have the capability and skill. It's gonna take some time. I think the best way I would answer the question is we see a path over time, probably in the midterm, to get back above 70% gross margin. Thank you, Jamie. We'll go to the next line. Anthony Petrone, Mizuho Group, please go ahead. Maybe one on China and one on pricing on instruments. When we think about the quota size that National Health Commission in China put out, it's the new quota is 559 systems. Just wondering on anti-corruption, you know, could that shift that number over time, whether it be that just there's fewer capital dollars going to projects or, you know, just from a timing element because things are getting elongated? The pricing question would be on instruments and accessories. The company put a 5% price increase in there, first one in 14 years. Chairman Powell came out and said, "You know, look, inflation's gonna be persistent and elevated for quite some time." If inflation stays high, you know, could another 5% price increase be on the table for 2024? Thanks. With regard to the capital side in China, I'll jump into that. I think demand for our systems and for the procedures they support in China, raw demand is really high, so it's really being limited or titrated by policy. I haven't heard anything that says people want to go back and revisit or lower the quota. I think that would be resisted by customers who are looking for purchases. I think it's more around delay and a kind of a timing thing, and how long that is, hard to predict, but months, not weeks. On the pricing side, I'll speak to a general principle rather than projecting 2024. You know, what we try to do is a couple of things. One is be an outstanding manufacturer, really get high quality at low cost, and make sure that we can invest in manufacturing prowess to do that. I think that's really powerful for US It gives us enormous flexibility to meet the customer's needs kind of where they are. With regard to pricing, we look at a couple things, certainly price to us, cost to us, but also price elasticity, what the customer can do and achieve, and that varies by market. I think we've become increasingly sensitive to and sophisticated at understanding pricing. Raw material pricing and core inflation to us is an input to our pricing. That's why we took price up this last year. It's not the only thing, and you shouldn't expect us to be purely algorithmic tracking inflation on its own. Thanks. We'll go to the line of Michael Polark of Wolfe Research. Please go ahead. Good afternoon. Thank you for taking the questions. I have a big picture one modeling long term. There's an investor presentation out earlier this year. In it, Intuitive identified 6 million procedures globally for multi and single port, for which you currently have line of sight. On that same slide, identified that there's 20 million soft tissue surgery procedures overall. If I look at where you are today, you're approaching 40% of that 6 million. My question is the delta between the 20 and the 6, the 14, kind of, how do you expand the 6 towards the 20? You know, what are the major unlocks that you expect over the next 3-5 years that'll move the 6 towards the 20? You know, kind of your feel for the pace of addressing more of the global procedure pie? Yeah, it's a good question. I think the general tools that we use to get from 6-20 are kinda three buckets. Some of them are clearances in new markets, so making sure that market we can address has access to the technologies that we already have. You think about something like Ion, for example. Ion is not yet available in all the markets in which we operate. As it operates, it starts to open what we can do. That's kind of one bucket. New indications are another one. Some of the work that Myriam described earlier starts to open new opportunities for us as we broaden the applicability of our platforms to new types of surgery and intervention. The third bucket or another bucket is reimbursement. There are places where we think additional data is required to get insurers to engage a little bit differently and open the market. Lastly, there are new products and technologies that we're working on that we have not yet described, that we think allow us to provide new solutions that are competitive in the marketplace. Each of those operates on a little bit different timeline, so I can't give you a simple synopsis of how fast each one runs. Some of them take a lot of years. Some reimbursement things are a long, long lead. Product development can be long lead. Other types of access can happen more quickly. That's a set of plans that we lay out. We're pretty disciplined about laying out what we wanna do over time, over a multi-year time horizon, and that's how we start to open that market. That was our last question. In closing, we continue to believe there's a substantial and durable opportunity to fundamentally improve surgery and acute interventions. Our teams continue to work closely with hospitals, physicians, and care teams in pursuit of what our customers have termed the Quadruple Aim. Better, more predictable patient outcomes, better experiences for patients, better experiences for their care teams, and ultimately, a lower total cost of care. We believe value creation in surgery and acute care is foundationally human. It flows from respect for and understanding of patients and care teams, their needs, and their environment. At Intuitive, we envision a future of care that is less invasive and profoundly better, where diseases are identified earlier and treated quickly, so patients can get back to what matters most. Thank you, everyone, and that does conclude your conference. We do thank you for joining. You may now disconnect. Have a good day.