Discounted Cash Flow (DCF) Analysis Unlevered

Intuitive Surgical Inc. (ISRG)

Healthcare

Operating Data

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Projected	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Revenue	2,265.10	2,131.69	2,384.29	2,706.41	3,138.08	3,723.96	4,126.89	4,573.42	5,068.27	5,616.65	6,224.37
Revenue (%)
EBITDA	938.20	623.30	848.09	1,077.42	1,203.77	1,405.05	1,527.78	1,693.08	1,876.27	2,079.28	2,304.26
EBITDA (%)
EBIT	870.93	548.91	758.68	985.40	1,104.60	1,282.16	1,389.52	1,539.87	1,706.49	1,891.13	2,095.75
EBIT (%)
Depreciation	67.27	74.40	89.41	92.02	99.16	122.89	138.25	153.21	169.79	188.16	208.52
Depreciation (%)

Balance Sheet Data

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Projected	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Total Cash	1,403.46	1,232.54	1,559.80	2,554.58	1,960.67	3,062.96	2,918.54	3,234.32	3,584.28	3,972.10	4,401.88
Total Cash (%)
Account Receivables	301.48	315.06	394.36	430.32	508.06	682.23	653.70	724.43	802.81	889.68	985.94
Account Receivables (%)
Inventories	179.62	181.62	167.85	182.41	241.32	408.89	336.34	372.73	413.06	457.76	507.29
Inventories (%)
Accounts Payable	46.21	61.61	52.69	68.47	82.53	100.55	103.17	114.34	126.71	140.42	155.61
Accounts Payable (%)
Capital Expenditure	-104.65	-105.52	-81.07	-53.86	-190.80	-187.32	-179.11	-198.49	-219.96	-243.76	-270.14
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 566.77
Diluted Shares Outstanding	113.70
Cost of Debt
Tax Rate	12.05
After-tax Cost of Debt	-0.55
Risk-Free Rate
Market Risk Premium
Cost of Equity	11.19
Total Debt	-
Total Equity	64,441.75
Total Capital	64,441.75
Debt Weighting	0.00
Equity Weighting	100.00
Wacc

Build Up Free Cash

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Projected	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Revenue	2,265.10	2,131.69	2,384.29	2,706.41	3,138.08	3,723.96	4,126.89	4,573.42	5,068.27	5,616.65	6,224.37
EBITDA	938.20	623.30	848.09	1,077.42	1,203.77	1,405.05	1,527.78	1,693.08	1,876.27	2,079.28	2,304.26
EBIT	870.93	548.91	758.68	985.40	1,104.60	1,282.16	1,389.52	1,539.87	1,706.49	1,891.13	2,095.75
Tax Rate	22.95%	23.72%	22.37%	25.07%	39.27%	12.05%	24.24%	24.24%	24.24%	24.24%	24.24%
EBIAT	671.02	418.73	588.94	738.38	670.78	1,127.69	1,052.72	1,166.63	1,292.85	1,432.74	1,587.76
Depreciation	67.27	74.40	89.41	92.02	99.16	122.89	138.25	153.21	169.79	188.16	208.52
Accounts Receivable	-	-13.58	-79.30	-35.96	-77.74	-174.17	28.53	-70.73	-78.38	-86.86	-96.26
Inventories	-	-2.00	13.77	-14.56	-58.91	-167.57	72.55	-36.39	-40.33	-44.69	-49.53
Accounts Payable	-	15.40	-8.91	15.78	14.06	18.02	2.63	11.16	12.37	13.71	15.19
Capital Expenditure	-	0.87	-24.45	-27.21	136.94	-3.48	-8.21	19.38	21.48	23.80	26.38
UFCF	738.30	493.82	579.45	768.45	784.30	923.37	1,286.47	1,243.26	1,377.78	1,526.85	1,692.06
WACC
PV UFCF							1,157.00	1,005.61	1,002.26	998.93	995.60
SUM PV UFCF											5,668.07

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	11.19
Free cash flow (t + 1)	1,759.74
Terminal Value	24,474.80
Present Value of Terminal Value	14,400.93

Intrinsic Value

Enterprise Value	20,069.00
Net Debt	-3,062.96
Equity Value	23,131.96
Shares Outstanding	113.70
Equity Value Per Share	203.45

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