Second Quarter 2010 Highlights
Second quarter revenue totaled $10.3 million, a 151% increase
over total revenue generated in the same period in 2009
Seven RIO® systems sold, increasing domestic commercial
installed base to 46 RIO systems
793 MAKOplasty® procedures performed, a 122% increase over the
same period in 2009
Launched three-year randomized prospective clinical research
study in Glasgow, Scotland
MAKO Surgical Corp. (Nasdaq:MAKO), a medical device company that
markets both its RIO® Robotic Arm Interactive Orthopedic surgical
platform and proprietary RESTORIS® implants for minimally invasive
orthopedic knee procedures known as MAKOplasty®, today announced
its operating results for its second quarter ended June 30,
2010.
Recent Business Developments
RIO Systems – Seven RIO systems were sold during the second
quarter, of which six were installed and customer accepted at
domestic sites. These new systems brought MAKO's domestic
commercial installed base to 46RIO systems as of June 30, 2010. In
addition, one RIO system was sold to a distributor in South Korea
which will be used by the distributor for demonstration purposes
and to obtain the regulatory approvals necessary to fully market
the RIO system and RESTORIS implant system in the South Korean
market.
MAKOplasty Procedure Volume – During the second quarter, 793
MAKOplasty procedures were performed, of which 780 procedures were
performed at domestic sites. The 793 MAKOplasty procedures
represent an 8% increase over procedures performed in the first
quarter of 2010 and a 122% increase over the second quarter of
2009. The average monthly utilization per system was 6.3 procedures
during the second quarter of 2010, which decreased slightly from
6.6 procedures per system per month in the first quarter of 2010
and was an increase from 5.5 procedures per system per month in the
second quarter of 2009. A total of 3,908 procedures had been
performed through June 30, 2010, since the first procedure in June
2006.
Clinical Research and Education – MAKO launched a clinical
research study in partnership with Glasgow Royal Infirmary,
Strathclyde University and National Health Services in Glasgow,
Scotland. In connection with the clinical research study, MAKO
placed a RIO system at the Glasgow Royal Infirmary. The system is
being utilized in a three-year randomized prospective clinical
study with the objective of demonstrating the clinical, functional
and, ultimately, economic benefits of MAKOplasty. Glasgow
Royal Infirmary reported that thirteen procedures were performed at
its site during the second quarter of 2010. At the Computer
Assisted Orthopedic Surgery (CAOS) International meeting in Paris
in June, MAKOplasty was discussed in four presentations including
two featuring medial uni-compartmental results, one featuring
bicompartmental results, and one on the accuracy of robotic total
hip arthroplasty, building on MAKO's base of clinical
evidence. Additionally, in the second quarter, MAKO held two
BioSkills courses, which are designed to bring together current and
prospective MAKOplasty surgeons to share best practices.
"We are pleased with the addition of six new commercial sites,
across multiple geographies, including three states that previously
did not have systems installed. We are also encouraged by our first
international sale of a RIO system and the 793 MAKOplasty
procedures performed worldwide in the second quarter," said Maurice
R. Ferré, M.D., President and Chief Executive Officer of
MAKO. "Additionally, we are enthusiastic about the
prospective, randomized clinical study being conducted in Scotland
and the continued flow of clinical evidence supporting our
procedure."
2010 Second Quarter Financial Review
|
|
As Reported (U.S.
GAAP) |
|
|
|
Non-GAAP |
|
Selected Financial Results
(unaudited) (in thousands, except per share data) |
|
Three Months Ended June
30, |
|
Adjustments |
|
2009 |
|
|
|
2010 |
|
2009 |
|
2009 (1) |
|
As Adjusted |
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ 10,251 |
|
$ 14,904 |
|
$ (10,827) |
(2) |
$ 4,077 |
Total cost of revenue |
|
3,671 |
|
10,219 |
|
(7,566) |
(3) |
2,653 |
Gross profit |
|
6,580 |
|
4,685 |
|
(3,261) |
(4) |
1,424 |
Net loss |
|
$ (8,524) |
|
$ (6,424) |
|
$ (3,261) |
(4) |
$ (9,685) |
Net loss per share - Basic and diluted |
|
$ (0.26) |
|
$ (0.26) |
|
$ (0.13) |
|
$ (0.39) |
Weighted average common shares outstanding -
Basic and diluted |
|
33,419 |
|
24,806 |
|
― |
|
24,806 |
|
|
|
|
|
|
|
|
|
(1) Management excluded certain
transactions during the three months ended June 30, 2009, resulting
in adjusted non-GAAP financial results for the three months ended
June 30, 2009, as management believes the exclusion of these
transactions provides readers a more meaningful comparison with the
results of operations for the three months ended June 30,
2010. |
(2) Consists of the recognition
of $8.8 million of revenue deferred in prior years and recognized
in the second quarter of 2009 upon the upgrade of thirteen Tactile
Guidance System™ (TGS™) units to RIO systems and $2.0 million of
revenue associated with the sale of three RIO systems in the first
quarter of 2009 which were recognized in revenue in the second
quarter of 2009. |
(3) Consists of the direct cost
of revenue from the deferred system sales of $3.6 million
(including $1.0 million from the three RIO systems in the first
quarter of 2009 which were recognized in revenue in the second
quarter of 2009) and the cost of providing the RIO system upgrades
of $4.0 million |
(4) Consists of the recognition
of $10.8 million of revenue in (2) above less the cost of revenue
of $7.6 million in (3) above. |
Revenue was $10.3 million in the second quarter of 2010 compared
to $14.9 million in the second quarter of 2009. Excluding the
recognition of deferred system revenue, revenue generated in the
second quarter of 2009 was $4.1 million. Accordingly, revenue
generated in the second quarter of 2010 represents a 151% increase
from the same period in 2009, excluding the recognition of deferred
system revenue. As indicated in the preceding table, revenue in the
second quarter of 2010 primarily consisted of $5.7 million in
revenue from the sale of seven RIO systems, and $4.2 million in
revenue from the sale of implants and disposables used in the 780
domestic MAKOplasty procedures performed in the quarter and a $0.3
million stocking order for implants and disposables associated with
the clinical research site, which reported that thirteen procedures
were performed during the quarter.
Total gross profit for the second quarter of 2010 was $6.6
million compared to a gross profit of $4.7 million in the same
period in 2009. Excluding the impact on gross profit related to the
recognition of deferred system revenue, gross profit generated in
the second quarter of 2009 was $1.4 million. Total gross margin for
the second quarter of 2010 was approximately 64%, comprised of a
74% margin on procedure revenue and a 58% margin on RIO system
revenue.
Operating expenses were $15.2 million in the second quarter of
2010 compared to $11.2 million in the second quarter of
2009. The increase in operating expenses was primarily
attributable to the following: an increase in sales and marketing
activities for the continued expansion of the direct sales force
and commercialization of the RIO system and RESTORIS implant
systems; an increase in research and development activities
associated with continuous improvement of the RIO system and the
development of potential future products, including the RIO-enabled
hip application; and an increase in general and administrative
costs as MAKO continued to build infrastructure to support
growth.
Net loss for the three months ended June 30, 2010 was $8.5
million, including non-cash stock-based compensation expense of
$1.6 million, or $(0.26) per basic and diluted share, based on
average basic and diluted shares outstanding of 33.4 million. This
compares to a net loss for the same period in 2009 of $6.4 million,
including non-cash stock-based compensation expense of $1.0
million, or $(0.26) per basic and diluted share, based on average
basic and diluted shares outstanding of 24.8 million. Excluding the
impact on gross profit related to the recognition of deferred
system, net loss during the second quarter of 2009 was $9.7
million, or $(0.39) per basic and diluted share.
Cash, cash equivalents and investments were $49.8 million as of
June 30, 2010, compared to $71.2 million as of December 31,
2009.
2010 Six-Month Financial Review
|
|
As Reported (U.S.
GAAP) |
|
|
|
Non-GAAP |
|
Selected Financial Results
(unaudited) (in thousands, except per share data) |
|
Six Months Ended June 30, |
|
Adjustments |
|
2009 |
|
|
|
2010 |
|
2009 |
|
2009 (1) |
|
As Adjusted |
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ 17,500 |
|
$ 18,631 |
|
$ (11,297) |
(2) |
$ 7,334 |
Total cost of revenue |
|
7,667 |
|
13,249 |
|
(8,789) |
(3) |
4,460 |
Gross profit |
|
9,833 |
|
5,382 |
|
(2,508) |
(4) |
2,874 |
Net loss |
|
$ (19,932) |
|
$ (15,309) |
|
$ (2,508) |
(4) |
$ (17,817) |
Net loss per share - Basic and diluted |
|
$ (0.60) |
|
$ (0.62) |
|
$ (0.10) |
|
$ (0.72) |
Weighted average common shares outstanding -
Basic and diluted |
|
33,300 |
|
24,774 |
|
― |
|
24,774 |
|
|
|
|
|
|
|
|
|
(1) Management excluded certain
transactions during the six months ended June 30, 2009, resulting
in adjusted non-GAAP financial results for the six months ended
June 30, 2009, as management believes the exclusion of these
transactions provides readers a more meaningful comparison with the
results of operations for the six months ended June 30, 2010. |
(2) Consists of the recognition
of $11.3 million of revenue deferred in prior years and recognized
during the six months ended June 30, 2009, upon the upgrade of
seventeen TGS units to RIO systems. |
(3) Consists of the direct cost
of revenue from the seventeen deferred system sales of $3.6 million
and the cost of providing the RIO system upgrades of $5.2
million |
(4) Consists of the recognition
of $11.3 million of revenue in (2) above less the cost of revenue
of $8.8 million in (3) above. |
For the six months ended June 30, 2010, revenue was $17.5
million, primarily generated from the sale of eleven RIO systems
and 1,511 domestic MAKOplasty procedures performed during the
period compared to $18.6 million for the six months ended June 30,
2009. As indicated in the preceding table, excluding the
recognition of deferred system revenue, total revenue generated in
the six months ended June 30, 2009 was $7.3 million. Revenue of
$17.5 million for the six months ended June 30, 2010 represents a
139% increase over the revenue of $7.3 million generated in the six
months ended June 30, 2009. The net loss for the six months ended
June 30, 2010 was $19.9 million, including non-cash stock-based
compensation expense of $2.9 million, or $(0.60) per basic and
diluted share, based on average basic and diluted shares
outstanding of 33.3 million, This compares to a net loss for the
six months ended June 30, 2009 of $15.3 million, including non-cash
stock-based compensation expense of $1.9 million, or $(0.62) per
basic and diluted share, based on average basic and diluted shares
outstanding of 24.8 million. Excluding the impact on gross profit
related to the recognition of deferred system revenue, net loss
generated in the six month period ended June 30, 2009 was $17.8
million or $(0.72) per share.
Conference Call
MAKO will host a conference call today at 4:30 pm EDT to discuss
its second quarter results. To listen to the conference call,
please dial 877-843-0414 for domestic callers and 914-495-8580 for
international callers approximately ten minutes prior to the start
time. To access the live audio broadcast or the subsequent archived
recording, visit the Investor Relations section of MAKO's website
at www.makosurgical.com.
About MAKO Surgical Corp.
MAKO Surgical Corp. is a medical device company that markets
both its RIO® Robotic-Arm Interactive Orthopedic system and its
proprietary RESTORIS® implants for minimally invasive orthopedic
knee procedures. The MAKO RIO is a surgeon-interactive tactile
surgical platform that incorporates a robotic arm and
patient-specific visualization technology and prepares the knee
joint for the insertion and alignment of MAKO's resurfacing
RESTORIS implants through a minimal incision. The FDA-cleared RIO
system allows surgeons to provide a precise, consistently
reproducible tissue-sparing, bone resurfacing procedure called
MAKOplasty® to a large, yet underserved patient population
suffering from early to mid-stage osteoarthritic knee disease. MAKO
has an intellectual property portfolio of more than 250 owned or
licensed patents and patent applications relating to the areas of
robotics, haptics, computer assisted surgery and implants.
Additional information can be found at www.makosurgical.com.
Forward-Looking Statements
This press release contains forward-looking statements
regarding, among other things, statements related to expectations,
goals, plans, objectives and future events. MAKO intends such
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in Section 21E
of the Securities Exchange Act of 1934 and the Private Securities
Reform Act of 1995. In some cases, forward-looking statements can
be identified by the following words: "may," "will," "could,"
"would," "should," "expect," "intend," "plan," "anticipate,"
"believe," "estimate," "predict," "project," "potential,"
"continue," "ongoing" or the negative of these terms or other
comparable terminology, although not all forward-looking statements
contain these words. These statements are based on the current
estimates and assumptions of our management as of the date of this
press release and are subject to risks, uncertainties, changes in
circumstances, assumptions and other factors that may cause actual
results to differ materially from those indicated by
forward-looking statements, many of which are beyond MAKO's ability
to control or predict. Such factors, among others, may have a
material adverse effect on MAKO's business, financial condition and
results of operations and may include the potentially significant
impact of a continued economic downturn or delayed economic
recovery on the ability of MAKO's customers to secure adequate
funding, including access to credit, for the purchase of MAKO's
products or cause MAKO's customers to delay a purchasing decision,
changes in competitive conditions and prices in MAKO's markets,
unanticipated issues relating to intended product launches,
decreases in sales of MAKO's principal product lines, increases in
expenditures related to increased or changing governmental
regulation or taxation of MAKO's business, unanticipated issues in
securing regulatory clearance or approvals for new products or
upgrades or changes to MAKO's current products, the impact of the
recently enacted United States healthcare reform legislation on
hospital spending, reimbursement, and the taxing of medical device
companies, loss of key management and other personnel or inability
to attract such management and other personnel and unanticipated
intellectual property expenditures required to develop, market, and
defend MAKO's products. These and other risks are described in
greater detail under Item 1A, "Risk Factors," in MAKO's annual
report on Form 10-K for the year ended December 31, 2009 filed with
the Securities and Exchange Commission on March 10, 2010 and
quarterly report on Form 10-Q for the quarter ended March 31, 2010
filed with the Securities and Exchange Commission on May 7, 2010.
Given these uncertainties, undue reliance should not be placed on
these forward-looking statements. MAKO does not undertake any
obligation to release any revisions to these forward-looking
statements publicly to reflect events or circumstances after the
date of this press release or to reflect the occurrence of
unanticipated events.
"MAKOplasty®," "RESTORIS®," "RIO®," "Tactile Guidance System™,"
and "TGS™," as well as the "MAKO" logo, whether standing alone or
in connection with the words "MAKO Surgical Corp." are trademarks
of MAKO Surgical Corp.
Condensed Statements of Operations
(unaudited) (in thousands, except per share data) |
|
Three Months Ended June
30, |
|
Six Months Ended June
30, |
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
Procedures |
|
$ 4,240 |
|
$ 1,669 |
|
$ 7,868 |
|
$ 2,824 |
Systems – RIO |
|
5,672 |
|
4,294 |
|
9,062 |
|
4,294 |
Systems – TGS, previously
deferred |
|
― |
|
8,807 |
|
― |
|
11,297 |
Service and other |
|
339 |
|
134 |
|
570 |
|
216 |
Total revenue |
|
10,251 |
|
14,904 |
|
17,500 |
|
18,631 |
Cost of revenue: |
|
|
|
|
|
|
|
|
Procedures |
|
1,111 |
|
963 |
|
3,066 |
|
1,450 |
Systems – RIO |
|
2,383 |
|
2,448 |
|
4,123 |
|
2,700 |
Systems – RIO upgrades |
|
― |
|
3,970 |
|
― |
|
5,183 |
Systems – TGS, previously
deferred |
|
― |
|
2,634 |
|
― |
|
3,606 |
Service and other |
|
177 |
|
204 |
|
478 |
|
310 |
Total cost of revenue |
|
3,671 |
|
10,219 |
|
7,667 |
|
13,249 |
Gross profit |
|
6,580 |
|
4,685 |
|
9,833 |
|
5,382 |
Operating costs and expenses: |
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
10,717 |
|
7,497 |
|
21,535 |
|
14,305 |
Research and development
|
|
3,701 |
|
3,090 |
|
6,984 |
|
5,603 |
Depreciation and amortization |
|
749 |
|
589 |
|
1,371 |
|
1,067 |
Total operating costs and expenses |
|
15,167 |
|
11,176 |
|
29,890 |
|
20,975 |
Loss from operations |
|
(8,587) |
|
(6,491) |
|
(20,057) |
|
(15,593) |
Interest and other income |
|
64 |
|
67 |
|
172 |
|
289 |
Loss before income taxes |
|
(8,523) |
|
(6,424) |
|
(19,885) |
|
(15,304) |
Income tax expense |
|
1 |
|
― |
|
47 |
|
5 |
Net loss |
|
$ (8,524) |
|
$ (6,424) |
|
$ (19,932) |
|
$ (15,309) |
Net loss per share - Basic and diluted |
|
$ (0.26) |
|
$ (0.26) |
|
$ (0.60) |
|
$ (0.62) |
Weighted average common shares outstanding -
Basic and diluted |
|
33,419 |
|
24,806 |
|
33,300 |
|
24,774 |
|
|
|
|
|
Selected Balance Sheet Data
(unaudited) (in thousands) |
|
June 30, 2010 |
|
December 31, 2009 |
|
|
|
|
|
Cash, cash equivalents and investments |
|
$ 49,757 |
|
$ 71,213 |
Total assets |
|
86,725 |
|
99,103 |
|
|
|
|
|
Long-term debt |
|
― |
|
― |
Additional paid-in capital |
|
211,363 |
|
204,977 |
Accumulated deficit |
|
(134,127) |
|
(114,195) |
Total stockholders' equity |
|
77,273 |
|
90,794 |
CONTACT: MAKO Surgical Corp.
Investors:
Susan M. Verde
954-927-2044 x349
sverde@makosurgical.com
Westwicke Partners
Mark Klausner
443-213-0500
mark.klausner@westwicke.com
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