Third Quarter 2010 Highlights
Third quarter revenue totaled $12.0 million, a 79% increase over
revenue generated in the same period in 2009
Nine RIO® systems sold, increasing domestic commercial installed
base to 54 RIO systems
Through the third quarter of 2010, a total of 20 RIO systems
have been sold worldwide
815 MAKOplasty® procedures performed, a 95% increase over the
same period in 2009
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 procedures known as knee MAKOplasty®, today
announced its operating results for its third quarter ended
September 30, 2010.
Recent Business Developments
RIO Systems – Nine RIO systems were sold during the third
quarter, of which eight were installed and customer accepted at
domestic sites. These new systems brought MAKO's domestic
commercial installed base to 54 RIO systems as of September 30,
2010. In addition, one RIO system was sold to a distributor in
Italy which will be initially used by the distributor for
demonstration purposes to market the RIO system and RESTORIS
implant systems in the Italian orthopedic market.
MAKOplasty Procedure Volume – During the third quarter, 815
MAKOplasty procedures were performed, of which 809 procedures were
performed at domestic sites, and our clinical research site in
Glasgow, Scotland reported that six procedures were performed at
its site. The 815 MAKOplasty procedures represent a 3%
increase over procedures performed in the second quarter of 2010
and a 95% increase over the third quarter of 2009. The average
monthly utilization per system was 5.7 procedures during the third
quarter of 2010, a decrease from 6.3 procedures per system per
month in the second quarter of 2010 and an increase from 5.4
procedures per system per month in the third quarter of 2009. A
total of 4,723 procedures had been performed through September 30,
2010, since the first procedure in June 2006.
Clinical Education – In the third quarter, MAKO attended four
local conferences where surgeons engaged in RIO interactive hands
on demonstrations. Additionally, in the third 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 nine RIO system sales, including the
addition of eight new domestic commercial sites, and are
enthusiastic about the adoption of MAKOplasty this quarter by
several leading orthopedic centers," said Maurice R. Ferré, M.D.,
President and Chief Executive Officer of MAKO, "We are also
encouraged by our second international sale of a RIO system and the
815 MAKOplasty procedures performed worldwide in the third
quarter."
Hip MAKOplasty Application
In October, MAKO initiated a multi-center orthopedic surgeon
preference evaluation program for its RIO-enabled hip MAKOplasty
application. Dr. Lawrence D. Dorr at Good Samaritan Hospital in Los
Angeles and Drs. Douglas E. Padgett and Amar S. Ranawat at
Hospital for Special Surgery in New York performed the first hip
MAKOplasty procedures as part of this program designed to solicit
user feedback in advance of MAKO's full commercial release of a hip
MAKOplasty application, currently expected in the second half of
2011. The hip MAKOplasty application utilizes the RIO system's
tactile, visual and audio feedback to assist the surgeon in
preparing the acetabulum (hip socket) for optimal placement of the
acetabular cup implant.
"The successful use of the RIO system in performing hip
MAKOplasty represents the achievement of a significant clinical
milestone towards MAKO's ultimate goal of commercializing a true
multi-application robotic arm platform for orthopedics," said Dr.
Ferré.
2010 Third Quarter Financial Review
Revenue was $12.0 million in the third quarter of 2010 compared
to $6.7 million in the third quarter of 2009, representing a 79%
increase from the same period in 2009. Revenue in the third quarter
of 2010 primarily consisted of $7.6 million in revenue from the
sale of nine RIO systems, and $4.1 million in revenue from the sale
of implants and disposables used in the 815 MAKOplasty procedures
performed in the quarter.
Total gross profit for the third quarter of 2010 was $7.5
million compared to a gross profit of $2.8 million in the same
period in 2009. Total gross margin for the third quarter of 2010
was approximately 62%, comprised of a 75% margin on procedure
revenue and a 56% margin on RIO system revenue.
Operating expenses were $16.5 million in the third quarter of
2010 compared to $12.3 million in the third 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 September 30, 2010 was $8.9
million, including non-cash stock-based compensation expense of
$1.7 million, or $(0.27) per basic and diluted share, based on
average basic and diluted shares outstanding of 33.5 million. This
compares to a net loss for the same period in 2009 of $9.4 million,
including non-cash stock-based compensation expense of $1.1
million, or $(0.33) per basic and diluted share, based on average
basic and diluted shares outstanding of 28.6 million.
Cash, cash equivalents and investments were $41.1 million as of
September 30, 2010, compared to $71.2 million as of December 31,
2009.
2010 Nine-Month Financial
Review |
|
As Reported (U.S.
GAAP) |
|
Non-GAAP |
Selected Financial Results
(unaudited) |
Nine Months Ended |
|
|
(in thousands, except per share data) |
September 30, |
Adjustments |
2009 |
|
2010 |
2009 |
2009 (1) |
As Adjusted |
|
|
|
|
|
Total revenue |
$29,514 |
$25,357 |
$(11,297) (2) |
$14,060 |
Total cost of revenue |
12,226 |
17,145 |
(8,789) (3) |
8,356 |
Gross profit |
17,288 |
8,212 |
(2,508) (4) |
5,704 |
Net loss |
$(28,870) |
$(24,748) |
$(2,508) (4) |
$(27,256) |
Net loss per share - Basic and
diluted |
$(0.87) |
$(0.95) |
$(0.10) |
$(1.05) |
Weighted average common shares outstanding -
Basic and diluted |
33,361 |
26,068 |
― |
26,068 |
|
|
|
|
|
(1) Management excluded certain
transactions during the nine months ended September 30, 2009,
resulting in adjusted non-GAAP financial results for the nine
months ended September 30, 2009, as management believes the
exclusion of these transactions provides readers a more meaningful
comparison with the results of operations for the nine months ended
September 30, 2010. |
(2) Consists of the recognition
of $11.3 million of revenue deferred in prior years and recognized
during the nine months ended September 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 nine months ended September 30, 2010, revenue was $29.5
million, primarily generated from the sale of twenty RIO systems
and 2,320 domestic MAKOplasty procedures performed during the
period compared to $25.4 million for the nine months ended
September 30, 2009. As indicated in the preceding table,
excluding the recognition of deferred system revenue, total revenue
generated in the nine months ended September 30, 2009 was $14.1
million. Revenue of $29.5 million for the nine months ended
September 30, 2010 represents a 110% increase over the adjusted
revenue of $14.1 million generated in the nine months ended
September 30, 2009. The net loss for the nine months ended
September 30, 2010 was $28.9 million, including non-cash
stock-based compensation expense of $4.6 million, or $(0.87) 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
nine months ended September 30, 2009 of $24.7 million, including
non-cash stock-based compensation expense of $2.9 million, or
$(0.95) per basic and diluted share, based on average basic and
diluted shares outstanding of 26.1 million. Excluding the impact on
gross profit related to the recognition of deferred system revenue,
net loss generated in the nine month period ended September 30,
2009 was $27.3 million or $(1.05) per share.
Conference Call
MAKO will host a conference call today at 4:30 pm EDT to discuss
its third 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® knee
implants for a minimally invasive orthopedic procedure called knee
MAKOplasty®. 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 and CE Marked RIO
system allows surgeons to provide precise, consistently
reproducible tissue-sparing, bone resurfacing for 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) |
Three Months Ended |
Nine Months Ended |
(in thousands, except per share data) |
September 30, |
September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Revenue: |
|
|
|
|
Procedures |
$4,069 |
$1,986 |
$11,937 |
$4,810 |
Systems – RIO |
7,579 |
4,634 |
16,641 |
8,928 |
Systems – TGS, previously
deferred |
― |
― |
― |
11,297 |
Service and other |
366 |
106 |
936 |
322 |
Total revenue |
12,014 |
6,726 |
29,514 |
25,357 |
Cost of revenue: |
|
|
|
|
Procedures |
1,034 |
847 |
4,100 |
2,297 |
Systems – RIO |
3,317 |
2,893 |
7,440 |
5,593 |
Systems – RIO
upgrades |
― |
― |
― |
5,183 |
Systems – TGS, previously
deferred |
― |
― |
― |
3,606 |
Service and other |
208 |
156 |
686 |
466 |
Total cost of revenue |
4,559 |
3,896 |
12,226 |
17,145 |
Gross profit |
7,455 |
2,830 |
17,288 |
8,212 |
Operating costs and expenses: |
|
|
|
|
Selling, general and
administrative |
11,648 |
7,924 |
33,183 |
22,229 |
Research and
development |
4,018 |
3,758 |
11,002 |
9,361 |
Depreciation and
amortization |
795 |
595 |
2,166 |
1,662 |
Total operating costs and expenses |
16,461 |
12,277 |
46,351 |
33,252 |
Loss from operations |
(9,006) |
(9,447) |
(29,063) |
(25,040) |
Interest and other income |
84 |
59 |
256 |
348 |
Loss before income taxes |
(8,922) |
(9,388) |
(28,807) |
(24,692) |
Income tax expense |
16 |
51 |
63 |
56 |
Net loss |
$(8,938) |
$(9,439) |
$(28,870) |
$(24,748) |
Net loss per share - Basic and
diluted |
$(0.27) |
$(0.33) |
$(0.87) |
$(0.95) |
Weighted average common shares outstanding -
Basic and diluted |
33,481 |
28,615 |
33,361 |
26,068 |
|
|
|
|
|
Selected Balance Sheet Data
(unaudited) |
September 30, |
December 31, |
|
|
(in thousands) |
2010 |
2009 |
|
|
|
|
|
|
|
Cash, cash equivalents and investments |
$41,136 |
$71,213 |
|
|
Total assets |
80,961 |
99,103 |
|
|
|
|
|
|
|
Long-term debt |
― |
― |
|
|
Additional paid-in capital |
213,210 |
204,977 |
|
|
Accumulated deficit |
(143,065) |
(114,195) |
|
|
Total stockholders' equity |
70,176 |
90,794 |
|
|
CONTACT: MAKO Surgical Corp.
Investors:
Susan M. Verde
954-927-2044 x349
sverde@makosurgical.com
Westwicke Partners
Mark Klausner
443-213-0500
makosurgical@westwicke.com
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