Fourth Quarter and Full Year 2010
Highlights
Fourth quarter revenue totaled $14.8 million, a 67% increase
over the same period in 2009
Thirteen RIO® systems sold in the quarter, increasing domestic
commercial installed base to 67 RIO systems
Total of 33 RIO systems sold worldwide in 2010
1,146 MAKOplasty® procedures performed in the quarter, a 104%
increase over the same period in 2009
Total of 3,485 MAKOplasty® procedures performed in 2010, a 118%
increase over the same period in 2009
Equity financing with net proceeds of $59.3 million completed in
the quarter
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 knee MAKOplasty®, today
announced its operating results for the fourth quarter and year
ended December 31, 2010.
Recent Business Developments
RIO Systems – Thirteen RIO systems were installed and customer
accepted at commercial sites during the fourth quarter. A total of
33 new RIO systems were sold worldwide in 2010 and MAKO's domestic
commercial installed base of RIO systems totaled 67 systems as of
December 31, 2010.
MAKOplasty Procedure Volume – During the fourth quarter, 1,146
MAKOplasty procedures were performed representing a 41% increase
over procedures performed in the third quarter of 2010 and a 104%
increase over the fourth quarter of 2009. A total of 3,485
MAKOplasty procedures were performed in 2010, and through December
31, 2010, a total of 5,869 procedures have been performed since the
first procedure in June 2006.
Clinical Research and Marketing – MAKO continues to build its
strong base of clinical evidence with over 58 clinical studies
currently in process. These studies are focused on accuracy,
clinical and radiographic outcomes, functional and kinematic
outcomes, implant design and clinical indications, surgical
techniques and robotic-arm use and healthcare economics. During the
fourth quarter, three papers were published related to MAKO
implants and procedures, bringing the total of published peer
reviewed papers to eighteen.
Hip MAKOplasty Application – In October 2010, MAKO initiated its
surgeon preference evaluation process, or SPE, for its FDA 510(k)
cleared hip MAKOplasty application. The SPE is designed to solicit
user feedback in advance of MAKO's full commercialization of its
hip MAKOplasty application, currently expected in the second half
of 2011.
Equity Financing – In November 2010, MAKO closed a public
offering of its common stock with net proceeds to the Company of
$59.3 million after expenses. MAKO expects to use the net proceeds
to support commercialization, sales, marketing and general
administrative activities, for research and product development
activities and to fund working capital and other general corporate
purposes.
"We are pleased with our strong operating results in the fourth
quarter and full year of 2010," said Maurice R. Ferre, M.D.,
President and Chief Executive Officer of MAKO. "In particular, our
significant system placements and increased procedure volume
strengthen the clinical and economic value proposition for
MAKOplasty and, we believe, position MAKO well for 2011."
2010 Fourth Quarter Financial Review
Revenue was $14.8 million in the fourth quarter of 2010 compared
to $8.9 million in the fourth quarter of 2009, representing a 67%
increase from the same period in 2009. Revenue in the fourth
quarter of 2010 primarily consisted of $8.3 million in revenue from
the sale of thirteen RIO systems and $5.7 million in revenue from
the sale of implants and disposables used in the 1,146 MAKOplasty
procedures performed in the quarter. Total revenue in the fourth
quarter was reduced by $2.2 million, of which $1.2 million related
to system sales prior to the fourth quarter, for the deferral of
system revenue related to the first year warranty services provided
by MAKO. This deferred revenue will be recognized in service
revenue over a twelve-month period.
Total gross profit for the fourth quarter of 2010 was $8.8
million compared to a gross profit of $4.5 million in the same
period in 2009. Total gross margin for the fourth quarter of 2010
was approximately 60%, comprised of a 67% margin on procedure
revenue and a 55% margin on RIO system revenue. The gross margin on
procedure revenue was reduced by a $400,000 charge in the quarter
for the write-off of the remaining excess inventory related to the
RESTORIS Classic implant system, as RESTORIS MCK continues to be
the implant system preferred by MAKO's customers. Excluding this
charge, the gross margin on procedure revenue would have been
74%.
Operating expenses were $18.7 million in the fourth quarter of
2010 compared to $13.9 million in the fourth 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 hip application and associated
implant systems; and an increase in general and administrative
costs as MAKO continued to build infrastructure to support
growth.
Net loss for the three months ended December 31, 2010 was $9.8
million, including non-cash stock-based compensation expense of
$1.7 million, or $(0.26) per basic and diluted share, based on
average basic and diluted shares outstanding of 37.3 million. This
compares to a net loss for the same period in 2009 of $9.3 million,
including non-cash stock-based compensation expense of $1.1
million, or $(0.28) per basic and diluted share, based on average
basic and diluted shares outstanding of 33.0 million.
Cash, cash equivalents and investments were $96.8 million as of
December 31, 2010, which included the net proceeds of the equity
financing, compared to $71.2 million as of December 31, 2009.
2010 Full Year Financial Review
|
As Reported (U.S.
GAAP) |
|
|
Non-GAAP |
Selected Financial Results
(unaudited) |
Twelve Months
Ended |
|
|
2009 |
(in thousands, except per share data) |
December 31, |
Adjustments |
|
|
|
2010 |
2009 |
2009 (1) |
|
As Adjusted |
|
|
|
|
|
|
Total revenue |
$44,296 |
$34,208 |
$(11,297) |
(2) |
$22,911 |
Total cost of revenue |
18,173 |
21,454 |
(8,789) |
(3) |
12,665 |
Gross profit |
26,123 |
12,754 |
(2,508) |
(4) |
10,246 |
Net loss |
$(38,687) |
$(34,023) |
$(2,508) |
(4) |
$(36,531) |
Net loss per share - Basic and
diluted |
$(1.13) |
$(1.22) |
$(0.09) |
|
$(1.31) |
Weighted average common shares outstanding -
Basic and diluted |
34,349 |
27,806 |
-- |
|
27,806 |
|
|
|
|
|
|
(1) Management excluded certain
transactions during the twelve months ended December 31, 2009,
resulting in adjusted non-GAAP financial results for the twelve
months ended December 31, 2009, as management believes the
exclusion of these transactions provides readers a more meaningful
comparison with the results of operations for the twelve months
ended December 31, 2010. |
(2) Consists of the recognition
of $11.3 million of revenue deferred in prior years and recognized
during the twelve months ended December 31, 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 year ended December 31, 2010, revenue was $44.3 million,
primarily generated from the sale of thirty-three RIO systems and
3,485 domestic MAKOplasty procedures performed during the period
compared to $34.2 million for the year ended December 31,
2009. As indicated in the preceding table, excluding the
recognition of deferred system revenue, total adjusted revenue
generated in the year ended December 31, 2009 was $22.9 million.
Revenue of $44.3 million for the year ended December 31, 2010
represents a 93% increase over the adjusted revenue of $22.9
million generated in the year ended December 31, 2009.
The net loss for the year ended December 31, 2010 was $38.7
million, including non-cash stock-based compensation expense of
$6.4 million, or $(1.13) per basic and diluted share, based on
average basic and diluted shares outstanding of 34.3 million. This
compares to a net loss for the year ended December 31, 2009 of
$34.0 million, including non-cash stock-based compensation expense
of $4.0 million, or $(1.22) per basic and diluted share, based on
average basic and diluted shares outstanding of 27.8 million.
Excluding the impact on gross profit related to the recognition of
deferred system revenue, adjusted net loss generated in the year
ended December 31, 2009 was $36.5 million, or $(1.31) per
share.
Conference Call
MAKO will host a conference call today at 4:30 pm ET to discuss
its fourth quarter and full year 2010 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. The participant code is
35606891. 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 periodic
filings with the Securities and Exchange Commission, including
MAKO's annual report on Form 10-K for the year ended December 31,
2009 filed on March 10, 2010, and quarterly reports on Form 10-Q
for the quarters ended March 31, 2010 and September 30, 2010 filed
on May 7, 2010 and November 3, 2010, respectively. 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 |
Twelve Months Ended |
(in thousands, except per share data) |
December 31, |
December 31, |
|
2010 |
2009 |
2010 |
2009 |
|
|
|
|
|
Revenue: |
|
|
|
|
Procedures |
$5,683 |
$2,740 |
$17,620 |
$7,550 |
Systems – RIO |
8,287 |
5,787 |
24,928 |
14,715 |
Systems – TGS, previously
deferred |
-- |
-- |
-- |
11,297 |
Service and other |
812 |
324 |
1,748 |
646 |
Total revenue |
14,782 |
8,851 |
44,296 |
34,208 |
Cost of revenue: |
|
|
|
|
Procedures |
1,860 |
790 |
5,960 |
3,087 |
Systems – RIO |
3,731 |
3,439 |
11,171 |
9,032 |
Systems – RIO upgrades |
-- |
-- |
-- |
5,183 |
Systems – TGS, previously
deferred |
-- |
-- |
-- |
3,606 |
Service and other |
356 |
80 |
1,042 |
546 |
Total cost of revenue |
5,947 |
4,309 |
18,173 |
21,454 |
Gross profit |
8,835 |
4,542 |
26,123 |
12,754 |
Operating costs and expenses: |
|
|
|
|
Selling, general and administrative |
13,858 |
9,843 |
47,041 |
32,072 |
Research and development |
3,973 |
3,766 |
14,975 |
13,127 |
Depreciation and amortization |
877 |
289 |
3,043 |
1,951 |
Total operating costs and expenses |
18,708 |
13,898 |
65,059 |
47,150 |
Loss from operations |
(9,873) |
(9,356) |
(38,936) |
(34,396) |
Interest and other income |
61 |
84 |
317 |
432 |
Interest and other expense |
-- |
(3) |
-- |
(3) |
Loss before income taxes |
(9,812) |
(9,275) |
(38,619) |
(33,967) |
Income tax expense |
5 |
-- |
68 |
56 |
Net loss |
$(9,817) |
$(9,275) |
$(38,687) |
$(34,023) |
Net loss per share - Basic and
diluted |
$(0.26) |
$(0.28) |
$(1.13) |
$(1.22) |
Weighted average common shares outstanding -
Basic and diluted |
37,281 |
32,964 |
34,349 |
27,806 |
|
|
|
|
|
Selected Balance Sheet Data
(unaudited) |
|
|
|
|
(in thousands) |
December 31, |
December 31, |
|
|
|
2010 |
2009 |
|
|
|
|
|
|
|
Cash, cash equivalents and investments |
$96,792 |
$71,213 |
|
|
Total assets |
137,079 |
99,103 |
|
|
|
|
|
|
|
Long-term debt |
-- |
-- |
|
|
Additional paid-in capital |
274,712 |
204,977 |
|
|
Accumulated deficit |
(152,882) |
(114,195) |
|
|
Total stockholders' equity |
121,771 |
90,794 |
|
|
CONTACT: Investors:
MAKO Surgical Corp.
Susan M. Verde
954-628-0749
investorrelations@makosurgical.com
Westwicke Partners
Mark Klausner
443-213-0500
makosurgical@westwicke.com
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