Second Quarter and Six-Month 2011
Highlights
Second quarter revenue totaled $18.6 million, an 81% increase
over the same period in 2010
Twelve RIO® systems sold in the second quarter, including ten
domestic commercial sales and two international commercial sales,
increasing worldwide commercial installed base to 86 RIO
systems
A total of nineteen RIO systems sold worldwide in the first six
months of 2011, a 73% increase over the same period in 2010
1,557 MAKOplasty® procedures performed in the second quarter, a
96% increase over the same period in 2010
2,861 MAKOplasty® procedures performed in first six months of
2011, an 88% increase over the same period in 2010
Intellectual property portfolio enhanced by the allowance in the
second quarter of a key patent and the recent securing of an
exclusive license
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 quarter ended June 30,
2011.
Recent Business Developments
RIO Systems – Twelve RIO systems were installed and customer
accepted at commercial sites during the second quarter, bringing
MAKO's worldwide commercial installed base of RIO systems to 86
systems as of June 30, 2011, of which 84 are domestic. Four of the
second quarter RIO system sales were part of the first quarter
binding commitment for eleven new MAKOplasty sites received from
Health Management Associates, Inc. (NYSE:HMA), an operator of acute
care hospitals primarily in the southeast and southwest areas of
non-urban America. A total of six RIO system sales have been
fulfilled under the HMA order, with the remaining five RIO systems
expected to be installed and customer accepted over the remainder
of 2011.
MAKOplasty Procedure Volume – During the second quarter, 1,557
MAKOplasty procedures were performed, of which 1,519 were performed
at domestic sites. The 1,557 MAKOplasty procedures performed
represent a 19% increase over the procedures performed in the first
quarter of 2011 and a 96% increase over the procedures performed in
the second quarter of 2010. In the six months ended June 30, 2011,
a total of 2,861 MAKOplasty procedures were performed. Through June
30, 2011, a total of 8,730 procedures had been performed since the
first procedure in June 2006.
Intellectual Property Portfolio – Since its inception, as MAKO
has progressed in the development of its innovative products, it
has licensed third party intellectual property that both enables
and protects MAKOplasty, and has filed original patent applications
capturing the novelty of these technologies. MAKO was recently
notified by the United States Patent and Trademark Office of the
allowance of one such MAKOplasty patent application, entitled
"Haptic Guidance System and Method." MAKO believes the allowed
claims of this patent broadly protect fundamental necessary
elements of what would be required to commercialize a viable
robotic solution for orthopedic surgery. Additionally, recognizing
the criticality of haptic technology, in May 2009 MAKO obtained a
non-exclusive worldwide license, in the field of orthopedics, to
the entire patent portfolio of Immersion Corporation, a leading
innovator in haptic technologies claiming more than 1,000 U.S. and
foreign patents and patent applications. Recently, MAKO and
Immersion expanded this license to provide MAKO with exclusive
rights to the same portfolio in the same field.
Clinical Research and Marketing – Efforts to build a strong base
of clinical evidence for knee MAKOplasty continue with over 65
clinical studies currently in process. During the second quarter,
46 abstracts were submitted for peer-review to five different
conferences.
Hip Application Development – The surgeon preference evaluation
of the hip MAKOplasty application is progressing according to
MAKO's plan and MAKO continues to expect a commercial launch by the
end of 2011.
"We are pleased with our strong operating results in the second
quarter of 2011 and our team's consistent execution of our plan,"
said Maurice R. Ferre, M.D., President and Chief Executive Officer
of MAKO. "Further, we believe that the expansion of our
intellectual property portfolio through the allowance of one of our
MAKOplasty patents and securing the exclusive rights to the
Immersion patent portfolio provide MAKO with the opportunity to
achieve a unique and valuable market position in the field of
robotically assisted orthopedic surgery."
2011 Second Quarter Financial Review
Revenue was $18.6 million in the second quarter of 2011 compared
to $10.3 million in the second quarter of 2010, representing an 81%
increase. Revenue in the second quarter of 2011 primarily consisted
of $7.7 million in revenue from the sale of implants and
disposables used in the 1,557 MAKOplasty procedures performed in
the quarter, $9.5 million in revenue from the sale of twelve RIO
systems and $1.4 million in revenue from service.
Total gross profit for the second quarter of 2011 was $13.1
million compared to a gross profit of $6.6 million in the same
period in 2010. Total gross margin for the second quarter of 2011
was 71%, comprised of a 78% margin on procedure revenue, a 63%
margin on RIO system revenue and a 81% margin on service
revenue.
Operating expenses were $23.1 million in the second quarter of
2011 compared to $15.2 million in the second quarter of 2010. 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 June 30, 2011 was $9.9
million, including non-cash stock-based compensation expense of
$2.6 million, or $(0.24) per basic and diluted share, based on
average basic and diluted shares outstanding of 40.6 million. This
compares to a net loss for the same period in 2010 of $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.
Cash, cash equivalents and investments were $76.8 million as of
June 30, 2011 compared to $96.8 million as of December 31,
2010.
2011 Six-Month Financial Review
For the six months ended June 30, 2011, revenue was $31.6
million, primarily generated from the sale of nineteen RIO systems
and 2,861 domestic MAKOplasty procedures performed during the
period, compared to $17.5 million for the six months ended June 30,
2010.
The net loss for the six months ended June 30, 2011 was $20.9
million, including non-cash stock-based compensation expense of
$4.9 million, or $(0.52) per basic and diluted share, based on
average basic and diluted shares outstanding of 40.4 million. This
compares to a net loss for the six months ended June 30, 2010 of
$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.
Conference Call
MAKO will host a conference call today at 4:30 pm ET to discuss
its second quarter 2011 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 84118019. 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 and
CE Marked 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. The MAKOplasty solution is comprised of imaging,
navigation, surgical procedures, haptics, robotics, software,
instrument and implant technologies and is enabled by an
intellectual property portfolio of more than 300 U.S. and foreign,
owned and licensed, patents and patent applications, as well as
copyrights, trademarks, trade secrets and employee know-how.
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
complying with regulatory requirements related to MAKO's current
products or 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, 2010 filed on March 10, 2011. 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®," 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, |
| |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| |
|
|
|
|
|
|
|
|
| Revenue: |
|
|
|
|
|
|
|
|
| Procedures |
|
$ 7,676 |
|
$ 4,240 |
|
$ 14,143 |
|
$ 7,868 |
| Systems – RIO |
|
9,474 |
|
5,672 |
|
14,838 |
|
9,062 |
| Service |
|
1,429 |
|
339 |
|
2,624 |
|
570 |
| Total revenue |
|
18,579 |
|
10,251 |
|
31,605 |
|
17,500 |
| Cost of revenue: |
|
|
|
|
|
|
|
|
| Procedures |
|
1,716 |
|
1,111 |
|
3,514 |
|
3,066 |
| Systems – RIO |
|
3,488 |
|
2,383 |
|
5,526 |
|
4,123 |
| Service |
|
274 |
|
177 |
|
533 |
|
478 |
| Total cost of revenue |
|
5,478 |
|
3,671 |
|
9,573 |
|
7,667 |
| Gross profit |
|
13,101 |
|
6,580 |
|
22,032 |
|
9,833 |
| Operating costs and expenses: |
|
|
|
|
|
|
|
|
| Selling, general and
administrative |
|
17,137 |
|
10,717 |
|
31,946 |
|
21,535 |
| Research and development
|
|
5,015 |
|
3,701 |
|
9,209 |
|
6,984 |
| Depreciation and
amortization |
|
977 |
|
749 |
|
1,952 |
|
1,371 |
| Total operating costs and expenses |
|
23,129 |
|
15,167 |
|
43,107 |
|
29,890 |
| Loss from operations |
|
(10,028) |
|
(8,587) |
|
(21,075) |
|
(20,057) |
| Interest and other income |
|
120 |
|
64 |
|
212 |
|
172 |
| Loss before income taxes |
|
(9,908) |
|
(8,523) |
|
(20,863) |
|
(19,885) |
| Income tax expense |
|
1 |
|
1 |
|
41 |
|
47 |
| Net loss |
|
$ (9,909) |
|
$ (8,524) |
|
$ (20,904) |
|
$ (19,932) |
| Net loss per share - Basic and diluted |
|
$ (0.24) |
|
$ (0.26) |
|
$ (0.52) |
|
$ (0.60) |
| Weighted average common shares outstanding -
Basic and diluted |
|
40,605 |
|
33,419 |
|
40,358 |
|
33,300 |
| |
|
|
|
|
| |
|
|
|
|
| Condensed Balance Sheets
(unaudited) (in thousands) |
|
June 30, 2011 |
|
December 31, 2010 |
| |
|
|
|
|
| Current Assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ 7,371 |
|
$ 27,108 |
| Short-term investments |
|
52,346 |
|
46,401 |
| Accounts receivable |
|
12,018 |
|
11,560 |
| Inventory |
|
14,657 |
|
10,504 |
| Deferred cost of revenue |
|
97 |
|
― |
| Prepaids and other assets |
|
2,238 |
|
1,283 |
| Total current assets |
|
88,727 |
|
96,856 |
| Long-term investments |
|
17,051 |
|
23,283 |
| Property and equipment, net |
|
11,139 |
|
9,212 |
| Intangible assets, net |
|
6,890 |
|
7,530 |
| Other assets |
|
165 |
|
198 |
| Total assets |
|
$ 123,972 |
|
$ 137,079 |
| |
|
|
|
|
| Current Liabilities: |
|
|
|
|
| Accounts payable |
|
$ 2,181 |
|
$ 1,518 |
| Accrued compensation and
employee benefits |
|
3,456 |
|
5,546 |
| Other accrued liabilities |
|
6,013 |
|
5,064 |
| Deferred revenue |
|
3,596 |
|
3,071 |
| Total current liabilities |
|
15,246 |
|
15,199 |
| Deferred revenue – long term |
|
75 |
|
109 |
| Total liabilities |
|
15,321 |
|
15,308 |
| Stockholders' equity: |
|
|
|
|
| Common stock |
|
41 |
|
40 |
| Additional paid-in capital |
|
282,470 |
|
274,712 |
| Accumulated deficit |
|
(173,786) |
|
(152,882) |
| Accumulated other comprehensive
loss |
|
(74) |
|
(99) |
| Total stockholders' equity |
|
108,651 |
|
121,771 |
| Total liabilities and stockholders'
equity |
|
$ 123,972 |
|
$ 137,079 |
| |
|
|
| |
|
|
| Condensed Statements of Cash Flows
(unaudited) (in thousands, except share data) |
|
Six Months Ended June
30, |
| |
|
2011 |
|
2010 |
| Operating activities: |
|
|
|
|
| Net loss |
|
$ (20,904) |
|
$ (19,932) |
| Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
|
|
| Depreciation |
|
2,081 |
|
1,092 |
| Amortization of intangible assets |
|
640 |
|
476 |
| Stock-based compensation |
|
4,946 |
|
2,930 |
| Inventory write-down |
|
28 |
|
1,107 |
| Amortization of premium on investment
securities |
|
195 |
|
299 |
| Loss on asset impairment |
|
148 |
|
986 |
| Provision for doubtful accounts |
|
154 |
|
― |
| Issuance of restricted stock under
development agreement |
|
1,080 |
|
― |
| Changes in operating assets and
liabilities: |
|
|
|
|
| Accounts receivable |
|
(612) |
|
(2,561) |
| Inventory |
|
(5,583) |
|
(4,410) |
| Deferred cost of revenue |
|
(97) |
|
― |
| Prepaid and other assets |
|
(955) |
|
(599) |
| Other assets |
|
33 |
|
(6) |
| Accounts payable |
|
663 |
|
508 |
| Accrued compensation and
employee benefits |
|
(2,090) |
|
(1,128) |
| Other accrued liabilities |
|
949 |
|
1,881 |
| Deferred revenue |
|
491 |
|
(118) |
| Net cash used in operating activities |
|
(18,833) |
|
(19,475) |
| Investing activities: |
|
|
|
|
| Purchase of investments |
|
(22,703) |
|
(8,522) |
| Proceeds from sales and maturities of
investments |
|
22,820 |
|
22,830 |
| Acquisition of property and equipment |
|
(2,754) |
|
(1,997) |
| Acquisition of intangible assets |
|
― |
|
(113) |
| Net cash (used in) provided by investing
activities |
|
(2,637) |
|
12,198 |
| Financing activities: |
|
|
|
|
| Proceeds from employee stock purchase
plan |
|
469 |
|
322 |
| Exercise of common stock options and warrants
for cash |
|
1,930 |
|
317 |
| Payment of payroll taxes relating to vesting
of restricted stock |
|
(666) |
|
(236) |
| Net cash provided by financing
activities |
|
1,733 |
|
403 |
| Net decrease in cash and cash
equivalents |
|
(19,737) |
|
(6,874) |
| Cash and cash equivalents at beginning of
period |
|
27,108 |
|
17,159 |
| Cash and cash equivalents at end of
period |
|
$ 7,371 |
|
$ 10,285 |
CONTACT: Investors:
MAKO Surgical Corp.
954-628-0753
investorrelations@makosurgical.com
or
Westwicke Partners
Mark Klausner
443-213-0500
makosurgical@westwicke.com
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