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8-K - FORM 8-K DATED NOVEMBER 9, 2011 - MAKO Surgical Corp.mako115308_8k.htm

Exhibit 99.1

 

MAKO Surgical Corp. Reports Operating Results for the Third Quarter 2011

 

Third Quarter and Nine-Month 2011 Highlights

 

Third quarter revenue totaled $20.0 million, a 67% increase over the same period in 2010

 

Eleven RIO® systems sold in the third quarter, increasing worldwide commercial installed base to 97 RIO systems

 

A total of thirty RIO systems sold worldwide in the first nine months of 2011, a 50% increase over the same period in 2010

 

1,813 MAKOplasty® procedures performed in the third quarter, a 122% increase over the same period in 2010

 

4,674 MAKOplasty procedures performed in first nine months of 2011, a 100% increase over the same period in 2010

 

MAKOplasty® Total Hip Arthroplasty commercially launched in September 2011 and twelve MAKOplasty Total Hip Arthroplasty applications sold in the third quarter of 2011

 

FORT LAUDERDALE, FL – (GLOBENEWSWIRE) — November 9, 2011 —MAKO Surgical Corp. (NASDAQ:MAKO), a medical device company that markets its RIO® Robotic Arm Interactive Orthopedic surgical platform, MAKOplasty® joint specific applications, and proprietary RESTORIS® implants that together enable orthopedic surgeons to consistently, reproducibly and precisely treat patient specific osteoarthritic disease, today announced its operating results for the quarter ended September 30, 2011.

 

Recent Business Developments

 

RIO Systems – Eleven RIO systems were installed and customer accepted at domestic commercial sites during the third quarter, bringing MAKO’s worldwide commercial installed base of RIO systems to 97 systems as of September 30, 2011, of which 95 are installed domestically. Four of the third 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 ten RIO system sales have been fulfilled under the HMA order, with the remaining one RIO system expected to be installed and customer accepted in the fourth quarter of 2011.

 

MAKOplasty Procedure Volume – During the third quarter, 1,813 MAKOplasty procedures were performed, of which 1,752 were performed at domestic sites. The 1,813 MAKOplasty procedures performed represent a 16% increase over the procedures performed in the second quarter of 2011 and a 122% increase over the procedures performed in the third quarter of 2010. During the nine months ended September 30, 2011, a total of 4,674 MAKOplasty procedures were performed. Through September 30, 2011, a total of 10,543 procedures had been performed since the first procedure in June 2006.

 

MAKOplasty Total Hip Arthroplasty Commercial Launch – In September 2011, MAKO commercially launched MAKOplasty Total Hip Arthroplasty (THA). Subsequent to the commercial launch, twelve MAKOplasty THA applications were sold through September 30, 2011.

 

Clinical Research and Marketing – Efforts to build a strong base of clinical evidence for MAKOplasty continue, with over 70 clinical studies currently in process. During the third quarter, 20 abstracts were submitted for peer-review to four different conferences.

 

“We are pleased with our strong operating results in the third quarter of 2011, including the commercial introduction of MAKOplasty Total Hip Arthroplasty,” said Maurice R. Ferre, M.D., President and Chief Executive Officer of MAKO. “We believe that the expansion of our product offering through the launch of the hip application will allow us to continue to drive the adoption of MAKOplasty to help enable surgeons to deliver consistent, reproducible precision to orthopedic procedures.”

 

2011 Third Quarter Financial Review

 

Revenue was $20.0 million in the third quarter of 2011 compared to $12.0 million in the third quarter of 2010, representing a 67% increase. Revenue in the third quarter of 2011 primarily consisted of $9.1 million in revenue from the sale of implants and disposables used in the 1,813 MAKOplasty procedures performed in the quarter, $9.3 million in revenue from the sale of eleven RIO systems and twelve MAKOplasty THA applications and $1.6 million in revenue from service.

 

Total gross profit for the third quarter of 2011 was $13.2 million compared to a gross profit of $7.5 million in the same period in 2010. Total gross margin for the third quarter of 2011 was 66%, including a 73% margin on procedure revenue, a 57% margin on RIO system revenue and a 76% margin on service revenue.

 

 
 

Operating expenses were $22.8 million in the third quarter of 2011 compared to $16.5 million in the third 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 MAKOplasty applications and the development of potential future products, including the recently launched MAKOplasty THA 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 September 30, 2011 was $9.7 million, including non-cash stock-based compensation expense of $2.5 million, or $(0.24) per basic and diluted share, based on average basic and diluted shares outstanding of 41.0 million. This compares to a net loss for the same period in 2010 of $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.

 

Cash, cash equivalents and investments were $67.4 million as of September 30, 2011 compared to $96.8 million as of December 31, 2010.

 

2011 Nine-Month Financial Review

 

For the nine months ended September 30, 2011, revenue was $51.6 million, primarily generated from the sale of thirty RIO systems, twelve MAKOplasty THA applications, 4,674 MAKOplasty procedures performed and warranty and maintenance services provided, compared to $29.5 million for the nine months ended September 30, 2010.

 

The net loss for the nine months ended September 30, 2011 was $30.6 million, including non-cash stock-based compensation expense of $7.4 million, or $(0.75) 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 nine months ended September 30, 2010 of $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.

 

Conference Call

 

MAKO will host a conference call today at 4:30 pm ET to discuss its third 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 16435167. 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 its RIO® Robotic-Arm Interactive Orthopedic system, joint specific applications for the knee and hip, and proprietary RESTORIS® implants for orthopedic procedures called MAKOplasty®. The RIO is a surgeon-interactive tactile surgical platform that incorporates a robotic arm and patient-specific visualization technology, which enables precise, consistently reproducible bone resection for the accurate insertion and alignment of MAKO’s RESTORIS implants. The MAKOplasty solution incorporates technologies enabled by an intellectual property portfolio including more than 300 U.S. and foreign, owned and licensed, patents and patent applications. 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 and quarterly report on Form 10-Q for the quarter ended September 30, 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
September 30,
    Nine Months Ended
September 30,
 
    2011     2010     2011     2010  
Revenue:                                
Procedures   $ 9,108     $ 4,069     $ 23,251     $ 11,937  
Systems – RIO     9,315       7,579       24,153       16,641  
Service     1,591       366       4,215       936  
Total revenue     20,014       12,014       51,619       29,514  
Cost of revenue:                                
Procedures     2,484       1,034       5,998       4,100  
Systems – RIO     3,973       3,317       9,499       7,440  
Service     378       208       911       686  
Total cost of revenue     6,835       4,559       16,408       12,226  
Gross profit     13,179       7,455       35,211       17,288  
Operating costs and expenses:                                
Selling, general and administrative     16,533       11,648       48,479       33,183  
Research and development     5,054       4,018       14,263       11,002  
Depreciation and amortization     1,177       795       3,129       2,166  
Total operating costs and expenses     22,764       16,461       65,871       46,351  
Loss from operations     (9,585 )     (9,006 )     (30,660 )     (29,063 )
Other income (expense)     (51 )     84       161       256  
Loss before income taxes     (9,636 )     (8,922 )     (30,499 )     (28,807 )
Income tax expense     19       16       60       63  
Net loss   $ (9,655 )   $ (8,938 )   $ (30,559 )   $ (28,870 )
Net loss per share - Basic and diluted   $ (0.24 )   $ (0.27 )   $ (0.75 )   $ (0.87 )
Weighted average common shares outstanding - Basic and diluted     40,981       33,481       40,568       33,361  

 

Condensed Balance Sheets (unaudited)
(in thousands)
 
  September 30,
2011
    December 31,
2010
         
Current Assets:                                
  Cash and cash equivalents   $ 8,410     $ 27,108                  
  Short-term investments     42,071       46,401                  
  Accounts receivable     11,228       11,560                  
  Inventory     18,164       10,504                  
  Deferred cost of revenue     125                        
  Prepaid and other current assets     2,110       1,283                  
Total current assets     82,108       96,856                  
Long-term investments     16,894       23,283                  
Property and equipment, net     15,917       9,212                  
Intangible assets, net     7,704       7,530                  
Other assets     148       198                  
Total assets   $ 122,771     $ 137,079                  
                                 
Current Liabilities:                                
  Accounts payable   $ 4,818     $ 1,518                  
  Accrued compensation and employee benefits     3,690       5,546                  
  Other accrued liabilities     7,743       5,064                  
  Deferred revenue     3,941       3,071                  
Total current liabilities     20,192       15,199                  
Deferred revenue, non-current     75       109                  
Total liabilities     20,267       15,308                  
Stockholders’ equity:                                
  Common stock     41       40                  
  Additional paid-in capital     285,828       274,712                  
  Accumulated deficit     (183,441 )     (152,882 )                
  Accumulated other comprehensive gain (loss)     76       (99 )                
Total stockholders’ equity     102,504       121,771                  
Total liabilities and stockholders’ equity   $ 122,771     $ 137,079                  

 

 
 

 

Condensed Statements of Cash Flows (unaudited)

(in thousands, except share data)

  Nine Months Ended
September 30,
         
    2011     2010          
Operating activities:                                
Net loss   $ (30,559 )   $ (28,870 )                
Adjustments to reconcile net loss to net cash used in operating activities:                                
Depreciation     3,188       1,728                  
Amortization of intangible assets     1,026       751                  
Stock-based compensation     7,433       4,632                  
Inventory write-down     222       1,270                  
Amortization of premium on investment securities     365       391                  
Loss on asset impairment     148       986                  
Provision for doubtful accounts     137                        
Issuance of restricted stock under development agreement     1,440                        
Changes in operating assets and liabilities:                                
  Accounts receivable     195       (4,112 )                
  Inventory     (9,808 )     (5,937 )                
  Deferred cost of revenue     (125 )                      
  Prepaid and other current assets     (827 )     (840 )                
  Other assets     50       (60 )                
  Accounts payable     3,300       326                  
  Accrued compensation and employee benefits     (1,856 )     (684 )                
  Other accrued liabilities     2,679       2,831                  
  Deferred revenue     836       3                  
Net cash used in operating activities     (22,156 )     (27,585 )                
Investing activities:                                
Purchase of investments     (30,646 )     (8,515 )                
Proceeds from sales and maturities of investments     41,175       37,581                  
Acquisition of property and equipment     (8,115 )     (2,157 )                
Acquisition of intangible assets     (1,200 )     (562 )                
Net cash provided by investing activities     1,214       26,347                  
Financing activities:                                
Proceeds from employee stock purchase plan     798       556                  
Exercise of common stock options and warrants for cash     2,411       334                  
Payment of payroll taxes relating to vesting of restricted stock     (965 )     (342 )                
Net cash provided by financing activities     2,244       548                  
Net decrease in cash and cash equivalents     (18,698 )     (690 )                
Cash and cash equivalents at beginning of period     27,108       17,159                  
Cash and cash equivalents at end of period   $ 8,410     $ 16,469                  

 

CONTACT:

 

Investors:

MAKO Surgical Corp.
954-628-1706
investorrelations@makosurgical.com

 

or

 

Westwicke Partners
Mark Klausner

443-213-0500
makosurgical@westwicke.com

 

Source: MAKO Surgical Corp.