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EX-99.2 - PRESS RELEASE DATED FEBRUARY 21, 2013 - MAKO Surgical Corp.mako130813_ex99-2.htm
EX-10.1 - EMPLOYMENT AGREEMENT - MAKO Surgical Corp.mako130813_ex10-1.htm
EX-10.3 - 2013 SVP OF SALES CASH BONUS PLAN - MAKO Surgical Corp.mako130813_ex10-3.htm
8-K - FORM 8-K DATED FEBRUARY 21, 2013 - MAKO Surgical Corp.mako130813_8k.htm
EX-10.2 - 2013 LEADERSHIP CASH BONUS PLAN - MAKO Surgical Corp.mako130813_ex10-2.htm

Exhibit 99.1

MAKO Surgical Corp. Reports Operating Results for the Fourth Quarter and Full Year 2012

Fourth Quarter and Full Year 2012 Highlights

Fourth quarter revenue totaled $30.2 million

Full year 2012 revenue totaled $102.7 million, a 22% increase over 2011

Fifteen RIO® systems sold in the fourth quarter, of which thirteen were sold to domestic customers

A total of 45 RIO systems sold worldwide in 2012, increasing worldwide commercial installed base to 156 RIO systems and domestic commercial installed base to 151 RIO systems

2,904 MAKOplasty® procedures performed in the fourth quarter, a 29% increase over the same period in 2011

Total of 10,204 MAKOplasty procedures performed in 2012, a 47% increase over 2011

Eleven MAKOplasty Total Hip Arthroplasty (THA) applications sold in the fourth quarter, of which three were sold to existing customers

As of December 31, 2012, 62% of worldwide commercial installed base is MAKOplasty THA enabled

2013 Annual Guidance

2013 RIO system sales estimated to be 45 to 48 systems

13,500 to 14,500 MAKOplasty procedures anticipated to be performed in 2013

FORT LAUDERDALE, FL – (GLOBENEWSWIRE) — February 26, 2013 —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 and year ended December 31, 2012.

Recent Business Developments

RIO Systems – Fifteen RIO systems were sold during the fourth quarter, of which thirteen were sold to domestic customers and two were sold through international distributors to hospitals in Italy and Thailand. The revenue associated with the two RIO systems sold to and customer accepted by the international distributors will be deferred until all revenue recognition criteria are satisfied. A total of 45 new RIO systems were sold worldwide in 2012, bringing MAKO’s worldwide commercial installed base of RIO systems to 156 systems and domestic commercial installed base of RIO systems to 151 systems as of December 31, 2012.


MAKOplasty Procedure Volume – During the fourth quarter, 2,904 MAKOplasty procedures were performed, of which 2,756 were performed at domestic sites and 395 were THA procedures. The 2,904 MAKOplasty procedures performed represent a 20% increase over the procedures performed in the third quarter of 2012 and a 29% increase over the procedures performed in the fourth quarter of 2011. The 395 THA procedures performed represent a 31% increase over the THA procedures performed in the third quarter of 2012. The average monthly utilization per system was 6.6 procedures during the fourth quarter of 2012, an increase from 6.2 procedures per system per month in the third quarter of 2012. A total of 10,204 MAKOplasty procedures were performed in 2012, representing a 47% increase over the total procedures performed in 2011. Through December 31, 2012, approximately 23,000 procedures have been performed since the first procedure in June 2006.

MAKOplasty Total Hip Arthroplasty Applications – In the fourth quarter, eleven MAKOplasty THA applications were sold, eight of which were sold with RIO systems sold during the quarter and three of which were sold as upgrades to existing customers with knee-only commercial systems. As of December 31, 2012, 96 RIO systems, or 62% of the worldwide commercial installed base, were MAKOplasty THA enabled.

Clinical Research and Marketing – During the fourth quarter, three papers were published related to accuracy of knee and hip MAKOplasty, bringing the total number of published peer-reviewed papers up to 31. The hip accuracy study published in the Journal of Engineering in Medicine* compared MAKOplasty THA with manual THA on six paired cadavers and showed that the MAKOplasty THA cups were 100% in the safe zone compared to 30% of the manually placed cups. In addition, MAKOplasty THA accuracy was shown in this study to be 4-6 times greater than manual accuracy in both inclination and anteversion.

Equity Investment – In November 2012, MAKO completed a public offering of our common stock, issuing 3,498,300 shares at a price per share of $13.15, resulting in net proceeds to MAKO of $42.9 million after underwriting commissions and expenses.

“We continued to make progress in the fourth quarter towards reestablishing our growth trajectory in RIO system placements and putting the building blocks in place to drive MAKOplasty procedure volume and utilization,” said Maurice R. Ferré, M.D., President and Chief Executive Officer of MAKO. “While 2012 was a challenging year for MAKO, we believe that the sales process changes we initiated in the second half of the year will position MAKO well for improved performance in 2013 and ultimately assist us in achieving long term success.”

 

 

 

 

 

* Volume 227, Issue 3, March 2013



2012 Fourth Quarter Financial Review

Revenue was $30.2 million in the fourth quarter of 2012 compared to $32.9 million in the fourth quarter of 2011, representing an 8% decrease. The decrease in revenue was attributable to the recognition of revenue from thirteen RIO systems and eleven MAKOplasty THA applications in the fourth quarter of 2012, as compared to the recognition of revenue from eighteen RIO systems and thirty-seven MAKOplasty THA applications (upon the commercial release of the MAKOplasty THA application in September 2011) in the same period in 2011, which was partially offset by an increase in procedure revenue and service revenue.

Gross profit for the fourth quarter of 2012 was $20.3 million compared to a gross profit of $22.4 million in the same period in 2011. Gross margin for the fourth quarter of 2012 was 67%, consisting of a 66% margin on procedure revenue, a 64% margin on RIO system revenue and an 83% margin on service revenue. Procedure gross margin for the fourth quarter of 2012 was negatively impacted by an inventory reserve adjustment of $1.2 million for excess procedure inventory due to the anticipated future releases of enhancements to certain of existing implant and disposable products. Excluding the $1.2 million inventory reserve adjustment, the margin on procedures would have been 74% and overall gross margin would have been 71% for the fourth quarter of 2012.

Operating expenses were $26.2 million in the fourth quarter of 2012 compared to $28.0 million in the fourth quarter of 2011. The decrease in operating expenses was primarily the result of compensation expense related to bonus awards incurred in 2011, but not in 2012, and the timing of expenditures associated with the continuous improvement of the RIO system platform and associated applications and the development of potential future products.

Net loss for the three months ended December 31, 2012 was $5.7 million, or a loss of $0.13 per basic and diluted share, based on average basic and diluted shares outstanding of 44.5 million. This compares to a net loss for the same period in 2011 of $5.6 million, or a loss of $0.14 per basic and diluted share, based on average basic and diluted shares outstanding of 41.3 million.

Cash, cash equivalents and available-for-sale investments were $73.3 million as of December 31, 2012 compared to $58.7 million as of December 31, 2011. As of December 31, 2012, no amounts have been drawn under the credit facility agreement with affiliates of Deerfield Management Company, L.P.

2012 Full Year Financial Review

Revenue was $102.7 million for the year ended December 31, 2012 compared to $84.5 million for the year ended December 31, 2011, representing a 22% increase. The increase in revenue was attributable to an increase in procedure revenue and service revenue, which was partially offset by a decrease in RIO system revenue attributable to the recognition of revenue from forty-two RIO systems and forty-seven MAKOplasty THA applications in 2012, as compared to the recognition of revenue from forty-eight RIO systems and forty-nine MAKOplasty THA applications in 2011. In addition to the forty-two recognized RIO system sales, the revenue associated with the sale of three international systems was deferred until all revenue recognition criteria are satisfied.


The net loss for the year ended December 31, 2012 was $32.6 million, or a loss of $0.76 per basic and diluted share, based on average basic and diluted shares outstanding of 42.7 million. Included in net loss for the year ended December 31, 2012 was non-cash and non-operating income of $3.7 million associated with the change in fair value of a derivative asset related to a credit facility agreement. This compares to a net loss for the same period in 2011 of $36.1 million, or a loss of $0.89 per basic and diluted share, based on average basic and diluted shares outstanding of 40.8 million.

2013 Annual Guidance

MAKO anticipates that it will sell 45 to 48 RIO systems and that its customers will perform 13,500 to 14,500 MAKOplasty procedures in 2013.

Conference Call

MAKO will host a conference call today at 4:30 pm ET to discuss its fourth quarter and full year 2012 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 86531216. 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 general economic conditions and credit conditions, changes in the availability of capital and financing sources for our company and our customers, unanticipated changes in the timing of the sales cycle for MAKO’s products or the vetting process undertaken by prospective customers, changes in competitive conditions and prices in MAKO’s markets, changes in the relationship between supply of and demand for our products, fluctuations in costs and availability of raw materials and labor, changes in other significant operating expenses, slowdowns, delays, or inefficiencies in MAKO’s product research and development cycles, unanticipated issues relating to intended product launches, decreases in sales of MAKO’s principal product lines, decreases in utilization of MAKO’s principal product lines or in procedure volume, increases in expenditures related to increased or changing governmental regulation or taxation of MAKO’s business, both nationally and internationally, unanticipated issues in complying with domestic or foreign regulatory requirements related to MAKO’s current products, including initiating and communicating product actions or product recalls and meeting Medical Device Reporting requirements and other required reporting to the United States Food and Drug Administration, or securing regulatory clearance or approvals for new products or upgrades or changes to MAKO’s current products, developments adversely affecting our potential sales activities outside the United States, increases in cost containment efforts by group purchasing organizations, the impact of the United States healthcare reform legislation enacted in March 2010 on hospital spending, reimbursement, unanticipated changes in reimbursement to our customers for our products, and the taxing of medical device companies, any unanticipated impact arising out of the securities class action or any other litigation, inquiry, or investigation brought against MAKO, loss of key management and other personnel or inability to attract such management and other personnel, increases in costs of retaining a direct sales force and building a distributor network, unanticipated issues related to, or unanticipated changes in or difficulties associated with, the recruitment of agents and distributors of our products, 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, 2011 filed on March 8, 2012. 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
December 31,

 

Years Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Procedures

 

$

14,298

 

$

11,387

 

$

50,920

 

$

34,638

 

Systems

 

 

12,752

 

 

19,774

 

 

41,219

 

 

43,927

 

Service

 

 

3,178

 

 

1,727

 

 

10,580

 

 

5,942

 

Total revenue

 

 

30,228

 

 

32,888

 

 

102,719

 

 

84,507

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Procedures

 

 

4,844

 

 

2,795

 

 

16,845

 

 

8,793

 

Systems

 

 

4,592

 

 

7,196

 

 

15,289

 

 

16,695

 

Service

 

 

539

 

 

484

 

 

1,666

 

 

1,395

 

Total cost of revenue

 

 

9,975

 

 

10,475

 

 

33,800

 

 

26,883

 

Gross profit

 

 

20,253

 

 

22,413

 

 

68,919

 

 

57,624

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative (exclusive of depreciation and amortization)

 

 

19,039

 

 

20,208

 

 

76,992

 

 

67,965

 

Research and development (exclusive of depreciation and amortization)

 

 

5,185

 

 

6,329

 

 

20,256

 

 

20,592

 

Depreciation and amortization

 

 

1,944

 

 

1,499

 

 

7,188

 

 

5,350

 

Total operating costs and expenses

 

 

26,168

 

 

28,036

 

 

104,436

 

 

93,907

 

Loss from operations

 

 

(5,915

)

 

(5,623

)

 

(35,517

)

 

(36,283

)

Other income (expense), net

 

 

184

 

 

84

 

 

3,051

 

 

245

 

Loss before income taxes

 

 

(5,731

)

 

(5,539

)

 

(32,466

)

 

(36,038

)

Income tax expense

 

 

1

 

 

45

 

 

85

 

 

105

 

Net loss

 

$

(5,732

)

$

(5,584

)

$

(32,551

)

$

(36,143

)

Net loss per share - Basic and diluted

 

$

(0.13

)

$

(0.14

)

$

(0.76

)

$

(0.89

)

Weighted average common shares outstanding -
Basic and diluted

 

 

44,455

 

 

41,297

 

$

42,658

 

 

40,752

 

Depreciation expense for certain property and equipment was reclassified from selling, general and administrative expense to depreciation and amortization expense in the prior period’s statement of operations to conform to the current period’s presentation. This change in presentation only affects the components of operating costs and expenses and does not affect total operating costs and expenses, revenue, cost of revenue, net loss or cash flows.



 

 

 

 

 

 

 

 

Condensed Balance Sheets (unaudited)
(in thousands)

 

December 31,
2012

 

December 31,
2011

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

61,367

 

$

13,438

 

Short-term investments

 

 

11,899

 

 

36,354

 

Accounts receivable

 

 

22,389

 

 

20,783

 

Inventory

 

 

25,080

 

 

19,529

 

Deferred cost of revenue

 

 

967

 

 

160

 

Financing commitment asset

 

 

7,608

 

 

 

Prepaid and other current assets

 

 

1,972

 

 

1,800

 

Total current assets

 

 

131,282

 

 

92,064

 

Long-term investments

 

 

 

 

8,902

 

Cost method investment

 

 

4,181

 

 

 

Property and equipment, net

 

 

22,996

 

 

19,389

 

Intangible assets, net

 

 

5,657

 

 

7,284

 

Other assets

 

 

2,786

 

 

132

 

Total assets

 

$

166,902

 

$

127,771

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

2,267

 

$

4,231

 

Accrued compensation and employee benefits

 

 

4,298

 

 

7,579

 

Other accrued liabilities

 

 

8,727

 

 

10,622

 

Deferred revenue

 

 

9,973

 

 

4,826

 

Total current liabilities

 

 

25,265

 

 

27,258

 

Deferred revenue, non-current

 

 

800

 

 

75

 

Total liabilities

 

 

26,065

 

 

27,333

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Common stock

 

 

47

 

 

41

 

Additional paid-in capital

 

 

362,364

 

 

289,352

 

Accumulated deficit

 

 

(221,576

)

 

(189,025

)

Accumulated other comprehensive gain

 

 

2

 

 

70

 

Total stockholders’ equity

 

 

140,837

 

 

100,438

 

Total liabilities and stockholders’ equity

 

$

166,902

 

$

127,771

 




 

 

 

 

 

 

 

 

Condensed Statements of Cash Flows (unaudited)
(in thousands)

 

Years Ended December 31,

 

 

 

2012

 

2011

 

Operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(32,551

)

$

(36,143

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation

 

 

5,909

 

 

4,352

 

Amortization of intangible assets

 

 

1,692

 

 

1,446

 

Stock-based compensation

 

 

13,137

 

 

9,901

 

Provision for inventory reserve

 

 

4,484

 

 

256

 

Amortization of premium on investment securities

 

 

335

 

 

476

 

Loss on asset impairment

 

 

1,033

 

 

146

 

Provision for doubtful accounts

 

 

266

 

 

158

 

Issuance of restricted stock under development agreement

 

 

907

 

 

1,691

 

Non-cash changes under credit facility

 

 

(3,998

)

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,872

)

 

(9,381

)

Inventory

 

 

(12,699

)

 

(11,619

)

Deferred cost of revenue

 

 

(807

)

 

(160

)

Prepaid and other current assets

 

 

(172

)

 

(517

)

Other assets

 

 

(331

)

 

66

 

Accounts payable

 

 

(1,964

)

 

2,713

 

Accrued compensation and employee benefits

 

 

(3,281

)

 

2,033

 

Other accrued liabilities

 

 

(1,895

)

 

5,558

 

Deferred revenue

 

 

5,872

 

 

1,721

 

Net cash used in operating activities

 

 

(25,935

)

 

(27,303

)

Investing activities:

 

 

 

 

 

 

 

Purchase of investments

 

 

(9,615

)

 

(33,131

)

Proceeds from sales and maturities of investments

 

 

42,545

 

 

57,252

 

Acquisition of property and equipment

 

 

(7,885

)

 

(12,337

)

Acquisition of intangible assets

 

 

(65

)

 

(1,200

)

Net cash provided by investing activities

 

 

24,980

 

 

10,584

 

Financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of common stock in equity financing, net of underwriting fees

 

 

43,243

 

 

 

Equity financing costs

 

 

(356

)

 

 

Proceeds from employee stock purchase plan

 

 

1,885

 

 

1,168

 

Exercise of common stock options and warrants for cash

 

 

4,315

 

 

2,932

 

Payment of payroll taxes relating to vesting of restricted stock

 

 

(203

)

 

(1,051

)

Net cash provided by financing activities

 

 

48,884

 

 

3,049

 

Net decrease in cash and cash equivalents

 

 

47,929

 

 

(13,670

)

Cash and cash equivalents at beginning of period

 

 

13,438

 

 

27,108

 

Cash and cash equivalents at end of period

 

$

61,367

 

$

13,438

 



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.