- 1Q2012 $19.6 million
- Previous quarter $32.9 million
- Same quarter 2011 $13 million
- Revenue down by $13.3 million as a result of fewer robot system sales than expected. The company?s six system placements missed the anticipated target of nine. MAKOhas now lowered their full-year placement guidance by four units, from 56-62 to 52-58.
Weak Sales: 52wk H: $45.15 L: $21.40
Revenue in the first quarter of 2012 primarily consisted of $11.6 million in revenue from the sale of implants and disposables, $5.9 million in revenue from the sale of six RIO systems and 13 MAKOplasty total hip anthroplasty (THA) applications, and $2.2 million in revenue from service.
Of the six RIO systems sold in the first quarter, five were sold to domestic customers and one to a distributor in Japan, for use in securing regulatory approvals and to demonstrate MAKOplasty in that market. The revenue on that system has been deferred due to a contingent obligation to reimburse costs associated with the regulatory process if things fall through, but should be recognized if and when regulatory approval is granted.
The commercial installed base is now 118 RIO systems worldwide
Utilization per machine dropped about 8% sequentially. Management mentioned that utilization was hurt by a back end-loaded fourth quarter, and the company did place a lot of systems (18) in that quarter. Still, it represents a slowdown at a time when orthopedic companies like Stryker, Zimmer (ZMH), and Johnson & Johnson (JNJ) have all talked about a stable, if not improving, orthopedic procedure market.?Seeking Alpha
Surgeries performed: 2,297 MAKOplasty procedures were performed in the first quarter, a 76 percent increase over the same period in 2011 and a 2 percent decrease from procedures in the previous quarter. Of the 2,219 domestic procedures, 211 were THA procedures.
Hip implant results missed expectation by a wider margin than in knees, suggesting that expectations on hip uptake were pretty aggressive. Also, ASPs missed target, as it seems doctors mixed-and-matched MAKO cups with competitor stems. That suggests the upcoming launches and expansion of implant products (developed with Pipeline Orthopedics) is indeed very significant. ?Seeking Alpha
Following the May 7 earnings call, several class action suits were filed against MAKOclaiming that the company and its top executives committed securities fraud by not disclosing that:
The developer of orthopedic knee procedure products posted a wider-than-estimated loss of 28 cents a share on revenue of 19.6 million. Analysts had expected the firm to report a loss of 20 cents a share on sales of $24 million. Shares of the company dropped heavily in extended-hours trading after the May 7th earnings call.
Analyst ratings are neutral overall. Many analysts dropped their target price on shares of MAKO Surgical. The average price target is $37.29, and analyists predict $-0.14 earnings per share next quarter
Based on the slower than expected start to the year, MAKO now anticipates selling 52 to 58 RIO systems in 2012, which compares to prior guidance of 56 to 62 RIO system sales. MAKOplasty procedure guidance remains unchanged at 11,000 to 13,000 expected procedures in 2012. MAKO expects about 1,200 THA procedures to be performed this year.
Efforts to build a strong base of clinical evidence for MAKOplasty continue, with over 70 clinical studies currently in process. During the first quarter, 25 abstracts were accepted to five conferences supporting the company?s RIO system and MAKOplasty knee and hip procedures. These abstracts are expected to be presented in 14 podium and 11 poster presentations at upcoming conferences
On May 7, 2012 MAKO entered into a credit facility agreement with Deerfield Management, allowing MAKOto borrow up to $50 million as needed in $10 million increments at any time over the next year. If the company decides to borrow, it has three years to pay it back.
MAKO has issued Deerfield warrants to buy 275,000 shares, which would dilute existing shareholders if exercised. Deerfield can buy those shares at an exercise price that’s 20% higher than the average close over the 20 days after May 8th.
if MAKO draws any of the $10 million increments, Deerfield will get additional warrants for 140,000 shares each time, with an exercise price that’s 20% higher than the average close over the following five trading days.
MAKO surgical?s Q1 earnings took analysts by surprise, hitting far below the company and analyst?s optimistic targets. While there is an argument for low sales due to tight hospital budgets, the missed margins and growth among the company?s competitors suggest other factors were in play.
Back in February, when RBC Capital analyst Glenn Novarro suggested that surgeons were not interested in the MAKOplasty knee surgery system because of high cost, Robotics Business Review reported on the stock?s slide and watched it recover again. In Q2, most analysts agree that MAKO is still an interesting growth stock.The quarter was a disappointment for robotic system sales, but the fault may lie with aggressive estimates in the face of fluctuating trends in hip utilization. Knee implant applications, however, offer more potential. Under these circumstances, the Q1 backlash makes for an opportunistic bull’s perfect buy.Read More