Aug 4 2010
Second Quarter 2010 Highlights
Second quarter revenue totaled $10.3 million, a 151% increase over total revenue generated in the same period in 2009
Seven RIO® systems sold, increasing domestic commercial installed base to 46 RIO systems
793 MAKOplasty® procedures performed, a 122% increase over the same period in 2009
Launched three-year randomized prospective clinical research study in Glasgow, Scotland
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 MAKOplasty®, today announced its operating results for its second quarter ended June 30, 2010.
Recent Business Developments
RIO Systems – Seven RIO systems were sold during the second quarter, of which six were installed and customer accepted at domestic sites. These new systems brought MAKO's domestic commercial installed base to 46RIO systems as of June 30, 2010. In addition, one RIO system was sold to a distributor in South Korea which will be used by the distributor for demonstration purposes and to obtain the regulatory approvals necessary to fully market the RIO system and RESTORIS implant system in the South Korean market.
MAKOplasty Procedure Volume – During the second quarter, 793 MAKOplasty procedures were performed, of which 780 procedures were performed at domestic sites. The 793 MAKOplasty procedures represent an 8% increase over procedures performed in the first quarter of 2010 and a 122% increase over the second quarter of 2009. The average monthly utilization per system was 6.3 procedures during the second quarter of 2010, which decreased slightly from 6.6 procedures per system per month in the first quarter of 2010 and was an increase from 5.5 procedures per system per month in the second quarter of 2009. A total of 3,908 procedures had been performed through June 30, 2010, since the first procedure in June 2006.
Clinical Research and Education – MAKO launched a clinical research study in partnership with Glasgow Royal Infirmary, Strathclyde University and National Health Services in Glasgow, Scotland. In connection with the clinical research study, MAKO placed a RIO system at the Glasgow Royal Infirmary. The system is being utilized in a three-year randomized prospective clinical study with the objective of demonstrating the clinical, functional and, ultimately, economic benefits of MAKOplasty. Glasgow Royal Infirmary reported that thirteen procedures were performed at its site during the second quarter of 2010. At the Computer Assisted Orthopedic Surgery (CAOS) International meeting in Paris in June, MAKOplasty was discussed in four presentations including two featuring medial uni-compartmental results, one featuring bicompartmental results, and one on the accuracy of robotic total hip arthroplasty, building on MAKO's base of clinical evidence. Additionally, in the second quarter, MAKO held two BioSkills courses, which are designed to bring together current and prospective MAKOplasty surgeons to share best practices.
"We are pleased with the addition of six new commercial sites, across multiple geographies, including three states that previously did not have systems installed. We are also encouraged by our first international sale of a RIO system and the 793 MAKOplasty procedures performed worldwide in the second quarter," said Maurice R. Ferré, M.D., President and Chief Executive Officer of MAKO. "Additionally, we are enthusiastic about the prospective, randomized clinical study being conducted in Scotland and the continued flow of clinical evidence supporting our procedure."
2010 Second Quarter Financial Review
Revenue was $10.3 million in the second quarter of 2010 compared to $14.9 million in the second quarter of 2009. Excluding the recognition of deferred system revenue, revenue generated in the second quarter of 2009 was $4.1 million. Accordingly, revenue generated in the second quarter of 2010 represents a 151% increase from the same period in 2009, excluding the recognition of deferred system revenue. As indicated in the preceding table, revenue in the second quarter of 2010 primarily consisted of $5.7 million in revenue from the sale of seven RIO systems, and $4.2 million in revenue from the sale of implants and disposables used in the 780 domestic MAKOplasty procedures performed in the quarter and a $0.3 million stocking order for implants and disposables associated with the clinical research site, which reported that thirteen procedures were performed during the quarter.
Total gross profit for the second quarter of 2010 was $6.6 million compared to a gross profit of $4.7 million in the same period in 2009. Excluding the impact on gross profit related to the recognition of deferred system revenue, gross profit generated in the second quarter of 2009 was $1.4 million. Total gross margin for the second quarter of 2010 was approximately 64%, comprised of a 74% margin on procedure revenue and a 58% margin on RIO system revenue.
Operating expenses were $15.2 million in the second quarter of 2010 compared to $11.2 million in the second 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 RIO-enabled hip application; 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, 2010 was $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. This compares to a net loss for the same period in 2009 of $6.4 million, including non-cash stock-based compensation expense of $1.0 million, or $(0.26) per basic and diluted share, based on average basic and diluted shares outstanding of 24.8 million. Excluding the impact on gross profit related to the recognition of deferred system, net loss during the second quarter of 2009 was $9.7 million, or $(0.39) per basic and diluted share.
Cash, cash equivalents and investments were $49.8 million as of June 30, 2010, compared to $71.2 million as of December 31, 2009.
2010 Six-Month Financial Review
For the six months ended June 30, 2010, revenue was $17.5 million, primarily generated from the sale of eleven RIO systems and 1,511 domestic MAKOplasty procedures performed during the period compared to $18.6 million for the six months ended June 30, 2009. As indicated in the preceding table, excluding the recognition of deferred system revenue, total revenue generated in the six months ended June 30, 2009 was $7.3 million. Revenue of $17.5 million for the six months ended June 30, 2010 represents a 139% increase over the revenue of $7.3 million generated in the six months ended June 30, 2009. The net loss for the six months ended June 30, 2010 was $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, This compares to a net loss for the six months ended June 30, 2009 of $15.3 million, including non-cash stock-based compensation expense of $1.9 million, or $(0.62) per basic and diluted share, based on average basic and diluted shares outstanding of 24.8 million. Excluding the impact on gross profit related to the recognition of deferred system revenue, net loss generated in the six month period ended June 30, 2009 was $17.8 million or $(0.72) per share.
Leveraging the power of automation to boost research