IMRSQ Imris Inc (CE)

Medical devices maker MAKO Surgical Corporation (MAKO) has announced selected operating results for the second quarter ending June 30, 2012. The company gave a descriptive account of the performance of its Robotic Arm Interactive Orthopedic (RIO) Systems and related MAKOplasty applications for the quarter.

MAKO sold nine RIO Systems in the reported quarter, versus twelve systems in the year-ago period. Of these nine systems, eight were sold in the U.S. while one was sold for commercial purposes to a well-regarded hospital in Hong Kong through a Chinese distributor.

Consequently, the company’s commercial installed base for its RIO Systems came in at 123 for the domestic market, whereas the worldwide commercial installed base increased to 126 systems. Even as sales volume improved sequentially, the average selling price of RIO Systems was in line with the last quarter.

The number of MAKOplasty procedures increased 66.3% year over year to 2,590 in the second quarter. Of the 2,590 procedures, 2,494 MAKOplasty procedures were performed in the U.S. The average selling price for the procedures was comparable with the sequentially prior quarter. The monthly utilization rate for each system was 7.2 procedures versus 6.4 procedures in the prior-year quarter.

The company sold nine MAKOplasty Total Hip Anthroplasty (THA) applications, of which, seven were sold with the domestic RIO Systems sales and the remaining two were sold as upgrades to existing commercial systems. Of the 2,494 MAKOplasty procedures performed in the domestic market, 280 were THA procedures.

Outlook

Based on its performance in the first half of 2012, MAKO now expects to sell 42 to 48 RIO Systems in 2012, down from its earlier view of 52 to 58 systems. The company has also narrowed its annual guidance for MAKOplasty procedures to a band of 11,000 and 12,000 (earlier 11,000 to 13,000) on the basis of its revised outlook for RIO System sales.

MAKO develops and manufactures advanced robotic arm systems and MAKOplasty applications. It competes with Arthocare Corp (ARTC), Given Imaging (GIVN) and IMRIS Inc (IMRS). MAKO is currently entangled in class action lawsuits which claim that it had misled investors who purchased shares between January 9 and May 7, 2012, by not disclosing the detrimental sales and utilization rates for its RIO Systems and MAKOplasty applications during this period.

The company’s growth strategy focuses on increasing sales of RIO Systems and MAKOplasty applications. Given the current orthopedic market scenario, there is considerable growth opportunity for MAKO, driven by demographic trends and an unsaturated domestic market. With slower-than-expected growth in the first half of 2012 and ongoing lawsuits, management’s near-term objective is to improve on strategy execution.

MAKO currently retains a Zacks #4 Rank, which translates into a short-term Sell rating.

 
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