Medical devices maker
MAKO Surgical Corporation
) recently declared that it intends to offer shares of its common
stock in a public offering. The sole manager for this offering is
Piper Jaffray & Co.
The company plans to use the proceeds for research and
development expenditure as well as selling, general and
administrative expenses in a planned attempt to improve its
intellectual property portfolio as well as its marketing
initiatives and enhance the sales force for its Robotic Arm
Interactive Orthopedic (RIO) Systems and related MAKOplasty
applications. This is aligned with MAKO's growth strategy which
focuses on increasing sales of its RIO Systems and MAKOplasty
Despite evading further liability, any subsequent public offering
might negatively affect the market price of its common stock.
However, the contagion of economic problems in Europe as well as
challenging global market conditions have resulted in turmoil in
the financial service industry and credit market, leading to the
company's limited access to capital.
MAKO's failure to attain profitability remains an overhang. The
company earlier asserted that it expects increasing operating
expenses as it continues to improve its infrastructure to support
long-term growth. It also expects a substantial net loss in the
After slower-than-expected growth in the first half of 2012, the
company's growth accelerated in the third quarter with a 46% jump
in revenues (to gross $29.2 million) on a year-over-year basis.
Management's near-term objective is to improve on strategy
execution to accelerate growth in the years ahead.
Given the orthopedic market scenario, there is considerable
growth opportunity for MAKO, driven by demographic trends and an
unsaturated domestic market. However, this market is still
struggling as patients defer elective procedures given the
lingering economic softness. The lukewarm demand situation is
exacerbated by sustained pricing pressure. Pricing compressions
on hips, knees and spine products have already impaired the
performances of several other orthopedic companies such as
MAKO carries a Zacks #2 Rank, which translates into a
short-term Buy rating.
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