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MAKO Surgical Corp. (MAKO)

Q4 2012 Earnings Call

February 26, 2013 4:30 pm ET


Mark R. Klausner – Managing Partner-Westwicke Partners

Maurice R. Ferré – President and Chief Executive Officer

Fritz L. LaPorte – Senior Vice President-Finance Administration, Chief Financial Officer and Treasurer


Matt S. Miksic – Piper Jaffray, Inc.

Matthew O'Brien – William Blair

Rich Newitter – Leerink Swann LLC

Kim W. Gailun – JPMorgan Securities LLC

Steve C. Beuchaw – Morgan Stanley & Co. LLC

Lawrence H. Biegelsen – Wells Fargo Advisors LLC

Bill Plovanic – Canaccord Genuity

Mark Landy – Summer Street Research



Good afternoon, ladies and gentlemen, and welcome to the MAKO Surgical Corporation’s 2012 Fourth Quarter and Year End Results Conference Call. As a reminder, this conference call is being recorded and will be available for replay on the Company’s website, under the Investor Relations section after the completion of this call.

It is now my pleasure to introduce your host, Mr. Mark Klausner of Westwicke Partners. You may begin.

Mark R. Klausner

Thank you, operator. Joining us on today’s call are MAKO’s President and CEO, Dr. Maurice Ferré; and the Company’s Senior VP and Chief Financial Officer, Fritz LaPorte.

The Company’s press release and financial results has been released via Globe Newswire that LaPorte will detail the contents of the release, following remarks by Dr. Ferre. If you've not received a copy of the press release, it is available in the Investor Relations section of MAKO's website

I would also like to remind you that this call is being webcast live and recorded. A replay of the event will be available later today on our website and will be available for at least 30 days following the call.

Before we begin, I would like to caution listeners that certain information discussed by management during this conference call including answers to your questions will include forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the Company's business. For a discussion of risks and uncertainties associated with MAKO's business, I encourage you to review the Company's periodic reports filed from time-to-time with the Securities and Exchange Commission, including the Form 10-K for the fiscal year ended December 31, 2011, the Form 8-K filed with our earnings release. And the Form 10-K for the fiscal year ended December 31, 2012, expectedly filed on or before February 28, 2013.

MAKO disclaims any obligation to update any forward-looking statements made during the course of this call. In respect of your time, we intend to limit this call to one hour. With that, it's my pleasure to turn the call over to MAKO's President and CEO, Maurice Ferre.

Maurice R. Ferré

Thank you, Mark. And Good afternoon and thank you for joining us to discuss MAKO’s 2012 fourth quarter and year-end results. On today’s call I will provide you with an update on our business and Fritz will review the details of our financial results.

2012 was a challenging year for MAKO while our results do not meet our initial expectations, we still experience meaningful growth. Over the course of the year, we grew our total number of commercial RIO Systems in the field by 38%, and we grew MAKOplasty procedures by 47%. In addition, I’m confident that the changes we have made internally over the past six months will position us well for success in 2013 and beyond.

The fourth quarter demonstrated progress towards stabilizing the business and re-establishing our growth trajectory. Specifically, we sold 15 RIO systems in the quarter, 13 of these were installed at domestic commercial sites, and two were installed at international commercial sites, increasing our installed base of commercial systems to 156, up from 141 at the end of the third quarter of 2012. For the year, we sold 45 systems worldwide, which was in line with our revised guidance of 42 to 48 systems.

In the fourth quarter, 11 MAKOplasty Hip applications were sold, of which 8 were sold and included with RIO systems sold during the fourth quarter. A total of 47 MAKOplasty Hip applications were sold in 2012, and at the end of the year, 62% of MAKO’s worldwide commercial installed base had the MAKOplasty Hip applications, up from 44% at the end of 2011.

Worldwide, our customers performed 2,904 MAKOplasty procedures in the fourth quarter, representing a 20% increase over the previous quarter, and a 29% increase over the fourth quarter of 2011. Of these procedures 2,507 were partial knee and 395 were total hip.

In 2012, our customers performed 10,204 MAKOplasty procedures, representing a 47% increase over 2011, which was at the low-end of our revised guidance of 10,200 to 10,600.

Average monthly utilization per domestic system was 6.6 in the fourth quarter and was 6.7 for the full year of 2012. On the clinical front, we ended 2012 with approximately 70 clinical studies in progress supporting our RIO systems and MAKOplasty knee and hip procedures.

In the fourth quarter, we completed two national and eight local BioSkills Training sessions. We continue to see strong interest from current and prospective surgeons in attending these meetings. In 2012, we completed a total of 12 national and 12 local BioSkills Training sessions.

Finally, as we’ve recently announced, we appointed Christopher Marrus to the role of Senior Vice President, Sales. Chris joined MAKO in early 2012, and was most recently a Senior Director of sales. Prior to MAKO, Chris worked at a number of medical technology companies including over five years with Intuitive Surgical, the last 2.5 as an area of Vice President of Sales. We are enthusiastic about Chris’s ability to lead the Sales team towards growing the business in 2013 and beyond. As I will discuss later, our team continue to be highly committed and to the execution of our long-term plan, and I remain optimistic about the opportunities in front of us.

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