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MAKO Surgical Corp.(MAKO)

Q3 2012 Results Earnings Call

November 7, 2012 4:30 PM ET


Mark Klausner - Westwicke Partners, IR

Maurice Ferré - Chairman, President and CEO

Fritz LaPorte - SVP, Finance Administration, CFO and Treasurer


Matt Miksic - Piper Jaffray

Chris - Goldman Sachs

Kim Gailun - JPMorgan

David Lewis - Morgan Stanley

Mark Landy - Summer Street Research

Matthew O'Brien - William Blair

Larry Biegelsen - Wells Fargo



Good afternoon ladies and gentlemen, and welcome to the MAKO Surgical Corp's 2012 third quarter results conference call. As a reminder, this conference 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.

Mark 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 of the financial results has been released via GlobeNewswire. Mr. LaPorte will detail the contents of the release following remarks by Dr. Ferré. If you've not received a copy of the press release, it is available on 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 7 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 and the Form 8-K filed with our earnings release. MAKO disclaims any obligation to update any forward-looking statements made during the course of this call.

In respect of your time, we tend to limit today's call to one hour. With that, it's my pleasure to turn the call over to MAKO's President and CEO, Maurice Ferré.

Maurice Ferré

Thank you, Mark. Good afternoon and thank you for joining us to discuss MAKO's 2012 third quarter results. I will discuss the highlights of our operating results from the third quarter. Fritz will review the details of our financial results. I will then discuss the progress we're making on our key operating priorities for the remainder of 2012 and provide some additional color on our operating results. In the third quarter, we sold 15 RIO systems. All of which were sold to domestic customers. These 15 RIO systems brings MAKO's commercial installed base of RIO systems as of September 30, 2012 to 141 worldwide of which 138 are domestic. Of note, any of the systems sold in the quarter were sold to hospitals that are part of a national integrated delivery system.

In the third quarter, we sold 14 MAKOplasty Hip application, 11 of which were sold with domestic RIO system sales during the quarter and 3 of which were sold as upgrade to existing knee-only commercial systems including 1, 2 an international customer in Hong Kong. As of September 30, 2011, 85 RIO systems or 60% of the worldwide installed base has purchased MAKOplasty Hip application. Worldwide during the third quarter our customers performed 2,413 MAKOplasty procedures, of which 2,322 were performed at domestic sites.

Of the 2,322 domestic procedures, 302 were Hip MAKOplasty procedures. The 2,413 MAKOplasty procedures performed represent a 7% decrease over the procedures performed in the second quarter of 2012 and a 33% increase over the procedures performed in the third quarter of 2011. The average monthly utilization per system was 6.2 procedures per system per month during the third quarter of 2012, a decrease from 7.2 in the second quarter of 2012 and 6.5 in the third quarter of 2011. Through September 30, 2012, over 20,000 procedures had been performed since the first procedure in June 2006.

During the quarter, we release the RIO 2.5 and the total Hip 2.0 software upgrade and began to rollout of these upgrades to the installed based. We anticipate that all RIO systems in our installed based will upgraded by the end of the year. In October, we also release the RESTORIS PST Cup and Tapered Stem Hip implant system resulting from our collaboration with Pipeline Orthopedics. This is our third release total hip implant system.

During the third quarter, MAKOplasty was discussed in five presentations at the International Society for Technology in Arthroplasty or ISTA 2012 Meeting in Sydney, Australia and in three presentations at the Harvard Advances in Arthroplasty Meeting in Boston, Massachusetts. In particular, a two year survivorship of RESTORIS MCK Hip Cup [high-accuracy] studies presented this quarter continue to build on the strong clinical case for MAKOplasty.

In the third quarter, we completed three BioSkills training session with a good mix of current and perspective surgeons. We currently plan to conduct five additional BioSkills training session in the reminder of 2012.

In conjunction with our customers, we participated in over 80 MAKOplasty patient education seminars in the quarter with approximately 2400 perspective patients denies. In the third quarter, MAKO was featured in 46 local and national media storage which continued to build awareness of robotic orthopedics and the benefits of MAKOplasty. Finally, the launch of the RESTORIS PST Cup and Tapered Stem and in order to further strengthen an already constructive relationship, we now today we have agreed to issue $7.0 million in MAKO common stock to Pipeline Biomedical Holdings, Inc which is the parent company of Pipeline Orthopedics. Pipeline is MAKO's partner in advanced implant development and commercialization.

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