Credit: Image source: Mazor Robotics.Mazor Robotics (NASDAQ: MZOR) , a robotic surgery company focused on spine and brain procedures, reported its third-quarter results on Tuesday, Nov. 7. Revenue more than doubled, margins expanded, and net loss shrank. When adding in the company's transformative deal with Medtronic (NYSE: MDT) , it was truly a quarter for the record books.
Image source: Mazor Robotics.
Mazor Robotics Q3 results: The raw numbers
EPS = Earnings per share. Data source: Mazor Robotics.
What happened with Mazor Robotics this quarter?
The big news from the quarter was that Medtronic and Mazor entered into the next phase of their strategic partnership. Medtronic made a $40 million investment in Mazor (its third) and also assumed worldwide distribution rights to the Mazor X.
As of November 1st, 29 former Mazor employees have joined the Medtronic robotic sales team, and all Mazor X activities have been successfully transferred.
If that wasn't exciting enough, the Mazor X also received regulatory approval in Europe on September 20th.
Updates aside, here's a review of the key financial takeaways from the quarter:
- U.S. revenue grew 170% to $15.4 million. A total of 17 systems were sold in the States (16 Mazor X's and one Renaissance.)
- International revenue fell 5% to $1.8 million.
- System sales revenue grew 209% to $10.2 million.
- Recurring revenue -- which includes disposables and services -- grew 63% to $7 million thanks to a larger base of installed systems. As of Septemeber, more than 170 Mazor systems are in use worldwide.
- Gross margin increased 3.5 percentage points to 69.2%.
- Operating expenses grew 48% to $15.7 million. However, this number is expected to decrease now that Medtronic is footing the bill for the Mazor X commercialization. Mazor is currently projecting $13 million in annual savings.
- Cash usage for the quarter was $2.9 million.
- Cash balance at quarter end was $99 million.
- 22 systems were ordered during the quarter (19 Mazor X's and 3 Renaissances). The backlog as of September 30th was 17 systems (15 Mazor X's and two Renaissance's).
What management had to say
CEO Ori Hadomi was thrilled with the company's third-quarter results:
Hadomi also highlighted prospective clinical data that was presented at a recent medical conference. The data showed that using the company's Mazor Core technology during lumbar fusion surgeries led to a five-fold reduction in surgical complications and a seven-fold reduction in revision surgeries when compared to freehand techniques.
Looking forward
Mazor doesn't offer guidance, but when asked about the company's ability to achieve profitability, Hadomi shared an interesting response:
The company's clear commitment to investing in innovation should be music to patient investors' ears given the potential competition .
In total, all the pieces appear to be falling into place. Mazor's revenue is growing rapidly, the company successfully executed its transformative deal with Medtronic, and profitability should be within reach with a couple of years.
Hadomi ended his prepared marks on the investor call by succinctly summarizing the company's position:
10 stocks we like better than Mazor Robotics
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Mazor Robotics wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 6, 2017
Brian Feroldi owns shares of Mazor Robotics. The Motley Fool owns shares of Medtronic. The Motley Fool recommends Mazor Robotics. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
