Mazor Robotics Starts Its "Transition" Year Strong
Mazor Robotics (NASDAQ: MZOR) reported its first-quarter results on Monday, May 14. Last quarter, the robotic surgery company's management warned investors that 2018 was going to be a "transition" year because of its decision to strike a significant commercial deal with medical device giant Medtronic (NYSE: MDT) . Management said that the deal was a huge win for the company, but it was going to result in "modest revenue growth" in 2018.
How did the company's actual growth shake out during the period? Let's dig into the details to find out.
Mazor Robotics Q1 results: The raw numbers
|Metric||Q1 2018||Q1 2017||Year-Over-Year Change|
|Revenue||$15.5 million||$11.7 million||32%|
|Non-GAAP Net income||$340,000||($3.9 million)||N/A|
GAAP = Generally Accepted Accounting Principles. Data source: Mazor Robotics.
What happened with Mazor Robotics this quarter?
- U.S. revenue jumped 27% to $14.2 million. The gains were driven mostly by increased sales of the company's disposable products and service contracts. Capital sales were $6.6 million in the quarter, which was up just 2% year over year. The small jump in capital sales was owed to the company's lower per-system rate because of its distribution agreement with Medtronic.
- International sales jumped 160% to $1.3 million.
- Gross margin declined by 6.3 percentage points to 58.3%. The fall was mostly a result of the company's pricing terms with Medtronic.
- Operating expenses fell 21% to $10.5 million. The decline was attributable to the company's decision to transition its salesforce to Medtronic.
- GAAP net loss was $1.3 million, or $0.02 per share.
- Non-GAAP net income -- which excludes stock-based compensation -- was $340,000. This marks the company's second profitable quarter in a row.
- Cash provided from operating activities was $2.7 million.
- Cash balance at the quarter end was $114.5 million.
- Mazor's installed base at the quarter end was 200 systems placed in 15 countries.
What management had to say
CEO Ori Hadomi credited Mazor's strong first-quarter performance to "continued global demand for the Mazor X and Renaissance systems." He also noted the company continues to gain strength in several key areas.
"Our performance, coupled with the growing number of peer-reviewed papers, presentations, and the interim data from our prospective studies, is transforming spine surgery in markets around the world," Hadomi said.
Hadomi also briefly commented on the progress that is being made with the company's joint research and development program with Medtronic.
"We are also advancing and expanding our technology development efforts with Medtronic, and I am pleased to share that commercialization of the Mazor X platform, which integrates Medtronic's Stealth navigation and offers a unique robot-guided implant solution that eliminates the need for guidewires, is expected at the end of 2018," Hadomi said.
Mazor's management team has never shared guidance with investors, but CFO Sharon Levita did reaffirm that the company will save about $13 million in 2018 as a result of its distribution agreement with Medtronic. Levita also restated that revenue growth is expected to accelerate after 2018, though investors were not provided with specific numbers.
Management also noted that the company is "making progress" with its decisions to focus on selling its Renaissance system to Ambulatory Surgery Centers (ASCs). The company noted that there are 5,000 ASCs in the U.S., so the opportunity ahead of Renaissance remains significant.
Finally, Hadomi also restated that 2018 is expected to be a transition year for Mazor as the company's commercial deal with Medtronic continues to play out. However, he remained steadfast in his belief that the company is setting itself up well for continued success.
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