CAESAREA, Israel--(BUSINESS WIRE)--
Mazor Robotics Ltd. (TASE: MZOR; NASDAQGM: MZOR), a pioneer and a leader in the field of robotic guidance systems, reported record third quarter revenue of $17.2 million. As previously announced, the Company received purchase orders for 22 systems in the 2017 third quarter, including 19 Mazor X systems.
Recent Significant Highlights
Entered the next phase of its strategic partnership with Medtronic assuming exclusive worldwide distribution of the Mazor X system, and Medtronic making a $40 million third tranche investment in Mazor. On November 1, Mazor and Medtronic completed the transfer of Mazor X capital sales, clinical sales and support activities to Medtronic and the absorption of 29 former Mazor employees into the Medtronic robotic sales team.
Received CE approval of the Mazor X system, allowing Medtronic to market the Mazor X in the European Union, as well as other countries that recognize the CE Mark.
Interim data from the first multi-center prospective study of spinal surgical robotics was presented at the North American Spine Society (NASS) annual meeting, demonstrating that spinal surgeries performed using Mazor Robotics’ proprietary Mazor Core™ technology have a five-fold reduction in surgical complications and a seven-fold reduction in revision surgeries, compared to freehand-based minimally invasive lumbar fusion surgeries.
“We delivered record quarterly revenue and more than doubled last year’s Q3 results,” commented Ori Hadomi, Chief Executive Officer. “Our performance demonstrates that we are executing our objectives to drive market penetration and increased utilization of our systems. We entered the next phase with Medtronic, our commercial partner, for the Mazor X system and the smooth transition ensures continued sales momentum while significantly lowering our operating costs beginning Q4 2017. In addition to the operational achievements, the recent prospective data results that were presented at NASS are a game changer for Mazor as it validates the strength of our proprietary Mazor Core ™ technology and reinforces the patient value and economic proposition of our systems.”
THIRD QUARTER 2017 FINANCIAL RESULTS ON IFRS BASIS ("GAAP")
Revenue for the three months ended September 30, 2017 increased 126% to $17.2 million compared to $7.6 million in the year-ago third quarter. U.S. revenue increased 170% to $15.4 million compared to $5.7 million in the year-ago third quarter, as the Company recognized revenue from 17 systems (16 Mazor X and one Renaissance) compared to six systems (three Mazor X and three Renaissance) in the third quarter of 2016. International revenue was $1.8 million compared to $1.9 million in the year-ago third quarter. Recurring revenue from kits sales, services and other increased 63% to $7.0 million in the third quarter of 2017 compared to $4.3 million in the year-ago third quarter, which is primarily attributed to the higher system installed base. The Company ended the quarter with a backlog of 17 systems (15 Mazor X and two Renaissance). As of September 18, 2017, Medtronic assumed exclusive worldwide distribution of the Mazor X under the Exclusive Lead Sharing and Distribution Agreement signed between the parties. The contracted pricing with Medtronic is at a lower rate than Mazor realized through its direct sales channel.
The Company’s gross margin for the three months ended September 30, 2017 was 69.2% compared to 65.7% in the year-ago third quarter. Total operating expenses were $15.7 million compared to $10.6 million in the year-ago third quarter primarily reflecting the Company’s increased investment in sales and marketing activities. The Company’s sales and marketing expenses are now expected to decrease as Medtronic assumed commercial responsibility for the Mazor X, effective September 18, 2017. Operating loss was $3.8 million compared to an operating loss of $5.6 million in the year-ago third quarter. Net loss for the third quarter of 2017 was $3.7 million, or $0.07 per share, compared to a net loss of $5.2 million, or $0.11 per share, for the year-ago third quarter.
Cash used in operating activities during the 2017 third quarter was $2.9 million compared to $4.6 million used in operating activities in the year-ago third quarter. The lower cash use is due to the significantly higher revenue in the 2017 third quarter. As of September 30, 2017, cash, cash equivalents and investments totaled $98.8 million.
THIRD QUARTER 2017 FINANCIAL RESULTS ON NON-GAAP BASIS
The tables below include reconciliation of the Company’s GAAP results to non-GAAP results. The reconciliation relates to non-cash expenses in the amount of $2.6 million with respect to share-based payments and amortization of intangible assets recorded in the third quarter of 2017. On a non-GAAP basis, the net loss in the third quarter of 2017 was $1.0 million, or $0.02 per share, compared to $4.9 million, or $0.11 per share, for the year-ago third quarter.
NINE MONTHS ENDED SEPTEMBER 30, 2017 FINANCIAL RESULTS ON IFRS BASIS (“GAAP”)
For the nine months ended September 30, 2017, revenue increased 99% and totaled $44.4 million compared to $22.3 million for the nine months ended September 30, 2016, due to higher system sales and an increase in recurring revenue. Recurring revenue totaled $18.5 million, an increase of 50% compared to $12.3 million in the nine months ended September 30, 2016. The growth in recurring revenue is attributed to the increase in the installed base and high utilization of the Company’s robotic guidance systems, both in the U.S. and globally. Gross margin for the nine months ended September 30, 2017 was 68.0% compared with 72.3% in the nine months ended September 30, 2016. This expected decrease is attributed mainly to the higher manufacturing costs of the Mazor X compared to the Renaissance system. Net loss for the nine months ended September 30, 2017 was $12.6 million, or $0.26 per share, compared to a net loss of $14.4 million, or $0.33 per share, in the first nine months of 2016.