MAKO Surgical Corp. Reports Operating Results for the First Quarter 2013

MAKO Surgical Corp. Reports Operating Results for the First Quarter 2013

First Quarter 2013 Highlights

First quarter revenue totaled $24.8 million, a 26% increase over the same
period in 2012

Five RIO® systems sold in the first quarter, increasing worldwide commercial
installed base to 161 RIO systems and domestic commercial installed base to
156 RIO systems

2,988 MAKOplasty® procedures performed in the first quarter, a 30% increase
over the same period in 2012

Six MAKOplasty Total Hip Arthroplasty (THA) applications sold in the first
quarter, of which one was sold to an existing customer

As of March 31, 2013, 63% of worldwide commercial installed base is MAKOplasty
THA enabled

FORT LAUDERDALE, Fla., May 7, 2013 (GLOBE NEWSWIRE) -- MAKO Surgical Corp.
(Nasdaq:MAKO), a medical device company that markets its RIO® Robotic Arm
Interactive Orthopedic surgical platform, MAKOplasty® joint specific
applications and proprietary RESTORIS® implants that together enable
orthopedic surgeons to consistently, reproducibly and precisely treat patient
specific osteoarthritic disease, today announced its operating results for the
quarter ended March 31, 2013.

Recent Business Developments

RIO Systems – Five RIO systems were sold during the first quarter to domestic
customers. These five RIO systems bring MAKO's worldwide commercial installed
base of RIO systems to 161 systems and domestic commercial installed base to
156 systems as of March 31, 2013.At the end of the quarter, MAKO had 154
MAKOplasty sites worldwide. In addition, the revenue associated with two
previously deferred international commercial system sales was recognized in
the first quarter as all revenue recognition criteria were satisfied. Six
MAKOplasty THA applications were sold, five of which were sold with the
domestic RIO systems sales during the quarter and one of which was sold as an
upgrade to an existing customer with a knee-only commercial system. As of
March 31, 2013, 102 RIO systems, or 63% of the worldwide commercial installed
base, have the MAKOplasty THA application.

MAKOplasty Procedure Volume – During the first quarter, 2,988 MAKOplasty
procedures were performed, of which 2,861 were performed at domestic sites. Of
the 2,988 procedures, 467 were THA procedures. The 2,988 MAKOplasty procedures
performed represent a 3% increase over the procedures performed in the fourth
quarter of 2012 and a 30% increase over the procedures performed in the first
quarter of 2012. The average monthly utilization per site was 6.6 procedures
during the first quarter of 2013. Through March 31, 2013, approximately 26,000
procedures had been performed since the first procedure in June 2006.

Clinical Research and Marketing – At the 2013 American Academy of Orthopedic
Surgeons in March 2013, Dr. Mark Blyth presented the initial results of the
first 100 patients from the prospective, single center, randomized controlled
trial (RCT) performed at the Glasgow Royal Infirmary with the University
ofStrathclyde. The RCT compares the MAKOplasty unicompartmental knee
arthroplasty performed with MAKO's RESTORIS MCK implants to manually placed
Biomet Oxford® implants. MAKOplasty resulted in significantly lower
post-operative pain from day one to eight weeks post-op and it took eight
weeks for Oxford patients to reach the lower pain levels that MAKOplasty
patients were already reporting after six days. MAKOplasty also demonstrated
higher accuracy in all dimensions measured, with statistically significant
differences in four of the six dimensions. Finally, a significantly higher
percentage of MAKOplasty patients had "Excellent" American Knee Society Scores
at three months.

Patent Infringement Actions – On April 16, 2013, MAKO agreed to settle all
patent infringement actions against Stanmore Implants Worldwide Limited and
affiliated entities. Under a confidential settlement agreement and an asset
purchase agreement between the parties, in exchange for a cash payment to
Stanmore, MAKO withdrew all legal actions against Stanmore and received
Stanmore's robotic business assets and related intellectual property, as well
as Stanmore's agreement to withdraw from robotics.

"The first quarter is typically a slower quarter for MAKO, and our first
quarter results were in line with our expectations," said Maurice R. Ferré,
M.D., President and Chief Executive Officer of MAKO. "The initial results of
our programs designed to drive utilization and system sales are encouraging,
and I remain confident in our outlook for 2013."

2013 First Quarter Financial Review

Revenue was $24.8 million in the first quarter of 2013 compared to $19.6
million in the first quarter of 2012, representing a 26% increase. The
increase in revenue was primarily attributable to the recognition of revenue
of 2,988 MAKOplasty procedures performed, which represents a 30% increase over
the procedures performed in the first quarter of 2012, and an increase in
system revenue and service revenue.

Gross profit for the first quarter of 2013 was $18.3 million compared to a
gross profit of $14.2 million in the same period in 2012. Gross margin for the
first quarter of 2013 was 74%, consisting of a 75% margin on procedure
revenue, a 63% margin on RIO system revenue and an 87% margin on service

Operating expenses were $27.2 million in the first quarter of 2013 compared to
$25.9 million in the first quarter of 2012. The increase in operating expenses
was primarily due to an increase in sales, marketing and operations costs
associated with the commercialization of the RIO system, MAKOplasty
applications and RESTORIS implant systems; and an increase in general and
administrative costs as MAKO continued to build infrastructure to support

Net loss for the three months ended March 31, 2013 was $9.6 million, or
$(0.21) per basic and diluted share, based on average basic and diluted shares
outstanding of 46.8 million. Included in net loss for the first quarter of
2013 was anon-cash and non-operating expense of $661,000 associated with the
change in fair value of a derivative asset related to a credit facility
agreement. This compares to a net loss for the same period in 2012 of $11.7
million, or $(0.28) per basic and diluted share, based on average basic and
diluted shares outstanding of 41.7 million.

Cash, cash equivalents and available-for-sale investments were $71.0 million
as of March 31, 2013 compared to $73.3 million as of December 31, 2012. As of
March 31, 2013, no amounts have been drawn under the credit facility agreement
with affiliates of Deerfield Management Company, L.P.


MAKO's 2013 annual guidance of 45 to 48 RIO systems sold and 13,500 to 14,500
MAKOplasty procedures performed remains unchanged.

Conference Call

MAKO will host a conference call today at 4:30 pm ET to discuss its first
quarter 2013 results. To listen to the conference call, please dial
877-843-0414 for domestic callers and 914-495-8580 for international callers
approximately ten minutes prior to the start time. The participant code is
58873803. To access the live audio broadcast or the subsequent archived
recording, visit the Investor Relations section of MAKO's website at

About MAKO Surgical Corp.

MAKO Surgical Corp. is a medical device company that markets its RIO®
Robotic-Arm Interactive Orthopedic system, joint specific applications for the
knee and hip, and proprietary RESTORIS® implants for orthopedic procedures
called MAKOplasty®. The RIO is a surgeon-interactive tactile surgical platform
that incorporates a robotic arm and patient-specific visualization technology,
which enables precise, consistently reproducible bone resection for the
accurate insertion and alignment of MAKO's RESTORIS implants. The MAKOplasty
solution incorporates technologies enabled by an intellectual property
portfolio including more than 300 U.S. and foreign, owned and licensed,
patents and patent applications. Additional information can be found at

Forward-Looking Statements

This press release contains forward-looking statements regarding, among other
things, statements related to expectations, goals, plans, objectives and
future events. MAKO intends such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained in Section
21E of the Securities Exchange Act of 1934 and the Private Securities Reform
Act of 1995. In some cases, forward-looking statements can be identified by
the following words: "may," "will," "could," "would," "should," "expect,"
"intend," "plan," "anticipate," "believe," "estimate," "predict," "project,"
"potential," "continue," "ongoing," or the negative of these terms or other
comparable terminology, although not all forward-looking statements contain
these words. These statements are based on the current estimates and
assumptions of our management as of the date of this press release and are
subject to risks, uncertainties, changes in circumstances, assumptions and
other factors that may cause actual results to differ materially from those
indicated by forward-looking statements, many of which are beyond MAKO's
ability to control or predict. Such factors, among others, may have a material
adverse effect on MAKO's business, financial condition and results of
operations and may include the potentially significant impact of a continued
economic downturn or delayed economic recovery on the ability of MAKO's
customers to secure adequate funding, including access to credit, for the
purchase of MAKO's products or cause MAKO's customers to delay a purchasing
decision, changes in general economic conditions and credit conditions,
changes in the availability of capital and financing sources for our company
and our customers, unanticipated changes in the timing of the sales cycle for
MAKO's products or the vetting process undertaken by prospective customers,
changes in competitive conditions and prices in MAKO's markets, changes in the
relationship between supply of and demand for our products, fluctuations in
costs and availability of raw materials, finished goods,and labor, changes in
other significant operating expenses, slowdowns, delays, or inefficiencies in
MAKO's product research and development cycles, unanticipated issues relating
to intended product launches, decreases in sales of MAKO's principal product
lines, decreases in utilization of MAKO's principal product lines or in
procedure volume, increases in expenditures related to increased or changing
governmental regulation or taxation of MAKO's business, both nationally and
internationally, unanticipated issues in complying with domestic or foreign
regulatory requirements related to MAKO's current products, including
initiating and communicating product actions or product recalls and meeting
Medical Device Reporting requirements and other required reporting to the
United States Food and Drug Administration, or securing regulatory clearance
or approvals for new products or upgrades or changes to MAKO's current
products, developments adversely affecting our potential sales activities
outside the United States, increases in cost containment efforts by group
purchasing organizations, the impact of the United States healthcare reform
legislation enacted in March 2010 on hospital spending, reimbursement,
unanticipated changes in reimbursement to our customers for our products, and
the taxing of medical device companies, any unanticipated impact arising out
of the securities class action or any other litigation, inquiry, or
investigation brought against MAKO, loss of key management and other personnel
or inability to attract such management and other personnel, increases in
costs of retaining a direct sales force and building a distributor network,
unanticipated issues related to, or unanticipated changes in or difficulties
associated with, the recruitment of agents and distributors of our products,
and unanticipated intellectual property expenditures required to develop,
market, and defend MAKO's products. These and other risks are described in
greater detail under Item 1A, "Risk Factors," in MAKO's periodic filings with
the Securities and Exchange Commission, including MAKO's annual report on Form
10-K for the year ended December 31, 2012 filed on February 28, 2013. Given
these uncertainties, undue reliance should not be placed on these
forward-looking statements. MAKO does not undertake any obligation to release
any revisions to these forward-looking statements publicly to reflect events
or circumstances after the date of this press release or to reflect the
occurrence of unanticipated events.

"MAKOplasty®," "RESTORIS®," "RIO®," as well as the "MAKO" logo, whether
standing alone or in connection with the words "MAKO Surgical Corp." are
trademarks of MAKO Surgical Corp.

Oxford® is a registered trademark of Biomet Orthopedics.

Condensed Statements of Operations       Three Months Ended
(unaudited)                              March 31,
(in thousands, except per share data)
                                        2013               2012
Procedures                               $ 14,836          $ 11,562
Systems                                  6,499             5,871
Service                                  3,474             2,206
Total revenue                            24,809            19,639
Cost of revenue:                                           
Procedures                               3,667             2,657
Systems                                  2,431             2,448
Service                                  442               381
Total cost of revenue                    6,540             5,486
Gross profit                             18,269           14,153
Operating costs and expenses:                              
Selling, general and administrative
(exclusive of depreciation and           20,138            19,376
Research and development (exclusive of   5,013             4,854
depreciation and amortization)
Depreciation and amortization            2,046             1,686
Total operating costs and expenses       27,197            25,916
Loss from operations                     (8,928)           (11,763)
Other income (expense), net              (677)             58
Loss before income taxes                 (9,605)           (11,705)
Income tax expense                       15                25
Net loss                                 $ (9,620)         $ (11,730)
Net loss per share - Basic and diluted   $ (0.21)          $ (0.28)
Weighted average common shares                             
outstanding --
Basic and diluted                        46,804            41,694
Depreciation expense for certain property and equipment was reclassified from
selling, general and administrative expense to depreciation and amortization
expense in the prior period's condensed statement of operations to conform to
the current period's presentation. This change in presentation only affects
the components of operating costs and expenses and does not affect total
operating costs and expenses, revenue, cost of revenue, net loss or cash

Condensed Balance Sheets (unaudited)        March 31,  December 31,
(in thousands)                              2013       2012
Current Assets:                                       
Cash and cash equivalents                   $ 41,469  $ 61,367
Short-term investments                      28,393    11,899
Accounts receivable                         15,111    22,389
Inventory                                   25,129    25,080
Deferred cost of revenue                    759       967
Financing commitment asset                  6,947     7,608
Prepaid and other current assets            2,453     1,972
Total current assets                        120,261   131,282
Long-term investments                       1,165     –
Cost method investment                      4,181     4,181
Property and equipment, net                 23,414    22,996
Intangible assets, net                      5,229     5,657
Other assets                                2,786     2,786
Total assets                                $ 157,036 $ 166,902
Current Liabilities:                                  
Accounts payable                            $ 1,509   $ 2,267
Accrued compensation and employee benefits  2,505     4,298
Other accrued liabilities                   7,702     8,727
Deferred revenue                            8,622     9,973
Total current liabilities                   20,338    25,265
Deferred revenue, non-current               752       800
Total liabilities                           21,090    26,065
Stockholders' Equity:                                 
Common stock                                47        47
Additional paid-in capital                  367,114  362,364
Accumulated deficit                         (231,196) (221,576)
Accumulated other comprehensive gain (loss) (19)      2
Total stockholders' equity                  135,946   140,837
Total liabilities and stockholders' equity  $ 157,036 $ 166,902

Condensed Statements of Cash Flows (unaudited)    Three Months Ended March 31,
(in thousands)
                                                 2013          2012
Operating activities:                                          
Net loss                                          $ (9,620)    $ (11,730)
Adjustments to reconcile net loss to net cash                  
used in operating activities:
Depreciation                                      1,759        1,378
Amortization of intangible assets                 428          420
Stock-based compensation                          2,938        2,721
Provision for inventory reserve                   311          28
Amortization of premium on investment securities  51           128
Loss on asset impairment                          265          249
Provision for doubtful accounts                   117          45
Issuance of stock under development agreement     194          227
Non-cash changes under credit facility            661          –
Changes in operating assets and liabilities:                   
Accounts receivable                               7,161        8,218
Inventory                                         (1,284)      (5,041)
Deferred cost of revenue                          208          (230)
Prepaid and other current assets                  (481)        (2,333)
Other assets                                      –            13
Accounts payable                                  (758)        1,344
Accrued compensation and employee benefits        (1,793)      (4,707)
Other accrued liabilities                         (1,025)      (3,066)
Deferred revenue                                  (1,399)      443
Net cash used in operating activities             (2,267)      (11,893)
Investing activities:                                          
Purchase of investments                           (25,018)     (3,160)
Proceeds from sales and maturities of investments 7,287        10,186
Acquisition of property and equipment             (1,518)      (2,183)
Net cash provided by (used in) investing          (19,249)     4,843
Financing activities:                                          
Proceeds from employee stock purchase plan        406          360
Exercise of common stock options and warrants for 1,270        2,026
Payment of payroll taxes relating to vesting of   (58)         (81)
restricted stock
Net cash provided by financing activities         1,618        2,305
Net decrease in cash and cash equivalents         (19,898)     (4,745)
Cash and cash equivalents at beginning of period  61,367       13,438
Cash and cash equivalents at end of period        $ 41,469     $ 8,693

CONTACT: Investors:
         MAKO Surgical Corp.
         Westwicke Partners
         Mark Klausner
Press spacebar to pause and continue. Press esc to stop.