The share price of Mazor Robotics Ltd. (Nasdaq: MZOR; TASE:MZOR) was up 2.3% today, following the publication of the company's first quarter results, completing a 15% rise this week and boosting the company market cap to NIS 3.2 billion. Mazor has developed a robot for spinal surgery. The company reported yesterday that it had already sold four Mazor X systems, which it is marketing jointly with medical devices giant Medtronic, in the second quarter. Mazor sold six of the systems in the first quarter.
Another factor in the share's surge is the optimism expressed by Mazor CEO Ori Hadomi in a conference call, when he reiterated a previous prediction that this would be a record year for Mazor in revenue and orders for its system, and said that the order for four systems was a strong beginning for the second quarter. Asked about the chances that the second stage in Mazor's cooperation agreement with Medtronic, which would make Medtronic the exclusive marketer for the Mazor X system, will be implemented, Hadomi answered, "So far, we have met our targets under the agreement faster than anyone expected. There is no real concern that we will fail to meet the milestone set for us by Medtronic for exercising the option. Even if we meet the milestone, the decision is still completely up to Medtronic. I don't want to speak for Medtronic, but I will be surprised if it doesn't exercise the option before the deadline."
Under the contract between the two companies, the deadline for exercising Medtronic's option for Mazor is February 2018. The company has a backlog of 14 orders for systems designated for installing.
Mazor's first quarter revenue totaled $11.7 million, 83% more than in the first quarter of 2016. Repeat revenue from the use of existing systems amounted to $5.2 million, a 37% increase. The company's gross profit margin dropped from 74% in the corresponding quarter last year to 64% in the first quarter of this year, because under the agreement with Medtronic, the revenue is shared, and because some of the orders for the product were for upgrading the customers' older products, for which revenue is lower, while costs are the same as for installing a new system.
The company stated in its conference call that its gross profit margin was due to rise slightly, following an improvement in the cost structure for manufacturing the product, a change in the mix of products sold, and possibly the termination of a discount for upgrades. Mazor's first quarter GAAP loss was $5.2 million, compared with $5.1 million in the corresponding quarter last year. The company reached the cash flow break-even point in the current quarter, after having burned $2.9 million in the corresponding quarter last year. Mazor has $64 million in cash.
Hadomi said in the company conference call that the cycle for selling the Mazor X unit was significantly shorter than for the Renaissance systems the company sold until last October: 6-8 months for selling a Mazor X system, compared with 12 months for selling a Renaissance system. He added that awareness of the system was high following the signing of Mazor's agreement with Medtronic, and that the improvement in the system itself and its adaptation to medical needs had bettered the sales cycle. It remains to be seen whether this improvement continues after the initial enthusiasm following the launch.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 11, 2017
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