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Why MAKO Surgical Is Tanking 40% After Hours

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There's blood out there right now. And it's not related to any type of surgical procedure, unless you consider a massive haircut a surgical procedure. In this case, this haircut is so deep that it might as well be a lobotomy.

MAKO Surgical (Nasdaq: MAKO  ) has just reported its second-quarter earnings, and there's a lot to be pessimistic about. As if its first-quarter release wasn't bad enough, this one adds insult to injury. RIO system sales came in at just nine, of which eight were sold domestically. The other one went to a distributor in China for use in a hospital in Hong Kong.

When you include the six sold in the first quarter, that brings the year-to-date total up to just 15. Both figures are less than was sold in the same respective quarters in 2011. In the first two quarters of last year, MAKO sold seven and 12 systems, respectively.

There were a total of 2,590 MAKOplasty procedures performed in the quarter, including 280 Total Hip Arthroplasty, or THA, procedures. Total procedures are up 66% compared with a year ago. The company also sold nine new THA applications, retrofitting machines for the newer hip procedure, and 71 of the domestic commercial installed base have the THA application.

One tiny bright spot is that machine utilization is at its high of 7.2, which means that each RIO system continues to get healthy usage and generate procedure revenue, but a lot of MAKO's growth story relies on the continued sale of RIO systems themselves.

Last quarter got off to a slow start, but the bright side that time around was that MAKO had affirmed its total procedure volume while it was forced to reduce guidance on full-year RIO system sales. RIO system outlook was reduced from a range of 56 to 62 systems to a lower range of 52 to 58 systems, while total procedures were still expected between 11,000 and 13,000.

This quarter, we're seeing outlook on both metrics being slashed, meaning the RIO system outlook is getting cut two quarters in a row because of the rough patch. Full-year RIO system sales are now expected between 42 and 48, and procedures are getting notched down to an expected range of 11,000 to 12,000. Not good.

I'll be digging in deeper overnight, so check back tomorrow. For now, it's no wonder that shares are getting absolutely crushed after hours.

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Fool contributor Evan Niu owns shares of MAKO Surgical, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of MAKO Surgical. Motley Fool newsletter services have recommended buying shares of MAKO Surgical. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 09, 2012, at 6:01 PM, Medicalrecordman wrote:

    You obviously didn't listen to the same CC that I did AH's. Typical Motley Tool amateur hour journalism.

  • Report this Comment On July 09, 2012, at 6:24 PM, bobleelaw wrote:

    Yes, a lot of pain for some people right now. I never liked this stock, but something about it at $15.00 made me buy some :) ...

    I may find it at $6.00 soon, but I hope not.

    My hope is that they turn around next year...will see.

  • Report this Comment On July 09, 2012, at 6:38 PM, Medicalrecordman wrote:

    What's funny is that the ONLY issue whatsoever here (as just stated in the AH's CC) is push-out. That's it, end of story. I'm a first-time buyer ever in AH's at $14.90

    Easiest money I'll ever make.

  • Report this Comment On July 09, 2012, at 11:02 PM, nickjob wrote:

    could mf have been more wrong?

  • Report this Comment On July 10, 2012, at 12:14 PM, CHill8008 wrote:


    Yes, nflx

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12/31/1969 7:00 PM
MAKO.DL $0.00 Down +0.00 +0.00%
MAKO Surgical CAPS Rating: ****