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Why Mazor Robotics Is Tanking Today

By Brian Feroldi - Aug 2, 2018 at 11:34AM

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Shares tumble after second-quarter results miss the mark. Here's what you need to know.

What happened

Shares of Mazor Robotics (MZOR), a medical device company focused on robotic surgery on the spine and brain, dropped 15% as of 10:35 a.m. EDT on Thursday. The plunge is attributable to the release of second-quarter results that whiffed on both ends of the income statement. 

So what

Here's a review of the headline numbers from the company's second quarter:

  • Revenue for the period was $13.2 million. This figure was down 15% when compared to the year-ago period. Wall Street expected $17 million in revenue, so this was a significant miss. Management said the decline was caused by lower pricing terms due to its distribution agreement with Medtronic (MDT -0.36%).
  • Gross margin declined 1,330 basis points to 56.1%.
  • Operating expenses dropped 23% to $11.3 million. 
  • Net loss was $3.8 million, or $0.07 per share. Market watchers were expecting a $0.02 loss, so this figure missed the mark, too.
  • Cash balance at quarter end was $108 million. 
DOctors Performing Surgery

Image source: Getty Images.

Given the disappointing quarterly numbers, it is easy to understand why this high-flying stock is falling today.

Now what

This year is one of significant transition for Mazor, so bulls shouldn't place too much emphasis on the results in any given quarter. Mazor pointed out that system sales increased 25% during the quarter, which suggests that overall demand for its products remains strong. Through the first six months of the year, Mazor's total sales are also up on a year-over-year basis, and its net loss has almost been cut in half. That's a positive trend.

Investors also have a catalyst to look forward to in the fall. CEO Ori Hadomi revealed that the Mazor X Stealth Edition will be unveiled at a healthcare conference in September. This is the first product that will combine technology from both Mazor and Medtronic, and there are high expectations for it.

In total, while Mazor's quarterly numbers are certainly disappointing, bulls continue to have plenty of reasons to remain optimistic.

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Stocks Mentioned

Medtronic plc Stock Quote
Medtronic plc
MDT
$99.08 (-0.36%) $0.36
Mazor Robotics Ltd. Stock Quote
Mazor Robotics Ltd.
MZOR

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