Are they being used?
In addition, keep your eyes peeled for updated guidance for per system utilization numbers. To be sure, while last year’s sluggish RIO system sales will likely result in a lower growth rate for overall procedure numbers, system utilization is a better measure to show existing sites aren’t letting their robots collect dust. As fellow Fool Brenton Flynn explained last week, solid monthly utilization is also key for companies like MAKO and Intuitive Surgical to continue paying the bills with their razor-and-blades business models. While I’d like to see monthly per system utilization north of seven procedures (as CEO Maurice Ferre had hoped during last quarter’s conference call), at a minimum anything above the fourth quarter’s 6.6 would help put investors at ease.
What else can they do?
Finally, look for any updates on new procedure types to expand MAKO’s scope of operation. As it stands, MAKO’s RIO systems currently only count two procedures in their wheelhouse: partial knee replacements and total hip arthroplasty.
Why is this dangerous? As I noted last month, high-cost solutions like Hansen Medical, Inc. (NASDAQ:HNSN)‘s Sensei X robotic catheter systems (and, consequently, Hansen’s shareholders) have suffered from limited adoption because it only performs a single procedure. As a result, Hansen’s per-system utilization plummeted and served as a precursor to its falloff in system sales. By contrast, Intuitive Surgical’s da Vinci robots continue to enjoy increased global acceptance because they can be used by surgeons to effectively perform dozens of different soft-tissue surgeries. As a result, Intuitive Surgical achieved impressive monthly utilization of around 13 procedures per system in 2012.
Back to MAKO, as luck would have it, during the company’s November conference call, CEO Ferre made his first official mention of plans to develop a solution for total knee replacements. Needless to say, this would substantially increase both MAKO’s value proposition and its per-system utilization. When pressed further during the Q&A portion of the call, however, Ferre was careful to say investors shouldn’t expect a definite time frame for its total knee products in the near future, and instead emphasized that “the important thing is that its part of our platform.”
Brace yourself
Though MAKO already told us how it did last quarter, that doesn’t mean the company can’t surprise us during next week’s announcement. In any case, be prepared to weather any resulting wild swings in MAKO’s share price, and remember that patience is key to holding a speculative long-term bet like MAKO. In the end, investors who can sift through the noise stand to enjoy massive gains if the company can eventually achieve sustained profitability.
The article 4 Questions for MAKO Surgical originally appeared on Fool.com and is written by Steve Symington.
Fool contributor Steve Symington owns shares of MAKO Surgical. The Motley Fool recommends Intuitive Surgical and MAKO Surgical. The Motley Fool owns shares of Intuitive Surgical.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
