Ok. ISRG just pulled a MAKO 2q12 and pre-announced sub-par system sales in the U.S. Most relevant and concerning to us at MakoLand is the following comment in the newswires: "According to Intuitive Surgical, weakness in U.S. sales was driven by 'increased economic pressure on hospitals, which in turn caused some to defer da Vinci System purchases.' "
I'm applying some Logic hear, and please let me know if it is flawed in anyway - MAKO basically indicated today that they did not miss their 2q13 numbers by 1) NOT saying anything about missing targets today - they would have announced today if they missed just like they did last year this time, and just like ISRG did today. I don't subscribed to the theory that the 4th of July wkend would have delayed any accounting. You can count the number of systems sold this past qtr on your fingers (and toes, hopefully). 2) More telling, they issued a PR at the same time ISRG issued their miss coincidentally with "happy" news of new board apptments - Logic tells me Mako would not have done this today to then announce a Third qtrly miss tomorrow or any other time this week. The announcement of a miss would have to come out this week - no question! Does this Logic make sense? if MAKO does isue bad news tomorrow or sometime rest of this week - hello, lawsuits, again, and good-bye Mr. Ferre and possibly Mr. Federico - be very careful of using/timing Press Releases to jerk investors around.
Just reading thru Gary Guthart's (ceo) comments from ISRG's CC yesterday, I noticed a subtle change in their excuse for the slowdown in U.S. system sales this past qtr. Whereas in the pre-announcement in early July, they attributed the slowdown to "increased economic pressure on [U.S.] hospitals", on yesterday's call, ISRG stated that, "Capital sales fell 5% from prior yr with the shortfall concentrated in the U.S. We attribute this PRIMARILY to a slower than expected daV benign GYN procedure growth in the U.S." I think this subtle change is meaningful.
I also looked at the Stryker earnings rpt from yesterday. Can't make anything out of it one or the other for MAKO. If they are losing mkt share to MAKO, they surely wouldn't admit it at this juncture.
it is obvious at this point in time that MAKO must have had a better than expected 2q12... Ferre and LaPorte have had plenty of time to managed expectations down since ISRG's pre-announcement. Those said expectations have now gone up since beginning of July as evidenced in Mkt Cap hitting and breaking through up-boundary of latest TTM range of $600M. Also, shorts seem to be also conceding that momentum has shifted - not piling on like they have been doing the last 4-5 qtrs. There is a remote outside chance that things are so bad that Ferre and/or LaPorte have checked out and don't care about managing expectations, but i think new chairman Frederico would (as evidenced by search effort and announcement of two new BOD members). Frederico is a new factor in MAKO's strategic planning. it would be good to know more about him.
Given that it's now the 10th and no sign of a pre-announce, we're probably ok. FWIW:
Here's the known new ones since the beginning of the year (subtract 5 for Q1)
Stringfellow Memorial Anniston AL
Sebastian River Medical Center Sebastian FL
Gilmore Medical Center Amory MS
Memorial Hermann Memorial City Houston TX
Des Peres Hospital St Louis MO
Stevenson Surgery Center Fremont CA
Boulder Comm Hospital Boulder CO
Oschner Medical Center New Orleans LA
Las Palmas Medical Center El Paso TX
Larkin Hospital Miami FL
Mass General MA (unconfirmed-analyst mentioned comm'l unit)
Guthrie Hospital NY
St Joseph Stockton, CA (not related to St Joseph's in Orange)
Hong Kong (unconfirmed)
14 potentials MINUS 5 known sales in Q1= 9 (takes up to 4 weeks for clues, if any to emerge so we'll see if any more show up before cc and then guess Q2 vs Q3, LOL). Mass General is a wild card as they previously also had a research unit. Add one for pick-up of deferred revenue.
Sentiment: Strong Buy
Don, was the Advanced Surgery Center of Bethesda, MD on any of the lists? They're doing Makoplasty now. I see they're on the MAKO website new as of today. Maybe they switched back to the old way of reporting after complaints or are posting randomly to try and confuse us! LOL
Sentiment: Strong Buy
I am actually more concerned with the board member announcement. You usually do not bring in additional board members unless something is not going right. The additional board member usually is a way to dilute the control of the management and it is gear up for more votes on the board to oust the CEO in most of the coporate politics. To me Q2 will not be a great beat. Mako probably will do OK or miss a bit. What's going to really happen in Q3 and Q4 will determine the fate of the CEO. If he miss again at the end of the year. Either one of the new board member will be able to take over the CEO role without any issue. To be this is a classic coporate politics unfolding in front of us.
I guess the writing is on the wall for some kind of bigger change up in management, but in this case, the new board members being introduced are more like new operators...Not necessarily meaning that something bad is going on. Actually, because this announcement came out today, I'm not too concerned that will indicate anything major for the quarter (not likely additional announcements will be coming).
I can see the logic. They probably wouldn't save one PR for tomorrow and would have released both today. Announcement of new board members at the same time might have softened the blow. Likely they beat/met or slight miss ie on revenue. Nothing major warranting an 8k. Of course, I'd like to see a beat on both and that's what I'm hoping for. I'm guessing 9-10 give or take a deferred revenue. My guess is a beat on revenue and a slight miss on eps but that shares rally like last quarter on the announce.
Sentiment: Strong Buy
Additional indication from Ferre himself... At the end of the MAKO PR today, Dr. Ferre is officially quoted: "Jack and Scott provide MAKO with impressive clinical and industry expertise," said Maurice R. Ferre, M.D., MAKO's President and Chief Executive Officer. "I look forward to working with them towards MAKO's continuing growth and success." The use of the word CONTINUING in the official PR is telling. if 2q13 was a miss, MAKO would not be having CONTINUING growth and success, that's for sure.