1. RIO sales are increasing. This is the most important thing right now.
2. Down tick in utilization is not a concern. when you consider a) it was summer vacation time. b) implementing software updates c) surgeons training on THA application d) managements focus was on selling RIOs and getting out software, which makes total sense. Sell RIOs and procedures will follow.
3. Speaking of THA application, increase in its sales only means an increase in utilization
4. Operating cost margins continue to decline
Conclusion - management has their stuff together. Focusing on selling RIOs is the key, and prior to yesterday it was everyone's #1 concern. MAKO is still in the early adopter phase, but the increase in sales, really exceptional studies, presentations, and testimonials looks really promising. Considering the increase in sales in 3Q, 4Q being traditionally the highest, and the incentive to buy and sell before ACA excise tax, I expect 4Q sales to be greater than ever. Combine that with utilization in the high 7s and I have MAKO at strong buy, especially at the current price.
To sum it up, despite several assertions of a "mixed bag" this quarter, MAKO Surgical's report held mostly good news for investors. Aside from the monthly utilization numbers, MAKO has answered many questions for uneasy shareholders with its slowing cash burn, plans for a Total Knee application, ramping hip procedure counts, and the crucial improvement in RIO System sales.
Mr. Market is just protecting its big players. Short squeeze will move this back toward 16 by at least next week. Once market gets over this post election freakout and investors have more time to digest what the 3Q really shows about MAKO, the stock won't see price levels below 17.