EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1
 
Mazor Robotics Inc.
 189 S. Orange Ave., Suite 1850
Orlando, FL  32801
Tel: 1 (800) 80-MAZOR
Fax: (407) 591-3560
usa@MazorRobotics-us.com
Mazor Robotics Ltd.
 PO Box 3104, 5 Shacham St.
North Industrial Park,       
Caesarea 3079567, Israel
Tel: +972 4 618-7100
 Fax: +972 4 618-7111
info@mazorrobotics.com
  

Mazor Robotics Reports Third Quarter and Nine Month 2018 Results
 
- Special General Meeting of Shareholders scheduled for November 19,
2018 to Vote on Merger Agreement with Medtronic -

CAESAREA, Israel – November 6, 2018 – Mazor Robotics Ltd. (TASE: MZOR; NASDAQGM: MZOR), a pioneer and a leader in the field of robotic guidance systems, reported financial and operating results for the third quarter and nine months ended September 30, 2018.
 
As announced on September 20, 2018, the Company entered into a definitive merger agreement under which Medtronic will acquire all outstanding ordinary shares of Mazor for $58.50 per American Depositary Share, or $29.25 (108.0 ILS. according to current exchange rate) per ordinary share, in cash, for a total of approximately $1.64 billion. The acquisition is expected to close during Medtronic’s third fiscal quarter ending Jan. 25, 2019, subject to the satisfaction of customary closing conditions including receipt of regulatory clearances and approval by Mazor’s shareholders at the Special General Meeting of Shareholders scheduled for November 19, 2018.
 
In addition, the U.S. Food and Drug Administration (FDA) notified Mazor on November 2 that the Mazor X Stealth Edition system, which integrates Medtronic's Stealth navigation with the Mazor X robotic guidance platform, received clearance in the U.S.  The integration of two best-in-class technologies will provide spine surgeons with 3D planning tools, robotic-guided execution, and real-time visualization in the operating room.
 
THIRD QUARTER 2018 FINANCIAL RESULTS ON IFRS BASIS ("GAAP")
 
Revenue for the three months ended September 30, 2018 was $10.1 million compared to $18.6 million in the year-ago third quarter.  U.S. revenue was $8.8 million compared to $16.8 million in the year-ago third quarter. This decrease is mainly attributed to the lower number of systems sold in the quarter and the lower pricing terms under the distribution agreement with Medtronic, compared to mostly direct sales in the year-ago third quarter.  International revenue was $1.3 million compared to $1.8 million in the year-ago third quarter. Recurring revenue from kit sales, services and other was $6.9 million in the third quarter of 2018, compared to $7.0 million in the year-ago third quarter.
 
The Company's gross margin for the three months ended September 30, 2018 was 47.3% compared to 62.3% in the year-ago third quarter.  This decrease is attributed mainly to the pricing terms with Medtronic, following the transition to the global distribution phase of the Medtronic partnership and a result of less systems sold this quarter. Total operating expenses increased to $22.3 million compared to $15.7 million in the year-ago third quarter, mainly due to $10.8 million of costs related to the merger agreement (of which $7.0 million are non-cash expenses). These costs do not include certain costs related to the merger agreement, including costs which are contingent upon closing. This increase in operating expenses is offset by lower selling and marketing expenses, following the transition to the global distribution phase of the Medtronic partnership. Operating loss was $17.5 million compared to an operating loss of $4.1 million the year-ago third quarter. Net loss for the third quarter of 2018 was $16.9 million, or $0.32 per share, compared to a net loss of $3.9 million, or $0.08 per share, for the year-ago third quarter.
 
Cash used in operating activities was $2.5 million compared to cash used in operating activities of $2.9 million in the year-ago third quarter. As of September 30, 2018, cash, cash equivalents and investments totaled $107.6 million.
 
THIRD QUARTER 2018 FINANCIAL RESULTS ON NON-GAAP BASIS
 
The tables below include reconciliation of the Company’s GAAP results to non-GAAP results. The reconciliation relates to non-cash expenses in the amount of $12.6 million with respect to amortization of intangible assets, to share-based payments and to costs related to the merger agreement recorded in the third quarter of 2018. On a non-GAAP basis, the net loss in the third quarter of 2018 was $4.4 million, or $0.08 per share, compared to $1.3 million, or $0.03 per share, for the year-ago third quarter.
 
NINE MONTHS ENDED SEPTEMBER 30, 2018 FINANCIAL RESULTS ON IFRS BASIS (“GAAP”)
 
For the nine months ended September 30, 2018, revenue totaled $38.8 million compared to $45.8 million for the nine months ended September 30, 2017. Gross margin for the nine months ended September 30, 2018 was 54.7% compared with 65.3% in the nine months ended September 30, 2017. This decrease is attributed mainly to the pricing terms with Medtronic following the transition to the global distribution phase of the Medtronic partnership. Total operating expenses were $44.1 million compared to $43.6 million in the year-ago nine-month period, mainly due to lower selling and marketing expenses, following the transition to the global distribution phase of the Medtronic partnership and offset by costs related to the merger agreement.  Operating loss was $22.8 million compared to an operating loss of $13.7 million in the first nine months of 2017.
 
Net loss for the nine months ended September 30, 2018 was $22.1 million, or $0.42 per share compared to a net loss of $12.9 million, or $0.27 per share, in the first nine months of 2017.
 
- 2 -
 
NINE MONTHS ENDED SEPTEMBER 30, 2018 FINANCIAL RESULTS ON NON-GAAP BASIS
 
On a non-GAAP basis, the net loss for the first nine months of 2018 was $5.4 million, or $0.10 per share, compared to a net loss of $7.6 million, or $0.16 per share, in the first nine months of 2017.
 
Use of Non-GAAP Measures
 
In addition to disclosing financial results calculated in accordance with generally accepted accounting principles in conformity with International Financial Reporting Standards (GAAP), this press release contains Non-GAAP financial measures for gross profit, operating expenses, operating profit (loss), net income (loss) and basic and diluted earnings (loss) per share that exclude the effects of non-cash expense of amortization of intangible assets and share-based payments and costs related to the merger agreement. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance that enhances management's and investors' ability to evaluate the Company's net income (loss) and earnings (loss) per share and to compare them to historical net income (loss) and earnings (loss) per share.
 
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when operating and evaluating the Company’s business internally and therefore decided to make these non-GAAP adjustments available to investors.
 
About Mazor
 
Mazor Robotics (TASE: MZOR; NASDAQGM: MZOR) believes in healing through innovation by developing and introducing revolutionary technologies and products aimed at redefining the gold standard of quality care. Mazor Robotics Guidance System enables surgeons to conduct spine and brain procedures in an accurate and secure manner. For more information, please visit www.MazorRobotics.com.

Forward-Looking Statements
 
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Any statements in this release about future expectations, plans or prospects for the Company, including without limitation, statements regarding the closing of the Medtronic acquisition of Mazor, statements regarding the benefits of the Mazor X–Stealth Edition system, and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions are forward-looking statements. These statements are only predictions based on Mazor's current expectations and projections about future events. There are important factors that could cause Mazor's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Those factors include, but are not limited to, the impact of general economic conditions, competitive products, product demand and market acceptance risks, reliance on key strategic alliances, fluctuations in operating results, and other factors indicated in Mazor's filings with the Securities and Exchange Commission (SEC) including those discussed under the heading "Risk Factors" in Mazor’s annual report on Form 20-F filed with the SEC on April 30, 2018 and in subsequent filings with the SEC. For more details, refer to Mazor's SEC filings. Mazor undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law.

U.S. Contacts: EVC Group
Michael Polyviou - Investors
mpolyviou@evcgroup.com;
732.933.2754

- 3 -
 
   Mazor Robotics Ltd.
                CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(U.S. Dollars in thousands, except per share data)
(UNAUDITED)

   
Nine months period
    
Three months period
  
   
ended September 30,
    
ended September 30,
  
   
2018
    
2017
    
2018
    
2017
  
Revenue
  
$
38,835
    
$
45,798
    
$
10,090
    
$
18,624
  
 
                                
Cost of revenue
  
$
17,587
    
$
15,895
    
$
5,315
    
$
7,020
  
 
                                
Gross profit
  
$
21,248
    
$
29,903
    
$
4,775
    
$
11,604
  
 
                                
Operating expenses:
                                
                                 
Research and development, net
  
$
8,695
    
$
5,692
    
$
3,626
    
$
1,658
  
Selling and marketing
  
$
17,944
    
$
32,638
    
$
5,656
    
$
12,429
  
General and administrative
  
$
6,618
    
$
5,310
    
$
2,176
    
$
1,653
  
Other operating expenses (*)
  
$
10,800
    
$
-
    
$
10,800
    
$
-
  
Total operating cost and expenses
  
$
44,057
    
$
43,640
    
$
22,258
    
$
15,740
  
 
                                
Loss from operations
  
$
(22,809
)
  
$
(13,737
)
  
$
(17,483
)
  
$
(4,136
)
 
                                
Financing income, net
  
$
750
    
$
631
    
$
541
    
$
188
  
 
                                
Loss before taxes on income
  
$
(22,059
)
  
$
(13,106
)
  
$
(16,942
)
  
$
(3,948
)
 
                                
Income tax expense (benefit)
  
$
2
    
$
(250
)
  
$
1
    
$
-
  
 
                                
Net loss
  
$
(22,061
)
  
$
(12,856
)
  
$
(16,943
)
  
$
(3,948
)
 
                                
Net loss per share - Basic and diluted
  
$
(0.42
)
  
$
(0.27
)
  
$
(0.32
)
  
$
(0.08
)
                                 
Weighted average common shares outstanding - Basic and diluted
    
52,673
      
48,334
      
52,938
      
49,011
  

(*) Merger agreement related expenses
 
- 4 -
 
Mazor Robotics Ltd.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF
(U.S. Dollars in thousands)

   
September 30,
    
December 31,
  
   
2018
    
2017
  
   
(Unaudited)
    
(Audited)
  
Current assets
            
Cash and cash equivalents
  
$
36,532
    
$
46,376
  
Short-term investments
    
70,074
      
56,708
  
Trade receivables
    
9,479
      
5,460
  
Other current assets
    
3,930
      
2,054
  
Inventory
    
7,259
      
7,864
  
Total current assets
    
127,274
      
118,462
  
 
                
Non-current assets
                
Long-term investments
    
968
      
5,171
  
Property and equipment, net
    
4,597
      
4,323
  
Intangible assets, net
    
1,676
      
1,925
  
Other non-current assets
    
852
      
1,115
  
Total non-current assets
    
8,093
      
12,534
  
                 
Total assets
  
$
135,367
    
$
130,996
  
 
                
Current liabilities
                
Trade payables
  
$
4,116
    
$
3,474
  
Deferred revenue
    
8,195
      
3,471
  
Other current liabilities
    
10,882
      
9,874
  
Total current liabilities
    
23,193
      
16,819
  
                 
Non-current liabilities
                
Employee benefits
    
433
      
414
  
Total non-current liabilities
    
433
      
414
  
                 
Total liabilities
    
23,626
      
17,233
  
                 
 Equity
                
Share capital
    
139
      
136
  
Share premium
    
235,939
      
225,678
  
Amounts allocated to warrants
    
9,629
      
9,629
  
Capital reserve for share-based payments transactions
    
20,255
      
10,480
  
Foreign currency translation reserve
    
2,119
      
2,119
  
Accumulated loss
    
(156,340
)
    
(134,279
)
Total equity
    
111,741
      
113,763
  
                 
Total liabilities and equity
  
$
135,367
    
$
130,996
  
 
- 5 -
Mazor Robotics Ltd.
CONSOLIDATED CASH FLOW STATEMENTS
 (U.S. Dollars in thousands)
(UNAUDITED)

   
Nine months ended
    
Three months ended
  
   
September 30,
    
September 30,
  
 
  
2018
    
2017
    
2018
    
2017
  
Cash flows from operating activities:
                        
Loss for the period
  
$
(22,061
)
  
$
(12,856
)
  
$
(16,943
)
  
$
(3,948
)
Adjustments:
                                
Depreciation and amortization
  
$
1,507
    
$
1,107
    
$
628
    
$
393
  
Finance income, net
  
$
(372
)
  
$
(328
)
  
$
(265
)
  
$
(209
)
Share-based payments
  
$
12,576
    
$
4,975
    
$
8,673
    
$
2,553
  
Income tax benefit
  
$
(2
)
  
$
(250
)
  
$
(1
)
  
$
-
  
 
  
$
13,709
    
$
5,504
    
$
9,035
    
$
2,737
  
                                 
Change in inventory
  
$
555
    
$
(3,350
)
  
$
(129
)
  
$
(400
)
Change in trade and other accounts receivable
  
$
(5,545
)
  
$
354
    
$
(982
)
  
$
(906
)
Change in prepaid lease fees
  
$
(6
)
  
$
(30
)
  
$
(14
)
  
$
(8
)
Change in trade and other accounts payable
  
$
6,358
    
$
159
    
$
6,361
    
$
(633
)
Change in employee benefits
  
$
19
    
$
123
    
$
(21
)
  
$
(13
)
 
  
$
1,381
    
$
(2,744
)
  
$
5,215
    
$
(1,960
)
 
                                
Interest received
  
$
703
    
$
432
    
$
208
    
$
249
  
Income tax paid
  
$
(37
)
  
$
(15
)
  
$
(3
)
  
$
-
  
 
  
$
666
    
$
417
    
$
205
    
$
249
  
                                 
Net cash used in operating activities
  
$
(6,305
)
  
$
(9,679
)
  
$
(2,488
)
  
$
(2,922
)
                                 
Cash flows from investing activities:
                                
Proceeds from (investment in) short-term investments and deposits, net
  
$
(5,802
)
  
$
1,416
    
$
(414
)
  
$
(9,019
)
Investment in long-term investments
  
$
(3,361
)
  
$
(4,288
)
  
$
-
    
$
(3,665
)
Purchase of property and equipment
  
$
(1,487
)
  
$
(1,557
)
  
$
(410
)
  
$
(244
)
Net cash used in investing activities
  
$
(10,650
)
  
$
(4,429
)
  
$
(824
)
  
$
(12,928
)
                                 
Cash flows from financing activities:
                                
Proceeds from issuance of ADRs, net
  
$
-
    
$
40,000
    
$
-
    
$
40,000
  
Proceeds from exercise of share options by employees
  
$
7,463
    
$
8,293
    
$
2,353
    
$
4,574
  
Net cash provided by financing activities
  
$
7,463
    
$
48,293
    
$
2,353
    
$
44,574
  
                                 
Net increase (decrease) in cash and cash equivalents
  
$
(9,492
)
  
$
34,185
    
$
(959
)
  
$
28,724
  
Cash and cash equivalents at the beginning of the period
  
$
46,376
    
$
14,954
    
$
37,475
    
$
20,347
  
Effect of exchange rate differences on balances of cash and cash equivalents
  
$
(352
)
  
$
(111
)
  
$
16
    
$
(43
)
Cash and cash equivalents at the end of the period
  
$
36,532
    
$
49,028
    
$
36,532
    
$
49,028
  
Supplementary cash flows information:
                                
Purchase of property and equipment in credit
  
$
(19
)
  
$
(96
)
  
$
(19
)
  
$
(96
)
Issuance costs on credit
  
$
-
    
$
(22
)
  
$
-
    
$
(22
)
Classification of inventory to fixed assets
  
$
50
    
$
300
    
$
50
    
$
300
  

- 6 -
 
Mazor Robotics Ltd.
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
 (U.S. Dollars in thousands, except per share data)
 (UNAUDITED)

   
Nine months period
    
Three months period
  
   
ended September 30,
    
ended September 30,
  
   
2018
    
2017
    
2018
    
2017
  
GAAP gross profit
  
$
21,248
    
$
29,903
    
$
4,775
    
$
11,604
  
Amortization of intangible assets
    
249
      
250
      
84
      
85
  
Share-based payments
    
480
      
248
      
153
      
140
  
Non-GAAP gross profit
  
$
21,977
    
$
30,401
    
$
5,012
    
$
11,829
  
GAAP gross profit as percentage of revenues
    
54.7
%
    
65.3
%
    
47.3
%
    
62.3
%
Non-GAAP gross profit as percentage of revenues
    
56.6
%
    
66.4
%
    
49.7
%
    
63.5
%
 
                                
GAAP operating expenses
  
$
44,057
    
$
43,640
    
$
22,258
    
$
15,740
  
Share-based payments:
                                
   Research and development
  
$
1,300
    
$
641
    
$
463
    
$
289
  
   Selling and marketing
  
$
2,032
    
$
2,363
    
$
660
    
$
1,512
  
   General and administrative
  
$
1,787
    
$
1,723
    
$
420
    
$
612
  
Merger agreement costs
  
$
10,800
    
$
-
    
$
10,800
    
$
-
  
Non-GAAP operating expenses
  
$
28,138
    
$
38,913
    
$
9,915
    
$
13,327
  
 
                                
GAAP operating loss
  
$
(22,809
)
  
$
(13,737
)
  
$
(17,483
)
  
$
(4,136
)
Non-GAAP operating loss
  
$
(6,161
)
  
$
(8,512
)
  
$
(4,903
)
  
$
(1,498
)
                                 
GAAP net loss
  
$
(22,061
)
  
$
(12,856
)
  
$
(16,943
)
  
$
(3,948
)
Share-based payments
  
$
5,599
    
$
4,975
    
$
1,696
    
$
2,553
  
Amortization of intangible assets
  
$
249
    
$
250
    
$
84
    
$
85
  
Merger agreement costs
  
$
10,800
    
$
-
    
$
10,800
    
$
-
  
Non-GAAP net loss
  
$
(5,413
)
  
$
(7,631
)
  
$
(4,363
)
  
$
(1,310
)
GAAP basic and diluted loss per share
  
$
(0.42
)
  
$
(0.27
)
  
$
(0.32
)
  
$
(0.08
)
 
                                
Non-GAAP basic and diluted loss per share
  
$
(0.10
)
  
$
(0.16
)
  
$
(0.08
)
  
$
(0.03
)

 
- 7 -