- Special General Meeting of Shareholders scheduled for November 19, 2018 to Vote on Merger Agreement with Medtronic -

CAESAREA, Israel, Nov. 6, 2018 — (PRNewswire) — 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.

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.