Leading radiosurgery systems maker Accuray Incorporated’s (ARAY) first-quarter fiscal 2012 adjusted (excluding one-time items such as acquisition-related charges and employee severance and retention costs) loss per share of 16 cents was lower than the Zacks Consensus Estimate of a loss of 28 cents.
However, on a reported basis, losses widened nearly six-fold year over year. The California-based company posted a net loss of $26.5 million or 38 cents a share in the quarter versus a net loss of $4.6 million or 8 cents a year ago.
Accuray closed its acquisition of Wisconsin-based radiation system maker TomoTherapy in June 2011. The results for the first quarter reflect the integration of both the entities.
Revenues
Consolidated sales for the quarter were $100.5 million, easily beating the Zacks Consensus Estimate of $86 million. This reflects a roughly 23% surge from the combined sales of $81.7 million (consisting of $38.1 million from Accuray and $43.6 million from TomoTherapy) in the year-ago quarter. Sales skyrocketed roughly 164% when compared with the year-ago stand-alone sales of Accuray.
Revenues in the first quarter were powered by solid installations of TomoTherapy systems. The healthy sales underscore the contributions of the newly acquired TomoTherapy business as well as the growing adoption of the company’s popular CyberKnife robotic radiosurgery system. Revenues from products and services were $56.2 million and $43.4 million, respectively, in the quarter.
Revenues, after adjusting deferred product and service revenues related to TomoTherapy, were $95.7 million in the first quarter.
Orders and Margins
Accuray installed 16 new CyberKnife and TomoTherapy systems in the first quarter, taking the aggregate global installed base to 598 units. The company added $39.2 million of new system orders in the quarter, leading to a total system backlog of $270.8 million.
Consolidated gross margin came in at 24.3% versus 30.9% (on a combined basis) a year ago. Combined product gross margin was 31.7% compared with 52.2% in the prior-year quarter.
Financial Condition
Accuray ended the quarter with cash and cash equivalents of roughly $140.2 million, down 46% sequentially, with long-term debt of $76.6 million.
Guidance
Accuray has forecast adjusted revenues for fiscal 2012 in the range of $400 million to $415 million. On a reported basis, sales are expected in a band of $409 million to $424 million for the full year. The current Zacks Consensus Estimates for fiscal 2012 is $417 million.
Accuray is a global leader in the field of radiosurgery and provides a non-surgical treatment option for cancer patients. The company continues to enjoy healthy demand for CyberKnife as evidenced by sustained growth in the number of patients receiving treatment with the device.
The acquisition of rival TomoTherapy has bolstered Accuray’s foothold in the radiation oncology space. The merger marks the union of TomoTherapy’s best-in-class radiation therapies and Accuray’s popular radiosurgery systems to create a leading player in the radiation oncology space.
However, Accuray faces stiff competition from Varian Medical (VAR) in the radiation oncology market and remains susceptible to reimbursement uncertainties. We currently have a Neutral rating on the stock.
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