Accuray Incorporated (ARAY) has slipped into a loss in fourth-quarter fiscal 2011 (ended June 30) as charges (of roughly $18.7 million) associated with its acquisition of Wisconsin-based radiation system maker TomoTherapy more than offset a healthy growth in its top-line.
The California-based leading radiosurgery systems maker posted a net loss of $25 million or 40 cents a share in the quarter versus a net income of $5 million or 8 cents a year ago. However, the adjusted (excluding acquisition-related charges and other one-time items other than stock-based compensation expenses) loss was 20 cents a share in the fourth quarter, lower than the Zacks Consensus Estimate of a loss of 41 cents.
For fiscal 2011, net loss was $26.7 million or 44 cents a share versus a profit of $2.8 million or 5 cents a share a year ago.
Revenues
Revenues for the quarter soared roughly 22% year over year to $75.2 million, sailing past the Zacks Consensus Estimate of $69 million. The company noted that sales include a contribution of $11.1 million from the TomoTherapy acquisition, which was completed in June 2011. Accuray witnessed record sales (of $64.1 million) for its CyberKnife robotic radiosurgery systems in the quarter.
Products sales for the quarter climbed 14% year over year to roughly $47.8 million while service revenues cruised 31% to $25.7 million. For fiscal 2011, sales were essentially flat year over year at $222.3 million, but ahead of the Zacks Consensus Estimate of $216 million.
Orders and Margins
Accuray installed 14 new CyberKnife systems in the quarter versus 10 systems a year ago, taking the aggregate global installed base to 240 units (up 16.5% year over year). The company booked 19 orders for CyberKnife compared to 16 orders a year ago. Moreover, Accuray installed 9 TomoTherapy systems in the quarter, bringing the global installed base to 342 units.
Gross margin fell to 42.8% from 50.3% a year ago on account of higher cost of sales (up 40% year over year). Operating expenses more than doubled year over year to roughly $57.5 million.
Financial Condition
Accuray ended fiscal 2011 with cash, cash equivalents and short-term investments of roughly $95.9 million, down 34% year over year, with no debt.
Guidance
Factoring in the impact of TomoTherapy acquisition, Accuray has forecast sales in the range of $400 million to $415 million for fiscal 2012. For first-quarter fiscal 2012, the company expects revenues between $80 million and $85 million. The current Zacks Consensus Estimates for the first quarter and fiscal 2012 are $80 million and $382 million, respectively.
Accuray is a global leader in the field of radiosurgery and provides a non-surgical treatment option for cancer patients. In the radiation oncology market, the company competes head-to-head with Varian Medical (VAR). Accuray 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.
Accuray expects the acquisition to be accretive to its earnings in fiscal 2012, and opportunities for cost synergies through increased operating efficiencies, complementary patient base and overhead reductions. We currently have a Neutral rating on Accuray, backed by a Zacks #3 Rank (Hold).
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