Leading radiosurgery systems maker Accuray Incorporated (ARAY) reported first-quarter fiscal 2011 (ended September 30) loss per share of 8 cents, higher than the Zacks Consensus Estimate of a loss of 7 cents and the year-ago loss of 6 cents. Net loss climbed 39% year over year to $4.6 million on account of lower sales due to seasonal factors.
Revenues & Orders
Revenues slipped 24.7% year over year to $38.1 million, missing the Zacks Consensus Estimate of $43 million. Products and services revenues dipped 36.5% and 9.8% year over year, respectively, to roughly $19.3 million and $17.7 million.
California-based Accuray installed 9 new CyberKnife robotic radiosurgery systems in the first quarter versus 4 systems a year-ago, taking the aggregate global installed base to 216 units. Moreover, the company booked 7 orders (worth $33.8 million) for CyberKnife compared to 9 orders in the prior-year quarter. Total order backlog at the end of the quarter was $381 million, up 31% year over year. This includes roughly $136 million related to CyberKnife contracts.
Gross margin improved to 47.9% from 42.7% a year-ago on the back of lower cost of sales and higher systems and services gross margins. Operating expenses declined 3.5% year over year to $24.4 million, supported by the company’s prudent cost management initiatives.
Balance Sheet
Accuray ended the quarter with cash, cash equivalents and short-term investments of roughly $140.9 million, down 7.7% year over year. It remains a zero debt company.
Outlook
Accuray has backed its outlook for fiscal 2011. The company still expects total revenues between $210 million and $225 million. The current Zacks Consensus Estimate is $225 million.
The guidance reflects lower deferred revenues from the CyberKnife systems sold under the Platinum multi-year service plan (discontinued in October 2005) compared to fiscal 2010. Accuray expects to book revenues of $5 million in fiscal 2011 (versus $29 million registered in fiscal 2010) under the Platinum service agreement, which will conclude all deferred revenues recognized under this contract. This sizable sales deficit will be a drag on the top line in fiscal 2011.
Gross margin forecast for fiscal 2011 remains in the range of 48% to 51%. Accuray plans to lift spending on R&D and sales and marketing in fiscal 2011 to expand the market for CyberKnife systems and develop next-generation technologies.
Accuray’s CyberKnife system boasts of a technology that differentiates it from traditional treatments. The CyberKnife system, a non-invasive alternative to traditional surgery, is the first and only commercially available intelligent robotic radiosurgery system designed to treat solid tumors anywhere in the body.
Accuray recently achieved an important milestone as patients treated with its CyberKnife system reached the 100,000 mark. The company competes head-to-head with Varian Medical (VAR) and TomoTherapy (TOMO) in the radiation oncology market. We are currently Neutral on the stock.
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