Leading radiosurgery systems maker Accuray Incorporated‘s (ARAY) second-quarter fiscal 2012 adjusted (excluding one-time items such as acquisition-related charges and employee severance and retention costs) loss per share of 10 cents was lower than the Zacks Consensus Estimate of a loss of 19 cents.
On a reported basis, the California-based company posted a net loss of $10.4 million or 15 cents a share in the quarter versus a profit of $4.1 million or 7 cents a year ago.
Accuray closed its acquisition of Wisconsin-based radiation system maker TomoTherapy in June 2011. The results for the second quarter reflect the integration of both the entities.
Consolidated sales for the quarter were $106.4 million, topping the Zacks Consensus Estimate of $101 million. Sales catapulted roughly 96% when compared with the year-ago stand-alone sales (of $54.2 million) of Accuray.
The solid revenues underscore the contributions of the TomoTherapy acquisition. Accuray continues to expand the global installation base for both TomoTherapy and CyberKnife therapy systems. Revenues from products and services were $63.8 million and $42.1 million, respectively, in the quarter.
Revenues, after adjusting deferred product and service revenues related to TomoTherapy, were $102.9 million in the second quarter.
Orders and Margins
Accuray installed 23 new CyberKnife and TomoTherapy systems during the second quarter, taking the aggregate global installed base to 616 units. The company added $70.3 million of new system orders in the quarter, a sharp increase from $39.2 million in the previous quarter, leading to a total system backlog of $276.8 million.
Consolidated gross margin (as reported) for the quarter was 37.8% while adjusted gross margin came in at 39.6%. Combined product and services gross margins were 48.6% and 21.2%, respectively.
Financial Condition
Accuray ended the quarter with cash and cash equivalents of roughly $148.5 million, up 6% sequentially, with long-term debt of $77.5 million (a modest sequential increase).
Guidance
Accuray has raised its sales (on a reported basis) target for fiscal 2012 to a range of $411 million to $426 million from its earlier forecast of $409 million to $424 million. The company has, however, retained its adjusted revenue forecast for the year, which is still expected in the range of $400 million to $415 million. The current Zacks Consensus Estimate for fiscal 2012 is $413 million.
Accuray is a global leader in the field of radiosurgery and provides a non-surgical treatment option for patients diagnosed with cancer. More than 200,000 people have been treated with the company’s technology globally.
Accuray continues to enjoy healthy demand for CyberKnife radiosurgery system as evidenced by sustained growth in the number of patients receiving treatment with the device. Moreover, the acquisition of rival TomoTherapy has bolstered the company’s foothold in the radiation oncology space.
However, Accuray remains susceptible to reimbursement uncertainties and faces stiff challenges from competitive product offerings of Varian Medical (VAR). We currently have a Neutral recommendation on Accuray. The stock currently retains a short-term Zacks #2 Rank (Buy).
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