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Accuray(ARAY) - 2025 Q3 - Earnings Call Transcript
2025-04-30 20:30
Financial Data and Key Metrics Changes - Revenue for Q3 FY 2025 was $113 million, up 12% year-over-year and up 14% on a constant currency basis [16] - Adjusted EBITDA for the quarter was $6 million, compared to $1.1 million in the prior year, driven by higher volume, pricing, and operational improvements [8][19] - Operating income for the quarter was $1 million, compared to an operating loss of $4.6 million from the prior year [19] Business Line Data and Key Metrics Changes - Product revenue for Q3 was $57 million, up 16% year-over-year, reflecting a 23% increase in unit volume [17] - Service revenue for the quarter was $56 million, up 9% year-over-year [17] - The service business represented approximately 49% of total revenue and 59% of gross margin for the quarter [8] Market Data and Key Metrics Changes - Book to bill ratio was over 1.2, indicating healthy customer demand across both developed and emerging markets [9] - Approximately 35% of order growth was driven by the replacement of aged equipment [9] - The company reported a backlog of approximately $452 million, with zero order cancellations in the quarter [18] Company Strategy and Development Direction - The company aims to be the most reliable global partner in radiation therapy treatment technology, focusing on operational efficiency and customer partnerships [6][7] - Investments in ERP and talent are expected to enhance adaptability and capabilities in a rapidly changing global market [7] - The service business is anticipated to be a growth engine and primary catalyst for expanding margins [10] Management's Comments on Operating Environment and Future Outlook - Management noted lower visibility on near-term growth in revenues and earnings due to global trade circumstances [5] - Despite challenges, management expressed confidence in emerging stronger and more resilient from the current environment [6] - The company expects a potential negative impact of $10 million to $15 million in Q4 revenue due to tariffs, primarily affecting product sales in China [12][21] Other Important Information - The company is exploring various mitigation actions to offset tariff impacts, including establishing a foreign trade zone and developing secondary domestic sources [11] - Total cash and cash equivalents amounted to $79 million, up from $64 million at the end of the last quarter [20] Q&A Session Summary Question: Impact of deferred China adjusted EBITDA - Management confirmed that product margins were affected by higher margin deferral on China, with product margins at 22.7% for the quarter [26][27] Question: Potential impact in markets like India and South America - Management indicated that while the China impact is significant, they see strength in other regions, including India and non-China APAC markets [28][29] Question: Scenarios regarding tariff exemptions for medical products in China - Management is working closely with their China JV to seek a tariff exemption but noted uncertainty regarding the timeline and probability of success [31][34] Question: Future activity in China and potential impacts - Management stated that they are conducting internal scenario planning and will provide more clarity in future calls [38] Question: Focus on emerging markets - Management confirmed a strategic focus on both developed and emerging markets, leveraging opportunities in regions like the UK and non-China APAC [39][41]
Here's Why You Should Hold Accuray Stock in Your Portfolio for Now
ZACKSยท 2025-03-05 14:25
Core Viewpoint - Accuray Incorporated (ARAY) is positioned for growth due to strong demand for its products, particularly in the Radiosurgery Market, despite facing reimbursement uncertainties and foreign exchange challenges [1][11]. Financial Performance - Accuray has experienced a 26.3% decline in stock value over the past year, compared to a 1.3% decline in the industry and a 16.2% growth in the S&P 500 [2]. - The company has a market capitalization of $197.4 million and predicts a 106.3% growth for fiscal 2025, with a price-to-sales (P/S) ratio of 0.4X, significantly lower than the industry's 2.7X [2]. Growth Drivers - The CyberKnife System has shown strong performance, with revenues growing over 50% year-over-year, driven by advanced capabilities and higher adoption rates, particularly in China and Japan [4][9]. - Product revenues increased by 19% year-over-year in the second quarter of fiscal 2025, supported by demand for CyberKnife, TomoTherapy, and the new Helix systems [6][8]. - China delivered over 50% year-over-year revenue growth, gaining 10 points of market share, aided by the rapid adoption of the Tomo C System and strategic partnerships [9][10]. Market Expansion - Recent regulatory approvals in China for the CyberKnife S7 system have expanded its market reach in the premium segment, where precision treatments are in high demand [5]. - The Helix platform secured 12 orders across emerging markets, indicating sustained order momentum and positioning Accuray for continued growth in China, Japan, and APAC [8]. Challenges - The weak Japanese yen has negatively impacted Accuray's service revenue, making contracts more expensive for local customers and potentially affecting contract retention [11][12]. - Reimbursement uncertainties from public and private payors for procedures using CyberKnife and TomoTherapy platforms could influence market acceptance and product commercialization [13][14]. Estimate Trends - The Zacks Consensus Estimate for earnings has remained stable at 1 cent per share for fiscal 2025, with third-quarter fiscal 2025 revenue estimates at $102.2 million, reflecting a 1% improvement from the previous year [15].