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Accuray (ARAY) Incurs Wider Loss in Q1, Misses on Revenue
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Accuray Inc. (ARAY - Free Report) reported a loss of 12 cents per share in the first quarter of fiscal 2017, wider than the Zacks Consensus Estimate of a loss of 10 cents. However the figure was in line with the year-ago reported loss.
Coming to revenues, the company registered an approximately 3.5% year-over-year decline in total revenues to $86.5 million, lower than the estimated $89 million.
Quarter Details
The downside in revenues was majorly because of declining product revenues that totaled $35.6 million compared with $40.0 million in the prior-year quarter. However, service revenues increased 3% year over year to $50.9 million.
Meanwhile, gross orders decreased 22.5% year over year to $50.3 million. Net orders totaled $37.1 million, down 17% on a year-over-year basis. Per management, the year-ago fiscal first-quarter orders included a huge number of orders for the MLC-equipped CyberKnife Systems and the 5-unit multi-system in the United States. Notably, the foreign exchange adjustments positively impacted net orders by $1 million.
Total gross margin contracted 160 basis points (bps) on a year-over-year basis to 36.2%. While product gross margins in the quarter declined 800 bps owing to the lower overall sales unit volume, service gross margins expanded 340 bps from the year-ago quarter to 37.5% courtesy of cost efficiencies from a larger installed base and deep focus on improved power consumption.
As a percentage of revenues, research and development and general & administrative expenses decreased 180 bps and 190 bps, respectively. However, selling & marketing expenses, as a percentage of revenues, soared a notable 160 bps.
The company ended the first quarter with a backlog of $407.5 million, up 7% on a year-over-year basis.
Balance Sheet
Accuray had $124.4 million of cash and investments as of Sep 30, 2016. Cash used in operations totaled $6.4 million in the quarter.
Guidance
Accuray reaffirmed the guidance provided in Aug 2016. The company projects full-year revenues in the band of $410.0 million to $420.0 million, reflecting growth of approximately 3% to 5% on a year-over-year basis, driven by continued penetration and market share gains by the TomoTherapy system. Additionally, solid momentum in CyberKnife system sales is expected to drive growth in the forthcoming quarters.
Adjusted EBITDA is anticipated in the range of $32 million to $38 million, representing year-over-year growth between 30% and 55%. Operating expenses are now projected at around $164.0 million. Backlog and gross orders are forecast to grow around 5% in fiscal 2017.
Intuitive Surgical has a long-term expected earnings growth rate of approximately 11.35%. The stock represents an impressive one-year return of roughly 33.3%.
AngioDynamics has a long-term expected earnings growth rate of 15.00%. The company posted a solid one-year return of almost 26.1%.
Glaukos Corporation recorded a stellar one-year return of almost 77.8%. Notably, the company posted positive surprises in the past four quarters, the average being 110.93%.
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Accuray (ARAY) Incurs Wider Loss in Q1, Misses on Revenue
Accuray Inc. (ARAY - Free Report) reported a loss of 12 cents per share in the first quarter of fiscal 2017, wider than the Zacks Consensus Estimate of a loss of 10 cents. However the figure was in line with the year-ago reported loss.
Coming to revenues, the company registered an approximately 3.5% year-over-year decline in total revenues to $86.5 million, lower than the estimated $89 million.
Quarter Details
The downside in revenues was majorly because of declining product revenues that totaled $35.6 million compared with $40.0 million in the prior-year quarter. However, service revenues increased 3% year over year to $50.9 million.
Meanwhile, gross orders decreased 22.5% year over year to $50.3 million. Net orders totaled $37.1 million, down 17% on a year-over-year basis. Per management, the year-ago fiscal first-quarter orders included a huge number of orders for the MLC-equipped CyberKnife Systems and the 5-unit multi-system in the United States. Notably, the foreign exchange adjustments positively impacted net orders by $1 million.
Total gross margin contracted 160 basis points (bps) on a year-over-year basis to 36.2%. While product gross margins in the quarter declined 800 bps owing to the lower overall sales unit volume, service gross margins expanded 340 bps from the year-ago quarter to 37.5% courtesy of cost efficiencies from a larger installed base and deep focus on improved power consumption.
As a percentage of revenues, research and development and general & administrative expenses decreased 180 bps and 190 bps, respectively. However, selling & marketing expenses, as a percentage of revenues, soared a notable 160 bps.
The company ended the first quarter with a backlog of $407.5 million, up 7% on a year-over-year basis.
Balance Sheet
Accuray had $124.4 million of cash and investments as of Sep 30, 2016. Cash used in operations totaled $6.4 million in the quarter.
Guidance
Accuray reaffirmed the guidance provided in Aug 2016. The company projects full-year revenues in the band of $410.0 million to $420.0 million, reflecting growth of approximately 3% to 5% on a year-over-year basis, driven by continued penetration and market share gains by the TomoTherapy system. Additionally, solid momentum in CyberKnife system sales is expected to drive growth in the forthcoming quarters.
Adjusted EBITDA is anticipated in the range of $32 million to $38 million, representing year-over-year growth between 30% and 55%. Operating expenses are now projected at around $164.0 million. Backlog and gross orders are forecast to grow around 5% in fiscal 2017.
ACCURAY INC Price, Consensus and EPS Surprise
ACCURAY INC Price, Consensus and EPS Surprise | ACCURAY INC Quote
Zacks Rank & Key Picks
Currently, Accuray carries a Zacks Rank #2 (Buy).
Some other favorably ranked stocks in the broader medical sector are AngioDynamics Inc. (ANGO - Free Report) and Glaukos Corporation (GKOS - Free Report) with a Zacks Rank #1 (Strong Buy), and Intuitive Surgical Inc. (ISRG - Free Report) with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has a long-term expected earnings growth rate of approximately 11.35%. The stock represents an impressive one-year return of roughly 33.3%.
AngioDynamics has a long-term expected earnings growth rate of 15.00%. The company posted a solid one-year return of almost 26.1%.
Glaukos Corporation recorded a stellar one-year return of almost 77.8%. Notably, the company posted positive surprises in the past four quarters, the average being 110.93%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>