Accuray Incorporated (ARAY - Free Report) reported first-quarter fiscal 2019 adjusted loss of 7 cents per share, wider than the Zacks Consensus Estimate of a loss of 6 cents. Notably, the company had reported a loss of 7 cents in the year-ago quarter.
The company posted net revenues worth $95.83 million, marginally beating the Zacks Consensus Estimate of $95 million. On a year-over-year basis, revenues climbed 5.4% in the quarter.
The stock carries a Zacks Rank #3 (Hold).
Product Revenues: Product revenues increased 6.7% year over year to $41.5 million in the reported quarter.
Service Revenues: Service revenues totaled $54.3 million, which rose 4.4% from the year-ago quarter’s tally. The upside can be attributed to Accuray's recent software releases.
Gross Order Update: Gross orders in the first quarter of fiscal 2019 totaled $61.4 million, up 10.4% on a year-over-year basis.
Per management, gross orders for Accuray’s flagship Radixact System more than doubled on a year-over-year basis in the fiscal first quarter. Accuray registered approximately 25 system orders.
Radixact represented approximately 85% of TomoTherapy platform orders.
Management has implemented a new initiative to reduce operating costs. This is expected to have a non-recurring charge of $1.5 million to $2 million in the second quarter of fiscal 2019.
For investors’ notice, the company expects annualized cost savings of approximately $15 million compared with fiscal 2018.
The benefit of the initiative is projected to be realized by the fourth quarter of fiscal 2019.
Gross profit in the fiscal first quarter totaled $37.9 million, down 0.6% on a year-over-year basis. Gross margin in the quarter was 39.5% of net revenues, down 240 basis points (bps).
Research and development expenses inched down 1.4% year over year to $13.9 million. Selling and marketing expenses fell 11.7% year over year to $13 million. General and administrative expenses rallied 38.3% year over year to $15.6 million.
First quarter operating loss was $4.7 million compared with a loss of $2.1 million in the year-ago quarter.
Accuray reiterated fiscal 2019 revenue guidance and updated EBITDA guidance.
For fiscal 2019, product revenue growth is expected between 4-8% and service revenue growth is projected at approximately 2%, resulting in total revenues between $415 million and $425 million. The Zacks Consensus Estimate is pegged at $413.3 million, below the guidance.
Adjusted EBITDA is projected between $23 million to $29 million, higher than the previous range of $21 million to $27 million. This represents growth of 35-70% year over year, significantly higher than the previously estimated growth rate of 23-58%.
Accuray exited the fiscal fourth quarter on a tepid note. Loss per share was wider than estimates and revenues surpassed the consensus mark.
The company continues to gain from the flagship Radixact platform, which garnered sizeable orders and drove the company’s TomoTherapy platform recently. A regulatory approval for Radixact X9 system in India buoys optimism. Gross orders rose in the United States and EMEA. Accuray’s service revenues also improved year over year. Significant expansion in gross margin is a positive.
However, decline in orders in the APAC region owing to China issues, long sales and implementation cycle of the CyberKnife and TomoTherapy systems are headwinds. Furthermore, unfavorable product mix, sluggish macroeconomic conditions and pricing headwinds are concerns.
Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are, Stryker Corporation (SYK - Free Report) , Intuitive Surgical, Inc (ISRG - Free Report) and Merit Medical Systems, Inc (MMSI - Free Report) .
All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intuitive Surgical reported adjusted earnings of $2.83 per share in the third quarter of 2018, which beat the Zacks Consensus Estimate of $2.65. Adjusted earnings improved 1.8% year over year.
Stryker delivered third-quarter 2018 adjusted earnings per share (EPS) of $1.69, which beat the Zacks Consensus Estimate of $1.68. Earnings improved 11.2% year over year, within the company’s guidance.
Merit Medical reported third-quarter 2018 adjusted EPS of 47 cents, beating the Zacks Consensus Estimate of 42 cents. Adjusted earnings improved 46.9% from the year-ago quarter’s tally.
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