ViewRay, Inc. (VRAY) Q3 2020 Earnings Call Transcript

ViewRay, Inc. (VRAY)
Q3 2020 Earnings Call
Nov 05, 2020, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to ViewRay's third-quarter 2020 financial results conference call. [Operator instructions] Please be advised that today's conference may be recorded. [Operator instructions] I would now like to hand the conference over to your speaker, Ms. Michaella Gallina, head of investor relations.

Please go ahead.

Michaella Gallina -- Head of Investor Relations

Thank you, operator. Good afternoon, everyone, and welcome to ViewRay's third-quarter 2020 financial results conference call. Joining me today are Scott Drake, our president and chief executive officer; and Zach Stassen, our chief financial officer. Earlier today, ViewRay issued a press release and presentation for today's call.

The presentation can be viewed live on our webcast or downloaded from the financial events and webinars portion of our site at www.investors.viewray.com. Today's call is being broadcast and webcast live, and a replay will be available on our website for 14 days. Before we begin, I would like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statement due to numerous factors.

For a description of these risks and uncertainties, please see ViewRay's annual report on Form 10-K for the fiscal year ended December 31, 2019, and its quarterly reports on Form 10-Q as updated periodically within the company's other SEC filings. Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, November 5, 2020. ViewRay undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I will now turn the call over to Scott.

Scott Drake -- President and Chief Executive Officer

Thank you, Michaella. Good afternoon, everyone, and welcome to our Q3 call. Today, we will discuss our third-quarter results. We will show how MRIdian's clinical data unlocks the strategic and economic value of the system.

We'll provide color on our path to treating more patients. Zach will cover our financial results, and then we look forward to answering your questions. If you're not on the webcast, I'll be referring to slides from the presentation on our investor relations site. Turning to Slide 3.

Our mission is to treat and prove what others can't. We have now surpassed more than 11,000 patients treated and have more than 2,800 patients with clinically reported outcomes. This growing body of clinical data is critical to our efforts to change and improve the paradigm of care. Let's turn to our Q3 results on Slide 4.

We received four MRIdian orders in the quarter highlighted by the first system we will install in the Veterans Administration. We continue to be pleased with the level of customer engagement despite the challenges posed by the ongoing pandemic. Turning to revenue. We recognized approximately $10 million, including one revenue unit.

As we stand today, installations are largely moving forward albeit at differing speeds from market to market. We currently have free movement in the U.S. and have been able to complete installs in reasonable time frames. However, work in Asia is delayed and in some instances significantly so.

Time lines to achieve required visas have been unpredictable. Europe is somewhere in between as there are intercountry travel challenges and time lines remain difficult to predict. We continue to closely monitor the impact of COVID-19 to our business worldwide. Regarding cash, we used approximately $16 million in the quarter.

The actions we have taken this year, augmented by the financial discipline and rigor we drive, have yielded progress on reducing cash burn. A few receivables moved into Q4, which elevated Q3 utilization. These payments are now in hand. We also amended our $56 million term loan with SVB effective October 30, which will defer amortization payments until November of 2022.

Zach will share more detail later in the call. Before we dive into our value propositions, let's turn to Slide 5 to first discuss the journey we are on. Customers are clear. They want what patients need, clinical data that allows ablative dose, fiber fewer fractions, low to no Grade 3 toxicity and no fiducials.

They want MRIdian SMART, stereotactic MR-guided adaptive radiotherapy, delivered consistently and reliably. We are building upon our pancreatic cancer beachhead in other tough-to-treat areas. We are also proving value in ubiquitous cancers like breast and prostate. This clinical value unlocks strategic and economic value.

From this foundation of clinical data, we will focus on driving treatment efficiency to enhance value for our customers and the patients they treat. Now on to Slide 6. MRIdian's value propositions are resonating in the marketplace. Last quarter, we shared detail on our clinical goals and road map.

Everything begins with and flows from our clinical value. Let's start there. On Slide 7, another example of how our customers are treating and proving what others can't. This is the first known report of ablative radiation to an oligomet in mesenteric lymph nodes.

The patient was diagnosed with primary bladder cancer in 2015 and was initially treated with surgery. Two years later, he had a metastasis develop in the adrenal gland. Chemotherapy was administered, but another met was found in a nearby lymph node. He continued cycles of chemotherapy for two more years, but the cancer did not respond and the lymph node continued to enlarge.

After almost five years of various treatments, this patient was referred to Dr. Chuong, who treated 50 Gray in five fractions, or two to three times higher dose than would typically be prescribed using an X-ray-based system. The images show the online adaptive planning via MRIdian. Due to significant movement of organs between fractions, adaptation ensured dose to the tumor and not to healthy tissue.

Dr. Chuong wrote in his case report that MRIdian SMART was a positive experience for the patient since he was able to not only achieve tumor reduction despite progression on prior systemic therapies but also offer him hope that he could still continue effectively fighting his disease. This case would never be treated on any other machine. To the dose we treated.

Moving to Slide 8. Our customers are continuing to drive clinical data that are expanding the use of MRIdian SMART and opening the pathway for first-line therapy. At ASTRO last week, our customer shared a wealth of MRIdian clinical data. In pancreas alone, our customers presented three additional impressive studies.

Cornell demonstrated excellent one-year survival at 87.5%. MCI reported on a cohort of 35 patients with excellent one-year local control also about 88%. Moffitt reported strong one-year survival and local control of approximately 92%. As you look out two years, retrospective trials demonstrate nearly 50% survival, which is very promising, and an improvement upon historically reported two-year survival rates of approximately mid-teens to low 20s.

Turning to Slide 9. Other recent data continue to point to safe and effective treatment via MRIdian SMART across tough-to-treat and ubiquitous cancers. In renal cancer, AUMC reported zero Grade 3 toxicity and 91% survival at one year in cancer patients that had large primary tumors and no other treatment options, the toughest of the tough once again treatable because of MRIdian. In patients with oligomets, MCI presented a treatment series with zero Grade 3 toxicity, again demonstrating the ability to safely deliver ablative dose in abdominal tumors while sparing organs at risk.

And in prostate cancer, Acibadem demonstrated low toxicity with no fiducials required, yet another data set reaffirming what we've seen from other customers with no fiducials in prostate cancer. Furthermore, all the trials we previously shared on our clinical road map are now enrolling patients. On Slide 10, you'll see the progression of how customers are pulling us toward potentially new heights. To illustrate, I'll use the progression on how multiple customers are treating pancreatic cancer.

First, we made the leap from X-ray-guided linacs, where customers were faced with the trade-off of low doses and high toxicity to MRIdian SMART, ablative dose, tight margins, fiber-fewer fractions with low to no Grade 3 toxicity. This yielded great clinical results yet physicians recognize that disease may reoccur outside of target volumes. Physician experience, now years in the making, is giving them the confidence in MRIdian's ability to protect healthy tissue and organs at risk. This confidence is leading them to rethink the treatment of the disease versus just the tumor.

Today, customers are evolving treatment volumes to include the visible tumor and invisible disease, in this instance, lymph nodes and nearby blood vessels that contain microscopic tumor cells. We are seeing early positive signals, and we hope this evolution of MRIdian SMART yields even better clinical outcomes for patients. Two years ago, we were pushing our customers to leverage the full capability of MRIdian. Today, our customers are pulling us and teaching us what MRIdian therapy can be.

I'll illustrate what treating the entire disease versus just the tumor looks like in practice on Slide 11. For X-ray based SBRT, placement of fiducial markers is required as the target and surrounding organs at risk are not visible. To be clear, the only thing visible on conventional linacs would be the fiducial markers. MRIdian SMART dose delivery takes advantage of the ability to see both the target and organs at risk, so these vital structures are protected from high, ablative and potentially damaging doses.

Note that the prescribed and delivered dose is carved around the bowel loops. This protection results not only in the reduction and, in some instances, elimination of Grade 3 toxicity but also allows escalation of the dose to truly ablative levels. The goal here is moving from just treating the tumor for local control to comprehensively treating the area at risk for regional tumor reoccurrence with the expanded goal of improving overall survival. Our customers are pulling us toward this method in other cancers.

Now let's move to our strategic and economic value propositions. On Slide 13, let's begin with our customers' macro goal in mind. They to treat patients with the best possible care, attract new patients into their health system and retain patients already in network. Essentially, they're seeking net new patients that they can treat in a clinically and financially responsible manner.

MRIdian's clinical value drives strategic and economic value for customers. MRIdian helps deliver these goals by: First, adding new patients that they couldn't or wouldn't treat prior to MRIdian. Second, by attracting new patients from outside their catchment area. And third, by increasing in-network referrals.

Lastly, MRIdian drives program efficiency by lowering the total treatment time per patient. Let's touch on each of these in more detail. First, customers are treating patients that they wouldn't or couldn't prior to MRIdian. Many of these cases have been highlighted in the webinar series our customers have hosted.

Second, on Slide 15, customers share how they are attracting and retaining patients with MRIdian. Many customers have added net new patients from outside the hospitals catchment area. For example, at Miami Cancer Institute, physicians estimate that 20% of their patients come from outside Miami. And GenesisCare Oxford reports that most of its patients travel long distances for MRIdian treatment.

MRIdian is also helping customers retain patients within their network. For example, Dr. Nagar at Cornell has seen approximately a four-fold increase in prostate cancer patients because of referrals to their MRIdian program. On Slide 16, let's translate these net new patients into economic value.

Dana-Farber/Brigham and Women's, for example, attracted 41 new patients in just their first year with MRIdian. Using conservative Medicare rates, this translates into about $850,000 of incremental ongoing revenue per year due to the impact of MRIdian. Over 10 years, this is about $8.5 million, which we believe more than justifies our price premium. To recap, MRIdian is helping differentiate cancer programs by adding new patients that wouldn't or couldn't be treated on other systems, by attracting new patients from outside their catchment areas and increasing in-network referrals.

Additionally, MRIdian can help drive program efficiency by lowering the total treatment time per patient. As a result, we have multiple customers that have bought a second MRIdian system and other current customers that are contemplating the same. On Slide 17, while the clinical, strategic and economic benefits to cancer programs are clear, the benefits to patients are also profound. These benefits include shorter courses of treatment, less disruption to their lives and more savings in their pocket.

Perhaps most importantly, MRIdian offers powerful clinical outcomes. In summary, on Slide 18, our journey begins with our mission to treat and prove what others can't. We have a beachhead in pancreas. We now have consistent and compelling data on over 200 patients developed by some of the top cancer centers in the world.

We're expanding to other tough-to-treat cancers such as oligomets, central and ultra-central lung, liver and more. We believe that the work our customers are doing is leading to a new paradigm of care, MRIdian SMART. We build on this work in tough-to-treat cancers and show benefit in more ubiquitous disease such as breast and prostate. With this growing body of compelling data, the name of the game becomes driving efficiency.

This journey of clinical data, changing the paradigm of care and driving efficiency is enabled by our ability to see, shape and strike as only MRIdian can. With that, I'll turn it over to Zach to discuss our financials.

Zach Stassen -- Chief Financial Officer

Thank you, Scott. For the fiscal quarter ended September 30, 2020, total revenue was $10.1 million, including one revenue unit, as compared to $20.9 million, including three revenue units, in the same period last year. Total gross profit was a loss of approximately $1.1 million compared to a profit of $0.6 million over the same period last year. The decrease was again attributable primarily to lower system revenue in 2020 versus prior year, which led to lower absorption of our installation infrastructure.

This decrease was partially offset by positive margin from our service business. Total operating expenses were $23.9 million as compared to $32.3 million for the same period last year. The decrease in operating expenses reflects the continued impact of the cash savings program we implemented earlier in the year, along with the impact of the headcount reduction at the end of Q2. Also contributing to the decrease are continued lower expenses as a result of COVID-related reduced activities.

Operating loss for the period was $25 million as compared to $31.7 million for the same period last year. Finally, net loss for the quarter was $28.1 million or $0.19 per share compared to $20.8 million or $0.21 per share for the same period last year. The fluctuation in our net income is partially impacted by the quarterly fair value calculations of warrants and the impact that volatility in our stock price has had on the value during the last year. Turning now to orders and backlog.

As Scott mentioned earlier, in the third quarter of 2020, we received four new orders for MRIdian systems totaling approximately $23.4 million compared to eight new orders totaling approximately $34.9 million in the same period last year. As of September 30th, 2020, our backlog stood at approximately $239 million as compared to approximately $231 million as of September 30th, 2019. Two systems were removed from backlog in Q3. We have not removed any orders from backlog due to COVID.

Regarding cash flow. We used approximately $16 million in the quarter. Net cash use was impacted by a few larger payments that shifted into the fourth quarter, some of which we have now collected. We finished the quarter with $164 million of cash on hand.

We are focused on driving fiscal discipline while prioritizing and investing in our clinical and innovation pipelines. Additionally, effective October 30th, we proactively amended our term loan with Silicon Valley Bank. As a result, we have deferred amortization to November of 2022 from its original start date of December of this year. This will result in the deferral of over $35 million of principal to the end of the new interest-only period.

Additionally, we expanded the facility from 56 to 58 million, extended the maturity from December 2023 to November 2025, lowered the interest rate and favorably adjusted several of the covenants. The specific changes, along with the amendment, are described in more detail in an 8-K, which we filed today. We appreciate Silicon Valley Bank's ongoing partnership in this transaction. With that, we will now open the line for questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Andrew D'Silva from B. Riley Securities. Your line is open.

Andrew D'Silva -- B. Riley Financial -- Analyst

Good afternoon. Thank you very much for taking my questions. So, just a couple of bookkeeping ones to start. Could you just let me know what was stock-based comp and capex was for the quarter? And then last year, there were roughly 3.2 million in onetime costs.

Anything like that took place this quarter?

Scott Drake -- President and Chief Executive Officer

No onetime costs this quarter and then stock-based comp -- yes, we'll follow up on a call. We can follow up with you on the specifics on the detail there.

Michaella Gallina -- Head of Investor Relations

Andy, on our depreciation and amortization, as you go through those calculations, I can give those to you now. In Q4, that was$1.4 million. Our cash used in operations was a use of 14.7 million, and our capex was$0.9 million in the quarter.

Andrew D'Silva -- B. Riley Financial -- Analyst

Great. And I've been doing a lot of inbound calls related to the APM. Obviously, it got moved around a little bit, put into the middle of next year. I don't see that as a big change from the long-term opportunity for you.

But what CMS did was essentially list 10,000 or so ZIP codes that would be impacted by the APM. And I was just curious if you had enough time to comb through everything just yet. And if so, maybe give us an understanding of what percent of your U.S. installed base is actually falling into the APM right now.

Scott Drake -- President and Chief Executive Officer

Yes. Andy, we've gone through that data. I don't know the percentage off the top of my head of U.S.-based customers, but we do have customers that are covered by the APM. I would agree with you.

I think the movement to July 1 really is not a very big deal. I think clarity is a big deal as it relates to the APM. And I would just remind everybody that we perform very well in the current reimbursement scheme. If you really think about the clinical strategic and economic value that we're delivering, you hear what our customers are saying, very solid performance in MRIdian centers even with COVID.

And then, you contemplate the future of the APM, I think two things are very likely to happen: one is the organic movement that is already under way toward SBRT will continue, quite possibly accelerate. Our customers say consistently that we're the ultimate SBRT machine. And the other thing that I believe will happen is competition for patients will increase. And again, when you hear what our customers say about the clinical value of the system, strategically how they're standing out with MRIdian, attracting net new patients that they wouldn't or couldn't treat otherwise, patients that are traveling to be treated on the system and how that translates economically, we feel like we're even better positioned under the APM.

Andrew D'Silva -- B. Riley Financial -- Analyst

Yes. It seemed like the physician-led webinar from ASTRO really kind of highlighted some of those points, which is interesting. What I'm kind of curious as how do you see things evolving once the APM is initiated. Looking at Florida as an example, it seems like you've been able to kind of build a niche based on proximity over there and more systems are kind of installed because effectively you have a base that's building over there.

Do you think that could be expedited by the APM in certain regions where one of your customers does fall within that APM-model ZIP code? And then customers around there would kind of be forced to or potential hospitals around there would be forced to look at alternative model equipment to be able to meet the profitability within the guidelines.

Scott Drake -- President and Chief Executive Officer

Yes. Andy, I think there's two dynamics that you're really pointing out there. One is the APM, and I think I covered there the drive toward SBRT, in our case, what we're calling MRIdian SMART, five or fewer fractions, ablative dose, no fiducials, low to no Grade 3 toxicity. I think that's its own dynamic.

And then on top of that, to your point, whether you're talking about the Florida market, the Mid-Atlantic, Northeast, Upper Midwest, I think the competitive dynamics of those markets are such that we're seeing an improvement in our commercial pipeline based upon those competitive dynamics in patients traveling for MRIdian therapy. So, I think both of those things bode well for us, and it's part of our commercial strategy as we go forward.

Andrew D'Silva -- B. Riley Financial -- Analyst

OK. A last question for me, I believe it was the first half of the second quarter, you noted that you didn't have any new orders in the back half of the second quarter. And now in the third quarter, you had four orders both times. Can you just maybe discuss capex spending and how the budgeting is going and maybe some of the transitions as the years evolve?

Scott Drake -- President and Chief Executive Officer

Yes. I'll answer the question as I think I understand it, Andy, but welcome you to sharpen the point. If the question is really around the commercial pipeline, I would tell you I feel very good about where we are. Our customers are incredibly clear, both current and prospective, in terms of what they want.

And what they want is really what patients need, which is clinical data. And I've hit the point on multiple occasions here, but they want an ablative dose, they want fiber fewer fractions, they want no fiducials, they want low to no Grade 3 toxicity. And that is very much what we are delivering, and I think that's really what's driving the commercial pipeline that we have. To your point on the pandemic, it's certainly not helpful to us as it is having an impact on capex budgets for our customers.

But we're seeing a way to kind of thread that needle a little bit. You see another four quarter order here. And we feel like, knock wood, if things continue to progress, we'll be able to continue to fight and compete even in the midst of the pandemic, but it certainly is a challenge for us.

Andrew D'Silva -- B. Riley Financial -- Analyst

All right, great. Well, congrats on improvements this year and best of luck closing out 2020.

Scott Drake -- President and Chief Executive Officer

Thanks, Andy.

Zach Stassen -- Chief Financial Officer

Yes. Andy, just want to close the loop. So, stock comp for the quarter was 5.8 million, just to complete the answer. Your line is open.

Operator

And our next question comes from Jason Bednar with Piper Sandler. Your line is open.

Jason Bednar -- Piper Sandler -- Analyst

Hey, good afternoon. Thanks for taking the questions here. I'll pick up actually on that kind of where we left off there, just on the hospital capex budget question, but maybe ask it a little bit differently. I mean you've got hospitals that maybe seem like they're in a little bit better state today than we were back in spring.

You had elective procedure volumes that have bounced back nicely. Capex spending is seeming like it's picking up at least in pockets of the budget. So, I mean, have you noticed any change in activity as you follow up on your book of leads? I mean not just the orders that we're seeing but as you see other -- some of the old leads progress through the pipeline and the funnel. I mean are you seeing that activity pick up? Or would you characterize most customers still taking a bit of a wait-and-see approach until we get to 2021 and maybe have a vaccine in hand?

Scott Drake -- President and Chief Executive Officer

Yes. Jason, I would say it is a bit of a mixed bag, to your point. We have customers that have moved forward with decent pacing in the midst of the pandemic. We have had others who have told us that they would like to purchase but they're going to delay that.

There are larger academic centers that are moving forward and for-profit centers that are moving forward. But again, that's offset a bit by other customers. I would say, qualitatively, I think there has been a bit of an improvement from where we were a quarter or two quarters ago, hard for me to quantify that. But I would say qualitatively, there has been improvement in that dialogue with the C-suite at our customers.

Jason Bednar -- Piper Sandler -- Analyst

OK. That's helpful color, Scott. I appreciate that. And I guess the one thing that's come up here in this call and also came out of your webinar last week, just the incremental patient volume data from several of your customers is really encouraging to hear and really gives you another factor to pitch to accounts to help maybe close on some of those sales leads.

But I just was really wondering if you could speak anecdotally to whether these factors are playing into the decisions of institutions, some of these orders that you've booked here the last couple of quarters. Are those having an impact? I mean, the clinical value has always been there. But as we're starting to get more data and evidence that's improving the economic argument, are we seeing that have an influence on the purchase decision?

Scott Drake -- President and Chief Executive Officer

Yes. I would say unequivocally, Jason, I give our commercial team a lot of credit. I think they are articulating our value proposition very clearly. Everything begins with and flows from our clinical value.

And then, you've heard in that webinar series, now I think, give or take, a dozen of them, customers talking about the strategic value treating patients they wouldn't or couldn't on any other system, patients traveling from outside of their catchment area, in-network referrals increasing. And then, you put on top of that, where we've been focusing not only our clinical pipeline but the innovation pipeline to drive more throughput with the MRIdian system that just amplifies the clinical, strategic and economic benefit that we represent to our customers. And I think you will see in the future -- and we have taken some customers under NDA into the future of our pipeline. The idea here is just to pour on efficiency, keep driving clinical data and drive more throughput in our systems.

And it's exactly why you see customers buying their second and, fingers crossed, third MRIdian system. And I think we're going to see more and more of that. And frankly, beyond the work that our commercial team is doing, I think our customers are having outstanding conversations with prospective customers. So, it feels like we're doing the right stuff here, and it feels like it's resonating in the market.

Jason Bednar -- Piper Sandler -- Analyst

OK. Excellent. I've got one more for you, and then I'll hop back in queue and let others ask some questions here. I mean, just -- I guess going back to some of those webinars and I think, Scott, you mentioned some of the efficiency improvements hearing -- again, just now hearing in the last response there.

I mean, just -- I hope you can unpack some of -- maybe in a bit more detail, some of what we could see from -- on the upgrade side that might be coming here over the next, whatever it is, a few quarters, a couple of years. It's indifferent on timing but just -- I think it was Dr. Mutic that talked about some imaging parameter selection upgrades and auto segmentation upgrades. Where are those on your road map? And again, anything you can speak to on the rollout plans, again, without getting too detailed on timing, I understand, for competitive reasons.

Scott Drake -- President and Chief Executive Officer

Yes. We're in the midst right now of rolling out improvements that we've made, both hardware and software, as it relates to eight frames a second and high-speed MLC. We are going to continue to go through all of our customers with those improvements, and we believe we'll have some pretty interesting improvements in 2021. And we have not spoken about those publicly yet, Jason, but I think you can count on the fact that we're going to continue to work on our software to provide better and better imaging and information, drawing more out of the MR signal.

And I think you'll see us continue to focus on driving down treatment times, which we've done a pretty good job of. In more simple treatments, we have customers that are sub-30 minutes and, in some instances, even in the 15-minute range for prostate, as an example. And we've got very complex full on adaptive treatments on pancreas sub-45 minutes with some customers. And we're just going to continue to drive that with both best practices and our innovation pipeline as we move forward.

Jason Bednar -- Piper Sandler -- Analyst

All right. Very helpful. Thanks so much.

Scott Drake -- President and Chief Executive Officer

Thank you.

Operator

Thank you. And our next question comes from the line of Suraj Kalia with Oppenheimer. Your line is open.

Suraj Kalia -- Oppenheimer and Company -- Analyst

Good morning, everyone. Scott, can you hear me all right?

Scott Drake -- President and Chief Executive Officer

We a can, Suraj. Good afternoon.

Suraj Kalia -- Oppenheimer and Company -- Analyst

Perfect. So, Scott, many, many calls going on so bear with me in case any question is redundant. Scott, what are the -- what has your interaction been with Siemens more recently? And how do you expect it moving forward. Is it pretty normal as before? Or has the trend line somewhat changed?

Scott Drake -- President and Chief Executive Officer

Yes. Suraj, I would say that our relationship with Siemens has been long-standing and very positive, and I would say that continues. We've taken the opportunity to augment and even improve our relationship with Siemens through the process of the pending Varian acquisition. Contractually and relationship-wise, I would say things are improving.

So, we feel very good about that. And I think I would characterize it as an incremental improvement because it's always been very good but an improvement nonetheless.

Suraj Kalia -- Oppenheimer and Company -- Analyst

Got it. Scott, status of PO2 rev rec or average install times? Obviously, there is a certain residual impact of COVID. We all appreciate that. But just sort of give an overarching perspective of how do you see it shaping up over the next, let's say, two, three quarters now.

Scott Drake -- President and Chief Executive Officer

Yes. Suraj, I would say one of the most frustrating parts of the pandemic is the impact on us being able to turn backlog into revenue. It's frustrating for our customers. It's frustrating for us.

Within the context of that, I would compliment our team. They are doing incredible work. And they're undergoing significant sacrifice, in some instances, enduring quarantine on the front and back end of installations and being away from home months at a time. But that said, it has definitely made things very difficult for us in Asia.

I would say, difficult for us in Europe. And in the U.S., we're still able to do installations in relatively rapid time frames, think in terms of 45 days or so. But it has been a challenge for us in various markets. And I will tell you the installation that we have going on right now in Paris with the spike in COVID cases is beginning to get more difficult.

So, I imagine we're in the midst of a difficult time here with spikes in various countries. My fingers are crossed for a vaccine or set of vaccines that work, so we can really convert that backlog into revenue. And like I said, it's one of the most frustrating parts of the pandemic from my perspective.

Suraj Kalia -- Oppenheimer and Company -- Analyst

Got it. And Scott, finally, some of the software enhancements that Jim has been talking about, you have been talking about, like eight frames per second and additional optimization of the signal-to-noise ratio. I know this might sound dumb, but is this going to be a standard feature in all cars? Or is this going to be structured as leather seating on one and blind spot control on another. Is it going to be a menu option? Or is it going to be a standard feature as and when these come online?

Scott Drake -- President and Chief Executive Officer

Yes. Suraj, great question, not a stupid question at all from my perspective. And I think there's going to be a little bit of a menu approach that we're going to be offering to customers. We do intend to extract value out of our innovation pipeline.

So, it's not going to necessarily be standard. There are going to be enhancements that we want to put into every system out there. But I think you can expect in the future that customers will have to pay for certain parts of the innovation pipeline as we go forward.

Suraj Kalia -- Oppenheimer and Company -- Analyst

Thanks for taking my question.

Scott Drake -- President and Chief Executive Officer

Thank you, Suraj.

Operator

Thank you. And our next question comes from David Lewis with Morgan Stanley. Your line is open.

Marissa Bych -- Morgan Stanley -- Analyst

Hi. This is Marissa Bych on for David this afternoon. We have touched on this before, but we're seeing increased interest for some capital-exposed businesses and newer and more disruptive sales models like leasing or usage-based agreements. Just curious, your recent thoughts on how the pandemic may impact your selling model going forward?

Scott Drake -- President and Chief Executive Officer

Yes. Marissa, thanks for the question. I would say that having some of those alternative acquisition options has been very helpful during the pandemic. We've talked about some of those on prior calls, I know.

But just to give you a sense, we have conversations with customers about a -- on one end of the spectrum, a purely subscription model. On the other end, a full ASP payment. And then, in between, where we have a lower payment upfront and some kind of sharing of benefit on the back end. And so, these are the kinds of things that are really moving us forward during the pandemic, to your point, and it's very helpful having those various alternatives that we talk to our customers about.

Marissa Bych -- Morgan Stanley -- Analyst

Right. OK, and I can understand it's very difficult for anyone to predict the capex environment really, really accurately and understand what's going on in full. But it sounds like you feel relatively strongly about your position with certain hospitals looking forward into next year. So, would you say that you believe you're sitting potentially higher in the hospital spending priority structure versus where you sat pre-COVID or just when you think about hospitals? And speaking with your customers about their top priorities on spending into next year, how do you think that looks, if you do have any sort of clarity or color around that?

Scott Drake -- President and Chief Executive Officer

Yes, of course. I would say that I think it's becoming better and better understood the value that the MRIdian system represents. And one of the consequences of the pandemic that forced us to get creative about sharing our clinical, strategic and economic value were these webinars that have gone on. And I think as a consequence of that, frankly, more people know about the value of the system today than they did prior to the pandemic.

So, I would say our reach has expanded. And quantitatively and qualitatively, our commercial pipeline has improved. So I feel better about things today ironically than I did at the beginning of the pandemic. But that said, I don't want to be Pollyanna.

The impact to hospitals to their P&L, to their capex budgets has certainly created a challenge for us. But I believe as that dissipates, we're going to have a better queue of customers lined up to hopefully make purchases going forward.

Operator

Thank you. [Operator instructions] The next question comes from Anthony Petrone with Jefferies. Your line is open.

Anthony Petrone -- Jefferies -- Analyst

Hi and thank you. Hope everyone is doing well. Thanks for taking my questions. We're hopping between calls as well, so I'll second Suraj.

But maybe, Scott, if you could begin a little bit with just in terms of the second wave of COVID, I know you touched on some of the impacts that are out there. But outside of installation cycle specifically, has the dialogue shifted at all in terms of capital commitments? It sounds like a lot of hospitals are more prepared this time. They don't need to make the investments in mechanical events, by and large. It seems like the workflow is a little bit better and capacity constraints are not as high as earlier in the year.

So when you factor all of that even though we are going into a second wave, how does the body language sound from the capital acquisition side from hospitals? And then I have a couple of follow-ups.

Scott Drake -- President and Chief Executive Officer

Yes. Anthony, thanks for the question and good wishes. Back at you on that front. I do think things have improved.

I think we are learning to deal with the pandemic better. I think our customers continue to do elective procedures at a pretty good clip, as you well know, covering other companies. Even as the second wave is happening, ICUs are filling up in some instances, yet those elective procedures are taking place. And that wasn't the case earlier on in the pandemic.

So, I do think qualitatively, the financial condition of our customers is more solid now than it was previously because of those elective procedures taking place. So, I do think we're in a slightly better place there. And hopefully, that's responsive to your question.

Anthony Petrone -- Jefferies -- Analyst

No, absolutely. And then, maybe a couple of follow-ups. There's more data that we have available, certainly the hospitals, on pancreas and prostate. I'm just wondering as this -- as the data has been out there, has that actually started more in discussions with hospitals and looking at MRIdian? So that would be the first one.

And then, just two quick follow-ups would be any follow-ups or updates as it relates to the Elekta agreement signed a few years ago? I know that was more arm's length. And also anything that you can provide as it relates to the update on the Medtronic agreement?

Scott Drake -- President and Chief Executive Officer

Yes. Anthony, going back to your question about the clinical data, I would tell you one of the things I feel best about is the steady flow of clinical data from our customers. And time and again, you're looking at ablative dose, fiber fewer fractions, low to no Grade 3 toxicity, no fiducials. This is exactly what our customers are looking for, and there's more and more and more of that data coming out.

And then, we're able to add to that by way of the webinar series or conversations between current and prospective customers, that clinical knowledge connected to the strategic value that that represents to our customers, treating net new patients that they couldn't or wouldn't treat otherwise, patients traveling for MRIdian therapy, increase of in-network referrals to the radiation oncology MRIdian program, all of that is what's yielding that second MRIdian purchase or in some instances, obviously, the first. So, we see that cycle improving, and it all begins with and flows from that clinical data that you mentioned. As it relates to the collaborations that we have, we ink those in Q4 of last year, so we're just coming up on a year of both of those collaborations. They're intact the relationships are healthy and growing.

We have real clarity with Medtronic on the clinical targets that we want to go after together. We, I think, both feel very good about what those targets are. It's right in our wheelhouse. And on the elective side, that collaboration is more around reimbursement in various markets than anything else.

And that is progressing as well. So, hopefully, that's responsive, Anthony.

Anthony Petrone -- Jefferies -- Analyst

Very helpful. Thanks, again. I'll hop back in queue.

Scott Drake -- President and Chief Executive Officer

Thank you.

Operator

And ladies and gentlemen, I'm not showing any further questions at this time. I'd now like to turn the call back to your speakers for any further remarks.

Scott Drake -- President and Chief Executive Officer

Thank you, operator, and thanks, everybody, for joining our call here. We appreciate your interest in ViewRay and look forward to talking to you in another 90 days. Thanks very much.

Operator

[Operator signoff]

Duration: 51 minutes

Call participants:

Michaella Gallina -- Head of Investor Relations

Scott Drake -- President and Chief Executive Officer

Zach Stassen -- Chief Financial Officer

Andrew D'Silva -- B. Riley Financial -- Analyst

Andrew DSilva -- B. Riley Financial -- Analyst

Jason Bednar -- Piper Sandler -- Analyst

Suraj Kalia -- Oppenheimer and Company -- Analyst

Marissa Bych -- Morgan Stanley -- Analyst

Anthony Petrone -- Jefferies -- Analyst

More VRAY analysis

All earnings call transcripts