Accuray (ARAY) Q3 2022 Earnings Call Transcript

Accuray (ARAY 1.40%)
Q3 2022 Earnings Call
Apr 27, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Accuray third quarter fiscal 2022 financial results conference call. [Operator instructions]. I would now like to turn the conference over to Ken Mobeck, vice president, finance. Please go ahead.

Ken Mobeck -- Vice President of Finance

Thank you, Gary, and good afternoon, everyone. Welcome to Accuray's conference call to review financial results for the third quarter of fiscal year 2022, which ended March 31, 2022. During our call this afternoon, management will review recent corporate developments. Joining us on today's call are Josh Levine, Accuray's chief executive officer; Suzanne Winter, Accuray's president; and Brandy Green, Accuray's interim CFO and controller.

Before we begin, I would like to remind you that our call today includes forward-looking statements. Actual results may differ materially from those contemplated or implied by these forward-looking statements. Factors that could cause these results to differ materially are set forth in the press release we issued just after the market closed this afternoon, as well as in our filings with the Securities and Exchange Commission. The forward-looking statements on this call are based on information available to us as of today's date, and we assume no obligation to update any forward-looking statements as a result of new information or future events, except to the extent required by applicable securities law.

Accordingly, you should not put undue reliance on any forward-looking statements. A few housekeeping items for today's call. First, during the Q&A session, we request our participants limit themselves to two questions and then requeue with any follow-ups. Second, all references we make to a specific quarter in the prepared remarks are to our fiscal year quarters.

For example, statements regarding our third quarter refer to our fiscal third quarter ended March 31, 2022. Additionally, there will be a supplemental slide deck to accompany this call, which can be accessed by going directly to Accuray's investor page at investors.accuray.com. With that, let me turn the call over to Accuray's chief executive officer, Josh Levine. Josh?

Josh Levine -- Cheif Executive Officer

Thanks, Ken, and thanks to everyone joining us on today's call. I'm joined today by Suzanne Winter, our president, and Brandy Green, our interim CFO. Accuray's fiscal 2022 third quarter performance continues to reflect the healthy demand environment we are seeing globally, which has been primarily driven by strong interest in the most recent innovation upgrades on our Radixact platform, like ClearRT, our Helical kVCT Imaging System, and Synchrony, our motion compensation, and automated target tracking technology. These unique innovations and the resulting functionality improvements that they represent have made Radixact a true workhorse product with leading-edge clinical case mix versatility.

These functionality improvements have had strong year-over-year revenue growth impact for Accuray in fiscal 2022. For the quarter, like many of our capital equipment peers, our operational results reflect the continuation of operational headwinds and associated costs from macro market factors, including global supply chain and logistics issues. Brandy will be providing greater detail in her prepared remarks about the collective impact of these factors on the quarter's results. We believe Q4 will remain challenging in terms of the intensity of part shortages and logistics headwinds, and we will continue to see pressure on service margins.

With that said, our teams are working cross-functionally to preserve production capacity and identify and mitigate risks to stay ahead of supply gaps that could impact production. And now I'll turn the call over to Suzanne for some more details on commercial highlights during the quarter.

Suzanne Winter -- President

Thank you, Josh. We delivered solid top line performance for the quarter and our Q3 results represent our 6th consecutive quarter of delivering above expectations in both orders and revenue. Looking at our first nine months of FY '22, we have delivered 14% growth in orders and 12% growth in revenue versus last year. We continue to see the strength of customer demand for both CyberKnife S7 and Radixact's TomoTherapy platforms and the growing recognition by customers that Accuray technology provides a new standard of accuracy and precision compared with conventional C-arm linac systems.

The market is adopting the use of ultra hypofractionated stereotactic body radiation and stereotactic radiosurgery or SBRT SRS treatment. We estimate that currently less than 20% of worldwide radiation therapy procedures are using ultra-hypofractionated treatments, but that number is expected to grow significantly over the next several years. These treatments are changing the way radiation therapy is delivered to patients as it delivers a more powerful dose of radiotherapy in only one to five treatment sessions versus 35 to 40 treatment sessions with conventional radiation therapy. This represents a paradigm change offering significant patient benefits and additional treatment options for providers and reduces overall healthcare costs with a focus on value over volume.

As discussed in previous earnings calls, the ability to deliver ultra-precise SBRT treatments vary substantially across commercially available radiation therapy platforms. Any error in the precision or accuracy of the treatment plan or delivery can have a significant impact on long-term patient outcomes and their quality of life, especially given the higher dose delivered over fewer treatments. The ability to see more to distinguish tumor from healthy tissue enabled through superior ClearRT helical CT imaging in addition to the ability to adjust the treatment beam to the tumor or patient motion continuously and in real time is only accomplished with Synchrony technology. These are two capabilities that differentiate Accuray technology from the rest of competitive radiation therapy platforms.

And in combination with our latest product introduction to the Radixact platform, VOLO Ultra treatment planning, we are being recognized with these tools as critical to providing clinicians with the ability to deliver the highest precision and accuracy required for SBRT and SRS treatment planning and delivery. The growing body of clinical evidence shows that Accuray technology is making a difference in long-term patient outcomes. As we have seen in the results, Phase B trial for prostate cancer, which showed 50% less bladder side effects for men treated with the CyberKnife. The tomo breast trial also demonstrated a reduction in secondary effect on lung and cardiac function for women treated on the TomoTherapy platform for breast cancer versus those treated with conventional treatment.

And most recently, the results of 10-year follow-up data from the CyberKnife Center in Milan, Professor Romanelli et al, showed durable pain relief after 10 years post treatment for patients suffering from trigeminal neuralgia. With over 20 years of clinical evidence, a growing body of studies now show the impact of Accuray's ultra-precision technology and what it has on patient outcomes years after treatment. And we continue to execute on our innovation road map that provides additional tools for clinicians to provide safe and effective therapy. During the quarter, we introduced the neuro package at the Radio Surgery Society Meeting in March.

The new neuro package for the CyberKnife S7 platform provides enhanced treatment planning capabilities for both the precision treatment planning as well provides access to the Brainlab Elements software, further expanding the capabilities for neuro-oncology customers. A key performance metric we are using to gauge our performance in the market is our ability to win competitive bunkers. In the developed markets, including U.S., Europe and Japan, which is a replacement market and highly competitive, we continue to be successful on seeding the incumbent linac manufacturers installed base. While this may vary from quarter to quarter in Q3, 21% of our unit orders were replacing a competitive system.

Year-to-date, our competitive replacement performance for the first three quarters of FY '22 has improved by six percentage points year over year for the same time period, demonstrating that winning in competitive bunkers is a growing contributor to our order performance. In emerging markets like China and in Kenya, where we sold our first CyberKnife S7 system, the majority of system orders were to new radiation therapy customers, allowing us to further our vision of expanding patient access to advanced radiotherapy care where it was previously unavailable. Looking at our regional order performance. The Americas region delivered 239% orders year-over-year growth, and the APAC region delivered 30% year-over-year order growth with China the major contributor, offset by the EIMEA region, which decreased 27% year over year, mostly due to market uncertainty, which lengthened the sales cycle.

In regional revenue performance, demand for customer installation remains very strong with the expected supply chain constraints tempering our ability to fulfill demand. However, I could not be more proud of our operations and sourcing team and their ability to navigate the challenges and execute a strong quarter and fulfill balanced regional revenue performance across our major regions, with year-over-year growth in both the Americas region and non-China APAC region. China, again, delivered solid results with $26 million in orders and $21 million in revenue despite the zero COVID policy, which is driving challenges for this region. We expect the stringent central government policies that restrict travel will slow our regulatory submission of our JV developed Type B products.

However, we remain on track for market introduction at the main conferences in the fall and are optimistic about the market reaction to the product features and the ability to gain share in the Type B segment pending regulatory clearance. In summary, we are advancing each of our strategic initiatives forward and our business fundamentals are strong. Our teams are executing despite the extremely challenging supply chain conditions in Q3. And while we cannot predict with full visibility when macroeconomic trends will improve, we are mitigating the impact of inflation headwinds with increased pricing on our high-value new product introductions like ClearRT on Radixact and increasing service contract pricing to partially mitigate the impact of increased inflation and logistics costs.

We have been very effective at expediting product supply, pivoting to alternate sources of supply and designing in alternate components to ensure availability. On the logistics activity with the assistance of our strategic partner, DHL, we have instated process controls to ensure better impact on shipment costs while maintaining quality and responsiveness to customer needs. We believe early visibility to component shortages and proactively mitigating risk associated with long lead time parts or key subassemblies is a key success factor. As a result, I am confident that the actions we are taking to successfully navigate these supply chain and logistics headwinds will provide operational productivity once the macroeconomic environment improves.

In summary, we are advancing our innovation-driven growth plan forward in all areas and expect continued customer demand for installations. Product revenue is growing from an increased investment in R&D growth initiatives with increased customer adoption of our unique platforms that provide providers with the mission-critical tools that are needed to provide ultra-precise SRS and SBRT and advanced patient care. Looking into the remainder of the year, we are maintaining our guidance for the full year at the revenue range of $420 million to $430 million and adjusted EBITDA of $15 million to $20 million with a range defined by our ability to fulfill customer demand impacted by the ongoing macroeconomic and supply chain environment. And now I'd like to turn the call over to Brandy for her review of the financial details.

Brandy?

Brandy Green -- Interim Chief Financial Officer

Thank you, Suzanne, and good afternoon, everyone. Accuray has delivered a good quarter while continuing to navigate notable supply chain and logistics challenges. We are pleased with our ability to stay nimble during this changing environment. Gross orders for the third quarter were $88.6 million, a 4% sequential increase and a 1% increase over the prior year period from innovation-driven order momentum.

As mentioned last quarter, we anticipated smaller year-over-year gross orders expansion for the second half of the fiscal year. From a product mix perspective, we saw stronger demand for our CyberKnife platform accounting for 57% of gross orders dollars for the quarter with the TomoTherapy platform accounting for the remaining 43%. During the third quarter, we had approximately $2 million of net cancellation, which represents 2% of total new orders for the quarter as compared to $8 million in the same period a year ago. We ended our third quarter with backlog of $580.4 million, representing a decrease of 5% from March 31, 2021.

Now, turning to the income statement. Total revenue for the third quarter was $96.2 million, representing a 6% decrease over prior year. For the first three quarters of 2022, revenue was $319.9 million, up 12% over prior year, representing strong customer demand for product innovation. Product revenue for the quarter was $43.2 million, a decrease of 9% compared to the prior year.

For the first three quarters of 2022, product revenue was up 30% as compared to the same period a year ago. Product demand remains strong. However, supply chain constraints on key components drove delays in finished goods shipments for the quarter. From a product mix perspective, CyberKnife accounted for approximately 22% of revenue unit volume in the quarter, while the TomoTherapy platform accounted for the remaining 78%.

As a reminder, the mix between CyberKnife and TomoTherapy varies from quarter to quarter. Historically, on an annual basis, our product revenue mix has remained at approximately 30% CyberKnife and 70% TomoTherapy for the past several fiscal years related to product introductions on our TomoTherapy platform. Service revenue for the quarter was $53 million, a decrease of 4% compared to the prior year, primarily related to $1.5 million unfavorable foreign exchange impact. Turning now to gross margin.

Overall, gross margin for the third quarter was 36.2% compared to 38.6% in the prior year. Product gross margin for the quarter was 34.3% compared to 41.6% in the prior year. During the quarter, for our JV accounting requirements, we deferred product gross margin on six systems sold during the quarter to a China joint venture that have not yet been transacted through to the end customer. We have two remaining systems deferred from prior quarters that we expect will transact through over the next two quarters.

Additionally, this quarter, we've experienced product cost inflation of approximately 1% contributing to margin headwinds. Excluding the gross margin deferral on these six deferred systems, our product gross margin for the quarter would have been 40.6%, a slight decline from the same period a year ago. Service gross margin for the quarter was 37.7% compared to 35.9% in the prior year. Service parts stocking levels improved during the quarter, even though outbound freight and logistics have remained a headwind.

Net parts consumption related to service contracts varies quarter-to-quarter and was lower by $3.1 million sequentially and approximately flat as compared to the same period a year ago. Additionally, service operational costs remained flat and stable sequentially over the past three quarters. Moving down the income statement. Operating expenses for the quarter were $35.1 million, which was flat from the prior year.

We've continued to monitor program costs, travel, marketing events and compensation costs in response to the pandemic. Operating loss for the quarter was $0.3 million compared to operating income of $4.4 million in the prior year. The operating impact of the China JV for the quarter was a gain of $1.9 million reported in our income statement as a single line item called gain loss on equity investment right below our operating income line. As our China joint venture continues to ramp its operational and commercial activities, we expect that our share of the China JV's quarterly income or loss will continue to fluctuate in the near term.

Adjusted EBITDA for the quarter was $5.4 million compared to $8.7 million in the prior year period. The decrease in adjusted EBITDA was primarily related to lower revenue, fixed China system product gross margin deferral, offset by the positive operating impact of $1.9 million from the China JV equity investment. The reconciliation between GAAP net income and adjusted EBITDA is described in our earnings release issued today. Turning to the balance sheet.

Total cash, cash equivalents and short-term restructured cash amounted to $98 million compared to $123 million at the end of last quarter. Net accounts receivable was $89 million, up 9% sequentially and $19 million from the same period last year due to back-end loaded shipments. Our net inventory balance was $138 million, up 11% sequentially and 1% on from the same period last year due to accelerated purchases of certain critical hard-to-source parts and increase semi-finished goods awaiting key components for final shipment. And with that, I'd like to hand the call back to Josh and Suzanne.

Josh Levine -- Cheif Executive Officer

Thanks, Brandy. Concurrent with our fiscal Q3 earnings press release, we also put out a press release highlighting two important leadership transitions, one at the CEO level and the other at the CFO level. In that press release, we announced that I will be retiring as CEO and resigning as a director of the Accuray board effective at the end of this fiscal year ending June 30, 2022. Suzanne Winter, Accuray's President, will lead the company as the new CEO effective July 1, 2022.

This transition is the culmination of a well-planned and thoughtful succession plan that began at the start of this fiscal year with Suzanne's promotion to president. I have come to know Suzanne as a strong strategic partner and a high-impact results-oriented business leader over the past 2.5 years, and I know the company will be in good hands under her leadership. At this time, I also want to thank Brandy Green for the significant contributions she made during the period of time that she was in the interim CFO role, essentially doing two jobs on a full-time basis. Her commitments to the company and the personal sacrifices you made during this period deserve the highest recognition and thanks.

On a personal level, it's been a true privilege over the past nine and a half years to lead this organization. I've had the opportunity to work with great people at all levels within Accuray and collectively focus our efforts on ensuring that patients get the best radiation therapy treatments available. I am proud of the impact we've had on the lives of so many cancer patients around the world. And now I'd like to turn this back over to Suzanne to discuss the CFO transition.

Suzanne Winter -- President

Thanks, Josh. Before I make my final comments, I also wanted to announce today our incoming CFO, Ali Pervaiz. Ali came to Accuray two years ago after having spent 15 years at GE and GE Healthcare in the finance organization, including as chief financial officer for GE's Diagnostic Imaging and Life Support Solutions businesses in the U.S. He brings strong operational experience in large capital equipment, healthcare technology and has driven bold margin expansion and operational excellence initiatives during his tenure at GE.

Finally, I am deeply honored to have the opportunity to succeed Josh and lead Accuray into the next chapter and build on our vision of building a better future for patients that have been diagnosed with cancer or certain neurological disorders. I'd like to thank the entire global and passionate Accuray team for their continued focus and commitment, providing the highest level of service to customers and the patients we serve. We are executing our growth strategy and continuing to build a foundation for long-term sustainable revenue growth, margin expansion with increased value creation for all of our stakeholders. With that, we'll hand it over for Q&A.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Brooks O'Neil with Lake Street Capital Markets. Please go ahead.

Brooks ONeil -- Lake Street Capital Markets -- Analyst

Good afternoon, everyone. I think the best way to say this is, congratulations to you all. I think this opens the door for everyone having a grade in the future. And I couldn't be more excited for the company and for each of you.

Suzanne Winter -- President

Thanks, Brooks.

Brooks ONeil -- Lake Street Capital Markets -- Analyst

Sure. Sure. My first question, and my biggest question is, Suzanne, I don't know if you've thought a lot about it, maybe you have. But what would you say are the two or three biggest priorities you have as you assume the CEO job at Accuray?

Suzanne Winter -- President

Thanks for the question, Brooks. And thank you. Yeah, my priorities over the next 60 days are to ensure that we have a very smooth transition between Josh and myself. Then my priority is really building on the foundation that we have started to build and continue to strengthen our fundamentals.

We absolutely have to execute on the important milestones that we have, not only on our innovation pipeline, but all of our growth initiatives so that we finally deliver on our financial performance in preparation for going into FY '23. And as we get further on and at our next earnings call, I will be laying out more of our growth plan and areas of focus for FY '23 and beyond.

Brooks ONeil -- Lake Street Capital Markets -- Analyst

Great. That's very helpful. And then, , I guess, the second question, obviously, concerns about the environment in China, given the lockdowns and the recent COVID experience there. Do you perceive any fundamental change in the overall demand picture for Accuray equipment over the next few years? Or do you see the current situation that's likely temporary or transitory and we'll get through this and move on with the program?

Suzanne Winter -- President

We think it's temporary. And we have very close communication with our team on the ground and despite the, I think, stringent policy going on in Shanghai and potentially moving on to Beijing. I think the feeling on the ground is that it is temporary. Business is still being transacted and we're certainly seeing that.

We saw it this quarter with our orders and revenue performance. There may be some slowing in China expected in Q4. But in general, we're on track for significant growth out of this subregion for the year. We have customers also that have type A licenses in hand that have already gone through the bidding process and the team feels confident these are going to go to revenue once some of the restrictions lift.

That being said, I mean, there are some headwinds that we are feeling as a result of the shutdowns. One of them is our -- some of our orders that are aging out that are in our backlog. But again, are underscored by licenses from the central government, but aging out of the backlog. We do have an impact on the NMPA regulatory submission for our Type B product.

So that's slightly delayed just because we're waiting to get an inspector on site to complete the report so that we can submit to NMPA. But again, we see these as being temporary overall, and I think that's a good thing.

Josh Levine -- Cheif Executive Officer

Hey, Brooks, I agree. I concur with everything Suzanne has said. If there's one thing we've learned over the last several years, we don't control the cadence and the timing of things in China, right? I mean, it's just it is what it is. I will tell you that I don't think there's been any change in the overall demand for our products.

And I think that while these things are -- they're frustrating from a delay and a timing standpoint. I would encourage our investors to realize that through three quarters of this year, we've got $60 million in incremental revenue in China that we didn't have, quite frankly, before we implemented the strategy, put the JV in place and started down the path strategically to be a bigger company in China. And obviously, not rely on that alone. But it is -- even with the delays and even with the frustrations, it is contributing in a meaningful way to the company's growth trajectory.

So the timing is the timing, we can't control what we can't control, but I don't think that we're in any different level of opportunity overall than we've been from the outset. And I think the future there for us is very, very bright.

Brooks ONeil -- Lake Street Capital Markets -- Analyst

That's great. Thank you very much. And again, congratulations to you all.

Josh Levine -- Cheif Executive Officer

Thanks, Brooks.

Suzanne Winter -- President

Thank you.

Operator

The next question is from Marie Thibault with BTIG. Please go ahead.

Marie Thibault -- BTIG -- Analyst

Hi. Good afternoon. Josh, congrats on your retirement, and thanks for the years of discussion and help to us over the years. And, Suzanne, congrats on the new role.

We're looking forward to working with you.

Suzanne Winter -- President

Thank you, Marie.

Marie Thibault -- BTIG -- Analyst

Yeah. I wanted to start here maybe on the demand environment. You mentioned the healthy demand environment globally and then broken out sort of by geography, sounds like Americas and APAC have been very strong, but a little bit of uncertainty in EMEA. I wonder if you could dig into each of those a little bit more.

I know you just gave us a lot of detail on China, but some of those other geographies as well.

Suzanne Winter -- President

Yeah. I mean, I think, again, we're seeing the strength in the Americas, partly due to the investment that we've made in our commercial infrastructure in the U.S. We are seeing very strong pipelines for demand and customer demand for some of the new products that we've introduced. So we're encouraged by that.

Again, China has been very, very strong for us, and we continue to see strength there. Japan has been strong for us. And year-to-date, they're up 10% from an order standpoint. I think the EIMEA, the European area has been a little tempered in their growth.

I think it's not because there is a lack of activity, but I think the sales cycles have been increasing and partially due, I think, to some of the unstable environment as a result of Russia, Ukraine and just some conservatism in making capital equipment purchases.

Marie Thibault -- BTIG -- Analyst

OK. That's helpful. And then,  maybe my follow-up here on supply chain headwinds. You certainly talked to us about this last quarter, and it sounds like, indeed, the constraints are impacting some ability to meet demand.

Do you have a way to size the sort of impact from that constraint here in the fiscal third? What you imagine it might be in the fiscal fourth and whether your visibility allows you to look beyond kind of midyear and how long some of these headwinds might last? I understand that's very difficult, but I appreciate any insights there. Thank you, again.

Suzanne Winter -- President

Yeah, I'll start and then I'll hand it over to Brandy. But I think that we, obviously, we saw some challenges in Q3, we expect they'll be similar in Q4. And we think we're going to see them through the end of the calendar year, at which time we think that the supply chain will start to catch up. And just in terms of mitigating inflation, there are obviously things that we are doing to mitigate inflation, but we actually think that we'll start to see relief in the second half of our fiscal year as we will start phasing in new material from new lower-cost suppliers.

And we also think we'll get some sourcing productivity in the second half of the year. So that's at least the time frame of what we're expecting. And then, , I'll have Brandy give a little bit more color.

Brandy Green -- Interim Chief Financial Officer

Yeah. I think, Suzanne, you said it very well. We've seen between 1% and 2% inflation. If you look at a year over year, 5% inflation on some of our parts costs.

But as far as supply challenges, I think Suzanne is absolutely right that we do expect this to release, and we live in the back half of FY '23.

Marie Thibault -- BTIG -- Analyst

Thank you.

Operator

The next question is from Josh Jennings with Cowen. Please go ahead.

Josh Jennings -- Cowen and Company -- Analyst

Hi. Thanks for taking my question. And I have to pitch in my congratulations, Josh, to your retirement. And look, good luck to the next chapter.

And Suzanne and Ali, congratulations on your new positions. It's a great news, and we're looking forward to tracking the progress of Accuray under your leadership. Wanted to ask two follow-ups on China. And the first one, just being on agents.

Brandy, I think you talked a little bit about some aging dynamics. I apologize I just didn't catch them fully. But if you could review those. And then,  just help us understand how we should be thinking about agents, particularly in the China market over the next 12 to 24 months that may be a little bit murky with everything that's coming with COVID in the near term.

But it'd be great to get an update there. And then,  also, I think just to review, I just wanted to get clarification on how Type B systems manufactured by the China JV, how orders and revenues flow through the A&L reporting, the P&L, but also the new order reporting? I just want to be clear in terms of -- as we're getting closer to the finish line here, I know it's pushed out a little bit, but that would be great. And just one follow-up after.

Suzanne Winter -- President

OK. So Josh, let me take your second question first, which is more on the timing on the type B product and just from what we can sort of see at this point. It takes between 10 to 12 months to get NMPA approval once we submit. Again, we need the COVID lockdown to lift before we can get that final registration.

So at this point, we are thinking that orders and revenue will start to show probably Q4 of fiscal year '23, a year from now. Now, that being said, we are still proceeding and on track to do a market introduction in the fall of this year. So late August calendar year 2022 at the major shows in China so that at least the system will be introduced to the marketplace, people can start budgeting and putting it in their sales process, but we can't take an order or ship for revenue until we get NMPA approval. So we're expecting the contribution Q4 of next year.

Josh Jennings -- Cowen and Company -- Analyst

That's great. Do you mind -- sorry to interrupt -- but just to refresh us on just some of the ASP metrics we should be baking into our model because one of the things we're trying to do is just give accurate credit in our forecast for this China JV officially and just wanted to make sure we were doing it appropriately and having the right numbers in our models. But particularly ASP assumptions and just making sure that Accuray would capture that full ASP in the order update as well -- new order update, as well as on the revenue line when those orders are converted, installed and converted to revenue?

Josh Levine -- Cheif Executive Officer

Josh, you know what, we really haven't been -- for a variety of reasons, mostly competitive reasons, we haven't been very forthcoming with target price point, target ASP information. I think we would feel comfortable in getting a little further downstream closer to better clarity around the understanding of NMPA approval timelines. We will be -- once we have approval, we will be ready to start producing product very, very quickly. And so, there's no lag there.

But I think for competitive reasons, it would be our opportunity -- our best approach to kind of keep that close to the vest so that competitors are not having a chance to do something with regards to a pre-emptive kind of discussion in any way. And so, as soon as we're there, you'll have the best information to be able to build out your models, I promise.

Josh Jennings -- Cowen and Company -- Analyst

Understood. Thank you for that. Thanks, Josh.

Suzanne Winter -- President

And then, Josh, for the first part of your question, which was timing on the agents. I think that's a bit murky at this point. But again, the good news is we know of our customers that have their licenses in hand. We know who has gone through the bidding process.

And so, once things open up, I think we'll get an idea of quarterly phasing and be able to help more with your models.

Josh Jennings -- Cowen and Company -- Analyst

Great. And just in terms of thinking about agents, I mean those agents will convert right to revenue, correct? And they will not like the backlog, right?

Correct.

Brandy Green -- Interim Chief Financial Officer

That's right. that's right.

Josh Jennings -- Cowen and Company -- Analyst

And then lastly, just as we -- I can't believe we're going to be in May next week. But ASTRO has been right around the corner in just a few months, but just wanted to level set our team's expectation, and we're getting more and more excited about online adaptive and all the work that you're doing with RaySearch and internally. But just any level set in terms of expectations on the update for progress on adaptive at ASTRO this year? Thanks for taking all the question.

Suzanne Winter -- President

Yeah. Thanks for that question. Actually, we're within weeks of going to ESTRO in Copenhagen. So that's the European meeting and then ASTRO in the fall.

And ASTRO, we're excited because we are going to be showing in partnership with RaySearch, a sneak preview of our online adaptive using the ClearRT as input. So we're already booked out for those -- for that meeting as well. So we're excited about the response. And so, we'll be talking about our online adaptive.

At the same time, we also have a very full agenda of clinical abstracts that are going to be shown. We have over 79 abstracts that are using Accuray technology that are going to be presented at this European meeting. So excited about that. And then,  in preparation for ESTRO, where we'll be doing another product introduction at that point of our partnership with C-RAD in our breast package, which we think is going to put us in a very, very strong position to have the most comprehensive breast package in the marketplace, as well as, again, discussing more about our online adaptive.

So two important shows coming up. Thanks for the question.

Josh Jennings -- Cowen and Company -- Analyst

Thanks, Suzanne. And Josh, we'll miss you at ESTRO this year.

Suzanne Winter -- President

Thanks, Josh.

Operator

The next question is from Frank Pinal with Jefferies. Please go ahead.

Frank Pinal -- Jefferies -- Analyst

Hi, everyone. First, Josh, congrats on retiring. You'll be missed. Best of luck on the next endeavor.

And Suzanne, congrats. Look forward to working together. I guess, two for me. Just picking up on the China opportunities, how would you size the financial impact of the pushout in type B and for the fiscal year? And is there an opportunity to sort of catch up there in the future, just given what the demand landscape looks like? And I have a follow-up on the macro question after that.

Suzanne Winter -- President

Yeah, I think that's a great question. I think there is opportunity to catch up. And I say that because we're going to do a market launch, and we're still on track to do the market launch. So hopefully, we'll be driving some pent-up demand and influencing customers' purchase decisions so that when we get the approval, we'll be able to fulfill and book the orders.

The market opportunity for type B, as you know, is very attractive. And over the next five years, we think there'll be over 1,500 systems that are going to go into the type B market. And the growth rate within that segment alone, we think is 12% to 15%. So we're really excited about the potential for this product within the marketplace.

And again, we just -- we can't get through the regulatory process fast enough.

Frank Pinal -- Jefferies -- Analyst

Great. Thank you for that. And then,  we're hearing a bunch of companies at this point, most recently this morning with Integra, comment on FX headwinds that they're -- higher than expected even a few weeks ago. And we are seeing changes in expectations around guidance.

And I'm curious what you are seeing at this point, how it's impacting the company and how you expect that to play into guidance for the balance of the year. Thanks.

Brandy Green -- Interim Chief Financial Officer

Yeah. So on the FX front, I mean, overall, we're only -- we're not seeing a lot of FX headwinds. We are definitely seeing some in our revenue, but not to a material impact. We have a hedging program in place, so that hedges our balance sheet pretty effectively.

So at this point, we feel fairly covered. Now, that's not to say that currency is changing out there, and we're monitoring it and looking at ways to mitigate.

Suzanne Winter -- President

But we're not changing our guidance. We are not maintaining our guidance as from a top line and an EBITDA perspective.

Frank Pinal -- Jefferies -- Analyst

Great. Thank you. Appreciate it.

Operator

[Operator instructions] The next question is from Jason Wittes with Loop Capital. Please go ahead.

Jason Wittes -- Loop Capital Markets -- Analyst

Hi. Thanks for the questions. Josh, congratulations on your retirement. Job well done.

I think you're leaving the company in a really interesting point. And Suzanne, look forward to continue working for you. And Ali as well, or Azi as well. So with that said, I just did want to ask a couple of questions.

First, if I could just review what you mentioned about China. Specifically, what was the contribution from China this quarter? And roughly how much is left in the backlog related to China orders?

Suzanne Winter -- President

I'll start with the contribution. We did $26 million in revenue and $20 million in orders. And just from a backlog perspective --

Brandy Green -- Interim Chief Financial Officer

We have about $70 million remaining in our type A for China in our backlog.

Jason Wittes -- Loop Capital Markets -- Analyst

Oh, great. Very helpful. And then,  I noted -- you noted you commented that Class B is probably at the current timeline, I think fiscal '20 -- Q4 of fiscal '23 is the outlook in terms of when you anticipate approval. Is that a change from your thinking prior last quarter? And is that -- and it sounds like that's been impacted by the COVID lockdowns?

Suzanne Winter -- President

It's definitely been impacted by the COVID lockdown. We've got one more step to go through before we can submit for NMPA approval, and that is really to get our notified body on site to finalize the report. And really since before the Olympics, before the shutdown really for the Olympics, we had been waiting for that final report. So yeah, it is pushed out about a quarter in terms of when we expect to be able to submit for NMPA approval.

However, as we said, we remain on track in terms of when we're going to introduce this to the marketplace. So that has not changed.

Jason Wittes -- Loop Capital Markets -- Analyst

OK. That's helpful. I understand. And then,  you mentioned it's still a little clouding in terms of some of the cost inputs.

You've made some changes. But based on your guidance on EBITDA, at least, it sounds like the outlook has -- you have made some adjustments. So otherwise, the outlook is kind of in line with what you were thinking last quarter. Is that the right way to think about it?

Brandy Green -- Interim Chief Financial Officer

Yeah, that's right. That is exactly right. Then that is why we're maintaining our guidance at $15 million to $20 million.

Jason Wittes -- Loop Capital Markets -- Analyst

All right. Great. Wonderful. I'll jump back in queue Thank you very much.

Suzanne Winter -- President

Thank you.

Operator

[Operator signoff]

Suzanne Winter -- President

Thank you. Well, in closing, as I look to become CEO in the next 60 days, I am excited by the momentum we see from global customer demand and expect to finish our fiscal year growing materially faster than the market despite the headwinds caused by supply chain. Together with the Accuray management team and all of our colleagues and partners, I look forward to building on the strong foundation we have put in place that will drive further benefits as macroeconomic conditions improve. I believe that we are extremely well-positioned to grow our top line, expand margins and to create value for the shareholders, as well as the patients and customers we serve.

And I'm looking forward to speaking with you again in August for our fiscal fourth quarter and full year earnings release. Thank you.

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Ken Mobeck -- Vice President of Finance

Josh Levine -- Cheif Executive Officer

Suzanne Winter -- President

Brandy Green -- Interim Chief Financial Officer

Brooks ONeil -- Lake Street Capital Markets -- Analyst

Marie Thibault -- BTIG -- Analyst

Josh Jennings -- Cowen and Company -- Analyst

Frank Pinal -- Jefferies -- Analyst

Jason Wittes -- Loop Capital Markets -- Analyst

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