What happened

After the company announced that it has received orders for a pair of MRIdian Linac systems, shares of ViewRay (NASDAQ:VRAY), a small-cap company focused on radiation therapy, jumped 17% as of 1:35 p.m. EDT on Friday.

So what

ViewRay stated that its MRIdian Linac system was selected for installation at two leading hospitals in Denmark. The company's systems were chosen as part of a collaborative bid with Varian Medical Systems.

Selling two systems might not sound like a big deal, but it is. ViewRay's guidance for all of 2017 calls for $45 million to $50 million in sales based on the sale of only seven or eight systems. This implies that each system costs more than $6 million, so adding two more systems to the company's backlog is meaningful.

Female doctor giving the thumbs-up

Image source: Getty Images.

ViewRay CEO Chris Raanes offered investors the following commentary in response to the news:

Radiation oncology departments are recognizing the value of MR-guidance and its ability to improve the way treatment is visualized, planned and delivered. This purchase illustrates the shift that's taking place in image-guided radiation therapy and its impact on clinical practice.

Now what

The MRIdian Linac system combines radiation therapy and magnetic resonance imaging into a single product. The combination enables oncologists to watch how the body reacts to radiation therapy in real time, enabling them to make adjustments quickly when necessary. ViewRay believes that its innovation enables oncologists to hit tumors with far more precision while also minimizing damage to surrounding healthy tissue.

Today's news release and ViewRay's growing backlog suggest that clinicians are starting to warm up to this product. As of June, its backlog had grown 80% to $182.1 million.

On the flip side, selling and installing a MRIdian Linac system take time, which isn't great news when you are still operating at a loss. That's why ViewRay recently decided to raise $50 million through a common stock offering.

Zooming out to the big picture, management believes that its addressable market is around 1,100 units per year. That's a huge number when compared to the seven or eight units that are going to be sold this year, so there's no doubt that this company offers investors upside potential if everything goes according to plan. That makes ViewRay an interesting stock for growth-focused investors to put on their radar.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.