Here's a review of the headline numbers from the quarter:
- Revenue grew 2% to $102.3 million. That was below the consensus estimate of $104 million.
- Consolidated gross margin contracted by 170 basis points to 37.5%. Management blamed the fall on product mix.
- Net loss was $4.6 million, or $0.05 per share. That was much better than the $0.08 loss market watchers had been expecting.
- Gross orders grew 29% to $100.2 million. This was a company record and included 16 orders received from China.
- Backlog at quarter end was $482.2 million.
- The company received FDA approval for motion management on radiation therapy device Radixact during the period. This enhancement will be marketed under the brand name Synchrony.
CEO Joshua Levine was happy to talk up his company's performance during the quarter: "Accuray grew revenue, generated adjusted EBITDA, executed our plan designed to realize $15 million in annualized cost savings, and moved closer to our goal of achieving GAAP net income profitability."
The company also reaffirmed its guidance for the fiscal year. That guidance calls for total revenue growth of 3% to 5% and for full-year adjusted EBITDA to land between $23 million and $29 million.
Traders cheered the lower-than-expected loss and strong growth in orders.
CEO Levine also shared some more details during the conference call with investors on why he is bullish on the upcoming launch of Synchrony:
With Synchrony on Radixact, Accuray will have the only two radiotherapy systems able to provide tumor motion tracking and beam synchronization and correction during treatment. This technical capability brings the beam to the tumor, not the tumor to the beam, enabling tighter dosing margins and healthy tissue sparing during the treatment. We also believe that precision and accuracy that Synchrony provides will expand hyperfractionated and with treatment opportunities for patients and physicians.
Accuray's strong order volume suggests that its near-term future could be looking bright. That's especially true with Synchrony waiting in the wings.
However, I find it hard to get excited about a medical device company that is posting only single-digit revenue growth. With so many great companies out there, I'm content to focus my attention on other opportunities.