Accuray (ARAY -2.61%) delivered a disastrous performance in 2019, with the stock sinking 17% in a great year for most stocks. However, 2020 is turning out to be a much different story. Heading into this week, Accuray's shares were up nearly 40%.
The stock enjoyed another positive catalyst with Accuray reporting its fiscal 2020 second-quarter results after the market closed on Tuesday. Here are the highlights from the company's Q2 update.
By the numbers
Accuray announced Q2 revenue of $98.8 million, a decrease from the $102.3 million reported in the same quarter of the previous year. However, this result beat the average analysts' revenue estimate of $97.73 million.
The company reported net income in the second quarter of $10.7 million, or $0.12 per share, based on generally accepted accounting principles (GAAP). This reflected significant improvement from the net loss of $4.6 million, or $0.05 per share, recorded in the prior-year period. It also was much better than the consensus Wall Street expectation of a net loss of $0.07 per share.
Accuray also said that its net orders in Q2 jumped 30% year over year to $89.9 million. Its total backlog at the end of the second quarter totaled $539.4 million, up 12% from the same period in fiscal 2019.
Behind the numbers
The company's product revenue in the second quarter fell to $43.8 million from $48.1 million in the prior-year period. This was partially offset by an increase in service revenue to $55.1 million from $54.3 million in fiscal 2019 Q2.
Although Accuray's revenue slipped, its bottom line looked much better thanks to the company keeping a lid on spending. Research and development costs fell 4% year over year to just under $13.1 million. Selling and marketing expenses dropped by 25% in Q2 from the prior-year period to $11.3 million. General and administrative spending declined by nearly 6% to $9.9 million.
Accuray also benefited from other income of $7.8 million in the second quarter of fiscal 2019 compared to an expense of $3.3 million in the year-ago period. This other income in the recent quarter stemmed from a non-cash special gain related to the company's capital contribution to a joint venture in China.
Accuray still expects that revenue for full-year 2020 will be between $410 million and $420 million. However, the company now anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year will be between $21 million and $26 million, up from the previous range of $19 million and $24 million.
While some healthcare stocks could be impacted by the coronavirus scare in China, Accuray CEO Joshua Levine said that the company doesn't think "the outbreak affects the longer-term demand outlook for radiotherapy equipment in China." He added, "China remains the world's fastest growing market for radiation oncology systems where we have a highly differentiated strategy to drive significant revenue growth in the coming years."