Accuray Swings to Loss, Reaffirms - Analyst Blog
May 06 2011 - 8:07AM
Zacks
Accuray Incorporated (ARAY) has swung to a loss
in third-quarter fiscal 2011 (ended March 31) as costs (of roughly
$2.6 million) associated with its impending acquisition of rival
TomoTherapy (TOMO) more than offset an increase in
sales.
The California-based leading radiosurgery systems maker posted a
net loss of $1.2 million or 2 cents per share
in the quarter versus a net income of $2.3 million (or 4 cents a
share) a year-ago. The results missed the Zacks Consensus
Estimate of
earnings of 4 cents.
Revenues
Revenues leapt 5% year over year to $54.7 million, but missed
the Zacks Consensus Estimate of $63 million. Products sales rose
4.3% year over year to roughly $35.2 million while service revenues
increased 4% to $18.3 million.
Orders and Margins
Accuray installed 4 new CyberKnife robotic radiosurgery systems
in the quarter versus 6 systems a year ago, taking the aggregate
global installed base to 226 units. The company booked 13 orders
for CyberKnife compared to 14 orders a year
ago.
Total order backlog surged 18% year over year to reach $413.4
million at the end of the quarter, boosted by sustained new order
flow for CyberKnife.
Gross margin improved to 49.9% from 48.9% a year-ago owing to
higher sales. Operating expenses climbed 23% year over year to
$27.8 million.
Financial Condition
Accuray ended the quarter with cash, cash equivalents and
short-term investments of roughly $143 million, up 22% year over
year, with no debt.
Guidance Reiterated
Accuray has once again backed its revenue forecast for fiscal
2011. The company continues to expect
revenues between $210 million and $225 million for the year.
The current Zacks Consensus Estimate is $225 million.
Accuray is a global leader in the field of radiosurgery and
provides a non-surgical treatment option for patients diagnosed
with cancer. In the radiation oncology market, the company competes
head-to-head with Varian Medical (VAR). Accuray
continues to enjoy healthy demand for CyberKnife as evidenced by
sustained growth in the number of patients receiving treatment with
the device.
Accuray, in March 2011, agreed to buy Wisconsin-based radiation
system maker TomoTherapy in a cash and stock deal worth $277
million. The company recently received antitrust clearance for the
transaction. The acquisition, which is now subject to customary
closing conditions and approval of TomoTherapy shareholders, is
expected to complete in June or July 2011.
The deal, if eventually consummated, will mark the union of
TomoTherapy’s best-in-class radiation therapies with Accuray’s
coveted radiosurgery systems to create a leading player in the
radiation oncology space. Besides expanding its global reach, the
acquisition will offer a major boost to Accuray’s sales and will
reinforce its foothold in this market.
Moreover, Accuray expects the transaction to be accretive to its
earnings in the fiscal year beginning July 1, 2012 and will offer
opportunities for cost synergies through increased operating
efficiencies, complementary patient base and overhead reductions.
We currently have an Outperform rating on Accuray.
ACCURAY INC (ARAY): Free Stock Analysis Report
TOMOTHERAPY INC (TOMO): Free Stock Analysis Report
VARIAN MEDICAL (VAR): Free Stock Analysis Report
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