Accuray (ARAY) Q2 Loss Wider than Estimate, Shares Fall
Shares of Accuray Inc. ARAY plunged 8.1% to close at $5.33 on Jan 29 following its dismal second quarter fiscal 2016 earnings results. Accuray reported adjusted loss of 8 cents per share, a couple of cents wider than the Zacks Consensus Estimate. The company had reported a loss of 13 cents in the year-ago quarter.
Quarter Details
Net revenue increased 11% (15% on constant currency) on a year-over-year basis to $108.9 million, beating the Zacks Consensus Estimate of $103.0 million marking the best quarterly revenue performance in the history of the company.
Total revenues from America were $51.0 million, while overseas revenues were $57.9 million.
The upside was primarily driven by product revenue increase of 17% to $55.8 million and service revenue improvement of 5% to $53.1 million. Increased orders of Tomo Therapy and CyberKnife systems drove the growth.
Gross profits increased 10.6% to $42.6 million or 39% of sales which comprised product gross margin of 41% and service gross margin of 37%. On a constant currency basis, total gross margin in the second quarter was 41%.
Operating expenses went up 1.5% on higher research & development (R&D) expenses (up 7.3%) to support the product development efforts, and increased general & administrative expenses (up 2.6%). Higher legal expenses also drove operating expenses in the quarter. The operating margin declined by 370 basis points (bps).
Gross product orders in the quarter under review added up to $67.1 million, taking product backlog to $366.7 million.
Cash, cash equivalents and investments increased to $155.8 million in this quarter, an increase of $2.7 million from the preceding quarter.
Guidance
Accuray expects fiscal 2016 revenues in the range of $395--$410 million, while adjusted EBITDA is expected to range between $25 - $35 million.
Management maintains gross order projection for the fiscal at approximately $295 million, which would represent a 10% increase on a year-over-year basis.
Accuray is also optimistic about its collaboration with RaySearch Labs, which they believe will have a positive impact over the long run.
Zacks Rank & Other Key Picks
Accuray currently carries a Zacks Rank # 2 (Buy).
Other favorably ranked stocks in the same space include Exactec Inc. EXAC, Gilead Sciences GILD and Infinity Pharmaceuticals Inc. INFI, all sporting a Zacks Rank #1 (Strong Buy).
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