Accuray Expands in France

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Radiosurgery systems maker, Accuray Incorporated (ARAY) announced that France-based Centre Oscar Lambret is the first to use its latest TomoHDA System to treat its patient. The advanced fully-integrated radiation therapy system combines TomoTherapy Hi-Art and Tomo HD technologies to treat cancer patients.

Accuray had acquired Wis.-based radiation system maker TomoTherapy in Jun 2011. TomoTherapy markets advanced radiation therapies for treating multiple cancer types. The TomoTherapy Systems are advanced radiation therapy systems, which provide precise and safe radiation therapy by combining CT imaging and radiation treatment delivery in a single device, thereby lowering side-effects.

Accuray had achieved a major milestone with the launch of the new TomoTherapy H Series, featuring the TomoHDA System, at the ASTRO meeting in Oct 2012. This unique series is considered to be the near-term growth driver for the company.

Prior to the ASTRO meeting, the TomoTherapy System occupied a niche position in the market, as it was considered as a specialty device used to deliver IMRT (intensity-modulated radiation therapy) for complex cases. The launch of the TomoTherapy H Series, which provide treatments that cover the entire spectrum of radiation therapy patients, positions the product line in the mainstream market.

Features such as the VoLO Technology and the TomoEDGE Dynamics Jaws technology are available with the TomoHDA system, which makes it the gold standard for image-guided IMRT. VoLO provides real-time efficiency for treatment planning and dose calculation. The advanced TomoEDGE technology is capable of providing precise dosage of radiation in lesser time. This allows for more treatments per day without compromising on clinical efficiency.  Moreover, the 3D imaging technology allows doctors to deliver radiation to only the tumor site, without harming the surrounding healthy tissues.

Our Take

Accuray’s product order momentum, reflecting healthy product adoption of new products encourages us. Earlier, the company had sold its latest TomoTherapy devices to Germany-based Heidelberg University Hospital, thereby enhancing growth in Europe.

However, a lot needs to be done to bring the company back on track. We remain concerned over Accuray’s declining top and bottom line along with reduced full-year guidance. Management needs to improve its higher-margin product revenues and aggressively remediate its structural issues for new offerings to fully contribute to total sales.

The stock currently carries a Zacks Rank #3 (Hold). While we remain on the sidelines regarding Accuray, medical instrument companies such as Cyberonix (CYBX), Natus Medical (BABY) and Intuitive Surgical (ISRG) are worth considering. While CYBX and BABY carry a Zacks Rank #1 (Strong Buy), ISRG carries a Zacks Rank #2 (Buy).
 

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