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Accuray (ARAY) Q2 Earnings Lag Estimates, Gross Margin Contracts
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Accuray Incorporated (ARAY - Free Report) reported loss per share of 10 cents for the second quarter of fiscal 2024, wider than the year-ago period’s loss of 2 cents per share. The metric was also wider than the Zacks Consensus Estimate of a loss of 7 cents per share.
Revenues in Detail
Accuray registered revenues of $107.2 million in the second quarter of fiscal 2024, down 6.6% year over year. The figure, however, topped the Zacks Consensus Estimate by 0.1%.
The overall top-line growth was dampened by lower Products revenues, which was partially offset by an uptick in Service revenues.
At constant exchange rate (CER), net revenues were $106 million, representing an 8% decrease from the prior-year period.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal second quarter, Product revenues declined 18.5% from the year-ago quarter to $51.5 million. This primarily resulted due to shipments of six fewer units year over year.
Services revenues improved 8.2% from the year-ago quarter to $55.7 million. At CER, Services revenues were up 7%. This was primarily driven by an increase in contract revenues and higher installation, training and spare parts volume.
Gross product orders totaled $93.9 million, up 18.8% year over year.
Accuray Incorporated Price, Consensus and EPS Surprise
In the quarter under review, Accuray’s gross profit declined 16.4% to $35.9 million. Gross margin contracted 396 basis points to 33.5%.
Selling and marketing expenses fell 16.4% to $11.4 million. Research and development expenses rose 4.4% year over year to $15.3 million, while general and administrative expenses went up 9.9% year over year to $13.2 million. Total operating expenses of $39.9 million decreased 0.9% year over year.
Operating loss totaled $3.9 million in the fiscal second quarter against the prior-year quarter’s operating profit of $2.7 million.
Financial Position
Accuray exited second-quarter fiscal 2024 with cash and cash equivalents of $72.8 million compared with $76.9 million at the end of the fiscal first quarter.
Total debt (including short-term debt) at the end of second-quarter fiscal 2024 was $174.8 million compared with $176 million at the fiscal first-quarter end.
Guidance
Accuray has provided its revenue outlook for the fiscal third quarter and reiterated its expectations for the metric for fiscal 2024 based on current expectations.
The company expects the third quarter of fiscal 2024 revenues in the range of $112 million-$118 million. The Zacks Consensus Estimate is pegged at $124 million.
Accuray continues to expect its fiscal year revenues to be in the range of $460 million-$470 million, reflecting year-over-year growth of 3-5%. The Zacks Consensus Estimate is pegged at $464.9 million.
Our Take
Accuray ended the second quarter of fiscal 2024 with better-than-expected revenues and solid Services revenues. Geographically, Accuray’s performance was strong in EIMEA (Europe, India, the Middle East and Africa) and Japan, which was impressive. Strong year-over-year order growth in the Asia Pacific (APAC) region, with particular strength in China, was also encouraging. The expansion in the global installed base also looks promising. An uptick in gross orders was also promising.
On the earnings call, management confirmed that new product launches like VitalHold for Radixact, Tomo C in China, Helix, Accuray’s Helical value segment product and Cenos, online adaptive capability will be growth catalysts. This raises our optimism about the stock.
However, wider-than-expected loss per share and dismal top-line and bottom-line performances were disappointing. A decline in the company’s Product revenues was discouraging. The fall in revenues from the Americas and APAC (excluding Japan) was also worrying. The gross margin contraction also does not bode well.
Zacks Rank and Key Picks
Accuray currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Stryker Corporation (SYK - Free Report) .
Elevance Health, carrying a Zacks Rank of 2 (Buy), reported fourth-quarter 2023 adjusted earnings per share (EPS) of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
HCA Healthcare reported fourth-quarter 2023 adjusted EPS of $5.90, beating the Zacks Consensus Estimate by 16.8%. Revenues of $17.30 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
HCA Healthcare has a long-term estimated growth rate of 9.6%. HCA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.8%.
Stryker reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.82 billion surpassed the Zacks Consensus Estimate by 3.8%. It currently carries a Zacks Rank #2.
Stryker has a long-term estimated growth rate of 10.2%. SYK’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 5.1%.
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Accuray (ARAY) Q2 Earnings Lag Estimates, Gross Margin Contracts
Accuray Incorporated (ARAY - Free Report) reported loss per share of 10 cents for the second quarter of fiscal 2024, wider than the year-ago period’s loss of 2 cents per share. The metric was also wider than the Zacks Consensus Estimate of a loss of 7 cents per share.
Revenues in Detail
Accuray registered revenues of $107.2 million in the second quarter of fiscal 2024, down 6.6% year over year. The figure, however, topped the Zacks Consensus Estimate by 0.1%.
The overall top-line growth was dampened by lower Products revenues, which was partially offset by an uptick in Service revenues.
At constant exchange rate (CER), net revenues were $106 million, representing an 8% decrease from the prior-year period.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal second quarter, Product revenues declined 18.5% from the year-ago quarter to $51.5 million. This primarily resulted due to shipments of six fewer units year over year.
Services revenues improved 8.2% from the year-ago quarter to $55.7 million. At CER, Services revenues were up 7%. This was primarily driven by an increase in contract revenues and higher installation, training and spare parts volume.
Gross product orders totaled $93.9 million, up 18.8% year over year.
Accuray Incorporated Price, Consensus and EPS Surprise
Accuray Incorporated price-consensus-eps-surprise-chart | Accuray Incorporated Quote
Margin Trend
In the quarter under review, Accuray’s gross profit declined 16.4% to $35.9 million. Gross margin contracted 396 basis points to 33.5%.
Selling and marketing expenses fell 16.4% to $11.4 million. Research and development expenses rose 4.4% year over year to $15.3 million, while general and administrative expenses went up 9.9% year over year to $13.2 million. Total operating expenses of $39.9 million decreased 0.9% year over year.
Operating loss totaled $3.9 million in the fiscal second quarter against the prior-year quarter’s operating profit of $2.7 million.
Financial Position
Accuray exited second-quarter fiscal 2024 with cash and cash equivalents of $72.8 million compared with $76.9 million at the end of the fiscal first quarter.
Total debt (including short-term debt) at the end of second-quarter fiscal 2024 was $174.8 million compared with $176 million at the fiscal first-quarter end.
Guidance
Accuray has provided its revenue outlook for the fiscal third quarter and reiterated its expectations for the metric for fiscal 2024 based on current expectations.
The company expects the third quarter of fiscal 2024 revenues in the range of $112 million-$118 million. The Zacks Consensus Estimate is pegged at $124 million.
Accuray continues to expect its fiscal year revenues to be in the range of $460 million-$470 million, reflecting year-over-year growth of 3-5%. The Zacks Consensus Estimate is pegged at $464.9 million.
Our Take
Accuray ended the second quarter of fiscal 2024 with better-than-expected revenues and solid Services revenues. Geographically, Accuray’s performance was strong in EIMEA (Europe, India, the Middle East and Africa) and Japan, which was impressive. Strong year-over-year order growth in the Asia Pacific (APAC) region, with particular strength in China, was also encouraging. The expansion in the global installed base also looks promising. An uptick in gross orders was also promising.
On the earnings call, management confirmed that new product launches like VitalHold for Radixact, Tomo C in China, Helix, Accuray’s Helical value segment product and Cenos, online adaptive capability will be growth catalysts. This raises our optimism about the stock.
However, wider-than-expected loss per share and dismal top-line and bottom-line performances were disappointing. A decline in the company’s Product revenues was discouraging. The fall in revenues from the Americas and APAC (excluding Japan) was also worrying. The gross margin contraction also does not bode well.
Zacks Rank and Key Picks
Accuray currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , HCA Healthcare, Inc. (HCA - Free Report) and Stryker Corporation (SYK - Free Report) .
Elevance Health, carrying a Zacks Rank of 2 (Buy), reported fourth-quarter 2023 adjusted earnings per share (EPS) of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
HCA Healthcare reported fourth-quarter 2023 adjusted EPS of $5.90, beating the Zacks Consensus Estimate by 16.8%. Revenues of $17.30 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2.
HCA Healthcare has a long-term estimated growth rate of 9.6%. HCA’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 9.8%.
Stryker reported fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.82 billion surpassed the Zacks Consensus Estimate by 3.8%. It currently carries a Zacks Rank #2.
Stryker has a long-term estimated growth rate of 10.2%. SYK’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 5.1%.