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Accuray (ARAY) Q4 Earnings Lag Estimates, Gross Margin Shrinks
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Accuray Incorporated (ARAY - Free Report) reported fourth-quarter fiscal 2024 earnings per share (EPS) of 3 cents against the year-ago period’s reported loss of 3 cents per share. The bottom line missed the Zacks Consensus Estimate of 4 cents.
Revenues in Detail
Accuray registered quarterly revenues of $134.3 million, up 13.5% year over year. The figure beat the Zacks Consensus Estimate by 9.4%.
The overall top-line growth was driven by higher product sales, partially offset by lower service revenues.
At constant exchange rate (CER), net revenues were $136.7 million, representing a 15.6% increase from the prior-year period’s level.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal fourth quarter, Product revenues improved 27.6% from the year-ago quarter’s level to $79.7 million.
Services revenues declined 2.2% to $54.6 million.
Gross product orders totaled $95.5 million, up 7.9% year over year.
Margin Trend
In the quarter under review, Accuray’s gross profit declined 2.1% year over year to $38.5 million. Gross margin contracted 330 basis points to 28.6%.
Selling and marketing expenses increased 0.3% to $10.7 million. Research and development expenses decreased 32.8% to $9.5 million. General and administrative expenses also went down 14.1% year over year to $11.4 million. Total operating expenses of $31.6 million decreased 17%.
Operating profit totaled $6.8 million against the prior-year quarter’s operating loss of $0.5 million.
Accuray Incorporated Price, Consensus and EPS Surprise
Accuray exited fourth-quarter fiscal 2024 with cash and cash equivalents of $69.1 million compared with $60.5 million at the end of the fiscal third quarter.
Total debt (including short-term debt) at the end of the fiscal fourth quarter was $172.2 million compared with $173.5 million at the end of the fiscal third quarter.
Guidance
Accuray has lowered its revenue outlook for fiscal 2025, based on current expectations.
The company expects revenues to be in the range of $460-$470 million (reflecting year-over-year growth of 3-5%). The Zacks Consensus Estimate is pegged at $460.2 million.
Our Take
Accuray reported mixed fourth-quarter fiscal 2024 results, wherein earnings lagged estimates but revenues beat the same. The company’s improving product sales were encouraging. ARAY achieved record quarterly system shipments with a 24% increase in systems shipped compared with the year-ago period’s level.
During the quarter, the company received Precision Treatment Planning System (“TPS”) in China for use with the Tomo C radiation therapy system. It also gained approval for Helix, a configuration of the Radixact Treatment Delivery System in Europe during the reported quarter. These approvals are likely to accelerate revenue growth in the upcoming quarters. Expansion into new markets looks promising.
However, contracting margins do not bode well for the company.
DaVita has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.
DaVita’s shares have risen 39.2% year to date compared with the industry’s 11% growth.
Aspen Technology has an estimated long-term growth rate of 13.1%. AZPN’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 4.24%.
Shares of Aspen Technology have lost 3.1% year to date against the industry’s 9.2% growth.
Universal Health Services has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.
The company’s shares have risen 44.7% year to date compared with the industry’s 34.9% growth.
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Accuray (ARAY) Q4 Earnings Lag Estimates, Gross Margin Shrinks
Accuray Incorporated (ARAY - Free Report) reported fourth-quarter fiscal 2024 earnings per share (EPS) of 3 cents against the year-ago period’s reported loss of 3 cents per share. The bottom line missed the Zacks Consensus Estimate of 4 cents.
Revenues in Detail
Accuray registered quarterly revenues of $134.3 million, up 13.5% year over year. The figure beat the Zacks Consensus Estimate by 9.4%.
The overall top-line growth was driven by higher product sales, partially offset by lower service revenues.
At constant exchange rate (CER), net revenues were $136.7 million, representing a 15.6% increase from the prior-year period’s level.
Segmental Details
Accuray derives revenues from two sources — Products and Services.
In the fiscal fourth quarter, Product revenues improved 27.6% from the year-ago quarter’s level to $79.7 million.
Services revenues declined 2.2% to $54.6 million.
Gross product orders totaled $95.5 million, up 7.9% year over year.
Margin Trend
In the quarter under review, Accuray’s gross profit declined 2.1% year over year to $38.5 million. Gross margin contracted 330 basis points to 28.6%.
Selling and marketing expenses increased 0.3% to $10.7 million. Research and development expenses decreased 32.8% to $9.5 million. General and administrative expenses also went down 14.1% year over year to $11.4 million. Total operating expenses of $31.6 million decreased 17%.
Operating profit totaled $6.8 million against the prior-year quarter’s operating loss of $0.5 million.
Accuray Incorporated Price, Consensus and EPS Surprise
Accuray Incorporated price-consensus-eps-surprise-chart | Accuray Incorporated Quote
Financial Position
Accuray exited fourth-quarter fiscal 2024 with cash and cash equivalents of $69.1 million compared with $60.5 million at the end of the fiscal third quarter.
Total debt (including short-term debt) at the end of the fiscal fourth quarter was $172.2 million compared with $173.5 million at the end of the fiscal third quarter.
Guidance
Accuray has lowered its revenue outlook for fiscal 2025, based on current expectations.
The company expects revenues to be in the range of $460-$470 million (reflecting year-over-year growth of 3-5%). The Zacks Consensus Estimate is pegged at $460.2 million.
Our Take
Accuray reported mixed fourth-quarter fiscal 2024 results, wherein earnings lagged estimates but revenues beat the same. The company’s improving product sales were encouraging. ARAY achieved record quarterly system shipments with a 24% increase in systems shipped compared with the year-ago period’s level.
During the quarter, the company received Precision Treatment Planning System (“TPS”) in China for use with the Tomo C radiation therapy system. It also gained approval for Helix, a configuration of the Radixact Treatment Delivery System in Europe during the reported quarter. These approvals are likely to accelerate revenue growth in the upcoming quarters. Expansion into new markets looks promising.
However, contracting margins do not bode well for the company.
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 DaVita (DVA - Free Report) , Aspen Technology (AZPN - Free Report) and Universal Health Services (UHS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.
DaVita’s shares have risen 39.2% year to date compared with the industry’s 11% growth.
Aspen Technology has an estimated long-term growth rate of 13.1%. AZPN’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 4.24%.
Shares of Aspen Technology have lost 3.1% year to date against the industry’s 9.2% growth.
Universal Health Services has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.
The company’s shares have risen 44.7% year to date compared with the industry’s 34.9% growth.