Accuray (ARAY) Q2 Earnings and Revenues Top Estimates
Accuray Incorporated ARAY reported a loss of 2 cents per share for the second quarter of fiscal 2023 against the breakeven earnings per share (EPS) in the year-ago period. However, the loss per share was narrower than the Zacks Consensus Estimate of a loss of 3 cents per share.
We had projected the loss per share to be 2 cents, which matched the company-reported result.
Revenues in Detail
Accuray registered revenues of $114.8 million in the second quarter of fiscal 2023, down 1.3% year over year. The figure topped the Zacks Consensus Estimate by 7.9%.
The fiscal second-quarter revenue compares to our estimate of $108.5 million.
The overall top-line growth was mainly dampened by supply-chain constraints and foreign exchange headwinds.
At constant exchange rate (CER), net revenues were $120.9 million, representing a 4% increase from the prior-year period.
Accuray derives revenues from two sources — Products and Services.
In the fiscal second quarter, Product revenues improved 4.2% from the year-ago quarter to $63.3 million. This figure compares to our Product revenues’ fiscal second-quarter projection of $55.9 million.
At CER, Product revenues improved 8%.
Services revenues fell 7.3% from the year-ago quarter to $51.5 million. This figure compares to our Services revenues’ fiscal second-quarter projection of $52.6 million.
At CER, Services revenues were flat.
Gross product orders totaled $79 million, down 7.4% year over year. This figure compares to our gross orders’ fiscal second-quarter projection of $88.4 million.
On a sequential basis, gross product orders increased 13.2%.
Accuray Incorporated Price, Consensus and EPS Surprise
Accuray Incorporated price-consensus-eps-surprise-chart | Accuray Incorporated Quote
In the quarter under review, Accuray’s gross profit rose 0.8% to $42.9 million. Gross margin expanded 78 basis points (bps) to 37.4%.
We had projected 36.3% of gross margin for the fiscal second quarter.
Selling and marketing expenses rose 2.7% to $13.6 million. Research and development expenses fell 0.4% year over year to $14.6 million, while general and administrative expenses went up 12.3% year over year to $12 million. Total operating expenses of $40.3 million increased 4.2% year over year.
Operating profit totaled $2.7 million in the fiscal second quarter, which declined 32.1% from the prior-year quarter. Operating margin in the fiscal second quarter contracted 107 bps to 2.4%.
Accuray exited the second quarter of fiscal 2023 with cash and cash equivalents of $67.7 million compared with $81 million at the end of the fiscal first quarter.
Total debt (including short-term debt) at the end of the fiscal second quarter was $179.8 million compared with $176.3 million at the end of the fiscal first quarter.
Accuray has reiterated its outlook for fiscal 2023 based on current expectations.
The company continues to expect its fiscal year revenues to be $447 million-$455 million, reflecting year-over-year growth at the midpoint of the range of 5%. The Zacks Consensus Estimate for the same is pegged at $448.7 million.
Accuray ended the second quarter of fiscal 2023 with better-than-expected results. Robust Product revenues and geographical performances are impressive. Continued strong demand for Accuray’s ClearRT Helical kVCT Imaging for the Radixact System, Synchrony Technology and VOLO Ultra enhancement looks promising. During the reported quarter, the company received 34 new system orders globally, with notable strength in the America's region with solid year-over-year growth. In China, Accuray made impressive progress with respect to its CyberKnife and Radixact Systems, which also buoy our optimism.
During the fiscal second quarter, Accuray advanced key strategic partnerships, including with C-RAD, introducing the VitalHold breast package. This is expected to allow Accuray to offer the most comprehensive breast package in the market. This also looks encouraging for the stock. Gross margin expansion bodes well for the stock.
However, dismal overall top-line and bottom-line performances and lower Services revenues are disappointing. The decline in gross orders is also worrying. The operating margin contraction also does not bode well. The current global supply-chain shortages, forex woes and inflationary pressure are other challenges the company is navigating through, which is another concern.
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 Neogen Corporation NEOG, McKesson Corporation MCK and Hologic, Inc. HOLX.
Neogen, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of 15 cents, beating the Zacks Consensus Estimate of a loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Neogen has a return on equity of 5.6% against the industry’s negative return. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 70.1%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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