ARAY - Earnings call transcript Q1 2018

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Operator

Good day ladies and gentlemen, and thank you for your patience.

You’ve joined the Accuray Q1 Fiscal 2018 Earnings Conference Call. At this time all participants are in a listen only-mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference maybe recorded. to call like host to now Mr. would turn over the your I Sherk. Doug begin. Sir, you may

Douglas Sherk

Thank good the Latif, XX, to fiscal you, and which XXXX, review conference to XXXX, recent financial call as Accuray's well results corporate on for ended first as of afternoon, quarter September everyone. developments. Welcome

Waters, are President and Vice Josh today and us Senior Accuray's President Chief Financial Accuray's Officer. Executive Joining Levine, Officer; and Kevin Chief

and of statements risks we like I'd business described today, control. to remind economic involve as growth; company's These during and to the in Securities macro the including statements. our housekeeping after that issued call factors today's available uncertainties, the items. cause other call future order forward-looking Systems' future and could statements and There risks from limited of commercial afternoon plans are in closed future filings market factors as and this well revenue differ fully more press outside materially are on no us the begin, growth; you we based a forward-looking to, our statements include on with number our TomoTherapy expectations, Commission. we information that associated strategies. with that The are to assume our we of date, update as Radixact Exchange and results any risks but adoption obligation of forward-looking Before this regarding Two release not and actual execution; including, the to CyberKnife, the

with themselves then that we question-and-answer two to questions additional session re-queue the follow-ups. during limit request First, and questioners

remarks a quarters. fiscal to references prepared we Second, specific our quarter make year in to all are the

quarter XX, regarding our first statements ended refer to example, our quarter For September XXXX. first fiscal

turn Levine. I'd the Chief Officer, Accuray's Executive over Josh and call like to President to Now

Joshua Levine

growth CyberKnife Good and revenue business of and call. Thank healthy the joining Orders both afternoon, fiscal XXXX. and on software well from you for performed strong both of result thank systems quarter everyone, a products. Accuray's Radixact us showed Doug. combination and and with in the you, today's first our

continue to approximately successfully are our and Radixact moving of newest orders our primarily generation academic centers and were has customer competitive $XX.XX results versatility, beyond Our Accuray. mix On our traditional customer overall combined Japan growth unit case performed base breakdown, System, community of when the facilities. Customer strengthened were quarter, our the reinforce that mix presence show strong position quarter. medical represented orders, our the gross growth driving expanding Order that did region for in by select was TomoTherapy regional efficiency to of orders in decisions and EIMEA us are representing more and which first from and with contributions within for Gross our XX%. our order prior products from million contributors expectations XX% significant during with regional a quarter. growth year. driven improvements year-over-year CyberKnife and first order speed indicates feedback

the APAC within with regions Class toward was was continued conventional linear the wins quarter year-over-year refill A down While to and performed competitive in to accelerators. replacing Americas announcement. along APAC opportunities in due the delays new China the type bunker license Order expectation, more region weighted

that to age-outs million orders from to orders, million $X of better age Net aged-out to $X previously primarily the of million fact were net backlog recognized have of Our to distributors in revenue first as quarter. orders $XX net $X This go than were guidance the that revenue. out European after due our still $X.X age-outs highlights of potential the million. million

results and met our orders. for or Accuray represent to expectations exceeded first quarter consecutive year-over-year XX% fourth increased has quarter consensus backlog earning the million, order gross Our $XXX that

X% grew the than expected for revenue million earlier are we've distributor-initiated as of and revenue year, driven somewhat conversion the communications X%. benefited over This designed in that from orders. total side, revenue initiatives expectations above product the from we was quarter to improve $XX our prior the On growth by first highlighted was prior

to During in in San clinician opportunity upgrades. software Delivery to from may we identify very that the Delivery generation occur during attended Meeting System can of versatility Diego, Radixact loss, efficiently mix treatment, plan. treatment first associated patient and automated System confidence recently caused ensures re-plan those such thermal the the internally was the as Radixact earlier that customers and other platforms and case software. and our adapt Planning efficiently for by of prospective the both by we efficiency tumor weight PRECISEART and has inflammation our physician over PRECISEART which System enabled and regarding ASTRO, the It and our is course software. Precision of objectively allows our speed quarter, positioning shrinkage. ASTRO Treatment solution an changes Treatment positive. and with the an improvements Radixact anatomical reporting prior System to expansion launched speed our of and highlighted and At been Planning related represented monitoring precision treatment Feedback feedback patient's existing software the and The and

technology on bring focused map Additionally, to market. road our ASTRO, plan and to new at we customers were the

To System. for motion enabling enabling our CT. System. a medium-term near- optimized on road for our map Our of our cone part of major we're relates for capability second including adaptive products. provide A developing we're as therapy advanced range of management imaging field CyberKnife to project improvements end, capabilities, working large to the beam The technology road view this map fully radiation is Radixact

Therapy tools of combined art enable our coupled will our radiotherapy Our software, when imaging and improved of across platforms. adaptive with capabilities, price capability with [ph] management both product full motion implement PRECISEART a suite unique innovative Adaptive to

additional System system time beyond ASTRO, we version software MX improve a an XX% System at MLC-equipped our substantially of Treatment by Planning CyberKnife CyberKnife for addition, new will currently. Precision In demoed our our that treatment and

local XXX clinical cancer highlighting data Pacific after that study presented, data low-risk to most of intermediate-risk there prostate securing study to SBRT men SBRT available disease. I'd was multi-institutional This that disease include that, with provides expanded to others Regence And prostate study System patients. XX.X% reimbursement the Kevin. SBRT. for extensive XX to ASTRO, years With tolerated. adds in announce we of participants treatments showing of coverage the follow-up prostate prostate hypofractionated well showed low-risk an important XX-year information long-term the with This CyberKnife patients. step Northwest groundbreaking the this low- at receiving study with CyberKnife February prostate mild industry. toxicity of CyberKnife selected Kevin? low- prostate men CyberKnife prostate month, excellent considered clinical and and expanded treatment had X-year illustrates published intermediate-risk and control, turn the call for by in to administered why SBRT in cancer studies study outcomes was being to prospective and we're also BlueShield is or Additionally, new increasingly announced study The compendium is like in the over BlueCross pleased create This

Kevin Waters

increase our good and European seen of quarter the revenue was first Total order to you, primarily Thank an Japan $XX afternoon, to the representing first in million, was improvement Josh, conversion, Growth prior which in revenue and and due quarter was year. year-over-year X% regions. for over the distributor everyone.

million, see is early, period. the good some an revenue still quarter X% of it our with TomoTherapy from Product was year over evenly very was conversion. million, year. was systems While $XX our a between traction the mixed revenue Product over on to for and focus $XX.X for from contribution X% fairly CyberKnife increase revenue the prior increase revenue an of Radixact. Service the quarter prior meaningful

compared certain acquisition. million will ago control. represent Service XX.X% part QX high gross not XX.X% of to charge recognized period. including compared consumption, service due margins service margin XX.X% the an and to in prior Product of overall in TomoTherapy XXXX. quarter fourth fiscal XX.X%. quarter to $X year. the in our the and XXXX prior in favorably overall and to year margins XX.X% gross year margin quarter quarter fully in in larger increase all-time attributable quarterly Further, for was gross margins year first and are was revenues product Our reoccur for factors, the to amortized to high intangible period of driven the Product The by margin with as by a in the prior percentage increased compared service overall quarter impacted margins sales both margins. significant cost in XX.X% amortization a gross the systems power in compared reliability, of less a was from periods were XX.X% leading improvements quarter CyberKnife prior of of us to improved the recorded gross the variety were financial prior year. the first gross This first

quarter service exceeded First margin plan. performance our

revenues in year prior above margins margin recognized the anticipate high not basis we points quarter year. to However, XXX XXX full the first and anticipated repeated to improve to be service approximately continue to thus, service are

basis, with $XX.X income in a ago operating the consistent for quarter an were our statement. the down year the Moving X% sequential in spent $XX.X XXXX. fourth of expenses increase from On Operating million recently expenses period. million, we $XX.X were quarter of million fiscal the

The which we headcount return As sales areas quarter investing are largest the as areas marketing call, I and and we in and spending our increased customers project and marketing. in two on is in functions. predominantly X% was R&D increase and OpEx year-over-year in shareholders, fourth sales our R&D provide noted that our to these increased

a of $XX to OpEx is $XX expect we up quarter. X%, XXXX, fiscal per rate X% million run which to For to be million

loss fiscal First to in million $X.X quarter quarter was and million million million EBITDA of in $X.X year quarter first the ago operating adjusted to for year prior compared a was $X.X period. the $X.X compared the loss first of

million equivalents, restricted Turning at cash balance investments approximately September of now sheet. to $XX and cash, cash XX. had our We short-term

cash our above cash plans. our current balance position is internal decreased, our Although

flows cash positive debt on repayments. expect excluding full any year We a basis,

million we Regarding flexibility August resources This growth of us our execute secures $XX existing opportunities. on debt. to a our that XXXX, transaction and our longer-term will structure allow convertible debt. In the refinanced capital

new of and due our to XXXX. now cash Our debt convertible and straight maturity by debt. compared million $XX debt interest convertible We as XXXX of total years, existing of significant dilution in XXXX expense February notes minimizes due $XX portion a XX notes convertible million have extends potentially reduces over

in our and we evaluating strategy being the cost-effective. remaining $XX XXXX, to are dilution also by options minimizes of on that focus the million retire We due will February

Turning now growth for to back gross of X% XXXX. we August, which our approximately annual guidance provided orders. are guidance in Today, reaffirming the for is fiscal year-over-year

we performance trailing patterns order order our quarter first at look to continue want our on investors exceeded expectations, basis. encourage to While a to X-quarter

improvement a sequential order on throughout basis expect fiscal gross quarterly We a XXXX.

EBITDA. adjusted and revenue Turning both to

second reiterating to would $XX XX%. range basis, average we anticipate a expect million year with now are previous orders EBITDA prior net adjusted backlog. in revenue these $XX million at to represent range saw net of age-outs we we believe growth the approximately year-over-year percentage fiscal happen to in EBITDA a quarter. the age-in quarters. hand to many consistent seen revenue levels see which quarter, Last, go our in back a million Josh. of improvement still year will second we of We $XX On million as We XX% of would year-over-year I $XXX to $XX to of have and that, age-out like in is to of million our And as with call full million. $XXX and the growth between

Joshua Levine

Thanks, Kevin.

your Before in to open now we the important the for commitment I'd And thank like questions, call focus, with. to the work we're line questions. improving team and for entire we're to increased Accuray ready up execution the open their involved

Operator

Instructions] Petrone you, Thank comes [Operator of sir. line Our from the of Jefferies. question first Anthony

line open. Your is

Anthony Petrone

to one And Congrats for it installed Maybe and on good the outlook term on relates start then a here, guys. longer Thanks, good base the to afternoon. Radixact one quarter on as good year. the guidance.

I existing mean, relates the just it you is looks of replacements TomoTherapy seems this like then much do have into of traction, situation how competitive were quarter this during Just And wondering the for as you next orders follow-up guidance. where how existing the one percentage Radixact of what often on to a of Radixact gaining the I'll year the are I'm base, - Tomo or takeaways. seeing see their installed and it of year? it And base base? driver turnover perhaps

Kevin Waters

Kevin. is This Anthony. Thanks,

both that on for is historically say will I our doesn't and more given XX% Radixact basis, of had from competitive of What replacements a orders give to all majority our replacements. opportunities On we replacements. much first year So roughly that our in full have basis make quarter. around percents a the fiscal to greenfield XX% TomoTherapy specific been orders came it of sense quarterly really actually and

to of full basis, would represent on However, roughly our XX% year a mix. expect order replacements the we still to XX%

Anthony Petrone

It's the $X the improvement for helpful. orders on then the million guess, previously reflecting, just year sequentially think I bookings. aged-out just that into I kind went guidance back and And throughout of gross of

So $XX about should And again. Thanks, previously there that that what the how million of could content in eventually just the be amount to the aged-out Or year? come sequential are did throughout back million that orders? the orders thinking improvement confirm, $X context in fold? - in out the of of from we gross into bookings the was

Kevin Waters

Yes.

aged-in, those not point a the just in of orders. we $X as So million stated gross are included that have clarification,

that new run number $XX.X we age-in, we a - a through When that we of calculation. have orders. order order gross are the gross reported million, actually net the all those order So

So…

Anthony Petrone

Got it…

Kevin Waters

point first clarification. the of That's

months that second would regards if at probably The million a at $XX improving of sequentially number XX to to X% you QX the more in growth I then growth it look improvement, in would there. kind would from sequential point continue to the a in range the to and basis. million $XX XX-month what And kind and regards look of rate QX trailing imply, put trailing on

Anthony Petrone

Thank you

Operator

you. Thank

comes of from question next Peterson Our Tycho JPMorgan.

open. is line Your

Unidentified Analyst

Hi. congrats Thanks, This a my Julia is question quarter. taking on Thanks Tycho. on for and strong guys. again for

Thank of drove this has strong down quarter, this very how growth seen Japan, then on And what strength a maybe you that you that a higher some Japan is there so question elaborate quarter. mix bit Could drove road? noted what in CyberKnife sustainable that is mentioned the you also Japan? the little that? into Just a you. And

Joshua Levine

degree an several Japan quarters. Julia, question. improving seen I the course I’ll momentum Japan of take the So, mean, in over we've last the of

momentum to ago, year If timing highlighted logjam, really the if kind to then. that months lines remember this before. Japan say we'd in broken And general due XX conversion basically has revenue variety factors you of in at I'd a seen a a ago, time seeing conversion healthier in we back cadence, XX you you point. of will, is perspective we were a if maybe that Japan revenue than much through between at That from slower will, in

the be contributor The basically which shown in to Japan quarter in the we for would have - an approval received Radixact, to other clearly year. earlier of in year this calendar calendar first

portion becoming Radixact activity a discussion the order Japan. sales in funnel -- in So and funnel is bigger of terms of

Your please second question, second the you question? repeat can

Unidentified Analyst

of quarter, because gross the that CyberKnife. mentioned this there a product was mix higher You - higher margin of

sustainable So what is you. drove how that? And Thank that?

Kevin Waters

Yes.

unit of year deals. for compare volume approximately between near to represented least revenue the the expect rollout first prior probably prior a total that quarter of if that represent And XX-XX our this CyberKnife quarter as CyberKnife total XX% in was CyberKnife year, term. XX% TomoTherapy that in And probably of the So XX% our and you dollars. number to forward revenue more I in XX% backlog would of split It's revenue to wouldn't at going deals CyberKnife.

Unidentified Analyst

Very just squeeze I you. can helpful. Thank in And if one.

R&D there increase mentioned in a is that You this year. projected

and Radixact driving Onrad, increase are market So R&D? already the Thanks. in what the just in with you that out considering is

Joshua Levine

continued areas. in several got we've - activity product So Julia, product key development

CyberKnife. large The on across view cone our volumetric would beam Radixact platforms, and field CT the of be large enhanced first one capability both on side imaging on and both

CyberKnife, upgrades to the of continuing, So little overall optimization. a generation the throughput Maybe bit lesser talked spend. our degree, around Planning biggest especially on about our We little those Treatment remarks CyberKnife the device. part improvement through for and speed bit Precision treatment a a prepared be probably would in software proportionately of next the focused System

in R&D So the those resource allocation of primary would be area. areas the

Kevin Waters

to of to the over that perspective some is of to maybe to grow put years. forecast XX% numbers, the number to R&D be at sales and our sales, upper compared last XX% few just XX% the And will approximately the end year for

can So highlighted Josh we absolute think the initiatives prepared in the remarks. support growth dollars, his that in

Unidentified Analyst

much you helpful. Very so Thank guys.

Kevin Waters

you. Thank

Operator

you. Thank

Our Jennings next Cowen. from question comes Josh of

Your question please.

Harris Iqbal

This actually of the afternoon. behalf good on I questions. Iqbal Harris is appreciate Hi, Josh.

the you highlight could that So as within such U.S. can support the else the talk the targeting new initiatives to leadership business, of about strategic kind new things like enacted, U.S. you for some of would anything as account franchise? things being or

Joshua Levine

right So as focused that we've account gone got emphasis on places with -- we underpowered, the U.S. historically in very capability focus about a basically and we street. product I product on feet about had quarters, in on a where on the would market, we've -- targeting, been significant talked on through to based also talking think win earlier positioning. better We've we're say,

we And structure, as number in territory U.S. so have the well to direct and two, or regions sales to market geography, the basically U.S. specifically. sales new from personnel of in increased to with increase the resourcing go include personnel three the Americas support as

I we've taking a variety think of there. got So things place

The effort right we've powering places where more we on of more in the got marketing by terms first targeting it. infrastructure firepower, we will, if is to think win, one behind really it, you sales best perspective and and got focused the

direction we're market. while So U.S. yield results, immediate I the moving won't in these things think right the in directionally

Harris Iqbal

kind you're plan you to of you done And of be product the road? That's early down market How features about out with Can some you one here? on rolling you lot potential kind And future additional will that mentioned those of the of earlier do of throughput the recently. a have the or innings talk then patient seeing Radixact. in then Great. helpful. some additional question doctors,

Joshua Levine

the has of to kind of efficiency, device really throughput Radixact commercial in routinely the treatment treatment patients sites, a one won't high-XXs, day. launch. in ramp before cancer full in in on that normal for some XX and XX, the have throughput I went range were monitor now get Florida the early that The name, is in over that's Miami treatment are ramp our institution reference South device. treating a of terms a to which the schedule the of sites center sea was So of been in specific examples it the XX of and the and there sites impact but speed we this change of course of best kind in monitor and original overall

this early these very is the product adopter terms product. The pretty in significant functionality. in I'd one, well what So not speed now had terms -- in TomoTherapy on of sites. it mix and than quite I mean, we regions from we or from is devices an treatment that the treating They're we're speed, of -- of of the H uplift performing generations of generation previous frankly, earlier being Series cases seen from had at say, throughput. broader are, across That's seen terms Tomo end seeing in it's initially

feeling positioning in at we're improvements overall So the we're platform. on functionality Radixact and good and about where really with efficiency

imaging pipeline regarding are motion target improve basis. standpoint kind the capability of innovation or the we've the in resolution are terms map from adjust beam, to the Radixact are capability, integrated the management, and CyberKnife focused forward the road talked really going Synchrony software technology that essentially development changes in And imaging project we management position the ability capability that of to things over adaptive a in same that the years Some about on developments on and enjoyed of on our and the with on radiotherapy. an automatic motion bringing

Harris Iqbal

Great. Thank you.

Operator

you. Thank

question Capital of from next Our Henry Brandon Markets. RBC comes

Your question please.

Brandon Henry

you the my given Yeah. question. sales And progressing are the about funnel uncertainties for is quota? that should about fiscal how movement on have for you taking ramp in finally, talk Class the any Class year A And 'XX? we how A you then be Thanks the seen Can do then quota? Onrad, Onrad the of thinking for any remainder have -- China Chinese the

Joshua Levine

but don't A is to any since is the little that question. the reported the can if, product, it's very the land. information - impossible non-Class that have said, So we absolutely announcement. to that minds I'd are would It's very Brandon, be with we what of we are in on, our there's A being announcement. to very created and people and world of -- timing and over of delay that again, And is announcement given Onrad still it information Class be based so view to is, where a Josh. this product or that it -- we additional The to outside this been we've but while some question on, the licenses Onrad, we may question think view focused But is regards equation. say, part affects this market when. uncertainty - Class in in fall the is how that A that parts of that The clearly not and situation still incremental of - happen. not when, that's on point, firmly predict your Class the of the we there something the for A believe how of would your going clearly overhang, a be where on QX answer by should think us really focus question characterizations, on influence And of we approval, interesting will obvious price I Onrad product Onrad earlier or specifications other outside

entered into institution's think slowdown, long of to forward will, uncertainty, if think I it. and with final has been Onrad. of kind I a created time around kind market move it's longer to decision, the time thinking And aggressively the you more a willingness the a it's the line if the will, you admittedly, of that line a

it. opportunities energy a in Class Our in a timing distributor of mean will to But again, be think linked in has I Onrad's in probably degree, in funnel terms really sales of to terms A China for timing to some the announcement. added resources or it pipeline and uptick, uplift linked of I and building increase people a

opportunity of part been improved hats and Onrad we're the market solely very access several quarters expanded market last hanging to with access about from position to a perspective an that in believe position strategy line. the other not the Having is thought We the for the in ourselves in ground, of of us. China that clear or process partner the in would on China. The strategy, an imply lines along of and the the a made we've is, JV order our on company something ability which product kind part with important Chinese a an for collaboration

pursuing. a that's you is that part say actively lot to it this tell on update that, I'd timing I have we're but applied of So right I of an don't now, of and another that tuned. energy can being stay

Brandon Henry

Okay. And second question.

kept I the guidance expense same. think raised you you growth guidance, guys but operating EBITDA slightly

guidance same? then that And where is about the it what for offset confidence gross just the keep spend and going? EBITDA the margins year? talk is just Is additional to can So higher

Kevin Waters

Yes, it's observation, Brandon. great a

the the that we guided I going XXX fourth and in looking be prior see stronger my said think over gross higher to more are in margins where my had allow may more to OpEx, improvement are be prepared on R&D. high at previous increased X% we a quarter basis points now our to margins XXX on and quarter nail did are remarks also first us prepared we XXX year service basis-point power in you going head X% I into remarks. to that in our up the think So a little end. in And call, that the we to in had we gross some hit

high of on taking do up depending I the us range So and EBITDA years, that OpEx the on the of seen to the power over side. few the million some kind the overage business. ability $XX still And have it into down lines, last be back as where we we're you've applying comfortable think or power and revenue the land the with within on with

Brandon Henry

thanks. Okay,

Operator

you. Thank

Amit Hazan Our next question comes Citi. from of

open. is line Your

Unidentified Analyst

is This me? for guys. Amit. Hey, Phil Can you on hear

Joshua Levine

Yes.

Kevin Waters

Yes.

Unidentified Analyst

question. Great. Thanks taking right. All for the

facilities strategy of anecdotal setting, that think transitioning on the in noting direction? the focus. couple And the how a regional Can that talk discussions of in we've to sort been a evidence academic? and those in maybe differ of community - those where from increased I go-to-market bit you wins challenges commercial how that sort give strategy, in discussions, some

Joshua Levine

been Well, think of and community-wise back I didn't because shift here or improvement company years products of regionally X lack product in our of were large primary throughput And product if and ago. all reliability, historically, - both had X facilities, and you closed speed and frankly driver just go quite I we areas. efficiency. a is the functionality shortcomings generation we a and the performance, in has mean, we quite as the those significant really of reliability product these treatment latest and in really have gap that very fully frankly where from presence

back in from based weren't go or getting single positioned a much we hospitals, X capability. product regional you So and in audience if competitive X positioning accounts, And in today, or of strongly. positioned all thinking we're community mix footprint, ago. smaller really standpoint more a bunker years at those types bunker dual or shifts based strategic terms We're be where on of and of a kind an you'd

quarters, quarters. smaller you accounts, of back XX%, mix what's we some overall setting seeing consistently last mix over momentum. the that's types our several if of customer - the approaching maybe types the of and those even pretty So look - now and fueling in in I really XX% I those been overall orders the Tomo in And segments presence mean - driving

in hadn't and as that's So good performing are in treatment historically products been our proxy viability say making recognition how I'd or are customers difference pretty our market way a they a clinical for that that perceiving a endorsement a choice.

Unidentified Analyst

guys the great. a share That's discussion like integrating you're What account or I those the taking of lines in guess, is potentially settings where of, competitive in multi-vault sort along then terms new and transitioning in And site. software into highlighting treatment vault, And settings in of one what Thanks. have And with just that? the software that transitioning system? is you're planning goes at what ASTRO? you the current sort where been integration

Joshua Levine

how straightforward OIS treatment And the connectivity MOSAIQ. situation - for get in MOSAIQ, a point. products ARIA oncology single setting. So our ARIA planning upgrades bunker the the - setting side, We terms being today are with in the platform. their exclusively of improving which the to significantly both really are current connectivity point. again - integrate ability the a into products terms difference software of system of and viability side, really of by And of and frankly this latest this software discussion is our on making if you with wave planning we pretty are integrating and a - are capabilities in at at a own is big our perceiving side, market don't product connect is of treatment vault our - equipment, time. again, used not across in multi-vendor have from the information both The We but quite over the talk platforms pretty of a but collection the -- our into we support area other customers that

kept been you of based haven't we lack on So will, out, connectivity. if of opportunities those

soon collaboration be RayCare, known to first-generation they past, that RaySearch I is which through going and is, system, OIS highlight we've be to once reasonably other would as mentioned as are with comes integrated the to have their platform in market thing that with we The with will Labs, market. the we coming

forward positioned our products relationship RayCare, of pretty across in well both overall. we're going terms suite the own well think connectivity of I as as again, So with software

Unidentified Analyst

And that just characterizing? agreement is you're exclusive an with there RayCare

Joshua Levine

mean, hope of facilities, I other in to integrate. served frankly there'll their close today, are settings. OIS I programs in believe belief quite XXX% when or used their No. that especially the But MOSAIQ and the in market biggest that that being think is systems is ARIA multi-vendor be represent about how you the

a momentum And being context. - some some, think behind with us -- will by we so RayCare RayCare in I aligned connectivity having have

Unidentified Analyst

Josh. great. That’s right. All much very Thanks

Operator

comes Bernstein from Cowen. question of the next Our Instructions] [Operator you. of line Thank Jeff

Your line is open.

Jeff Bernstein

Hey, guys.

little couple you prostate around got. Just of a your first the of follow for and could whether on reimbursement expanded that? if the see you've more Wanted deeper thoughts that's SBRT to a for And bit that what up questions.

Joshua Levine

was my as BlueShield. cover male necessarily should I X.X point lives that They isn't in remarks that's that, Pacific So lives. million in Regence prepared lives, that Jeff, about the BlueCross mentioned Northwest. I out

prostate mean we we coverage. bit should regards position frankly But growing we in So a with a be conservative in to - that. is the what I little latest SBRT trend quite this how

now. carriers, major XX think of of inside XX Medicare All CMS of cover the the SBRT regions I

been So the product mainstream, has and it's think absolutely very a say, is I is some the become months this. much norm data perspective let's you that our today available view from XX the And becoming fueling the course if last, the available the - over XX that or will. is to of of

that's low- effects delivered especially side treatment, very a high for hypofractionated and low a very You patients to the very with get get of from intermediate-risk life this great quality kind - treated is outcomes. outcomes. by CyberKnife, This radiotherapy to cost-effective way standpoint, clinical is

growing we a a So of think situation. this a continuing is not and pan going a in kind continue. we think that to is This is the trend, that one flash

Jeff Bernstein

being you been at this reason for do to has guys So for a evolving? customer is that And now? you choose in while? Or look compelling this a place as a

Joshua Levine

we're So I think the just safe, clear to answer. in be

treatment efforts about you treatment have think then of platform. country descending CyberKnife good terms that part is made terms is and around When one their order, absolute than Prostate there application in something of intracranial. hypofractionated their very the lung, not growth of think overall of the with anchor the is the fastest next. XX% We installed kind CyberKnife CyberKnife. fastest-growing in of we've very, of And service today the use liver in in growing. prostate I prostate this of mix their institutions of the And pioneered growing, The procedure case that's the is of development hypofractionated and base if fastest a else. been are communities. still procedure areas really About are treatment strong our a though, longer industry. anybody for hypofractionated at marketing business

us trend think So I think for a news. I good of is this indicative that to and strong continue. It's going a one is

Jeff Bernstein

there's York. here a big deal know this I been in New has So -

you experience So of more broadly type now does and can that say, kind that it and mean that being? take doing market of what Sterling's and "Hey, they look how are successful

Joshua Levine

- institution, example the will practices good in New being that certainly there of no that to of another. is are from using a Georgetown So points York, say vary it as I CyberKnife have good these on models D.C. Winthrop developed, been to prostate-centric practices in is points the would kind question but strong build radiotherapy reference institution - choice. success that how reference platform

general, in So have points us think expand to -- are the good about in to the try these what's order possible their with reference for device. knowledge market I them

Jeff Bernstein

on has little of - the problem previously. there? Got the right deliveries a And reported you. been just just in mechanics and a better improved talk that going which bit some you distribution-driven about you what's kind then territories, of Can

Kevin Waters

Yes, Kevin. this is

the announced talked earlier, highly a mix feet And the Resource highly to past had we've we We've you're also with and of right, project weighted dedicated VP European the that regional managers. on was some about. towards hired product As hired of distributors Revenue process weighted that's internally. towards we region our in street manage the

of just year. of for that to at look quarter you 'XX in our Europe the XX% compared now region revenue last QX XX% total first in total, represented of If

revenue So it's some regards nice changes in made conversion. to early to with see we've traction

Jeff Bernstein

That’s great. Thanks.

Kevin Waters

Jeff. Thanks,

Operator

to and time, the Levine, any like I'd back this turn Sir? call closing over CEO, for to you. President Thank remarks. At Josh

Joshua Levine

for everyone we a Thank results forward operator. with QX the this when in evening. speaking call afternoon. you, report you, Thank have good to and we end you you And participation January. look Thank at of the

Operator

gentlemen, program. the for that participation. your you does and Thank conclude Ladies

Accuray (ARAY) 24 Oct 172018 Q1 Earnings call transcript