ARAY - Earnings call transcript Q2 2018

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Operator

Good day ladies and gentlemen, and welcome to the Second Quarter Fiscal Year 2018 Accuray Incorporated 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, today’s program is being recorded. I’d now like to introduce your host for today’s program Doug Sherk. sir. ahead, go Please

Douglas Sherk

and review everyone. second financial which XX, fiscal Jonathan, conference quarter to call XXXX, XXXX. December on to results ended good you, Welcome afternoon, Accuray’s of Thank for the

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

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

themselves two with follow any First, during request requeue then the questions ups. and to question-and-answer-session questioners to we the limit

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

Levine. December XXXX. Accruray's turn call fiscal of that regarding second With Josh Chief statement our to referred the example, second way, quarter which and over Officer, our ended XX, Executive For I President the out quarter

Joshua Levine

results to afternoon last quarter Radixact as seen fiscal quarters. generation and CyberKnife our upgrades. and devices Contributing as our latest positive platforms on Doug. of impact software recent call. continued joining Thanks, the us performance several which continuing product over were for our thank most second the these today's of you everyone both to Good Accuray's well across momentum

orders. the behind year orders but to CyberKnife fiscal quarter quarter very prior during XXXX. of a recent perform Orders performance. continue regional the EMEA second of were Japan line percentage XXXX On order fiscal XX% our strong historical to second strong order system our in a well XX% of our CyberKnife a the order global were replacement basis, were line regions system with our with quarter the of XX% Product quarter that of XX% distributor suggesting a revenue total seeing quarter second Radixact by we represented quarter. up the increased Gross More of of related XX% year. revenue improving driven XXXX orders. from during XX% orders for process early Order are during was volume order international focus highlighted performance all the year-over-year of which to prior $XX.X of $XXX.X family heightened system revenue effects in existing expectations order bit to and growth the sales specifically in contributors to financial were was Our TomoTherapy customers was of fiscal by on conversion in unit million. to million, mix products represented due second primarily from performance the mix. total the our the TomoTherapy contribution our and

that to to account A commissioned we commercial opportunity we embarked and our control U.S. that I headwind on that China now our to best focused to analysis improved of you'll the the started are commercial making filing drive restructuring targeted all background, and report that progress the restructuring changes from drive due U.S. and our sales visible focus fiscal to We'd timing XXXX. will region the specific In reference region, was of initiated our U.S. as third-party XXXX. to related coverage the that we license our fiscal to in later year the U.S. organizational related U.S. build remember territory we market out we standard way optimize and A on team team. in more a believe opportunities. And radiotherapy performed remains While organization, we've U.S. on the completed Americas with a restructuring model uncertain incremental APAC can this expectations, contribution commercial fiscal Class announcement. continuing

for Our $XX.X million. previously range million were were cancellations million $X.X net million $XX age Net our to resulting $XX of from of age quarter outs guidance XXXX, the $XX fiscal orders and within million. out of of primarily second net provided

and increased future backlog $XXX.X million for growth. ending best product is XX% year-over-year indicator to our revenue Our

Our commercial driven momentum by current several factors. is being

To currently XX treatment workflow and sense be the First, of improved vault system significantly market versatility. of regional performance, our market strategic to is have you have system, Radixact market in Japan, response of to funnel more X,XXX first half contributor the an half our by a and product our be viable product Western the order accepted a recent complete, to as those of ability product represents In have the product momentum geographic potential than second and contribution this sales overall Europe a quarter, we the Japan. opportunities. in XXXX sales are the vaults quarters. fiscal true primarily competitor XX speed, previous which where have in additional months, to give the the a capabilities, is and about single resource which fourth throughput Radixact camps and in has Radixact taken the are majority we past based overall plus additions, on in of a with business workhorse momentum. positioning larger backlog region being some the US, settings dual two we we potential we Accuray’s US of access a our that our overall hospital year a result efficiency expand The in and and majority growing expect and of restructuring been and broad orders better will to mix believe in as US market represents case Europe during over But mainly to now of our registration community every that alone. fiscal changing Improvements our opportunity. functional

Within oncology upgrades inflammation which within that significantly the patient's of include tumor our as due during treatment and module The the of the is second of the both momentum identifies course positioning physician our efficiently a an workflow plan. and planning have Accuray prior data that reporting is our and changes connectivity captures system and Software. launch to anatomical Treatment re-plan and and Planning System Treatment adapt treatment Precision systems. department suite known These driver is monitoring allows management weight occurred loss, our integrated our of the recent IDMS improve confidence capabilities, treatment to shrinkage. It and software automated this PRECISEART solution upgrades internally to that regarding treatment patient ensures the Planning

orders revenue are to the which sharing driver Additionally, coming is management roadmap our from customers improved we’ve for System contributing XXXX. The conversion CyberKnife international and both our Radixact focused includes distributor we and been the see overall is that Radixact motion into to our that on systems we systems, software the management for future enabling imaging momentum. and initiatives capability our fiscal impact commercial launched last and beginning revenue with

highlighted of fiscal full to indications are early are timing guidance. These commercial improved financial too seeing our XXXX early revenue These the point, year are pleased supporting it’s to momentum. this visual traction to While makers primary on and factors us declare key recognition. our are the I the we difference victory just allowing we with areas the reiterate improved related

In reduce catalysts, during continued addition second commercial to to to capital make exposure our the debt. dilution structure additional related to the these strives quarter, of operational the convertible and we improve company’s meaningful and

Now to for financial look a our I over would Kevin at the turn deeper performance. like call to

Kevin Waters

China. everyone. evenly in revenue has Product quarter increase period. revenues a XX% our due of an meaningful contribution the very Product Josh. $XX.X $XXX.X prior sales we from European between second fairly for of our quarter primary generated systems outside APAC primarily been you, In second a over of primarily these the prior from quarter XX% mixed was year Total APAC afternoon, revenue the The year. was And revenue Thank regions. Radixact. million, over increase Growth was growth drivers million and was representing revenue CyberKnife product with good for to the and increased TomoTherapy our twofold.

of revenue. are to we Radixact the converting initial First, orders

We than have recognized units launch. XX since product Radixact more

the increased the million, prior conversion. service quarter of contract. year-over-year distributor a we revenue in an on $X.X upgrade stream. improvements of to at X% service increase due of over revenues customers revenue to increased sequential providing distributor Service the Second, purchase $XX.X predictable contracts our million was for increase order to year revenue Over XX% purchase due

For the XXXX, to XX% half year. the compared of revenue prior fiscal grew first

Our later. higher CyberKnife into product will gross growth, in I translate system major margins, was to a turn this which contributor discuss which

second to XX.X%. XX% XX.X%, and XXX margins were gross the of For point as a quarter year. increased revenue prior attributable margins overall our Product second percentage basis prior prior by of quarter, overall the the margin impacted gross XX.X% margin expansion was Systems in Systems gross to larger CyberKnife quarter, year. increased gross in compared compared of Product the period favorably year compared to Radixact with

from This in as over a quarter TomoTherapy discussed will prior the charge ago in last Our our the gross amortized and XX.X% call Systems $X order in go-to-market Radixact fiscal pricing XX.X%, in financial the to quarterly periods October, generating to million and reoccur compared favorable included amortization strategy second margins in as Systems. Service year margins intangible during period. fully XXXX. the prior amortization charge QX TomoTherapy for is compared were our year not acquisition. Further was the generation

prior margins First fiscal XXXX XXX of improvement XX.X%, point gross service over basis represent year. which was half

results As noted the our margins for best this half are therefore, the plan of look and fiscal previously, our of we quarterly first our progress fluctuate metrics margin year-to-date. as for business in we indicator service and operating at service can

Moving quarter the period. our million income on from increased as Radixact expense The G&A down CyberKnife business growth expectations spending both majority and ago in were due year system. on of the progress also increased million, compensation R&D of the year-over-year to XX% expenses the expenses. $XX.X the incentive for development line and coming higher Operating statement. operating from $XX.X an increase our we at

a fiscal For continue of operating is approximately of to approximately X% to which rate per X%, run $XX quarter. million expect we XXXX, increases expense

the we this range. the this at end higher of towards Although point, trend expect

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

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

the part combination Our the in retire to dilution. cash in plan include we that of February a the existing new minimize cash raised to due by term of an notes the strategy of cash executing through XXXX amendment a shareholder loan that $XX December We are facility. and revolver our balances this convertible XXXX million the

should $XX cash convergent step the notes transformation. significant notes We and of notes are of in convertible XXXX notes million the net of we give February to settlement notes paid all approximately will the stock a This share. in in the million structure price plus in positive up is conversion After For avoiding company the at remaining do, share have cash February the convertible in approximately above years in retirement million solutions. million. the X.X maturities from back of to debts a will the X will is term retiring $XX us shares. need of XXXX of believe additional the access another that common and the loan capital to the of our consist $XX amount of now. asset principal $XX minimize method, have notes, and consider per of principal into million The convertible amount convertible December be will due of any flexibility which value elected The revolver of mature dilution delivered raised these $X.XX shares proceeds alternatives the

represents Turning month This of earlier XXXX. gross orders. to fiscal do our again annual for and guidance guidance today. reaffirmed approximately now for We've so growth X% this year-over-year our

be in in sequential million We expect the third growth our to quarter XXXX for $XX of range. continues operating low line XXXX our plan. quarter-over-quarter fiscal and the with This is

adjusted Turning to EBITDA. both the revenue and

million $XXX $XXX revenue of to We range are million. reiterating our

first half this the time. We at revenue the very on metric have of feel about year expectations confident exceeded in this and therefore guidance

at result XX% XX%. million we We year-over-year to second a range reiterating QX quarter. comparable between be anticipate which net would level $XX of growth in a $XX completed million, recently our age-outs a EBITDA are For and to to

to these full in happen year revenue have average of year-over-year age-outs continue see We of previous expect to age-in, still orders many net backlog. go seen as On believe will we we a basis, as in percentage in to improvement a quarters. a

already revenue current Accepted clear type revenues not and obligations although are want deferrals provide I to future brief accounting do XXXX. all XXX will that the be Accuray recognition they training across the Accounting materially the we are are periods and our believe service we year Accuray still allocates the not until including in Finally, reported the assessment timing on obligations not Principles, a of will to fiscal full of delivered changes standard evaluating beginning be our also therefore XXX. XXX. Currently under update new financial currently I this represent under standard, of recognized and ASC impact. those adopting results revenue of want our performance at discrete Generally our adoption of

Additionally, includes billed any from contracts backlog the although our Accuray's unbilled only include or in to move service XXX, do we gross and orders separate current backlog. current not product

we the does we XX recognized orders continue criteria And but months to as XXX. periods hand now with are to have be adopt would this back like Our Josh. not to also backlog evaluate revenue to call greater potential the I in include future still and old as than that, that will

Joshua Levine

Kevin. Thanks,

with up thank increased the make I'd in for supporting line difference Before their the questions. we operator like lives. to the patient's questions, focus, and improving open ready now call important your for for we're work to execution And Accuray entire commitment me our team that, open that's

Operator

Certainly. [Operator Instructions].

question comes Our of Josh line first the from from Jennings Cowen.

please? question Your

Josh Jennings

you experienced congratulations EMEA wanted first in And level put to And gentlemen. on you you're another Josh what line regions. the initiatives place conversion in the in level I sustainability dynamic what in have in about generate that strong the the need of of quarter. or revenue the new the revenue Do are thanks to experienced you row a just APAC last of Hi, base have two terms of it you you conversion to quarters? is in are in see a in the to do dynamic. -- confidence rectify to delays that tracking order quarters new number confidence ask and seeing curious the

Joshua Levine

couple So, Josh, it’s things. a of

background, know You form of Kevin. position dedicated the way to that just reports VP in that revenue management level a by resources of we've add

project in of additional support with results We ultimately range have help assisting the with recognition. assist added regions and distributors management in to that processes, activities revenue installation streamlining the

added. the last tangible quarter visible encouraged way. its higher in to all and visible we’ve impact a level -- resources this pleased with two of become a of think result we’ve some specifically across started what frankly obviously those I seen, of obviously we the Again, quarters has very last QX of activities in as quite are accountability

that that there’s going to expect do from more the I we’re work standpoint work but think resources having a continue the I what an definitely see And they’re generally would to we’ll that focused impact. here directional on that and are doing, forward.

as a we translates All revenue of ultimately go this more forecast into predictable accuracy forward.

Josh Jennings

JV access be oncology you a you understand Any in to a terms of there Thanks on China the radiation for update how for talked help China. us big that. a deal in market progress unlocking opportunity? can that there could And and search historically domestic partner

Joshua Levine

from active. a the dialogue and still discussions standpoint are JV the So,

us those partners a a to an next partner would XX kind of are focus an competency we focused who of there. assembly the fall a or the has the discussions Chinese the as of advancing Class opportunity, approval -- We on matter of entity that enable well that the re-meeting branded if regulatory we shortlisted will provider the are you going radiotherapy. both or really This to The to find over someone have week as is partner be local by in opportunity on The China for been days be essentially biggest with as segment of solution. absolute product the or ground here product manufacturing process market that’s the market. outside the to course here to in has going in A ethnic of portion segment is opportunity

If in Class premium specification point its opportunity about which products at you probably the of segment only price and radiotherapy represented estimate even XX% China. we our the products, earlier to go and is back in market peak that estimates, A Class highest-level A the

something the at end segment segment a value is we have So, XXXX big perspective. we something announce. end opportunity to this to cycle there the the be waiting the no have captured to June. the fiscal of from a are and talk be probably calendar our a out track by frankly about think And core year to of of than I on quite later But still hope to at would may point end

the about that’s So timing.

Josh Jennings

good. Sounds

a half fiscal you about terms XX I confidence on guidance then And order your in would a confidence last you sneak for a weighted has think low one fiscal order guidance weak been one can level. growth quarter-to-quarter just here of, just performance. half, these suggest million third XXX seasonally remind including setup talk there toward and us seasonality? one just reaffirmed then QX? the quarter drove back one, of Just year. in. said last XQ in X%, Thanks. second you what Kevin, for Can rate an last But [ph] I And you until your plus for is

Kevin Waters

large assumed operating QX. our a plan So, always

of point. to we’re plan operating the gave. third really through expect opportunities in and quarter. U.S., those initiatives revenue internal first fourth the QX had We quarters expect of attraction Right we the at fiscal to in first $XX low number million again in a a Josh initial we’re from that’s contribution the starting beginning this lot the currently come quarter. now, our of fiscal a in really the our lot I fourth So commence our I some walk in see and And to two U.S. largest marketing that own to with the year.

by So, view it’s and in driven back conservative the license around very China Class A U.S. a half moderate, primarily issuances. tempered

Operator

question next line from of Petrone Jefferies. the Our comes Anthony from

Your question please.

Anthony Petrone

Maybe just on a orders. few housekeeping and distributor revisiting that’s starting

So maybe install those the are segment really improve of really just base base I and update the on view up renewal sort an and And total of what hanging fruit and for install a as for Radixact? have then you percentage would low specifically that Tomo follow-up.

Kevin Waters

XXX install X base Anthony those of than And EBITDA one-third probably XXX, ripe XXX our to roughly North So, and older XXX for are years, be of replacement. would install it is now so range range. those more units than

Anthony Petrone

is as also mix what then well? within Tomo And the of there

Joshua Levine

of Western It’s third units really Joshua, in probably a and about Kevin a standpoint, XX% And Tomo that’s Europe. CyberKnife that concentration from talked just U.S. the family say mix. that the geographic of I’d primarily related, XX% XX-XX,

Anthony Petrone

particular for are Radixact? on low-hanging fruit -- way a would And where discussions you in such those do view that units sort is see moving again, you of those

Joshua Levine

contributions. in cycles, we are deliverable just of XX% of region. ’XX, key ratio I mean, a total the about if fiscal our replacement we years. for fiscal think opportunity. last on and replacement course Yes. fiscal for the the most and teams U.S. focused really, XXXX in two total in were roughly of the We EMEA you commercial both mix. two the At key the over initiative XX% definitely. And order say of really I’d terms those about end sales finished mix order the It’s

sets to our generation platform trade install as So, quite in compensation, next motion a grow. to Radixact for to able we’re are them up, frankly be be functional to upgrade operating Tomo based imaging continuing order able into for of those the catalyst to existing to to need in product to QX, Radixact in customers to trade see that the capability a be number themselves order up loss based pathway improved that capabilities. to upgrade put going platform nicely

move really the forward. serves quite So, to discussion catalyst trade as it up and a frankly trade

Anthony Petrone

remind what of on year have Europe. last us, distributor think measures this 'XX time put were revenue, then standpoint, fiscal was And just a conversion it XQ But thanks in importantly sort U.S. the I been I can place? in again. stuck now where in of of a think sort you distributor are were in they may where Can their from and percentage position float a comp of orders

Joshua Levine

that I say I can, a of Yeah. were orders know that bought we percentage don't have let's down.

cycle clear addition about in distributors, VP management added additional I Anthony, this region positions all of fiscal the revenue those position Just but with QX literally the project we first the in of adds We're working we in the adding last about fiscal in in the be talked into the to QX. before coming quarter resources talking headcount those put XXXX. management in added this year, were emphasis

than think I that growth three If generated three XX% order distributor how past of backlog better think metrics about orders. magnitude orders, about basically that overtime, XX% distributor public the in order in with been of last has generated the years the you in the had years, we've we've say shifted just

those We've impact with about distributor user the are channel backlog. end situations. construction oversight having the you and of institution. don't an into that these in site is the permitting, again on of when have So, a sight anymore talked sitting mix the We direct organization activities range length processes planning, an in orders time line of that introduce

catalyst what seeing in along. line activity. an I we're the these of perspective putting we're in pleased from direction and to things related and in reporting that And place we move to were pretty regards processes, accountability those moving sight us direct did kind the streamlining with these that with structure in think for to So, of date order oversight more help

Kevin Waters

XX% our real Europe of region increased and at of XXXX how XX% Josh you represents revenues fiscal total that described activities, distributor And that's just European And in of total the of of compared to in translates, 'XX. And the first primary tangible are if conversion. first around in the total, the Anthony, look revenues. that half driver only half in our terms dollars of

Operator

Thank you.

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

Your question please.

Brandon Henry

thanks question. taking for Yeah my

first growth you revenue So, of By second XX% math revenue kind half looks of of first that That revenue on half revenue guidance year, flat to half compares on the my where it is 'XX question 'XX. kind guidance. fiscal like implies side. this down guys versus fiscal second grew the to

of So, second or to is that something versus is half fiscal this revenue you about terms being guidance? need first 'XX there in think 'XX half conservative, fiscal

Kevin Waters

Yeah.

the it’s half year-over-year to the second to of ahead lot where though this wanted half year of half to does our focused first even back foreign of basis, our the we still cause on appropriate trending at of half And Brandon So, be feel over a of time a kind year. range. on the we stay of we for year, are therefore, increase of first kind

seeing good now, conversion distributor we calendarization the achieving out Josh and mentioned right as focused guidance on But our as are We expected. planning we is around activities. revenue are progress

Brandon Henry

sales half that’s of seeing improvement in region discuss is terms Is Americas what confidence region, Can quarters. something question Americas underperformed Okay. you you the past on in that’s funnel region? fiscal post in the the one in And second are giving there a the hires? recent a then obviously you

Joshua Levine

this in The targeting. latest places end of last catalyst street we comparatively segmentation of really from just competitive standpoint defining customer kind and really on so market kind win. consultant generation quite is if the was Those feet have at commissioning commercial based the physician just was you that several we to to a hard the you strong opportunity, we a on drove targeting was think from that Brandon, terms us essentially do -- focusing basically market right the quite taking project of of Yes, where with our infrastructure comparatively underpowered areas. frankly have metric about been the talked that year account competitors. would our been of in where analysis Josh. we’ve where about products, It of look work frankly a our any the energies competitive use that One the best in historically, at and historically we

that related that to with the the important as have space. was we’ve to other really a in pretty this domain but development sales significant coverage high-level I a territory The people, to we’ve essentially one in analysis level that’s us evident that end was resourced which general amount the It’s market model come added was is the at additional to experience US frankly a is standpoint. that hiring organization. our the people deployment point a resource And territory added to really of territory form market some strategic of quite restructuring talent of things the element managers, from market think gotten of sales and the directors, account people sales and

ramp there’s going shortening to here of the be with a new is domain there hoping that and would expertise traditional that normally of kind a people. that associated be believing So, we’re a factor be

so, while are and say people are our years And they Accuray do percentage would the not new years. board They space. that last are a we days, proven many people to earlier have in I now performers XXX over that to new or XX domain healthy are of the over relatively on

kind we on when process with and thought the that’s in of in activity at specifically think ramp we confidence the funnel some year towards back look the QX. the the half that I and So, of look taking that as we a the focus are

Operator

you. Thank

of Our from next line question Tycho Peterson comes from JPMorgan. the

question please. Your

Tycho Peterson

Hey, the the there. Radixact about you talked thanks. replacement and kind Josh cycle of opportunity on

the Just looks curious and there? on like funnel what greenfield competitive, opportunity

Joshua Levine

in settings. the market a right growing you where of mix or funnel uptake in remarks prepared revenue two with or the those healthy to feel we in adoption kind I last market half to think got mean and seeing stands competitive with three go Radixact, we have medical sale And But had We’ve of you smaller be U.S., is in now center Europe, leading our in if opportunities we’ve community situations. of of as remarks. if market I of good pretty the dual terms regional series. the where mean successful that Tycho, and that of activity over hospitals, replacement continue footprint product now. systems basically this again, year quarters in the the we’re indicator opportunities. more which shared a the and H last now, the is the strong the covers almost really traditional academic our waterfront new funnel single all to gamut, approved, quarters situations, obviously know, bunkers, will XX markets, that install been is a based Tomo of metrics, course replacement that mean, the for uptake target and we of Radixact I right about to we And some device. we’re opposed Japan and back sales you opportunities. as of going opportunities, some for for product

Tycho Peterson

then out? motion precession maybe roll when little and a know CyberKnife that’s on And you you about talk and I Can on think then development I that and management pipeline both on I improved Radixact had talk you in enabling imaging here thinking you Radixact. bit rollout? guess to timeline just to on

Kevin Waters

stage those a is visibility early projects. I I some think for mean, the of

maybe to XX thinking months. We’re XX

Tycho Peterson

room at CyberKnife. sense upgrades? what on us is install further the this here and guess give there a of of point percentage you then MX Can I upgraded to basis is for additional And

Kevin Waters

upgraded a data know, in devices of reality an still, the is to MX me. But are I out have, of don’t answer The Collimator. if reasonable don’t is. have there there degree MLC, the the is we there Multileaf front I without

And MX not so is that to opportunity at XX% That still really represents represents I’m operating of based it install probably plus plus, -- is going where guess the XX% for platform. is that the us. least the probably with

leaves level on a which XX%, has So, probably lot with XX%, of MX our of runway us. MLC been obviously for penetration

Tycho Peterson

light volatility In backlog Are about talked of order and you ASC expecting and go XXX visibility? then recognition revenue, current on conservative. competitor last order any what And you your impact of through. and being to had one,

Joshua Levine

prepared No. the which I current training statements and my it’s some that they changing how that. they already have only competitive account our in currently we talked in said comments know I when have that defer are of financial remarks delivered, revenue for recognize

won’t any had because criteria something offering also in valuate that un-built XXX service I continuing noted contracts us months XX right for address service could criteria benchmark. the backlog change backlog. timing never evaluate in also example So have our is age-out our backlog, be as a ASC for give other that doesn’t And or directly opportunity, us. XXX if type we're the included an while But to then we of in that's

Operator

you. Thank

Street of line from question O'Neil Our next comes from Capital. Brooks the Lake

Your question please?

Brooks O'Neil

out number much. of just here a hoping competitive the and in the overall what as very order Good state-of-the-art you hospital overview equipment Thank equipment environment just evening sense the investors, curious growth. guys, sort to here. see terrific you us is big assess congratulations for how I allow of today, to quick that'd is other of was there, you strong customers. you helpful. I particularly your people some three, see then potential the two, strategic not acceleration And I you one revenue of be posture sort of of radiation on for your macro And these importance might both one. environment in the very world Number results like give of an sufficiently and was when I with feeling get parts the pushbacks talk

Joshua Levine

the me So, part the environment. kind CapEx with which first macro start of the was of question, let

sea as quite more right place discussion for in perhaps And important are part years right center now positioning ago we've I probably go when level it's you is than the been most in from I I today we've commitment behind Obamacare, absolute if the to comparatively affordable cautiously the strategic an sit looking care time. act of profit we've Obamacare. model. I care is mean environment. capital back we've an where reality seen a some what clinical that of in more several care of the hospitals. their done CapEx standpoint, stable certainly it and course from Those been more really years, out last think the us. been relates people hospital cancer several of we're say over would about radiotherapy affordable act of conversations The multidisciplinary

much So would are stable think we seeing in and last reimbursement several of July, in a recently a of us to we're radiation again, we'll in I terms net the be announced kind space say we're and environment. where generally, relatively slightly believe I to the has relatively positive. now. effect place Last good more years again stable at where again I neutral the reimbursement, for overall, been compared CMS

we term, an with and type there the directionally start in I no longer of volume the body question model. deal episodic just is image moving around the with But well think payment trends that of past, front, trends. reimbursement think our treatment about directional lines as think IMRT, you and people system we've reimbursement strategic is talking of moving those up talked we're guided are stereotactic that. more and positioned I on When radiotherapy to kind well portfolio about more too

really performing when competitive significant reached is our we're of term. you’re was well and the platform about is our The is seen think of aligned case specifically. clinical on, really has company the history. positioning portfolio I heading question, capability products us part reimbursement that efficiency functionally, from wise, the Radixact for workforce really company’s in where and wise is has focused part the think mix Really, frankly that best longer last change this quite both this the and your standpoint status answer either again, products talking and clinical start best I what you So, Tomo with about capability impact versatility, in side products, capability, we wise workflow a

terms positioning. like in I we portfolio where so, And of are our

things and only fuel roadmap positioning add several will in next got we’ve product’s perspective in a the from terms pipeline that of think I years the the provide some capability. over tailwind

more CyberKnife than space. On device-specific data of -- than clinical any the the more product any clinical in data the got we’ve

We XX% about that wide area range XX% a form of case current solution the the treatment made procedure an are product and improvements prostate of are with mix how intracranial the do CyberKnife it. installed that base terrific now the with just for specifically but the it’s case most has lot growing. the of its a absolute other and mix performing and fastest prostates basis that still really volume which treatment And types liver in we’ve lung, in today, to product is the beyond a on and

the and than we’re I So, years more next we’ve think strongly company been over several a positioned ever. as today

Brooks O'Neil

Kevin? question now, was extraordinarily you thought. the actions of the couple to convert, ago a Kevin of is think you bit wouldn’t be I stock this XX for mentioned because some actually have weeks it than you addressing I what might might lower be think million positive just be that as But might that right that. in That’s of would A asked to susceptible more say quite just range and now. palatable would be the But the willing right the

Kevin Waters

Yes, correct.

of price settle convert the at X.X the be remaining to be set of possibility and could the that. that at which XX will million company on aside calculated price has closing a there January end shares the million So, the

dilution stock over be holders mind. of on obvious at to to the equal weeks But that there’s kind cash minimize to I to convert scenarios XXXX. other point shares which the issued. negotiate various directly One the open could and some are strategies come considering few to could to is would raised repurchase as And we my However, shares all market, a the our that’s the going this stock next the prepared in payment in be mentioned than remarks in some mitigate of one December reasons in rather cash we that very the we’re alternative. working issued of type

Our out of market goal going which still is to dilution remains after minimize to the that’s Xst. February amount the the same, in

Operator

this CEO Thank session to to for back today’s conclude Josh further I would President like program. program Levine question-and-answer you. the the any hand and remarks. of And does

Joshua Levine

We afternoon. with participation everyone you QX speaking the of and your Thanks, for results evening. at you Jonathan. this Thank forward report good end And look have a we’ll thank your April. and our

Operator

does Thank and your you, program. participation gentlemen, the ladies conference. today’s conclude in for This

now may Good disconnect. day. You

Accuray (ARAY) 23 Jan 182018 Q2 Earnings call transcript