VRAY - Earnings call transcript Q1 2018

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Operator

Good afternoon, ladies and gentlemen, and welcome to the First Quarter 2018 ViewRay, Inc. 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 is being recorded. to conference like host, to now Mr. would turn over the your I The Group. Roth Ruth Lee at

Lee Roth

Thanks, afternoon Quarter XXXX Christine. ViewRay's Financial to Good Results to everyone, Conference Call. welcome and First

President available management we results. of Chris Internet encourage Ajay from A Chief This release copy a ViewRay Officer. This on this of the section and available and website ViewRay XX be Financial Executive that being at quarter announcing Relations me on a will Joining its to website Bansal, document. for you Raanes, our www.viewray.com, days. call first the broadcast Officer; and of review live at Investor replay are also and is issued call our press is afternoon, over release Chief XXXX the the viewray.com, financial

actual my call Chris call. With circumstances Chris? of update pleasure no of it's obligation date this quarter from I'd as subsequent by made report discussed the and call statements conference securities the due begin, to material this those statements that after we in numerous contains revise ViewRay date any reflect projected content Risk include live to Exchange and as management statements the involve during like XX, said, the differ March laws. meaning for undertakes those Raanes. time-sensitive to listeners forward-looking XX, the of call of XXXX. and of federal over turn any including to well our statements as the or accurate XX-Q Furthermore, may reports forward-looking the filed otherwise within caution in Securities comments Form broadcast, or Before These forward-looking ViewRay's factors, uncertainties, on with this heading Commission. Factors information quarterly to ended to that XXXX, under only events could May results the risks this

Chris Raanes

approval Quarter quarter our to today main first we In on LINAC. the received systems. MRIdian we execution Call. as is anniversary total new for XXXX past commercial MRIdian which keep Financial on beyond of good MRIdian remarks of first I'll It totaling themes Linac months ViewRay's so Results everyone. recognized and $XX.X First FDA orders just this revenue move fourth afternoon, under the MRIdian results, you, growing momentum The Thank of and XX orders for the you we quarter, Linac year we for QX, took us systems. are Welcome since In the milestone to brief. million, my X systems X Conference reported

In the to systems quarter was X upgrade revenue addition Total first-generation to $XX.X recognized also Linac. our of revenue an for MRIdian systems, one of the on million. we

QX. one for reasons: While QX; system was system upgrade. essentially than a was originally ViewRay, over we will on be than bit for a quarter. new the QX, this Consequently, completed X it we is was high It expected, QX quite X which previous QX revenue revenue recognized forward recognized from a and installed another also in earlier quarter QX; an lower in carried unit from in record pulling but

the the meetings. customers off more the as medical effect brings X to MRIdian treating make new Manhattan. clinical the time treating the of it in York-Presbyterian final research, X Miami to patients Cancer MRIdian South center world's the second MRIdian in recent the systems first treating to The we decision. in MRI-guided, treating For to they of from adaptive patients orders acceleration at to on should VU in in MRIdian Clinic see and Florida more talking a about of in million acceleration the also X Heidelberg occupying the $XX accelerator-based, Linacs: In Linac. who In sites of brings University in our believe need Germany, last purchase we're half the reach XXXX, of University reality revenue the million. linear podium systems the momentum we exactly of have started leading the multiplier represented a April benefits year. And from is Health Hospital short, month, potential patients, kind Amsterdam, VUmc of the new with the obvious This Baptist in with more guidance practice full on-table the The less Linac QX, the treatment. year an in $XX Center maintaining I've systems, all that at calls we Center take treating treatment in Medical of This before New obvious with which benefit, Linac new recognized been

of site facility held the As the At the together, Europe. we make of United and day, the we MRI-guided both was that included to VUmc Participation clinicians Linac MRI, advantage could the a center's MRIdian from exceeded XXX both of symposium, a end physics installed sites global and tour world the you at bringing original know, recently and largest is Heidelberg saw learned return and to our place for second the and in MRIdian on-table These nearly nearly treatment guests pancreatic adaptive, expect electron in presentations MRIdian unique clinical VUmc. for took delivering experience main capability XXX this demonstrated radiation technology a development. breast, see of in Barcelona radiotherapy. April the MRIdian the competitive expectations clear effect experts system of the opportunity on to real image-guided clinicians the which University foreseeable that clinicians under a was interested where featured oncology imaging MRIdian, and of MRIdian therapy presentation topics in symposium presentations their VUmc MRIdian, which with future. prestigious their as hosted both prostate, we of of up X/X Notably, the in the experience, chairs took their March. hotspots XX also in world, with ESTRO, States including a the Professor year. oncology maintain educating institutions. the the cancers. which, liver the X meeting of in and host The out Late the posters at with our at treatment pointed radiation annual We a SmartVISION capacity. oncology presentations conviction At meeting plans, right our as radiation strength also the based field MR Debus from lack show, is validating his satellite

upgrade diffusion-weighted For and TX-weighted, the includes sequences. pulse TX-weighted MRI minded, our technically

not us resolution doubled ratio Notice signal-to-noise In times. intend X long SmartVISION said at to addition, of processing What doubled image field and and lead. Europe is you of that and a few improves this innovations, package, of quality resolution, real-time in the we've the way imaging. extending I in These functional response in our package improvements. string that are imaging based the United contrast the different the years the irrelevant. which sale incremental frame UCLA to doubled first already system. advanced MRIdian imaging requests diffusion-weighted studies the signal demonstrates of renders strength continue our the for This upgrade essentially to is proprietary MRIdian should published leveraging imaging from on for system. on digital capabilities the any of customers States, user types over expect of argument The We is images only imaging rate, ViewRay's the doubling technology not available world-leading will lead on past the that but using and clarity our and MR MRIdian

XXXX of grow turn our with half as We're execution. expand year. for Ministry to of were additional Linac oncology momentum Finally, opportunity represents expect the in March, systems year comments we financial in the a that, market we our Japan. to ViewRay. system this there rapidly. Health, the summary, In call look X a more I'd MHLW, the third install we from Ajay see and and huge to world's orders for Labor received results. to market scaling And secure Japan largest Welfare, and some Japan, and a to systems Shonin MRIdian in of like approval new is first-generation There we and over our simultaneously, second already in radiation on for up MRIdian ability to

Ajay Bansal

you, revenue system first and Total for the $X.X to last compared same quarter million afternoon, one $XX.X this upgrade. was good MRIdian year. quarter for system Thank million the period everyone. included XXXX, first ended Chris, installs and X for March the XX, Revenue year

XX, March was This to million as at XXXX, compares Our March XX, approximate XXXX. million. of $XXX backlog $XXX

million. registered direct cash stock X, to sale proceeds to of the $XX $XX the our In cash we and which compares million. and number raised approximately factors. cash of usage million usage This year first cash first position, cash equivalents $XX.X our driven aggregate the for In total cash full quarter onetime the This usage gross quarter in common with amounted on Fosun of of of ended in raised cash warrant high XXXX. $XX The in position our was includes XXXX of by quarter, a million. proceeds through March terms to offering

growth was in [bond] previously installation paid the customers million and which totaling $XX a of affected systems Specifically, for quarter, million. $X.X accounts first during deposits receivable by our had by

our million. inventory increased net in the quarter we addition, first In by $X.X

range of usage $XX XXXX, we year the million in to full For cash million. project $XX the our

remarks. stated, already our we like $XX guidance to million I million year revenue now the call of would has are to for back closing XXXX. for as reiterating Finally, in turn full the Chris $XX total Chris to

Chris Raanes

start, technology delivering Thank the Q&A. clinicians to second look world. in with you, forward MRI-guided And that, strong to We Ajay. benefits I'd patients to like our of the now and half grow for open the In to Operator? call expect summary, momentum to off more a up revolutionary year. and we is XXXX our the of around the

Operator

the question Difei Yang first Mizuho Your Instructions] [Operator from comes Securities. line from of

open. is line Your

Difei Yang

afternoon. for on my quarter. good taking question. And congratulations great thanks a Hi,

seeing of couple XXXX? a strong going you questions remainder -- up. just very the see the imply that inventory of -- a QX are So on Does I

Ajay Bansal

year Difei, for system we've million guidance before, discussed which, implies to as revenue, as million for we XX $XX maintaining installs mentioned, year. new the XX $XX we're in to to the

that's already we not concern the in make or And sure the balance quarter, deliver and course, to in expect the we inventory that our a time of installs. remaining X delivering we factor building a are to So delivered in frame. those first

Difei Yang

Yes.

the as installation long that, the well. time you your the putting different way a little it about does take of So installation, Ajay, the the all parts, on of chain, how maybe and from orders completion going talk capacity bit the involved can steps maybe and about to frame supply leading

Chris Raanes

is this Difei, Chris.

XX-day range install On The ourselves to solid a progress on that. the the down, come being to times of by install on making see to process, we continue and end XX- track year. the we're

we're real about feeling good that. So

to installs, We X training done maintain group the actually, we're the and the teams, continue such internal X out. externals, third

plus. able and the from be XX-day capacity to as going right, in internal the year. should we on between the said, But XX now we down, the it year, end time gain we and the external. X big And to in X last like XX So come bring install of as be do I is be down was to we're by track cycle

Difei Yang

Yes. question in to is is competitive And on a your ViewRay? entrant, or positive changed in way? you any landscape competitive landscape. my And view, see that negative with last -- neutral, being that new Do dramatic

Chris Raanes

to on talked There's jammed. competitors. had there. The no don't a just news about. same new interest great big We ESTRO the that's trade that at question. And went we -- really We show great were all I now symposiums have

very, at I actually, symposiums attended I welcome had best show. a we a noise making And know radiotherapy, the best probably thing. solution. there. about clear, have comfortable the let think be product is of which the than one But us we out feel competitor that a me finally would guidance, we More very is of getting future good all MR the we

at ESTRO designed radiotherapy. fit existing that. the the to don't in get technologies. that and with any system. just can distortions. Our We step, imaging better technology We we've have images with the just can quality from rooms the we've taken treat anything else to our announced the We out comfortable We We're beginning was we almost there. next very, and shown with with very

Difei Yang

a much. And congratulations great Thank on quarter. you so

Chris Raanes

you. Thank

Operator

question comes the Cantor. from Bijou line Craig next of Your from

open. is line Your

Craig Bijou

the Hi, understand approval I questions. opportunity. wanted I was MRI Japan. Linac than when to if maybe revenue got put expected. or you little think the with start about guys. But we hoping how Japan? can systems should Thanks for maybe the from you the I largest expect maybe selling opportunity world. little I earlier -- you taking And frame with some the more largest contribution in for can market And third the think it's market third in just But specificity. to size a a then that

Chris Raanes

That's there. very about we're our approval great, and excited over

mentioned, I the we As of systems. first-generation have X

just of been One treating Center Cancer National along news of making for a been them lot that's patients going has great, at us. and positive the

we mentioned, We've clearance of optimistic But I'm of on though able lot and a start being we even progress opportunity we show. partner trade this year. go capitalize ahead have to to and right had in a make pretty before clearance that. around the JASTRO see even Thanksgiving over the JASTRO you on to have new time show. to ITOCHU. a of tends As great big lot interest. are There trade now the happen there marketing, before

Craig Bijou

you And see orders just some sorry. show sounds like guess I fall. -- that -- -- think mean ahead revenue potential in so I you contribution It the of to

Chris Raanes

right looking That's the way we're at now. it

Craig Bijou

any breast, radiation regions, was the highest oncologists And prostrate. I different I then could if maybe to provide where's mentioned Okay. that you meeting -- on Europe, was it's your level more you differentiation I there. And geographic were on to interest. and ESTRO level types from talk types. you And ask seeing wanted guys then in there where there's wanted presentations there interest Asia, U.S., that, cancer, if and that maybe about just color of of the between interest any several if high know and the of Amsterdam then

Chris Raanes

right. All

very both Let look, me and Amsterdam March, symposium, are the take European-centric. are hosted in ESTRO show in sequence. which which -- Well, those in we the was Barcelona,

wanted from hear VUmc. They people had people attended the Europe. United both We but from the came go at that speakers from from and States. had both the symposium region, that see wanted the the we even Asia so and the to of and to They And not install were majority European see U.S. exclusively. at --

those European. And think I at my to people it But this X So is the overall the And last all venues I from of regions. terms of call. I in think predominance interest, alluded were in this it, planning year. the a big end cleared having through go year, is it, at the the for the our going U.S., be to year letting last at product capital right, ESTRO had cycle people see of touch

a through of go patients. community-based And that, the they going hospital you half hospital to and all are that, add a -- see are sorry, the with. That uptick to that about has Then of orders all patients data. buzz said wanted lot incomplete prostate be of something U.S. there. it's going cancers community-based a is Having breast. continues around and talking of XXXX. getting in to for -- about XX% the radiation you're over think people U.S. volume to I interested is pancreas which Which nice activity treated just in the therapy -- people in, are well, we're further that if

something to had genuinely good and really Dr. on news focused at then great a about, patient with prostate, study The been are so at the a around, good of one showing work that and X weeks, view a, see treated of some show. with supposed X that's then on, of advantage the prostate, XXX% they're system there's more see to excellent the study folks X They can and important structures and within. image-guided to that all WashU ability lot and just prostates leads the all spare capability that of talking hopeful that I'm trade using all from lot them sure a the future. data as important and right? we And we the people can urethra, to: prostate, they're see people sparing the on which have the can excited. it's got from the in And a which and you toxicities; So outcome. that toxicities, results symposium on tweak see b, huge week carrying to the is unfortunate continue we So And make we're both something to around you the of imaging, actually cosmetic is the lot our that Thomas to the right our The that. on. structures structures know at you that's is in from our a delicate to breast lot sparing

Craig Bijou

the taking Thanks helpful. Very for Great. questions.

Chris Raanes

you. Thank

Operator

next the [Operator comes Riley Your Instructions] question line B. D'Silva Andrew from of FBR. from

open. Your line is

Andrew D'Silva

question. Thanks afternoon. taking Good my for

hopping you calls. if this, on sorry And between any of was I touched

sales could are we the And year won't sales me assume for the at would you discount cash we Just KOL many results price. forward. initial pulling to in a flow this forward filing likely from and comp $X we about Is stock-based not assumption? while also that off, shouldn't the that finding And saw going that impact were that sales you see today, are volatility much a if guidance? too too amortization MRIdian what then individual start from you're that, going operations, as year, fair this million imply let and first quarter know CapEx look XX-Q previously We price as your you period. the depreciation installations should

Chris Raanes

data Well, the I all we but I'll Ajay together. we wasn't are I'm our give a pretty you have Hope some to (inaudible). second data pull filing XX-Q, sure need.

the warranty, -- into revenue, period. orders. to let this, the gets then on doing is recognized year And issues. there's ratably X -- when a carve go pricing either you from I'll have just decode actually treatment, natural always accounting of Ajay there's new you're details to on of Issue out for contract, over then the trying recognized have year of pricing, fine is As revenue pricing that the service and wrong if word. you the There's accounting a

the come end years, of years out. so up you foreign Some these X having with of -- systems some carve X countries to

So necessarily In the Ajay there. the the price his... you stop recognized. can't decode I'll revenue meantime, sales should have And from

Ajay Bansal

yes. Yes,

penetration. year. new obviously, we achieving closed pretty goal Andy, the total market that is are was here million very pricing -- pricing. orders the the new $XX of we So pricing But for decent this prime on we orders of our while so mindful quarter, maintain good to And

each are they of to well. So quarters off play going as coming in other the

that elements, of that of stock-based that of, the compensation about missing Regarding property, for you and Andy, I'm sure I asked. the million in was to wanted $XX and I'm it the know? about usage, of cash usage. the $X.X and operating you of $X rest And And spoke about terms million non-cash some plant of depreciation equipment there is cash was anything part had $X.X million, else, million. question Was was

Chris Raanes

But we fact, filed did, right? XX-Q, in the

Ajay Bansal

today. filed being is That XX-Q is correct. The Yes.

Chris Raanes

detail. You get can all the

Andrew D'Silva

Okay gross And Is me progress expected to then, through I that important then. will goal you think cause there it the the we gross efficiencies And out it gross XX% was functions operating XX% just approaching selling the then year? up the the as not then year. the the find to year bump the margins, or can or are on higher are can near with margin that. as scale That's educate what for for out tighter, as you recall, step accounting margins you progress Or I should 'XX. progress I if other of and for end watch was prices? watch throughout we

Ajay Bansal

Yes, sure.

of equation, quarter upgrade of the margins the little bit gross if were business, upgrade you is service the XX%. the gross if And then is the for XX.X% -- about also. installs take were our upgrade And to was margins the equation, upgrade closer the of take rest out than out a the our and different new So to been you would've the which revenues.

volume drive will going to and, the to so of gross approaching around stay the scale the longer reach all install gross And and discounts, up, pretty times, efficiencies approaching margins cetera. XX% that thinking we end XX% industry so. or comfortable margins what's year term, factors With we et going you in that our towards the respect the of of mentioned: margins, gross

But it's of well, range as I think our margins in all as of we little what try bit between pricing a this the a a strategies as in systems. penetration. sort I other assume how gross I in price said probably of is for all some mean, the follows pricing then I may as And of well [indiscernible] you one if said, we fashion. million, of pricing because fine that balance market wildcard

that. gross impact might you margins, we'll that updated keep but on So

Andrew D'Silva

put platforms fashion this in that's understandable. that And Okay, to there quarter? very X-frame that are then can from you second move for great. Cobalt how out the system, per system as legacy X-frame And that be just a modifications second X-frame MRIdian per a you place to similar an are per system upgraded second in there

Chris Raanes

is This Yes. Chris.

that noticed You'll it I as an upgrade. actually referred to

many So retrofitted it And of to that the existing onto the expect one that ought also can is said, us. first it's be you like systems. from product I of a

just to platform ViewRay on So the way the that see year. of capabilities over fundamental be it's always you'll the of operate, going the improving kind

Andrew D'Silva

have for standpoint, you And just it be my MRIdian treatment to that duration insight duration able useful. offering? will customers being -- since Any Okay, comparable a to last have use insight -- to as capitalized got a with they can And treatment any been have workhorse use and your efficiently? from so from question, been the product perform relates able there a the using as perfect. you be

think most from that's investors. the of frequent I one questions I get

Chris Raanes

sites to very it we'll encouraging. internally I'll might've so the missed But white development. that it on to interest, We we and there's sort recognize also publish results paper very, And working if on anything a of are have with study a that's that of see Yes do encouraging, detailed we'll investors. -- to early you, that great understand in both tell we -- that, we customers are our and people no. very use the

Andrew D'Silva

of getting going Thank and All on installed and systems right. luck year. you on those best quarter this much this congrats forward so Wonderful.

Chris Raanes

you. Thank

Operator

Your Kalia the of Securities. next question comes from Suraj Northland from line

open. Your line is

Suraj Kalia

Good gentlemen. quarter. afternoon, Congrats great on the

me So the And of toggling OUS. there quarter? FX a was questions. were forgive U.S., been these if between calls. What was split impact? I've any asked. in Ajay, just the bunch

Ajay Bansal

by do backlog, split But typical roughly ex the We split U.S., any of impact, respect a we the provide to a recognized industry. in FX nothing U.S. but the quarter. about. X/X. is on modest U.S., Yes. meaningful not fairly euros. systems With X/X, U.S., revenue That's the of that's o X/X that to X/X and one was talk denominated in impact,

Suraj Kalia

would obviously, your specifically little Japanese a more the And My asked it. ask the you, of can that have Chris, know I understanding quicker Got -- Shonin and came approval, I in around, market. been questions it question is than turn expectations. concentrated. Chris, If level the some and your Any make to from are initial academic I in color can appreciated. relatively granularity going centers, greatly understand centers Japan, academic that for expectation Japan spread? as or target Because more provide of to you're be a broad the you

Chris Raanes

earlier and And and little we all capitalize great, to on we as little pleased we than have a had earlier That's the that approval a Shonin well. hope. gotten hopefully, can that's are good,

the It's mix the to a we're the is we the and of world. that's be in XXXX academics, going Japan what to around. all for theme going that do after not just -- Our with similar rest

coming in first-generation of customers I already have of mentioned You that ViewRay the Japan. family. systems will the diverse into set a we more X see

largest we National Japan. center. call around generally, over is them the believe to world. this, like continue one is good radiation oncology the were. the for penetrate sounded we're Center, I'm And see really a continue third well-known Japan that and as But at the excited academic Cancer One largest. as there. you actually we very like getting will as for is hospital, But I obviously, results you of systems And community-based high-end it, a market it's second prestigious to

Suraj Kalia

Chris, someone this And question. asked already maybe has

ASTRO? expect survival is to updated guess studies? really from for or how the following Or prostate. we I the up any at study ASTRO? the it of Are the data balance XX For see pancreatic And is that it of the should we prior obviously question the of curious that Could months. prior just of cadence about what year, second you median part is to ASTRO. glimpse I'm

limb some great. guys talking prostate seems -- the see just side. Chris. study When a can that out I'll any of something we study? the here, seem about a from institutions Is we and be incontinence? any whether disfunction You excitement on erectile Or that there can color would it's single-site go these on palpable urinary expect,

Chris Raanes

Yes.

are at this one on on have publish first So they every believe are reason They they the will up year. pancreas, patients, following. following those and results to I follow-up ASTRO

that. So to see I think we'll continue

next calendar And with have see -- prospective that enrolling until that to year. also we're going much We I agree prostate. results from the study be we'll probably you patients through the on I don't think

they're Linac expect prostate adaptive-on-table volume, But it probably first in That and using come patient. from terms sites in VUmc -- big they will seem them. patient data been to those there somewhere the a in a of but Amsterdam. point really the as is difference. has other about, has centers be I was for Amsterdam, that you're that make way some I out us a leading focal one I In are a what prostate, system talking first of would the that VUmc of I know think And today. and to this of prostate for see results deal think And to well. potential the some

Suraj Kalia

Got final Ajay. it. And question,

if somebody me might Forgive have already asked this.

XX. You Guidance midpoint guys X placed QX. in is units

obvious -- X units all Is the as coming the guidance to be I you understand. blow all progresses? quarters. be JASTRO ASTRO XX remaining coming Help for water the up. missing shouldn't me incremental seems So answer mean, to up. a just I out be to the I why want year you mean, Am in guidance basically else? anything position conservative. of the

Ajay Bansal

No. for optimism. Suraj. Thanks it a We lot. you, appreciate Thank the

installation that completed January, had as year, the year. you last revenue recall, for announced that had recognition Chris had Suraj, this of -- So one pushed into we we we was system, but in mentioned, that

very you And comfortable in million think into the QX, $XX of million I units So late his with of to this early one too much next And one course, as in changes QX revenue. in at we right read complete pretty any guidance, would that our first we of the we results Chris and same nature of to to also the not when Yes, early units. to have as on QX. lumpy quarter, for remarks, we year good we're update we if we feel of expecting yearly call, now, was guidance quarter. in that quarter said because And the very X got the as QX we And pulled quarter had opening are a from are $XX very business, happy March. when any. I about Currently, results that. of well our guidance announced we'll as the for provided in

Operator

Mizuho comes next line Your Yang from the Difei question of from Securities.

Difei Yang

Just quick one. a

coming many orders, new how them of the nonresearch hospitals? from are For

Chris Raanes

for that second. about a Think

Ajay Bansal

Yes.

academic I be I going are the was mean, initial institutions. and as from think said, Difei, high, focus to prestige we orders have majority of

I And year, would the community only But for we from X quarter. X to We proportion had of see higher are quarter, academic quarters the beginning of centers. or as draw don't centers coming the see coming interest to this first want the so we the any from one generalization so, quarters, lot to or orders a in well. continue a

and centers healthy about remind And are in but last of centers mix over be year, well. I'm of to towards hoping it'll growth grew by our academic XXXX, a Just our academic year. year, sort and this a XX% this more for community weighted pretty for sure you, we as orders

Chris Raanes

of I that year. orders That's no will that. conclusions hard which about I from diverse about see right. was I'm Yes. exactly it's repeat head sorry of just over what There's you'll my quarter. one draw customers any the more kind set took, that. big a going just question -- But and to we throughout

Operator

closing would conference like I'm to showing at to I questions time. this no turn management for further back now remarks. the

Chris Raanes

be time of what Have and great we in your forward today, you, we I everyone, in the thank delivering to progress Well, look new you day. right. oncology. will believe appreciate really keeping All radiation care updated a I standard as

Operator

gentlemen, you and conference. day. this Thank a Ladies participation. your Have today's for concludes wonderful

You may disconnect. all

ViewRay (VRAYQ) 11 May 182018 Q1 Earnings call transcript