VRAY - Earnings call transcript Q2 2018

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Operator

Good day, and welcome to the ViewRay Second Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Lee Roth, from The Ruth Group. Sir, you may begin.

Lee Roth

morning good and Brian, to everyone. Thanks, ViewRay's to Second Quarter Call. Conference Results Financial XXXX Welcome

over from are of Financial the and today financial press me Joining company quarter second review also ViewRay available section is Officer; at XX www.viewray.com. morning, call issued live to of being XXXX Ajay you is available release this call the the announcing Chief A the website Scott and Bansal, Internet release days. and Earlier that Relations on Chief www.viewray.com This copy Investor encourage document. Officer. results. of ViewRay a this from Executive at President a the Drake, on broadcast We the replay website be will

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

Scott Drake

on call, morning, to ViewRay why Good first provide our morning, for observations. some thoughts this early call QX some I'll us. and On share and our you Welcome I thank everyone. joining joined

highlights share Next, begin, we'll an ViewRay Ajay open the will update I'm operational for team. join To key line excited to the financial and then and on questions.

Over After my many of the criteria I've at to Spectranetics, opportunities the venture. medtech about next think chance became year past deeply looking landscape, the across had since clear. sale X the

First, I impact. big team join to wanted a making societal a

me Second, I in customers, wanted improve world. It's and and enjoying a I for data to really clinical space matters company technology meaningful be the has clinically wanted get could We special. fits to we a technology. into patients around a scale. perfectly I'm treatment business know cancer part clear criteria of getting really do and have And team, that grow opportunity change our disruption. and can to that these to something ViewRay the where we third, a

must broadly multiple on mission. our Linac adoption MRIdian be clear, on achieve To we're deliver become will adopted to this broad us groundbreaking to goals and require Our intensively fronts. focused driving

to must and commercial marketplace. Our win resources in the team have reach the

supply revenue sustain our to of operational Ajay on call deep purchase of compendium between and capitalize patients received trenches, pieces position. financial protect back growth. must down puzzle. our going opportunity. there in over support for but build significant nontrivial, value and our turn data service, and important for is required highlights. and my treatment the the it's operational and each short, and chain creation. a readiness are excellence, work of here, We're in improving streams installations Changing it live these ease recognition. customer seamless and use, I'll cancer span lies work efficiency In we time pleasure is be must to work This team to this and must infrastructure innovation the leadership to expand ahead order Our the Indeed, lot vault into drive clinical a extend the to We being to

Ajay Bansal

everyone. second Scott, X morning, In you, the recognized recorded million. and quarter, revenue we total good revenue and $XX.X Thank on of Linacs MRIdian

for $XX.X the under installations States that Medicine/Palos first therapy. received our for was MRIdian second Loyola these Cobalt of in million, cost like of to This Linacs end end orders at to the Total write-off, million. would inventory totaling quarter, the In MRI-guided from United up was for quarter. $XXX of Center, revenue $XXX hospital now included backlog Health million. new days. stood totaling approximately the in quarter quarter, completed the community ability of we XXXX. provide of at of the the $XX.X installation nonrecurring I related At also the with million One final our second radiation the note the million well quarter the $X.X second XX a

second forma this our XX%. Excluding margin approximately write-off, was quarter pro gross for product the

In terms of with of our cash million. cash $XX.X position, the we cash equivalents ended quarter and

$XX reaffirmed, full of to had $XX for XXXX. maintaining total year our recently million revenue are we As we the guidance million

Let a of brief recent me some know provide recap highlights.

our life. Scott receptible week, advanced set. study X survival inoperable, GI earlier, As or about will we multi-institutional, to the XX survival, overall quality with and data of at locally the free committed patient secondary progression pancreatic The was cancer of enroll prospective The remain to single-arm reported clinical mentioned is primary clinicaltrials.gov. expanding patients. submitted Last toxicity trials endpoint XXX borderline for endpoint trial of days, Grade

presented our Physicists and advancements team continue This In adaptive This to to featured a Systems MRIdian. MRI-guided key engage AAPM, to webinar At MRIdian or a visualization, nearly radiation abstracts, for last build of we'll the driving was and of attended the XXX(k) XXX also VUmc We of awareness the therapy attendees clinical from initiative, XXXX Medicines real-time Furthermore, these tumor thought the also meeting. tumor XX addition Louis, further and MRIs on-table improve by the recently while demonstrated capability. These prediction WashU, SmartVISION. in Association therapy. MRIdian double St. annual with unique meeting week assessment tissue highlighting advancements potentially field, allowing leaders number we past week, AAPM. joined to to enhancements. a of and soft response submitted American

see another meaningful world-leading this like business Miami our we With would now in oncologists the to call financial at update, as September. held I turn be ahead, over Scott. to and opportunity engage that to Looking to back symposium

Scott Drake

Ajay. Thanks,

our repeat look the world. questions. me granularity please treatment as my better Operator, ViewRay sharing patients around for more forward Let dig as joining pursue the our deeper excitement we for line into on team I for I cancer plans business. the open to

Operator

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

Difei Yang

Just a couple of questions.

goods. of cost on First,

this leverage? we unit expecting what be goods that of leveraged, to should achieve fully you be at? So where think cost that operation And of you is can kind when is the

Ajay Bansal

we mentioned XX%. quarter, of Yes, get have fourth Difei, goods hope towards end to we to cost the as are approaching that of

of confident be the next let average to moving get are pieces lots our late reiterate, cost goods we should Having We to year. early said days that, of in of industry business. able fairly are towards me just there

with growth correct last the of are we and system. reflect that to as for desire example, achieve that One the as what's the things to as us, key on looking we strategy our the penetration call for we pricing the -- mentioned we well, are on

that's we the gross hope times but margins of unique to play and to all in going mentioned in, is enjoy come. to as the have industry-leading system So we

Difei Yang

seeing there? are the the seeing in new are you out you then And or orders, -- Okay. pressure are for you competitive what marketplace seeing

Ajay Bansal

competing socket, it's As standard the we have out the we're for mentioned so competition comes for competing is main We're to linacs with and not -- competition the we our just that for there. before, you are and from competing unity. socket Varian with always

or market in the X%, annual basis, a X%. range Linac, MRI of you So far take of X% the is on penetration if an quarterly to

So Occasionally and these Elekta Varian selling Elekta, units key at run we standard fairly from competition all we of but broad. they the into is [indiscernible] competitive systems. are or competition or are

Difei Yang

should And the Okay. about of how rest of XXXX? rest the think orders new we for

Ajay Bansal

we As first last back expect years, than new look two half and the quite been over orders. so growth good a the half bit half for second our at first stronger second the you half, has

Operator

line Bijou And our of Fitzgerald. the question comes next from Cantor Craig from

Craig Bijou

start the with want the that and the tenure some that little a of yourself be company and maybe and some company deeper of priorities, to did previously things out the saw just but could the priorities the dig just of of in or you setting to need lines, you change same thus for to ideas goals changes some with to you're have along your you that could then either appreciate and maybe related make? lay and into your you specific far, may I Scott, you early the it's you thought in dig you, we in want some may or that

Scott Drake

Craig, to morning good Thanks, you.

and really you is several picture big of cancer at standard saw, step for what of kind statement. take that's saw, that believe if the a think to Sean months care big we we in back the weeks, have I looking actually we had I opportunity the company, become the the follows, as we treatment, a

Our hard you the maximize number at line current oncologist opportunity big I see the invasive a preserve the this macrotrends of we're look medicine the surgery, tissue. an radiation soft new therapy stream. with invasive going that of on is We effects have and and we the if think, radiation the treatment, the system which, is side swimming and right we can like to to can reduce deal, to of tissue, is where to And therapy treatments the we've really enable and minimally treatment more the more in with adapt entirely surgical traditional taken without level. capability table, healthy

Grade is clinical toxicity radiation you've think seen. higher incredibly X of for and the the early that positive outcome small pancreatic doze yet I as We doubled that. subset of the or illustrative patients completely vanish was data

mentioned that's see can that opportunity a the innovation big value So and in exists, treat that the but cancer in and lot there's that work to to work patients excited there's that's operational team, to. to to better the the create and on teams shareholder estimation picture, the there's to leverage that's I team, my here prepared that, we is do commercial what work do from already as remarks, and recapitalize my we the profound to we're

Craig Bijou

Great. That's helpful.

just within I to the business, guess burn investments, of for some to a it's make the As and you potential cash on I follow-up to the of some about want and the of talk with operations additional want cash related Scott, the also maybe current need that, company.

So guys your company? the in us priorities the cash maybe some burn, see position, may business, of current some additional of the the understand and investment if your help -- then any how cash just require

Scott Drake

for thanks that. Yes,

the are in funding we We midst that need and required of have, markets. that the maximize from dig to to there Ajay value. of need opportunistic we doing what's sizing opportunity we more going the to got the on get really will in additional the we and we're fully team so And I've and on shareholder be and capital work. timing can in with a standpoint understand precise capitalize what

a in will but not granularity I'm in, at we time, as more share and dig this give So need you position we we will funding to more more.

Craig Bijou

elaborate more little Ajay. can installed came lower you may Great. you one anything just on a it than proper on The call in ASP the just couple of ASP about then were And -- we I quickly and squeeze there for also? I expecting, systems, out so that for comments the a if believe, make out that broader be want in so adoption, figuring to maybe did

Ajay Bansal

Sure.

specifically, that first, quarter second systems of couple QX was we lower revenue in So a in recognized about ASP. are that there the talking the

system China clinical that a was the other than One of a had them for system, also system usual. was and ASP first--in-territory specifically lower

me through working backup. some should systems that dial you you're the just the expect you first-in pricing these and let comment ASP market about clarify as So then mentioned. to clinical of And

in on for many us to the I to comes and a everything. out institutions for the gross reason out comes clearly, current fine and We may and $X that certain value out best but both $X.X impact about, for traction well ongoing we number for know them. are once kind tune account limited our was million able we well you here are are the EBITDA, it that from the growth for $X.X it to to us be pointed advantageous, the million of is, are to to of that has cost higher for because good but CapEx institution, what's we and that a of us you margins, not pricing, systems million lower the as direct sustain with cases, pricing are trying we $X have so getting and it institution, ASP, pricing capture the -- talked that that way have What institution the million.

Operator

Our line from D'Silva Riley. next question from the Andrew B. of comes

Andrew D'Silva

Just a few there. quick ones

operations just that, that keeping depreciation question. and doing obviously book from amortization very if that'd for me, while then and questions, Ajay, pull flow my ask And CapEx, next First, compensation, you cash could I'll you're be stock-based helpful.

something talked are as now Is be about tumors. more before headwind linear sales marketing you're little how and at Just of the process? a proficient linear related from your to cone are you competitors that other curious guys that some when in related viewing than thought soft accelerators viewing beam even or tissue on CT CT recent to seeing the and you're based commentary accelerators based

Ajay Bansal

total first, that depreciation $X.X non-cash.Items, we amortization million, about for in X.X. beam take debt our on stands in the may scale operating a cash me beam Yes, to was so the our comp cone scale, from interest, of quarter, XX was getting was and if $XXX,XXX. they've in is had receivable cash about CT and know and discount we lot be scale the net quarter. the XX of system on X for the a X.X, to let cone to Stock-based so the X.X the this quarter for cone to visibility to numbers X reflects and improvements amortization $XXX,XXX. on of usage that it's use beam accounts That'd activities cash visibility $XX.X Coming as from back used of collected made just CT, so a million, then be like, CT you a

to an it to you So get with marginally, have MRI get yes, today, vision? to, No. you compete what better, you're but it trying to is compared to where does

Andrew D'Silva

just Okay, top provide great. your for over diligence just on personal prepared Great join company? you to -- color And you I'm the you decided ViewRay? And took the as you when info Scott, that the insight introduced you're little actually remarks. a through your how you just then process that there. the thanks to went for can due curious, to decided

Scott Drake

really the and to the years was was to, on board introduced I the with happy in, and and a opportunity through board. to to company. the had industry the Chris spend Dempsey, dig I to part a Yes, who of both company member learn conversation to board I the a just looking opportunity know and about the in a Andrew. I being the company board the from bit from the that actually bring good member and then the time And more was I company turned with potentially and the new amazed clear a member me. of greater Jim And was becomes running Chris

and I'm from kind the my standpoint, a thrilled turn here. of so to conversation opportunist And took be

the to and would excited about at the the be cancer patients to high better get treat say begin, I So more here. level, I opportunity more I just thrilled

Andrew D'Silva

great. Great,

were fair it's that So throughout assume the page Chris you whole that to on and same process?

Scott Drake

the do us and and We was was person company, company to point this right a over last years to is that that phase through of he honored today, here and where Yes, getting to little next the X.X incredible the I graciously very him he the able the thrilled thought he's yesterday. that. did and it maybe done to toast to work be take I'm the

Andrew D'Silva

back the question, good color the was to moving burn. And process. Ajay, hear to over great cash last and That's a that

burn to Any $XX year. thoughts million or last I the for shake it what mentioned you quarter how on revisions that -- $XX now should out did do? million think you

Ajay Bansal

$XX higher thinking Yes, range -- now, end cash why and our our the bit million $XXX that revise to to million is would year. right perhaps, higher would burn than the a current for that of the that's little I be towards probably

Scott Drake

up to bit that want QX you of with Andrew, QX, in there's question, Ajay, on to follow color add that. element to correcting quick on piece? associated a any One timing that,

Ajay Bansal

Yes, when usage so also our installs depends depends cash next might some do burn, out our customers, it to to year some this on the pushing and of going to you're we so it that on year, going increase, we're cash from collect the and obviously, and in are baking QX burn from collections QX.

Operator

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

Suraj Kalia

hear you Can me okay?

Scott Drake

can. we Suraj,

Suraj Kalia

it's how that start the great to ViewRay. is story, me to it have I let say on at sensing at having pleasure and and to off shepherded say, Spectranetics a board, least have covered you pleasure you Scott, a personally, have you

Scott Drake

Suraj. I kind and how just with lies look so opportunity forward the here much I you ahead. can't tell You're for that again working you excited to we're

Suraj Kalia

idea with the I streamlining a Scott, the later, questions I those process that. how I'll now, process, fully you it's so Spectranetics for what Right that pretty fact very the -- empathize on to have about keep would decent in went excel, early save on so

Let me guys it backlog, the or perspective, were se, cancellations? to math know start from or I out, some age say stopped you a giving and outs safe numbers that Ajay, at I there have units, is but just look when per

Ajay Bansal

that. right to absolutely observe you're Suraj, Yes,

or do of there If is see you somewhere around would there a the about. math, $XX you gap million

aging because took backlog. the So accounts, our didn't of we out during cancellations nonprogress the some of of of any some on order have we quarter, the couple of and but a them

Suraj Kalia

to Cobalt And in were any there upgrades quarter? this

Ajay Bansal

any the revenue Cobalts from quarter. to not recognize from No, upgrades we linac this did any

Suraj Kalia

just Street The hey, also his Scott, adoption, Fair the target of was, in traction I'm to key terms it, community be and and Raanes point he going the why prosthesis, is that keep linac's that's paraphrasing breast enough. MRIdian in by extrapolation, bread would to on that the of Chris -- to be hospital an things and articulated hospitals eye had that a one -- indicator, Chris, of segment. that's And was us butter pancreatic

hospitals? on wait the so Just what color hospital? there releases? the we different community be quarters, have press Is the based traction to that we community it next you've just increase into push some something believe Or should feel can on over is give to you far, us can seen you to how in X that X for done ViewRay's

Scott Drake

say I of the that We target for the we of hospitals and community front. want that's company recognition, our the batting here to recently. over to that believe like coming midst being Suraj, Yes, pleased there there do a order, we'll and funnel, order centers, success and the here some may take to purchase see front. is in time for top that important pipeline on from the we're done but frame community would I thoughtful goal about to to terms sign upper-level what expand in that's work positive continue us. I'd very our very I be updated primarily shorten hospital keep hospitals. say in agree in regarding a install to We the of conversation see the on what's to in macro academic is first that so funnel. improve the I'd purchase also then in community to average penetration But very to time revenue you like within we're through want want our with the the and to be

Suraj Kalia

isn't stood? to for Ajay, QX housekeeping my just have the things want that finally, question. U.S-o-U.S math I And a enough. Can give also idea you but days you wrong, just installation the Fair sure and where an make exiting split us

Ajay Bansal

backlog with as the Yes, last roughly our mirrors days. installation ex X/X we U.S, installation did U.S. to our in noted QX backlog, than XX% less said that. our roughly in And have we remarks, respect of as we XX significantly prepared and was mirrors days so the previously,

Operator

Petrone question from our of the And Instructions]. Jefferies. from [Operator next line Anthony comes

Anthony Petrone

can now? me I hear was on mute, you believe I

Scott Drake

We can.

Anthony Petrone

and enrollment, questions few clinical and Okay, the bit of great. other new studies, and on absolutely breast an to front also start I'll pancreatic be just follow-ups. cancer update the there, just may welcome. Scott then on Couple as and it just update particular to maybe a congratulations in your have appointment an on or relates -- -- lung perhaps a maybe

Scott Drake

Yes.

one we terms that like cadence first of we think we how perspective, patients. on looks anticipate of to of now, our here study. pancreatic previously, to before work getting comments proving we're rapidly that think and we underway to I'd the my value from deep a is that study, In enroll QX, cancer streams excited subsets to I can to guide work enrollment the see really this referred that I technology in into get like But the we're in and various to what of broader going

well, areas give shareholder to on yet quite you'll those going value you important the all and we're commercial with see get fronts. clinical some sharing on So detail you operations deeper, X not details capitalizing associated Anthony, innovation, to more I data, those to as focus with stream, each opportunity and but maximizing that and of work I'll prepared that, as critically the are one be on of

Anthony Petrone

competitive of on that a may process, nature terms a little of cancer would be ultimately, from that, at you, would relates win? couple cadence? that we competitive detail the that may a No, with on that called Can this, May does a a imagine and the of of was be, be France, tender. little look tender, earlier as can order looked release, offering sense -- company I that's then cancer were also see centers out MRIdian, French be that us unit this bit be on it what give may of as unit like bit announced ago, just helpful. potentially the weeks on so to congratulations the competitive out follow-up XX And in

Ajay Bansal

with we so transpires difficult that's how orders hospitals, Anthony, possibly we have the hospital own out. orders that very apply it Each encouraged know Unity could you and down in to respect do call are our have X more for Elekta the to the we how X decision road, the future, tender, we we very have many get and Yes, will board of from as of that well, and them already and But way. and their that set on are tender getting possibly. encouraged makes we fallen have particular

Anthony Petrone

that for last just guess, to be backlog, would then time of And of come in Helpful. and that we cadence, go time out the of may me, that backlog backlog, sort backlog strikes can to the you the get of the orders today looking It relates the is just as it going terms give that on, us perhaps you're be real I at to stickiness sits an in us update from and stability question. as it backlog? of age in likelihood have the the

Ajay Bansal

so you orders in we at 'XX look 'XX, and the announced 'XX in we 'XX. we we took and Yes, XX took we orders XX orders the in orders if have took in took

adds XX. that to up So

fairly X, is we've the had, not out distributors a So cancellations in X couple There backlog because on in out we converting before, are or of I them of and total. the backlog are now our year our respect mentioned, I believe, or portion in ordered with X those enough Overall, of the and last to customers with with did units to we that we projects. aged some some of taken backlog of our took cancellations cancellations, Cobalt movement a couple having systems earlier have as has large them backlog, most X to cancellation units current. rate, older just see in backlog primarily and of linacs, which do

institutions to from for years the would. it's backlog, the for a fairly cone an doing that go and make money CT shared with our to beam to product you a kind they've of it have So linac decision something been conscious we sticky as switch have linac XX these very with pay MRI

these to So of the make lot of a that thought, stickiness decisions they leads with the backlog. and

Operator

remarks. showing I'm the for back further would Drake now to closing questions. And call I Scott turn no

Scott Drake

good our for here everyone the Have Brian, seeing call Thanks, Look thank joining you morning. and this not-too-distant a all to you, future. forward in Friday.

Operator

you thank today's today's Ladies for may a you and gentlemen, disconnect. all great in and call. day. concludes program have conference This participation Everyone, your

ViewRay (VRAYQ) 5 Aug 182018 Q2 Earnings call transcript