) recently celebrated the successful one year completion of its
takeover of TomoTherapy Incorporated at the Wells Fargo Healthcare
Conference in Boston. Derek Bertocci, the company's chief financial
officer, suggested certain strategies at the conference,
which are expected to drive growth for the company following
the first anniversary of the transaction.
Based on the successful integration of TomoTherapy, Accuray not
only reaffirmed its goal to generate profits by the end of fiscal
2013 but also announced additional milestones for fiscal 2013. The
specific guidance regarding fiscal 2013 will be provided during the
fourth quarter fiscal 2012 results.
Accuray, on March 7, 2011, had announced its acquisition of
Wisconsin-based radiation system maker TomoTherapy in a cash and
stock deal worth $277 million. TomoTherapy makes advanced radiation
therapies for treating multiple cancer types. The acquisition was
completed on June 10, 2011, following the approval of the
transaction by TomoTherapy shareholders.
The acquisition of TomoTherapy has bolstered Accuray's foothold
in the radiation oncology space. The merger marked the union of
TomoTherapy's best-in-class radiation therapies and Accuray's
popular radiosurgery systems to create a leading player in this
market. The combined entity is now offering state-of-the-art
therapies, ranging from high-precision radiosurgery to image-guided
intensity-modulated radiation therapy for treating cancer and other
Besides expanding its global reach, the acquisition has provided
a major boost to Accuray's growth on the back of higher revenues,
solid service gross margin and higher installed base. Accuray
reported healthy service gross margin of 16.1% in the third quarter
of fiscal 2012, buoyed by better dependability and lower service
costs related to TomoTherapy Systems. The sustained strong service
gross margin reported in the last three quarters of fiscal 2012 led
Accuray to raise its guidance for fiscal 2013 to the range of
The company had raised its research and development (R&D)
spending by 23% for the first three quarters of fiscal 2012 after
the acquisition of TomoTherapy to maintain its leading position in
the radiation oncology market. Also, it expects operating expenses
to reduce by 45% or less by end of fiscal 2013 attributable to its
Accuray is a global leader in the field of radiosurgery and
provides a non-surgical treatment option for patients diagnosed
with cancer. Most of the company's growth comes from acquiring
market share from its rivals for two of its flagship products, the
Cyberknife and the TomoTherapy Systems.
However, Accuray remains susceptible to reimbursement
uncertainties and faces stiff challenges from competitive product
). We currently have a Neutral recommendation on the stock, which
is backed by a short-term Zacks #3 Rank (Hold).
ACCURAY INC (ARAY): Free Stock Analysis Report
VARIAN MEDICAL (VAR): Free Stock Analysis
To read this article on Zacks.com click here.