Why ViewRay Stock Fell 9.4% on August 3

ViewRay stock fluctuations

On August 3, ViewRay (VRAY) reported revenues of $16.4 million for the second quarter of 2018, which is a YoY (year-over-year) rise of 2,248.6%. The performance was driven by the recognition of revenues related to the sale of three MRIdian Linacs for MRI[1. magnetic resonance imaging]-guided radiation therapy. It also received new orders worth $34.6 million for its MRIdian systems. At the end of the quarter, it had a backlog of orders worth $200 million, which is a YoY rise of 11.1%.

ViewRay also surpassed Wall Street’s consensus revenue estimate by $2.7 million. However, its reported EPS was $-0.30, which was lower than analysts’ estimate of $0.10. The earnings miss negatively affected overall investor sentiment and pushed down the stock 9.4% to close at $11.05 on August 3.

At the end of the second quarter, ViewRay had cash on its balance sheet of $66.1 million.

Why ViewRay Stock Fell 9.4% on August 3

The above diagram shows the distribution of cancers treated by MRIdian at end of Q1 2018.

2018 outlook

For 2018, ViewRay expects to report revenues of $80 million–$90 million. It also plans to gradually reduce its COGS (cost of goods sold) as a percentage of total revenues to 30% by the end of the fourth quarter. By late 2019, the company plans to get its COGS-to-revenue percentage close to the industry average. It also expects robust growth in new orders for its MRI Linac system in the second half of 2018.

Competitive pressure

Despite tough competition from other MRI device players such as Varian Medical Systems (VAR) and Elekta, ViewRay is focused on advancing its market share for its MRI Linac systems, which is currently at 3%–5%.