Accuray Incorporated (NASDAQ:ARAY) Q2 2023 Earnings Call Transcript

Suzanne Winter: Yes, Josh. Thanks for the question. The Americas region is obviously the largest health care market globally. We have doubled down in terms of our investment in commercial organization and initiatives. One of the big growth catalyst is the very large replacement market. This is largely a replacement market in the U.S. It’s a mature market. We have an older aged installed base. I would say our sales teams are firmly focused on ensuring customer satisfaction within that installed base but also encouraging upgrading those systems through trade-in, trade-up to our latest performance capabilities, so that they can start to provide advanced care like ultra-hypofractionation and in CyberKnife radiosurgical capabilities. So we do expect to continue to see the return on those investments and that focus.

Joshua Jennings: And I wanted to ask about the Type A wins in China and the revenue conversion cycle here. It seems like that’s a great revenue opportunity in the back half and in the early fiscal ’24. But one, just any more details you can share just on that the November bidding process? And just within the Type A award channel, just what should we expect next? Is — are there more rounds to go? And is there more opportunity for Accuray?

Suzanne Winter: Yes. Again, thanks for that question. Yes. No, the Type A, we were very encouraged to see the bidding, the central bidding process resumed after a period of time during COVID, where it was delayed. And so this is very encouraging and I think it’s a good sign of recovery in China. This is — the bidding process is the next step to being — achieving the funding for the systems and beginning of the installation. And so for us, it’s very strategic. It is the opportunity to place 18 more systems into the China market which, again, just is that critical mass of premier systems at premier institutions within the market that we think will drive the branding for Accuray within that subregion. No, we do expect there’ll be additional bidding — central bidding processes that will happen throughout the year.

We don’t have any visibility at this time into timing. And certainly, there’s a new 5-year plan that will be announced that will get a better indication, I think, of Type A and Type B market sizes.

Joshua Jennings: If I could just sneak one more in, just while we’re on China, just seems like everything you downloaded today on the progress with the regulatory submission and some of the completion of production and testing at the manufacturing facility, things are on track. But should we still be thinking about a fiscal ’24 kind of approval and launch? Maybe just to refresh any timelines you’d have us thinking about for the Tomo C through the JV in China?

Suzanne Winter: Yes. I think no additional information from what we’ve discussed in the past. A typical regulatory cycle is about 12 months. And again, we can never predict the regulatory cycle. But if we assume that it will be typical, yes, we have — we’re still holding to potential impact in the back half of FY ’24 from an approval for the Tomo C product.

Operator: Our next question comes from Neil Chatterji with B. Riley.

Neil Chatterji: Congrats on a strong quarter. Maybe just first off, you talked about the Munich Center, adding the second CyberKnife. Just curious if you could just remind us how often you see that dynamic of centers adding multiple iterate systems.