Accuray Inc. (NSDQ:ARAY) is starting 2011 with a sizable hole in its top line that will hamper sales growth and profits over the next year, company officials said in a conference call with analysts.
The Sunnyvale, Calif.-based maker of the Cyberknife Robotic Radiosurgery System expects to only break even in 2011. Officials are predicting relatively flat sales in the range of $210 million to $225 million, as a result of phasing out the “legacy platinum” service contracts it signs with hospital clients. The previously announced move will put the company at a disadvantage saleswise, according to Accuray senior vice president and CFO Derek Bertocci.
“We will need to replace $24 million just to break even,” Bertocci told analysts on the call.
Accuray has already felt some effects from the phased-out sales process, with a 5 percent drop in overall sales for 2010.
For the three-month period ended June 30, the company posted a $5.0 million profit on $61.8 million in sales, a 310 percent increase from the $1.2 million in net income (on $58.8 million in sales) the firm posted for the same period last year.
For the full year, Accuray boosted its profits to $2.8 million on $221.6 million sales, compared to $609,000 in net income on $233.6 million in sales last year.
Accuray president and CEO Euan Thomson said the company will also look to increase its R&D and administrative spending as it seeks to make further improvements in the technology and increase market penetration.
The company has 206 Cyberknife systems in the market worldwide.