Is ViewRay Inc., (Nasdaq: VRAY) starting to recover? or is this just a dead cat bounce?

vray stock

ViewRay Inc., (Nasdaq: VRAY)

ViewRay Inc., (Nasdaq: VRAY) operates in the healthcare sector, within the advanced medical equipment and technology sub-industry.

Company Overview

ViewRay Inc., is a designer, manufacturer, and marketer of advanced medical equipment and technology devices. Its primary product, the ViewRay MRIdian, uses high-quality radiation therapy and simultaneous magnetic resonance imaging (MRI), and is provided in two generations.

While the first generation of the MRIdian is cobalt-60 based radiation beams, the second generation, the MRIdian Linac, uses linear accelerator (Linac) based radiation beams. The device, overall, is made up of the MRI system, radiation delivery system, and a software integrated with both treatment planning and delivery.

Hence, it conveniently images and treats cancer patients and also measure the dose of radiation they have been exposed to in the course of the treatment.

Industry Background

VRAY operates in advanced medical equipment and technology sub-industry. In terms of market cap and revenue, its top three competitors are AxoGen, BioLife Solutions, and BioSig Technologies.

A Florida-based human tissue company, AxoGen (Nasdaq: AXGN) has a comprehensive product portfolio which addresses over 900,000 procedures.  It has a market capitalisation of approximately $600 million.

BioLife Solutions (Nasdaq: BLFS) was incorporated in 1998. It is engaged in the development, manufacturing, and marketing of biopreservation tools and services for cells, tissues and organs. Bio Life Solutions’ market cap is $348 million.

BioSig Technologies (Nasdaq: BSGM), with a market capitalisation of approximately $159 million, is a development-stage medical device company.

Growth Strategy

VRAY has focused on the development and marketing of its MRIdian systems. As of June 30, 2018, the systems have been installed at over 15 cancer centers. And even till now, the company’s backlog remains robust. During 2018 Q2, it received new MRIdian orders of more than $34 million.

This growth is expected to proceed at a rapid pace provided the company does not come across any regulatory problems as it takes its products beyond to Japan, one of the world’s largest markets for medical devices.

Financials

VRAY recorded total revenue of $30.2 million from 5 primary revenue units for the Q2 ended June 30, 2019. Its posted total revenue costs and operating expenses were $26.9 million and $29.5 million respectively. Also, total gross profit was $3.2 million.

In the same period the previous year, the company had posted total revenue of $16.4 million from 3 revenue units.  Also, total revenue costs and operating expenses were $16.4 million $18.3 million respectively. Moreover, total gross profit was $0.1 million for the same period last year.

However, for the quarter recently reported, the company sustained a net loss of $30.8 million or $0.32 per share. For the same quarter last year, however, net loss was $22 million or $0.30 per share.

Finally, the company has revised its guidance for 2019 full fiscal year. Previously, it had expected revenue in the range of $111 million to $124 million primarily from 17 to 19 revenge units and 3 upgrades.

However, this has been tuned down to a current range of $80 million to $95 million to be driven primarily by 12 to 15 revenue units and 3 upgrades.

Outlook

Presently, VRAY’s technicals suggest a strong sell. From oscillators to moving averages, the pointer is towards the sell direction. However, its current 14-period Relative Strength Index (RSI) of 22.17 is neutral.

As of August 15, VRAY has a market capitalisation of approximately $653 million. It has a 52-week range of $2.76 and $10.73. But at its current market price of $$4.01, this might be a bargain price to buy.

About Oluwa Solademi 15 Articles
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