- Accuray, a provider of radiation therapy devices, is laying off approximately 5.9% of its global workforce as part of a drive to cut costs, according to a Thursday filing with the Securities and Exchange Commission.
- The company, which employed 1,024 people at the end of June, delivered fourth quarter results and an outlook for the coming year that fell short of analyst expectations in August, causing its share price to fall.
- Accuray told investors on an August earnings call that margins were “temporarily challenged” in the fourth quarter but that “pricing actions” were starting to improve the situation. Since then, the company has decided to cut costs.
Accuray competes against the radiotherapy equipment companies Elekta and Varian Medical Systems, part of Siemens Healthineers, and a range of other cancer treatment modalities such as brachytherapy, chemotherapy and immunotherapy.
The business is growing: Net revenues increased 7.5% in the most recent quarter and grew by 4.1% to $448 million in its 2023 fiscal year, which ended in September. While Accuray hit its guidance range, and would have beaten the top end without the effect of foreign exchange, the fourth quarter results and outlook for the coming year failed to satisfy investors.
“Deal mix and direct material inflation” pressured margins in the fourth quarter, and while Accuray grew its installed base in most regions last year, the key U.S. market is contracting.
“The U.S. continues to see radiotherapy capacity consolidation across the market and was the only sub-region where we saw a decline in our installed base,” Accuray CEO Suzanne Winter said in August. “Our focus in the U.S. is a long-term approach where we have focused our commercial investment with a goal of ensuring the highest level of service and customer satisfaction for our older installed systems.”
The company faces the pressures despite taking market share last year, according to an analyst on the fourth quarter call, and Winter forecasting the company will again increase its stake in the market.
Accuray’s main competitors have also reported challenges, with Elekta telling investors that the macroeconomic and geopolitical environment hurt orders and Varian struggling with supply chain problems.
Accuray expects the layoffs will cost it $2.5 million in the second quarter of its 2024 fiscal year, according to the SEC filing.