Accuray Incorporated

Good day, and welcome to the Accuray second quarter fiscal 2023 financial results. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Jesse Chiu, Senior Vice President, General Counsel, and Corporate Secretary. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to ACRID's conference call to review financial results for the second quarter During our call this afternoon, National will review recent corporate developments. Joining us on today's call are Suzanne Winter, Accra's President and Chief Executive Officer, and Ali Kervais, Accra's Chief Financial Officer. Before we begin, I would like to remind you that our call today includes four looking statements. Actual results may differ materially from those contemplated or implied by these four looking statements. Factors that can cause these results to differ materially are set forth in the press release we issued just after the market closed this afternoon. as well as in our filings of the Securities and Negotiations Commission. The forward-looking statements on this call are based on information available to us at the state's date, and we assume no obligation to update any forward-looking statements as a result of new information or future events, except to the extent required by applicable securities laws. Accordingly, you should not put undue reliance on any forward-looking statements. A few housekeeping items for today's call. First, during the Q&A session, we request that participants limit themselves to questions and then re-queue with any follow-ups. Second, all references we made to a specific quarter in the paragraph marks are to our fiscal year quarters. For example, statements regarding our second quarter refer to our fiscal second quarter ended December 31st, 2022. Additionally, there will be a supplemental slide deck to accompany this call, which can be accessed by going directly to Accurate's investor page at investors.accurate.com. With that, let me turn the call over to Accurate's Chief Executive Officer, Suzanne Wood. Suzanne?

Thank you, Jesse. Good afternoon, and thank you for joining the call. I am very pleased with our excellent performance in the second quarter and our position going into the second half of the fiscal year. During the quarter, we delivered strong revenue and evened out performance, delivered a robust book of orders across all regions, and made significant progress on our FY23 strategic agenda of driving above-market revenue, margin expansion and profitability initiatives, and the formation of strategic partnerships that can create value for all stakeholders. We are doing this while navigating persistent macroeconomic and foreign exchange headwinds, which Ali will elaborate on later in the call. I'd like to start by expressing my thanks to the Accurate team that continues to deliver new levels of performance. While we have seen some improvements in the supply chain environment over the course of the past year, our teams continue to battle and rise to the challenge every day driven by accountability to Accura's higher purpose of ensuring that our customers have access to the highest precision radiotherapy tools available so they can provide advanced cancer care to improve lives. Over this past year, we have taken actions to improve the flexibility of our supply chain and customer-facing teams so that we will fulfill new demand as well as maintain smooth operations and satisfaction in our installed base of customers. These initiatives have put Accurate in a better position to manage the ongoing headwinds with teams performing at the highest levels. This is why I'm especially proud of a couple of key accomplishments within the quarter. The first, we delivered a record system shipments in the second quarter with 29 new systems delivered, which represents a historical milestone for the company. Second, we are proud to be recognized by the 2022 IMV Service Track Report for achieving best in service in radiation oncology based on IMV's annual survey of U.S. radiation oncology professionals. These are shining examples of the talent, agility, and dedication of our global Accurate team. We continue to make significant progress in advancing our innovation-driven growth strategy. Our product pipeline is the strongest in the company's history, and we continue to focus on solving clinical challenges and enhancing the value of our portfolio. I am very pleased with the Q2 orders performance, which included 34 new systems and represents 13% sequential orders dollar growth. These results reflect both growing customer demand for Accurate Solutions and the positive impact from our commercial initiatives. We believe these factors will continue to grow Accuray's revenue faster than our addressable market for FY23 and beyond. Sharing key highlights from the region, the Americas region delivered another quarter of outstanding order performance with 92% year-over-year growth driven by the adoption of our latest innovations. ClearRT, the industry's only helical CT imaging technology, and Synchrony, Accuray's real-time adaptive radiotherapy delivery are capabilities that are differentiated and driving win rates. In the U.S. in Q2, we saw that 100% of RAD Exec orders included the options for ClearRT and Synchrony, up from 80% in Q1. In Japan, Accurate has gained the number two market share position, and in Q2, we continued our strong competitive win rates. Nearly 50% of Q2 orders in Japan were replacements of the competitor's aged installed base. Additionally, the Japan team won a seven RADxAC system public tender in a highly competitive battle against the number one market share leader. Our Japan team continues to drive share gain in this largely replacement market. We also had strategic wins in the EIMEA region. with a competitive replacement rad exec win in Belgium at Charles Roy University Hospital. Additionally, we celebrated a second CyberKnife system win and strategic endorsement at the prestigious Euro Radio Surgery Center in Munich. Dr. Alexander Młaczewicz, director of the facility, is quoted saying he believes that CyberKnife is the number one technology for delivering radio surgery and purchased the additional CyberKnife so they could accommodate the growing patient demand for ultra-precise radiosurgical care. Turning to China, our joint venture continues to be a long-term value driver for Accurate, and we continue to dominate market share in the premier Type A radiotherapy market segment with greater than 75% market share. In Type B, we advanced our progress, completing our NMPA regulatory submission of TOMO-C. Tomo C will be our domestic, China-made JV product that will compete in the Type B segment, which is the largest segment of the China market with an estimated annual market potential of $600 million. We expect Accurate's premier brand reputation and awareness in the Type A segment will also help drive success and share gain of Tomo C in the Type B value segment upon introduction. Further, we believe our success as a total C product in China will have translation potential globally as we enter new geographies with a value segment product, allowing Accurate to compete in the large $1.3 billion annual global value market segment. Additionally, in November, the Ministry of Health central bidding process for Type A licenses resumed after a delay due to COVID lockdown. Eighteen Accurate systems were awarded to customers during the central bidding process and are expected to convert to revenue over the next few quarters. Despite the impact of challenges of the COVID lockdown in China, demand for radiotherapy system installation and training remains very high. We saw this firsthand at Accurate's 10th annual CyberKnife users meeting in November, where training participation rates were tremendous. with over 100 participants attending in person and 850 participants joining the training online. As we continue to accelerate our top line through growth initiatives, we are equally laser-focused on profitability. We made solid progress on our margin and profitability expansion plans and saw early indicators of a positive impact to our service margins in Q2, an area where we think we have tremendous opportunity. As we have mentioned on recent calls, the leadership team and I are focused on three main pillars, pricing discipline in our commercial efforts, including new value-added service offerings, reducing product and service costs through efficiencies, and optimizing operating expenses, which will have a meaningful impact in the midterms. Finally, establishing strategic partnerships are central to our growth agenda, allowing us to provide best-in-class solutions and expand the scope of our commercial access. In Q2, we advanced key strategic partnerships, most recently with C-RAD, introducing the Vital Fold Breast Package that will allow Accurate to offer the most comprehensive breast package in the marketplace. RaySearch also continues to be a very strong partner for us in treatment planning solutions, oncology information systems, and with the development of Artemis Adaptive Radiotherapy that combines ClearRT imaging and RaySearch's industry-leading digital technology and auto-contouring algorithms. This solution will further differentiate Accurate as the only company that offers a comprehensive adaptive radiotherapy solution that can correct for patient changes both during treatment with Synchrony and between treatments with Artemis, both with precision, speed, and patient experience. Finally, we're very excited to have announced a commercial partnership with GE Healthcare. This partnership pairs two industry technology leaders together with the aligned goal of providing personalized, ultra-precision solutions throughout the care continuum, from diagnosis to treatment to survivorship. Our commercial teams are engaged, leveraging our respective strengths, and developing customer pipelines. We believe the GE partnership will be a powerful value driver for patients, providers, and shareholders. I will now turn it over to Ali, who will speak more about our financial performance.