ViewRay, Inc. (NASDAQ:VRAY) Q4 2022 Earnings Call Transcript

Scott Drake : Yeah. God willing, we will. Offsetting penalties as it relates to that, Jason, on one hand, Paul and I have conversations with customer, including a couple here over the past couple of weeks where customers are trying to get into our installation slots even here still in ’23. And that’s very good to see. And I think we have more instances of that. We never have enough or too much of that. That feels really good on one hand. But on the other hand, to Rick’s question, we are fighting a lot of things that we don’t control. The permitting process, construction, labor shortages, both at construction companies and at hospitals and obviously, supply chain. So I would say there’s very positive signals. And on the other hand, there are very real challenges that we have been facing over time.

When those things are in the rearview mirror, perhaps we’ll be able to speed things up. But we want to be very transparent in terms of both the positive things that are happening in the business and the very real challenges that we face today that, frankly, we’ve been facing over the past three years.

Jason Bednar : Okay. That’s all fair. And maybe I’ll squeeze in one more here. I mean, follow the kind of the three-question format that Rick set. I appreciate the color on the community center mix that you provided there, kind of where the business is at today. if you were to put on your — kind of your wizard hat there, Scott, or whatever hat you want to wear, I guess, where does the community center mix go longer term for your business? Thanks.

Scott Drake : Yeah, Jason, I can be kind of brief here. I think it goes up. I think there’s more and more interest in MRIdian. I think people are fascinated by what our customers are doing. The clinical data, the throughput that they’re showing, the fact that they’re attracting net new patients, there’s a lot of interest. And when you look at the number of community hospitals versus academic centers, the community hospital number is just so much larger. So I think you’re going to see as we go forward, the proportion of our business that’s represented by community hospitals is going to go up.

Jason Bednar : Any number you want to throw on that? Or just believe it as higher than 40?

Scott Drake : That sounded like a fourth question. We’re good. We’re good.

Jason Bednar: All right. Thank you.

Scott Drake : Thanks, Jason.

Operator: Your next question comes from the line of Chris Pasquale from Nephron. Your line is now open.

Chris Pasquale : Thanks, good evening, guys. Bill, I wanted to make sure I understood your comments about the two turnkey units. So first, maybe just define that term for us and how that’s different from a typical install. And then could you just clarify whether those units are or are not included in the guidance you gave today?

Bill Burke : Sure. Thanks for the question. So the turnkey units are both included in the guidance we provided. A turnkey unit in these units are specifically VA units. It’s where revenue is recognized on the completion of the installation and customer acceptance. So if acceptance slips due to some change in the construction timeline, then the revenue may not be recognized until the following year. We’re doing everything we can. I know the commercial team is laser-focused on getting these turnkey unit installations in as quickly as we can. And we understand we want to get them done by December 31 and get customer acceptance at that point. But again, if they slip till customer acceptance on January 3, all the revenue wouldn’t be recognized until three days later. And that doesn’t change the trajectory or valuation or anything of the — like that of the company. It’s just a factor of what Scott just said in terms of the difficulty and construction timeline sometimes.