TOMO: Shares Plunge on Q2 Results and Lowered Guidance
Submitted By Knobias ClipReport
By Fain Hughes, fhughes@knobias.com
TomoTherapy Inc. (TOMO) plunged to a 52-week low on Friday, as shares lost half their value in early trading. The Company released financial results for the second quarter ended June 30, 2008 after the bell on Thursday.
For the second quarter, the company reported revenue of $52.0 million, an increase of 19% from $43.7 million in the second quarter of 2007. The company incurred a net loss of $6.9 million, or $0.14 per share, compared to a pro forma net loss of $0.7 million, or $0.02 per share, for the second quarter of 2007. The 2007 pro forma results do not include the accretion of redeemable convertible preferred stock of $102.6 million. Including the accretion, the 2007 second quarter net loss attributable to common shareholders was $103.3 million, or $3.15 per share. Second quarter 2008 gross margins were 24.1% compared to 33.2% in the prior year period.
The Company also lowered its FY08 revenue guidance to $190 million-$210 million and net loss guidance to a range of $0.28 to $0.43 per share.
Dr. Frederick A. Robertson, TomoTherapy’s CEO, explained in a conference call, “We are disappointed in our Q2 results. It feels like we were hit by the perfect storm in the quarter. During the period, we heard concerns from customers for the first time regarding the economic enviroment and saw a strong marketing campaign from a competitor. We also experienced continued delivery shifts in our backlog and had concerns related to our Japanese distributor. Individually, any one of these would likely not materially impact our business, but combined, they significantly affected our results.”
“We are a very young company that is constantly changing and evolving. We are an upstart in a marketplace of established competitors. There are still growing pains, and we have a long way to go. We are taking a number of immediate actions to improve our financial performance by driving sales and increasing financial predictability. To maximize our sales efforts, we are increasing the number of reps and training and improving the accuracy of the sales forecasting process. We are also closely managing expenses while still investing for long term growth. R&D is still the key to maintaining our innovation leadership position.”
Dr. Robertson noted, “We are still not involved in a significant portion of available opportunities. By selectively improving sales coverage and expanding product features, we anticipate access to a larger portion of market opportunities in the future. In September, we will be introducing new product features which will allow our system to treat simple cases better and faster, a key to increased penetration in the market.”
He concluded, “We remain enthusiastic about the future of this business. TomoTherapy remains the gold standard for high-quality cancer care. Continued innovation and expansion of our clinical capabilities will extend our technology leadership position and increase our prospects for robust growth and market share gains.”
Piper downgraded TOMO to Neutral from Buy and removed the stock from their Alpha List to reflect the Company’s negative outlook results. The also lowered their target to $7 from $14. Baird downgraded TOMO citing reduced visibility and lowered its target to $8 from $14.
