Here's Why Things Aren't Looking Good for ViewRay, Inc. Today

By Cory Renauer Markets Fool.com

What happened

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Shares of ViewRay, Inc. (NASDAQ: VRAY), a med-tech company focused on improving cancer treatment, are getting beaten up after a less-than-thrilling earnings report was released after the bell yesterday. As of 3:40 p.m. EDT, the stock was 11.9% lower than its previous close.

So what

ViewRay Inc.'s fancy MRI-guided radiation-therapy delivery systems aren't cheap. This year the company expects to generate between $45 million and $50 million in total revenue, mainly from the sale of seven or eight MRIdian Linac systems.

Image source: Getty Images.

If ViewRay can book that revenue this year, it would be a tremendous launch for the system, which just received FDA clearance in February. Unfortunately, investors will have to be a bit more patient. The company didn't book any product revenue during the first quarter and doesn't expect to do so until the second half of the year.

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Now what

The good news is that ViewRay's $144.9 million backlog at the end of this March was 62% higher than the backlog it reported at the same time last year. The company also has a larger cash cushion after completing some value-diluting share offerings recently.

So far this year patient investors have watched ViewRay's share count rise about 32%, but the company also finished the quarter with $49.3 million in cash and cash equivalents. Operations lost $10.95 million in the first quarter, which means the company might not require another trip to the equity tap in the foreseeable future, provided it can deliver on its backlog in a timely manner.

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Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.