Accuray (ARAY)

Management has repeatedly failed to meet targets by Accuray's Board of Directors yet continues to receive bonuses and stock option grants. Company has never earned an operating profit, not even in good times. Management is insular, intolerant of dissenting views and poorly regarded by employees. Internal communications are poor. Company lacks a strategic focus. Internal management systems are too complex for a company of Accuray's size.

Cyberknife treatment is considered an experimental treatment for many conditions and is not covered by many insurance plans, both private and public, in many instances. When Cyberknife treatments are covered, they are sometimes classified in the same category as less complex, less expensive to deliver services.

Many states have highly politicized Certificate of Need processes that require hospitals and medical groups to get government approval for purchases of medical equipment. In states where CON laws exist, there is often extensive efforts from owners of older radiation therapy systems to keep CyberKnife systems out and these efforts are often successful.

Accuray's founder, former CEO, Board Chair and largest individual shareholder just took a management post at Varian.

CyberKnife is a $4-5M purchase which could be deferred as hospitals face financing difficulty in the current credit markets.