ViewRay, Inc. (NASDAQ:VRAY) Q3 2022 Results Conference Call November 1, 2022 5:00 PM ET
Company Participants
Matt Harrison – Director, IR
Scott Drake – President & CEO
Zach Stassen – CFO
Dr. Paul Strong – VP of Clinical Affairs
Conference Call Participants
Jason Bednar – Piper Sandler
Rick Wise – Stifel
Marie Thibault – BTIG
Mike Ott – Opp Co
Young Li – Jefferies
Operator
Good day and thank you for standing by. Welcome everyone to the ViewRay Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded.
I’d now like to hand the call over to your speaker today, Matt Harrison, Director for Investor Relations. Please go ahead.
Matt Harrison
Thank you, operator. Good afternoon, everyone, and welcome to ViewRay’s third quarter conference call. Joining me today are Scott Drake, our President and Chief Executive Officer; and Zach Stassen, our Chief Financial Officer.
Earlier today ViewRay issued a press release and presentation for today’s call. The presentation can be viewed live on our webcast or downloaded from our website. Today’s call is being broadcast and webcast live, a replay will be available on our website for 14 days.
Before we begin, I would like to remind you that, the discussion during this conference call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the Company’s most recent filings with the SEC.
I will now turn the call over to Scott.
Scott Drake
Thanks, Matt. Good afternoon, everyone, and welcome to our Q3 call. Today, I’ll begin with our financial results. Following that, I’ll outline recent events including commercial wins, clinical highlights, China approval and key takeaways from ASTRO. Zach will go into depth in our financials and provide an update to our 2022 guidance and we look forward to opening the line to Q&A.
In Q3, we added another eight orders highlighted by key wins at MD Anderson, the Houston VA and SUNY Upstate New York. MD Anderson is one of the premier cancer centers in the world and they are looking to take their MR Linac program to a new level. We’re excited to welcome them to the MRIdian family.
Houston represents our third VA order and we are highly motivated to bring the best care possible to our veterans. GenesisCare announced their next two MRIdian centers at Birmingham and Gilbert in the UK which brings their total number of orders to six. Our backlog now stands at $370 million up 26% over prior year, and revenue grew 38%.
Another highlight this quarter is gross margin, which came in at roughly 17% or 700 basis points over prior year. Solid execution from our team puts us in a position to deliver 40% revenue growth for full year 2022 and for second consecutive year improved gross margin by 750 basis points with perhaps a bit of upside this year.
Cash used in the quarter was about $15 million. Let me reinforce that we are utilizing cash to fuel growth, mitigating supply chain risk by advanced purchase of key components, and investing in manufacturing processes and in-sourcing to improve gross margin. We expect that, revenue growth we are seeing in our order book will continue to drive gross margin and operating leverage, and we’re confident in our line of sight to breakeven without tapping equity markets.
Turning to Slide 4. As we have shared many times, our mission is to treat and prove what others can’t. Right in line with our mission and following the success of the SMART Pancreas trial, we announced LAP-ABLATE. LAP-ABLATE is a Phase 3 global multi-center, randomized controlled trial in locally advanced pancreatic cancer.
The trial will compare current standard of care, chemotherapy to chemo plus MRIdian SMART Therapy. It’s important to note that conventional radiation has failed to prove survival benefit in several pancreatic cancer trials. Headlining these failures is the LAP07 trial, which examined a similar patient population to the one we are targeting in LAP-ABLATE.
Survival in that trial was about 15 months in the radiation plus chemo arm versus 16 months for chemo alone. Conventional radiation proved no survival benefit. We are in the process of attempting to prove a meaningful survival increase, where conventional radiation has failed.
e are striving for this proof in both pancreas and central and ultra central lung in LAP-ABLATE and Lung STAAR respectively. With success, these trials will expand the addressable market for MRIdian therapy and provide a deeply valuable solution our customers seek and patients deserve.
These clinical trials are critical in further differentiating MRIdian and accelerating our path of therapy adoption. Dr. Mike Chung states that, he and other investigators are “excited to launch the international LAP-ABLATE trial intended to provide randomized evidence that five-fraction MRIdian SMART substantially prolongs two years survival versus chemotherapy alone for locally advanced pancreatic cancer, and in doing so, changed the paradigm of how this disease is fundamentally treated worldwide”. Treat and prove what others can’t, indeed.
Turning to Slide 5. We are excited to announce the Chinese approval of MRIdian. China is the second largest and fastest growing Linac market in the world. China currently has roughly one Linac per million people leaving plenty of room to reach the industry recommendation of four Linac per million.
The Healthy China 2030 policy is focused on improving health, life expectancy and the expansion of healthcare infrastructure. MRIdian is well positioned to help address cancer needs in China. We’re excited about this opportunity and the prospect of expanding access to the benefits of MRIdian therapy.
Turning to Slide 6, ASTRO was a great show for ViewRay. We took the opportunity to highlight the remarkable clinical data our customers are generating. There was great response to the full 12 month MIRAGE prostate data. Quick punch lines include the fact that the MRIdian arm cut treatment margins in half, cut treatment volume by about 30%, and cut healthy tissue toxicity by about 60%.
Acute toxicity for these patients takes the form of sexual dysfunction and the life-altering effects of incontinence. We are proud and grateful for UCLA taking on a head-to-head randomized control trial. Too often the calling card in this industry is good enough, is good enough. Certainly this isn’t true if your loved one is on the table. Clinical science will illuminate the path forward and this is our calling card.
There was also great feedback regarding the smart pancreas data. This is the first time anyone has proven in a prospective trial the ability to safely deliver in ablate of dose in pancreatic cancer. Customers are also very encouraged by the survival signal. As I mentioned, we’re building upon the considerable pancreas data, our customers have demonstrated as the foundation for LAP-ABLATE, our Phase 3 randomized control trial.
Also at the show, there was a lot of buzz about A3i. Current, A3i users shared their stories about both the ease of use and clinical enhancements of these innovations. We are now expanding the launch of A3i and look forward to our global rollout. All of the clinical and innovation enhancements have led to impactful commercial meetings. It’s fair to say interest in MRIdian is high.
Take a step back to see the combined impact of our clinical and innovation pipelines. I’d highlight three points. Number one, three years ago, we had single center studies or small data sets reported as posters or brief talks. This year, we had two large prospective trials as main session presentations.
Number two, these clinical outcomes are energizing the next-generation of clinicians. Young, hungry radiation oncologists and physicists are highly motivated to change the field with MRIdian data and see this therapy very much as a career defining opportunity.
And number three, our strategy is working. Clinical data is driving demand. One West Coast customer saw a threefold increase in patients treated on MRIdian from Q2 of ’21 to Q2 of ’22, and an East Coast customer increased their prostate program fourfold in the last four years on MRIdian with zero marketing dollars. Both customers are preparing for more MRIdian systems. I’m proud of our team and pleased with our progress as we pursue our strategy.
With that update, I’ll turn it over to Zach.
Zach Stassen
Thanks, Scott. Today, I’ll cover our third quarter business results and updates to our 2022 guidance. Full details can be bound in today’s press release, and we will be filing our 10-Q subsequent to this call.
Turning to Slide 8, our team delivered solid results with another eight orders in the quarter, totaling over $47 million in value. Our backlog increased 26% versus the prior year period ending a quarter at roughly 370 million. The combination of our recently introduced A3i feature set the clinical data we are delivering and increasing patient awareness is impacting the market. The positive energy around MRIdian and ASTRO was evidenced our strategy is working.
Revenue in the quarter grew 38% to nearly $26.5 million highlighted by 48% growth in product revenue driven by the increase in revenue units. Gross margin during the quarter was approximately 17%, a nearly 700 basis point improvement versus the prior year period.
Gross margin was led by a product margin of 19%, demonstrating the leverage driven by additional revenue units. Our team has done a tremendous amount of work to position us well for the gross margin expansion we expect, and this quarter is proof as to why we feel good about the path ahead.
Gross margin will bounce around a bit from quarter-to-quarter based on the timing of installations, but the trend is solidly positive. For the second year in a row, we are in a position to deliver a more than 750 basis point improvement in gross margin.
Operating expenses were 28 million in the quarter versus 25 million in the prior year period demonstrating solid operating leverage. We are continually looking for ways to operate more efficiently and expect sales growth to meaningfully outpace OpEx growth for the foreseeable future.
Other income and expense was 2.1 million in the quarter. Other income was impacted by both a gain on the warrants on our balance sheet, as well as increased borrowing costs. These increases are largely offset by the interest we are earning on our cash balance. Net loss for the quarter was $26 million or $0.14 per share compared to a net loss of 25 million or $0.15 per share in the prior year period.
Turning to cash use, we use approximately $15 million in the quarter. Supply chain risk persists and in order to mitigate those risks, we are deploying cash to solidify inventory to fuel growth. We finish the quarter in a strong liquidity position with approximately $147 million in cash on hand.
Let’s discuss guidance on Slide 9. Based on increased visibility and confidence on the revenue front, we are again raising the bottom end of our range from $90 million to $94 million. The new range is $94 million to $104 million with an implied growth range of 34% to 48%, and we are proud of what our team is delivering in a challenging environment.
Shifting to cash use, year-to-date, we have utilized approximately $73 million of cash. We now believe the cash use for 2022 will be between $78 million and $92 million. The increase from prior year guidance is primarily derived from timing differences in a couple large system payments.
While system shipments for the year are on track, project timelines can and do routinely change related to construction and permitting and can result in an impact to payment timing. We regularly deal with these types of issues and have high confidence in collection, but the inner quarter timing can be dynamic.
We expect the collection date delay will benefit our 2023 cash, which allows us to remain confident in our long-term assumptions regarding cash. We believe given our robust backlog and commercial pipeline that our current available resources provide us with a clear path to breakeven and we do not believe we will need to raise additional equity capital to meet these objectives.
On Slide 10, let’s take a look at the progress we are making towards our financial objectives. We said we would deliver approximately 40% growth for the full year. Year-to-date, we delivered 36% revenue growth in our encouraged by what we see ahead on our path to 40%. We said we would deliver gross margin improvement of 750 to 1,000 basis points. Year-to-date, we delivered 725 basis points and are set up well to drive additional progress in Q4.
And finally, we said we would deliver meaningful operating expense leverage. Our revenue growth continues to significantly outpace OpEx growth as we realize the benefits of our strategy and continue to grow into our infrastructure.
This year, we took material steps forward on the innovation, clinical and financial fronts. Our new innovations in clinical data are in the early stages of impacting the market. On the financial front, the trends are positive and we expect them to continue into future years and bolsters confidence in our ability to reach cash flow breakeven.
Turning to Slide 11, we look forward to diving deeper into our strategy, market opportunity, business outlook, and more importantly for you to hear from some of our key users at our upcoming Investor Day. We hope you can attend in person in New York or virtually on November 17.
With that, operator, will you please open the line for Q&A.
Question-And-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Jason Bednar with Piper Sandler. Your line is now open.
Jason Bednar
Good afternoon. Congrats on another quarter here guys. A couple of items I wanted to touch on, maybe a big picture one to start here. Primarily the release of the data we just saw at ASTRO recently in the Phase 3 trial or launch in pancreatic cancer. Maybe help us to understand, I mean, not question that decision, but why do you need to run another trial? What are you hoping to accomplish or show? I feel like with all the data you have out there and all the evidence from your customer partners, the evidence is there, that patient safety and outcomes are clearly better from MRIdian than conventional radiotherapy. Same goes for survival benefit. So again, the question is, what does another trial provide that you don’t already have? Do you think you need more data to drive more uptake? Or it is RCT for a single indication like this a sticking point to adoption? Just any color you have there? And then I’ve got a couple of follow ups.
Scott Drake
Yes, Jason, thanks for the question. I guess, let me weigh in first from a macro perspective, and Paul Strong is with us, our VP of Clinical and welcome him to add any kind of color that he would like. We spend a ton of time as you are aware with our MAB and our clinical consortiums. And I would tell you that, our customers believe this is an incredibly important and necessary trial to run to change guidelines for pancreatic cancer. It’s also one that is really engaging medical oncologists and others in the field beyond just radiation oncology.
So, I think we have an opportunity, as I said in the prepared remarks, quoting Mike Chung, to really fundamentally change the landscape here. And as I said, I think we are doing that in tough-to-treat cancers, proving survival benefit in pancreas, and central and ultra central lung. And I think if we nail those, people will give us credit broadly in the toughest to treat cancers and also prove value in more common cancers such that as we’ve done with MIRAGE and SCIMITAR, and now we’re pursuing SHORTER and FORT. So, it’s very much part of the clinical strategy. Let me ask, Dr. Strong to weigh in, and then you’re welcome to ask any follow-up there, Jason.
Dr. Paul Strong
Yes, thanks Scott. Jason, I’d just add a little more color on Scott’s point about medical oncology and surgery as referring physicians. We would agree that the data that we have is very powerful within radiation oncology, but we know many of these patients might not even make it to radiation oncology. So, the need to have level one evidence that convinces a larger set of the referring population moves MRIdian into the guideline and really differentiates, and the idea of proving that in one of the toughest cancers to treat halos onto other tumor sites. So, it’s a strategic investment in a clinical trial to really differentiate, and yes, that’s my only add there, Scott.
Jason Bednar
Maybe, another bigger picture one, but looking ahead to 2023, I know we don’t have guidance here, but Scott just wanted to maybe take your temperature, the streets modeling 40% revenue growth on top of what you’re doing here in 2022. I think you’ve mentioned in the past, seeing that the P&L transition to one that or maybe not transition isn’t the right word sustain at one a level less emblematic of top tier growth in medtech and 40% fits that description. I guess we’re, we’re a few months closer now to 2023 since you last made those comments. Is that still a growth profile you’re comfortable with at the top line? And then, in light of the strength we’re seeing in the margins in the quarter, you just reported a similar question for you and you have Zach, feel free to weigh in, just how you’re feeling about the ability to take another big step forward in gross margins next year?
Scott Drake
Yes, of course. Jason, I’m going to stop short of specific numbers, but what I can tell you wrote and you’ll hear more from us at our Investor Day here in a few weeks. We very much anticipate being able to deliver top tier top-line rev revenue growth, that is completely being fueled by our innovation pipeline and our clinical pipeline just as we drew it up three or four years ago. And you see that happening right before our eyes.
We have also said that that revenue growth will really translate into very attractive gross margin expansion. You saw that happen last year at about 750 basis points this year. I anticipate we’ll do that maybe a bit better, and I think that top-line growth is going to continue to drive gross margin expansion in the ’23 and ’24 timeframe.
And that’s going to be augmented out in that ’24, ’25 plus timeframe with both our cost down program targeting to take out about a million dollars of our cost of goods and concurrently in sourcing. And that top-line growth and gross margin expansion along with really tight OpEx discipline is what allows this business to flip to cash flow positivity in that ’25, ’26 timeframe.
So, we feel really good about all of that. We feel really good that it’s happening just as we drew it up several years ago. Again, I’ll stop short of any specific comments, but we feel really good about where this business is going clinically from an innovation perspective and financially as well.
Operator
Thank you. Our next question comes from the line of Rick Wise with Stifel. Your line is now open.
Rick Wise
Hi, Scott, Zach, great to see all the progress. Scott, you talked about what a great ASTRO you had, and I was hoping you’d expand on what you described as the impactful commercial meetings. What’s that mean? Does that mean you received orders? Or just help us understand how having an excellent meeting where you had great data, obviously, a transformed company meeting with folks this year? How should we imagine that translates into orders?
And the second half of that, in a way is, maybe you can, as part of that talk about logistics the macro environment, your ability to install. So if we might, we’re seeing the backlog accelerate. Are you able to install at a faster rate going forward given the backlog, given this commercial momentum?
Scott Drake
Yes, absolutely, Rick. So let me take a cut at answering the ASTRO question first, and then we’ll talk about logistics and installations as well. The best way that I think I can describe the conversations that we’re having today and ASTRO is just exemplary is to contrast it in terms of where we were two or three years ago, when the conversation centered around technology, which is really emblematic of where this industry has historically been.
You find companies generally spending more time talking about what their technology is versus what their technology does in the form of prospective Phase 2 and Phase 3 data. I think, we are making a significant impact in that, and the conversations that we’re having with customers today in stark contrast are all about clinical data, and how they can really get a MRIdian program off the ground if they’re a new customer. And if they’re an existing customer, we’re talking about strategies of deploying multiple MRIdian’s in a given area to really differentiate a cancer center.
So, we’ve gone from kind of where the industry was talking about technology, describing an MR Linac, all of these kinds of things to today talking about prospective Phase 2 and Phase 3 data. Hard to tell you how different that is, Rick. But hopefully that gives you a little bit of sense in terms of how things are changing, and we’re most gratified in markets where there’s multiple MRIdians how the competitive dynamic is playing out. So, we feel very good about that.
As it relates to logistics and installations, the environment continues to be challenging as it has been for the past couple of years. We are playing whack-a-mole, if you will, on supply chain items. Our team has done really a remarkable job managing through these challenges, and I think by and large they’re abating, but we still run into difficulty here and there.
From a capacity standpoint, I think, we are very well positioned for the growth that we anticipate in 2023, and beyond. And we’ve got plenty of four warning to expand that installation capacity well in advance. So, I think we are very well-positioned, Rick. I think we are building a really strong and solid company, and kind of staying with the macro theme of your question and kind of building on where Jason was.
A few years ago, we were kind of in orders story, that’s the way the street looked at us. Today, I think we are a revenue growth and gross margin story and orders obviously feed that revenue growth. And I think we switched relatively quickly into a revenue growth and adjusted EBITDA story given our balance sheet and where we are taking the business out into the future. So I hope that’s responsive, but happy to dig in any of those areas as you wish.
Rick Wise
Yes. Let me move on to one other question. I was hoping you’d expand Scott, on your comments about the China approval, as you say, obviously, huge rapidly growing market. I know it’s incredibly early days. It’s been a month or something since you have got clearance. But maybe help us to better understand your early commercialization plans. Does your partnership accelerate, because your partner has an experience when does it accelerate the China order funnel in your mind? And when will we start to see initial orders and or hopefully revenues start to be more visible? Thank you.
Scott Drake
Yes. Rick, we are really excited about the China opportunity. The way I’m positioning with investors is, give us a little bit of an opportunity to dig in. Chindex has been preparing for this launch for a very long period of time. They are a very capable partner in China, very smart on all of the different facets of medtech that are required to succeed. But I think until we get a little more time under our belt, I would view it as upside to everybody’s model, that’s how we’re viewing it here.
As I’ve said publicly before, it would not surprise me for us to see some orders come out of China in the relative near-term. But what really catalyzes markets for us, is MRIdian programs that are working, that patients are traveling to. We have talked about these examples before Florida, California, the UK, upper Midwest and Northeast, et cetera. So that’s going to take us a little while to get to that point in China. I don’t want any of that commentary to come across as us not being enthusiastic. We are, but I don’t want the street to get ahead of us with this opportunity, and the momentum that’s building in our business beyond China.
Rick Wise
I’m going to sneak in one extra question, if you don’t mind. Elekta, your competitor Elekta’s Unity system recently received CE Mark approval for what they describe as comprehensive, most management of true tracking, automated gating functionalities. How do you want us to think about this announcement in the context of ViewRay’s MRIdian? Is this a headwind for future commercialization, a validation of your strategy, a non-issue, some combination of all that? Thank you, Scott.
Scott Drake
Yes. Thank you, Rick. Here’s — I think our customer’s point of view is much more important than mine. Candidly, our customers are very clear in terms of their definition of clinical success. They want to first and foremost deliver an ablative dose and they want to do that safely. They want to do it with tight margins, no fiducials, and five or fewer fractions, and lower no grade three or higher toxicity.
We look consistently, Rick, for anybody that’s able to deliver that kind of therapy and deliver the kind of clinical data that we are. So far as I’m aware, I’ve not seen anybody else deliver that kind of therapy. So, I’m just going to reserve judgment there and continue to point to clinical data. Phase 2 and Phase 3 data that really is meaningful for our customers as they make therapeutic decisions and for patients that really deserve and require better care.
Operator
Thank you. Our next question comes from Marie Thibault with BTIG. Your line is open.
Marie Thibault
Maybe I could hear another high level question for Scott. Wanted to get your take, certainly, sounds like the CapEx environment and the order funnel is quite open and healthy here in the U.S. Wanted to hear if things are any different in any of your geographies? We’re thinking particularly of Europe and APAC. Is there any hesitancy on spending there or are you feeling similarly optimistic?
Scott Drake
Marie, first thanks for the question. I think we continue to see this area, this line of questioning in the same way that we did a quarter ago and conversations that you and I have had in between, we very much have our eye on it. We really look for any kind of concerning signal. We haven’t seen any as yet.
You were at ASTRO and we had gosh, I couldn’t even tell you how many customer conversations really from all around the world. And even talking to for-profit hospitals, they seem to be very interested in MRIdian programs and expansion thereof. So, we think being in that strategic bucket of capital is very advantageous for us. But I don’t want to be pollyanna, we definitely have our eye on it, but it continues to feel pretty good and pretty positive at the moment.
Marie Thibault
And then, my follow-up, maybe just a very brief two part, both clarification questions, on the A3i rollout, glad to see that’s underway. Is there any revenue involved with that? I’m forgetting probably should go back and check my notes on that. Just want to clarify. And then for Zach on the risk around system related payment and receipt of that payment, is there any impact at all to revenue or is that completely decoupled from revenue recognition? Thanks again for taking the questions.
Scott Drake
You got it, Marie. In terms of A3i, it has been a real driver for us for customers getting onto our highest level service plan that includes tech refresh. So it has been a very attractive driver there and I think future Innovations will bolster that in the event that a customer doesn’t have tech refresh, there would in fact be revenue associated with it. And in fact pretty significant revenue associated with an A3i upgrade, but I think the vast majority of customers are selecting that high level of service. And as it relates to system payments, I’ll turn that one over to Zach.
Zach Stassen
Yes. So, Marie, no revenue risk, I think we feel great about system shipments and machines moving on time. I think what happens in normal course as we get a little closer to install and really add definition to construction timelines is, it can be impacted by months, sometimes a quarter here and the rerelated to permitting delays or things of that nature. And sometimes just the payment terms on any given deal, but yes, no revenue risk, no impact to demand overall.
Operator
Thank you. Our next question comes from the line of Chris [indiscernible]. Your line is now open.
Unidentified Analyst
Hi, this is Devon for Chris. Thanks for kicking my question. Just one quick one, as far as hospital CapEx and budgets, just any qualitative commentary or updates there, I know some of your peers have seen backlogs grow because of supply challenges, and there was also some delays in installation due to staffing and scheduling challenges. So just wanted any updates you could provide there.
Scott Drake
Yes. I would share that I think we’re in a little bit of a different spot than some of our larger industry peers where these macro headwinds impact us differently. Frankly, we find ourselves somewhat safe harbored in a strategic bucket of capital versus replacement capital. And the area that probably is a bit similar, as we’re alluding to hereto Marie’s question on payment timing, these are very significant programs. And our customers from time-to-time have permitting delays or construction delays and that can impact timing, but really not the certainty of either revenue or payments. So, I think we’re relatively well protected there. So hopefully that’s responsive to your question, but again, happy for a follow up if you wish.
Operator
[Operator Instructions] Our next question comes from the line of Mike Ott with Opp Co. Your line is now open.
Mike Ott
I’m on for Suraj. Thanks for taking our questions. Scott and Zach, I know you mentioned, Scott, that the A3i launch is expanding, and I believe last call you guys were live at two customers have done over a 100 fractions. Don’t know if you have any updated numbers you can share there?
Scott Drake
Mike, we’re at a bunch. I don’t know what the number is, but our customers are cranking with it. We have our third customer that has A3i almost complete with their installation at this point. I don’t know whether or not they’ve done their first treatments with it, but we’re very much opening up the aperture here in Q4. And we feel very satisfied based upon customer feedback and very confident that we’re ready to roll this out globally pending any kind of regulatory approvals that are required from one market to the next. So, feedback is very positive and we’re excited to get this into all of our customers’ hands.
Mike Ott
Excellent. Thanks, Scott. And then for the increased 2022 cash usage guide up to the 78 to 92, is it fair to characterize that as a mix of kind of the supply chain inventory investments that you’re making as well as some of the collection timing issues that Zach mentioned?
Scott Drake
Yes. Exactly, Mike. It’s really those two items, and I think it’s important to understand cash for any newer investors in ViewRay from both a macro and a micro perspective. From a macro perspective, we have been saying now for years that our clinical and innovation pipeline would drive growth. We see, that happening this year approximately 40% growth.
And we said that, that growth would drive gross margin expansion. Mike, you have heard many times that, that’s yielded 750 basis points last year. We will do that or better this year and we are set up very well for expansion in ’23 and ’24. And that top-line revenue growth and gross margin expansion coupled with really tight OpEx discipline is what allows this business to flip, to cash flow positivity in the ’25, ’26 timeframe.
So from a macro perspective, that’s the path that we see ourselves on. We do not believe we have to tap equity markets to get to that point of positivity, that’s a real milestone for the Company that we look forward to achieving. And then from a micro perspective, quarter-to-quarter fluctuations, as Zach has pointed out both in prepared remarks and in Q&A, that’s the stuff that’s just indigenous to this business.
When installation will push out, a construction project will push out, and then cash collections go hand in glove with that, that’s something that we deal with on a very regular basis. So, those are the two components you have nailed it, and I think it’s really important for investors to understand both the macro and the micro from a cash perspective in this business.
Mike Ott
All right. That’s very helpful color. Thanks for the update. Scott.
Operator
Thank you. Our next question comes from Young Li with Jefferies. Your line is now open. Young Lee, your line is open. Please check your mute button.
Young Li
Sorry about that. Thanks for taking the question. I guess first question, I’m just kind of curious, you have presented some really good data at ASTRO and I guess looking forward to 2023. You have some more clinical trials. That’s in progress. Was wondering if you can maybe update us on expected timing for some of the key ones like SHORTER, Lung STAAR and FORT?
Scott Drake
You know what, Young, I’m going to turn that over to Dr. Strong to touch on some highlights that are forthcoming.
Dr. Paul Strong
Yes, sure. Thanks Scott. Yes, really briefly SHORTER nearing end of enrollment, we expect to see acute toxicity from that study in the following year. The SMART-1 study which many know about is, a clinical trial looking at single fraction and MRIdian treatment for multiple tumors and single patients. That data will come online in 2023 very excited about that. And then Lung STAAR is open for enrollment. That will take some time. So I can’t project today when we will see that data, but that is open and ongoing. So I think some big data from some studies that will complete and then we will obviously continue to look at follow-up data for SMART Pancreas in the coming years. So hopefully that is responsive to your question.
Young Li
Yes, very helpful. I guess one quick follow-up. I was just wondering, if you can give us some preview for what we should expect at the Capital Markets Day in like two weeks?
Scott Drake
Yes. Young, I think you will get a pretty good view of our overall strategy, how we’re progressing on our clinical pipeline, our innovation pipeline, our commercial pipeline, how all of that rolls up to our P&L? And we will give [Technical Difficulties] for the first time a view, a long terms of where we’re going to be taking this business in the next few years here to four. It’s always been a one year kind of guidance that we provide at the beginning of a calendar year.
And as Zach said, we’re really excited to put some of our key opinion leaders in front of you to give investors the opportunity to ask questions about the kind of wonder of MRIdian the clinical data that’s being generated in the toughest to treat cancers and more common cancers alike.
And we will have an executive there to also answer business questions, because the business of MRIdian is also very important, I think, for investors to understand, how our customers are doing financially very, very well, and why so many of them are reinvesting in a second, third, or sixth MRIdian system.
So, I think those will be the highlights of the event and we really look forward to sharing that in that time and viewpoint with our investors.
Operator
And I’m currently showing no further questions. At this time, I’d like to hand a call back over to Scott Drake for closing remarks.
Scott Drake
Thank you very much everybody. Thanks for your interest in ViewRay. Look forward to seeing you November 17 in New York.
Take care and have a good evening.
Operator
This concludes today’s conference call. Thank you for participating. You may now disconnect.
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