Accuray Incorporated (ARAY) Earnings Call Transcript & Summary

Welcome to Accuray's Investor Briefing meeting at ASTRO. My name is Elizabeth Kennard, and I'm the Vice President of Global Marketing here at Accuray. Joining us today, we have Suzanne Winter, our Chief Executive Officer; Ali Pervaiz, Chief Financial Officer; Sandeep Chalke, Chief Commercial Officer; Dr. Seth Blacksburg, our Chief Medical Officer; and Awais Mirza, our Director of Patient Access. We're also joined by our esteemed guests and global thought leaders, Dr. Sean Collins, Dr. Jon Lischalk; Dr. Nima Aghdam ; and [ Dr. Connie Manske ]. Thank you for joining us. During the meeting, you will hear from Accuray leadership team who will highlight the company's vision for advancing patient care while creating value for our stakeholders. You will also have the opportunity to hear from our guests on multiple topics, including their perspectives on Accuray technology, the future of radiation medicine and trends and alternative payment models in radiation oncology. We will hold a Q&A session immediately following the presentations. All of our remote attendees will be muted during the meeting. You may submit your questions during the presentations via the Ask A Question box located on the webcast page or ask them live if you are here in-person. We request that you hold all questions related to our fiscal first quarter ended September 30, 2023. We will host a separate earnings call to report the results of our fiscal first quarter on Wednesday, November 1, after the close of the market. Before we begin, I would like to remind you that our presentation today includes forward-looking statements, including statements related to our product road map, growth and growth catalysts. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in the slides accompanying today's presentation as well as in our filings with the SEC. These forward-looking statements are based on information available to us and to the management's expectations as of today's date, and we assume no obligation to update any forward-looking statements as a result of new information or future events. With that, let me turn the meeting over to Accuray's Chief Executive Officer, Suzanne Winter. Suzanne?

Thank you, and welcome to all the participants that are joining us here at the American Society of Radiation Oncology in San Diego and those that are joining us virtually. As Elizabeth went through, we have a very rich agenda, I won't go through it again, but we'll cover a variety of topics. I'm going to start out with business overview, and then we have a whole section on real-world experience from our esteemed clinician panel, who will be talking about their experience and clinical trends that they're seeing in radiation oncology. But let me start out by just our overall vision here at Accuray. Very simply, we want to conquer cancer. And we want to do that by really advancing technology and our solutions to form -- to extend lives and to advance the technology to the point that it is curative. We also want to reduce the overall burden for patients. This is a terrible disease, it's terrible for the families, and to the extent that we can provide solutions to be able to reduce that burden, shorter sessions, the SBRT that we're going to be talking about as a clinical technique, but also the ability to then improve the quality of lives, and we do that through highly precise targeted treatments. Everyone at our company has had some experience, either in their family or themselves that have had an experience with cancer. It's a very stressful time in our patients' lives. Everyone that works at our company is really driven by a higher mission, and it is something that has allowed us to attract outstanding talent because we're doing good things, and it's nice to be able to have a higher purpose to what we do on a daily basis. We have an outstanding executive team, many of whom are joining us here in the room, but all of these folks have just a wealth of health care experience at large companies and its clinical institutions, some are radiation oncologists, but all of them have come to the company because they believe in the technology and what Accuray is trying to accomplish. So we're incredibly proud to have them on board. Very important to know that all of our incentive at the executive level are also aligned with what our shareholders also value. So not only are we incented on revenue but also EBITDA and profitability overall. We have a tremendous Board of Directors with extensive medtech experience, both former CFOs and Chief Marketing Officers, operational VPs that come to us and provide guidance for us as a management team. This is a working Board. We have a great, I think, working relationship and governance, and so we're all focused on value creation for our stakeholders. Just again, at the very highest level, cancer continues to be a leading cause of death and cancer incidence continues to grow. And I think by 2030, 20 million people annually will have been diagnosed with cancer. At the same time, 10 million will die as a result of cancer. And so there's a tremendous need to close the gaps. There's also global disparity in the access to care and access to radiation therapy. Just for radiation therapy landscape, the global market is really dominated by 3 companies. They're very high barriers to entry. The infrastructure that is required to be able to support our products and our customers is very steep. And there's a significant capital investment for our customers to buy radiation therapy, not only at the initial purchase but on an ongoing basis. These are just dynamics for the landscape, but I think it's important to understand that you have to be good as a radiation therapy company in supporting every aspect of the investment. Installed base, IB growth is a critical success factor, I think, to your long-term future. Not only do we need to, of course, get orders for new equipment, but we need to get them in the ground, installed and in use and that's a key to growth. If we look at the markets, they're really at the highest level in 2 dimensions. One are the developed markets like the U.S., Western Europe, Japan, which is largely a replacement market that at this point, it's -- you're either growing by stealing competitive share and also protecting your own installed base. In the emerging markets, it's the opposite. This is where radiation therapy is under penetrated and really the growth comes from the installation of new radiation therapy vaults. So at the highest level, Accuray, our goal is really to close the gaps to cancer care and really in 3 dimensions. We want to continue to invest in R&D and innovation so that we are closing the gaps to the real pain points in radiation therapy and providing solutions not only from a technology but also service and support, driving patient access to radiotherapy treatments. Again, this is still a gap, not only in the developed markets, in rural areas, but in what we are going to target as the high-potential underserved emerging market areas. And then finally, very critical to our success, but just as important as the former 2 are delighting our customers once they've made this investment, this is a long-term investment. It's critically important that we maintain high operational performance so that no patient is rescheduled. That's how we want to measure ourselves. It's not necessarily on system uptime, but really, if a patient has had to be rescheduled and have their treatment rescheduled. Our strategic growth plan is really in 4 players. One, we want to continue to outpace the market through growth and innovations and capture share. Second, we think the service business has a tremendous opportunity for Accuray. So expanding the service revenue not only through installed base growth and a focus on uptime, but also new services and solutions that we can sell back into our installed base. We are continuously looking, and you're going to hear from Ali Pervaiz about operational excellence and efficiency, looking for opportunities to streamline our business to operate more effectively so that we are running with the utmost efficiency. And then finally, profitability expansion, very important to our business and strengthening our balance sheet and cash flow so that we maintain our flexibility to do strategic things into the future. Accuray has a history of innovation-driven growth, and it's really been in our DNA back from the introduction of the CyberKnife into the acquisition of TomoTherapy in 2012 as well as to where we are now today where we have had a number of new innovations on to our platforms, the CyberKnife S7 most recently, the Radixact, ClearRT. We have introduced VOLO Ultra, Synchrony on Radixact and now with our latest VitalHold breast -- comprehensive breast package and we are continuing to invest in looking at those clinical issues that are still barriers to providing the best therapy available. Just a little bit. We have 2 major platforms. Both of them are highly differentiated the Radixact System, as you can see on the video is a helical system, its helical imaging and is the full CT on the system and continuously delivers radiation therapy in a helical fashion. It is the ultimate full-body workhorse solution that is able to do a versatile array of applications. The CyberKnife system, very different first robotic system. You can see the patient does not go into a bore, so there's no claustrophobia it's actually a robotic arm with a linear accelerator at the end. It actually moves around the patients. It's a phenomenal system that can provide whole body stereotactic radiosurgery and SBRT. We really pioneered with the CyberKnife, the use of hypofractionation. And so the CyberKnife continues to be a very strong product in the marketplace. Highlights from ASTRO. So we are showing a number of different things. We are, again, continuing to show our ClearRT high-quality CT imaging on the Radixact system. This has been just a tremendous growth catalyst for our business and driving new Radixact System sales. VitalHold is as a result of our partnership with C-RAD. This is a surface-guided radiation therapy that really allows us now in the U.S. and in Europe to take orders and ship and then provides a comprehensive breast solution. We should be getting shown in here in the fall in preparation for Gastro as well. We are showing here on the show some additional value-added service solutions, enhanced education and enhanced physics support through our Alliance A+ offering. And we are also introducing Accuray Financial Services. This is a partnership that we are doing to provide additional flexibility in financing solutions for our customers that are having challenges with access to capital. And then finally, we introduced here is a 510(k) pending, the online adaptive solution for Radixact called Cenos, we have had tremendous response to Cenos, and this adds to our tool set in adaptive therapy. We have an offline adaptive toolkit. We have Synchrony that provides real-time motion compensation and adaptation and now we have an online, with the patient on the table, ability to take a look at treatment planning to see if any adjustments need to be made. So something that we do interfraction as well as intrafraction were now able really to provide a full tool set for clinicians to take a look at patient and tailor the delivery based on how they're presenting. We have this -- we've done this in partnership with Limbus AI. So it's another powerful product of partnerships within the industry. Just at the highest level from the highlights, we're tremendously proud to have surpassed our 1,000 installed base milestone. This is incredibly important, just showing the importance of, first of all, global adoption of the technology, but also gives us a critical mass to be able to support these customers. In FY '23, we had the highest total revenue that we've had in the history of the company. Within that, we had 9% year-over-year product revenue growth, which is tremendous, just again, showing above-market growth in system adoption. We also were able to ship out the highest number of systems from our factory at 24% growth overall in unit volume. This really speaks so much to our company's ability to really face a lot of supply chain headwinds that we encountered this past year. So very proud of our teams and their resiliency in the face of those headwinds. Again, we grew our global installed base 5% year-over-year, very important for our service revenue growth. And we were included in the Russell Index, which, again, very important to us as a stock to get that visibility within the marketplace. And then finally, we announced a new headquarters location. So we changed our headquarters location from Sunnyvale, California to Madison, Wisconsin. We did it for a number of strategic reasons. One of which is we certainly get a lot more visibility from a government standpoint by being one of few in Wisconsin versus one of many in California, but we also have some operational savings moving from California to Wisconsin, which Ali will talk in more detail about. But we have growing global momentum. We're excited about what we are seeing. It speaks to the momentum we're seeing in the marketplace, but also the adoption of our new product innovation. We talked about our installed base growth, which is higher than our CAGR for the last 5 years. Same thing with unit volume growth. We are seeing growing momentum now. Very important to us that we have balanced regional revenue contribution that we're not relying on any one region. We have 4 regions: the Americas, the European and Middle East, Africa and India, our APAC, which includes China and also Japan. We think there's significant market opportunity for Accuray. We have been primarily competing on the left-hand side of this slide, which is in a $1.75 billion part of a $3.5 billion market, which has been mainly in the premium and specialty markets that we foresee low growth in this segment of the market and our estimated share is around 26%. Really, the opportunity for us is now to compete in these emerging market locations where they may not be able to buy premium systems, and that would be the value segment part of the market. We're not interested in competing in the economy market that's highly price sensitive segment of the market, but the value market is open to us, and that also has the greatest growth globally at 8% to 10% growth. And we are expanding with new products into this value segment. The Tomo C which is our jointly developed product that is manufactured in Tianjin, China to fuel our growth in the Type B value segment part of the market. We released today at 1:00, a press release that announced that we did get NMPA approval for the Tomo C. So we're excited about that. And that will allow us to -- that will allow our joint venture team in the field to start taking orders from customers. We're still waiting on the treatment planning section to be able to ship to customers, but this is a major milestone for us who are excited about the potential. We are also going to be introducing a value segment product called the Accuray Helix that will be for other non-China value segment parts of the market. We are going to start out with an introduction in November in Mumbai for the India market, and we're excited about the potential for this as well. That will be manufactured in Madison, Wisconsin. With that, I'm going to hand it over to Sandeep Chalke, who's going to talk through our commercial strategy.

Thank you, Suzanne. All right. I'll take you through some of the commercial strategies here we operate about in 60 different countries today. And like Suzanne said, we are already taking the region -- doubling down into different regions, in different countries and also taking -- opening up new countries at the same time. So we're growing every quarter from 1 country, 1 region to new countries and new regions as well. We talked about the 4 different regions that we have together. And the priority is, again, high-level priorities that we set for ourselves are based on a few high-level areas. 42% of our revenue today is recurring revenue comes out of the installed base only. So that means dependent on service contract revenue and associated dollars which are attached to it. Within that, we have different strategies by region. In the AMS or U.S. market, we have a protect strategy and then similarly in Japan, which is a mature market, we are protecting our installed base and taking on some of the competitive installed base over. In Europe and in APAC, including China, is where we see new bunkers or new walls getting built. And the access is growing on a daily basis on a quarterly basis, and we are tapping into that installed base growth. Market growth is where we see different dynamics between regions as well and the recessionary pressure, the access to capital that Suzanne just talked about on the U.S. side is seen, is felt, and we are creating different solutions, including financing. But in the European market, the Indian market, Middle East, Africa and also in Asia Pacific, including China, we see growth in the market itself and we are prepared to take on such growth by way of segmentation, customer segmentation, product mix as well as financing. And on the channel basis, basically, we are mostly indirect company, but we have some really strong presence in a few countries with the direct market or direct presence where we sell direct and we service direct. And we are tapping on to more countries as we speak, as we see more potential to grow. And whenever we see the potential and the growth coming in, we are also moving from indirect to direct business as well. So that's a high-level piece a little bit. Let me double down into 3 different areas on giving you some details. We talked about China. China, as you have seen already, that we are -- we have been gaining momentum on growing installed base on a double-digit CAGR for the last couple of years -- last few years. And we have a significant share in the Type A market. The Tomo C product essentially gives us access to the Type B market, which is yet another -- probably the largest market available in China. In NMPAs, an announcement just came in today, but we've been working in that market doing roadshows and attending events for starting earlier this year already. So we are prepping the market and the reception for this first helical delivery, locally available product has been phenomenal. So we expect a good momentum to build from here as we start taking orders starting next month or rather in October itself. So we'll start building that momentum and see more growth coming from China. We talked about a little bit about partnerships and some of the real examples that you see at the ASTRO. Some of you have actually walked the floor. Cenos, we just talked about and Limbus AI is where we partner with. It gives us access in the AI technology as well. C-RAD is our partner for the comprehensive breast package that we just -- that we are -- we have FDA clearance and also CE Mark clearance and we are waiting for to enter in Japan. GE Healthcare essentially gives us the commercial partnership access and builds that partnership to take on the commercial solution. And then Brainlab is like we have the neuro access with Brainlab. And research has been our long-term partner already, and we continue to grow with them. We're not stopping just at the core partnership for our product, our technology, but also looking at partnering with QA suppliers, quality assurance suppliers and also commercial partnership. Essentially, when we look at partnership, it generates speed for us. It keeps us relevant. It keeps us significantly involved and make it current offerings. And for our customers, it essentially gives us a lot of flexibility, along with best-in-class solution as the customers look at us for better solutions overall. The next slide, I'll just show you a quick example of how -- what does it take when we say a Radixact-like equipment gets installed, and this is a time-lapse video. One of our recent installation in Switzerland, where a large Radixact equipment is getting built. We have a bunker which is about 4 feet port concrete bunker, which goes on all 4 walls, ceiling and flooring. And it takes many resources to build -- create an installation and build the unit in, then we calibrate the equipment before we hand it over. So it takes about 6 to 8 weeks, sometimes 9 weeks depending on the site requirements and how the infrastructure is built around that -- in that hospital. We talked about service. Suzanne did touch on the services, our growth opportunity, and we believe it is something which we're just starting. But just before I did that, let me just take you through the life cycle of this. This is a long life cycle business. We take orders and when we -- from orders to shipment, it takes about 18 months to 24 months before we start shipping. That's when we clocked the revenue. Then we talked about the install and go live. It takes about 3 months. We then have 12 months of warranty. And then about 10 years or so, we have to support our customer through service contract. And at the end -- back end of it, about 3 to 5 years, sometimes our customers do extend the life of this equipment. So there are different life cycles that we have to go through. And at the same time, the revenue that we generate from every single equipment comes in stages. It comes at the time of point of shipment. It comes at point of installation, warranty and then number of service contract, which is an annuity business for us as we go from 1 year to the other, and the back end is something similar. Now when we say we want to grow service revenue, we're not dependent only on the service contract revenue here. We're trying to expand the experience of our customers by enhancing the offerings. We talked about the Alliance A+. These are the new offerings which are coming together and will be bundled and given to our customers throughout the life cycle of the equipment [indiscernible]. So that's the service contract or high levels of overall growth that we are looking at from at Accuray, and we are very proud to take this business to the next level. I would like to introduce Dr. Seth Blacksburg as our CMO, taking out from the clinical radiation.

Thank you so much. So in terms of clinical trends in radiation therapy growth, it is an exciting time to be a radiation oncologist. What we are seeing is the confluence of different technologies that are allowing us to treat patients better. We're seeing improvements in diagnostic radiology. We're seeing improvements in genomic assays, we're seeing improvements in our ability to detect disease at different stages. And so we're able to offer incredible technology to improve quality of life and duration of life to millions of folks worldwide. And when we think about the spectrum of disease, what we're seeing is an ability to detect disease at its extremes. We're able to detect cancer at much earlier stages where technologies that Accuray has can be utilized to cure folks very early on. And so we're detecting early-stage cancers much earlier. We're also seeing that we could detect cancers much later. And so we're seeing patients who have metastatic disease where we can offer them ablative therapies to improve their quality and duration of life. And so it is an extremely exciting time. During this confluence of technologies, we're also seeing improvements in systemic therapies like immunotherapies, so patients are living longer. And as a result of living longer, they may manifest cancers later on during their course of life. And radiation therapy has been proven to be extremely effective at helping those patients. And when we looked at trends in radiation oncology over the next 5 to 10 years, what we see overall is projected trends where we're expected to grow as a field. But when we go into the data a little bit more, what we see is there are areas of radiation that are expected to contract and those are older forms of delivering treatment. Conventional radiotherapy or seeds or brachytherapy where you actually place radioactive sources inside of the body, those are expected to decline. Proton therapy is expected to decline. Areas where radiation is projected to grow and when even at proceedings like ASTRO, we are seeing the buzz and the excitement is in the ability to deliver radiation that's been shaped and is precisely delivered. One form of that is intensely modulated radiotherapy, which is computer-guided radiation where you could shape the doses to really aim at the tumor and spare the normal tissues. And the other is in stereotactic applications. Overall, the field of radiation oncology is moving towards fewer treatments, along the spectrum of many treatments to just a single treatment -- sort of the trend is in hypofractionation, which is fewer number of treatments and the end of that is called stereotactic radiotherapy, where you could deliver ablative doses in between 1 and 5 fractions. And we believe with a lot of what we've already seen that Accuray technology is extremely well positioned to provide advantages in this area and capitalize on these trends. When we look at clinical trends overall, what we're seeing is a focus on personalized medicine. So being able to tailor specifically to an individual's cancer diagnosis and their own biology, a treatment that will be best for them is something that is extremely popular in oncology, but it needs to be firmly tethered to workflow and economic realities. And we have a treat for all of us, where we have 4 widely respected thought leaders who are going to talk with us today. And 3 areas where we are seeing and ASTRO was showing this, tremendous growth in the field of radiation medicine is in prostate stereotactic radiotherapy and the use of radiation to treat oligometastatic disease and the use of radiation to treat CNS, Central Nervous System disease. I'm going to go through it quickly because our thought leaders will shed a little bit more light on that. Prostate stereotactic body radiotherapy refers to using 5 or fewer treatments to treat prostate cancer for cure. What we've seen here at the proceedings of ASTRO is in the plenary session, Professor Nick van As, from The Royal Marsden presented 5-year data, showing an excellent outcome on delivering fewer number of treatments for patients who have prostate cancer. Accuray has sponsored data where we have mature 10-year outcomes demonstrating this excellent treatment is available for folks and Dr. Sean Collins is going to go more into that space. Oligometastatic disease is an extremely exciting area. Traditionally, radiation oncologists have been trained to think of cancer as either being curative or palliative and that paradigm has changed dramatically over the last 5 to 7 years, where we're now thinking of where there's metastatic disease as something that could be treated where the cases patient will die with rather than from that cancer. And that's known as oligometastatic disease, which is a disease state where we can provide stereotactic ablative treatments to select areas of the body and let somebody live much longer and with less toxicity. And we're seeing an explosion in the field of radiation in this field and just cancer in general, and Dr. Jon Lischalk is going to talk to us a lot more about that. And certainly, with advances in diagnostic imaging and then systemic agents, this is growing by leaps and bounds. And finally, Central Nervous System, so brain and spine tumors where we are seeing a growth in the utilization, the adoption and excitement over applying stereotactic radio therapies to address both malignant lesions, and benign lesions. And so as we start changing our philosophy on cancer care, the focus is on treating less normal tissues of the body. And this is where stereotactic ablative therapies, such as the ones Accuray provides and is exceptional app is becoming more and more popular. And Dr. Nima Aghdam will go over that. We support our providers and clinicians with outstanding education. We think this is a pillar of oncology care and we have global training hubs that are being set up and have been set up in China, Japan, in Wisconsin and Switzerland, where we have advanced curriculum, where we're allowing clinicians to develop confidence in utilizing our technology and help develop with them better ways of treating advanced cancers and early-stage cancers. And then what we're finding is that by addressing clinicians hands on, we're seeing direct benefits to reaching out to folks and training them and learning from them. These are 2 examples on the international stage where we've had symposia and hands-on applications in Tokyo and in Barranquilla, Colombia, which has been met with extreme enthusiasm and even machine sales. And so it's now my pleasure to introduce some, as I mentioned, widely respected thought leaders who we have today is Dr. Sean Collins, who's a professor at Georgetown University. He's going to be giving a lecture on prostate stereotactic body radiation therapy. Dr. Jon Lischalk from NYU who is going to talk with us about oligometastatic disease and Dr. Nima Aghdam from the Harvard Medical School at Beth Israel -- Beth Israel Deaconess Medical Center, who will talk to us about Central Nervous System treatment. And so I'm going to introduce Dr. Sean Collins and welcome him here. So Dr. Collins is the Director of the CyberKnife prostate program at MedStar Georgetown University Hospital and a Professor of Radiation Medicine at Georgetown University School of Medicine, Dr. Collins joined Georgetown in 2006 after completing his residency in radiation oncology at Medstar Georgetown and the Lombardi Comprehensive Cancer Center and previously a surgical internship at the hospital. In addition to his medical degree, Dr. Collins holds a Doctorate in Biological Chemistry from the University of Michigan's Medical Scientists Training Program. He has published extensively on outcomes and quality of life as it relates to prostate stereotactic body radiation, and he's a frequent international lecturer. He serves as a reviewer, an editorial board member for numerous medicine and oncology journals, and he has amongst the highest volume of prostate stereotactic radiotherapy manuscripts that have been published internationally to date. He is a frequent lecturer on domestic and international stage and is widely recognized as one of the leading authorities on the use of stereotactic radiation therapy for treating prostate cancer, we're absolutely elated to have joined us today. Thank you, Sean.

So I want to say that I've treated 2,300 patients with the CyberKnife for prostate cancer. And the best thing that Accuray has done this year has gotten Seth Blacksburg as our Chief Medical Officer. When I have a question about -- if I have a challenging case in prostate SBRT, what I do is I call up Seth because he genuinely cares about the patient being treated correctly. And I thank him every time for being my friend and helping me with challenging cases. So the future of prostate radiation oncology in my opinion, involves both the CyberKnife and Radixact and I'm going to try to explain that to you today why I feel that way. I am an Accuray clinical consultant, I do have some disclosures. And this slide right here is called the inconvenient truth of prostate radiation oncology. So Michael Zelefsky is one of the best prostate radiation oncologists in the world. And when I was a resident, 15 -- over 15 years ago, this is the data that came out using conventionally fractionated radiation. And unfortunately, when you treat -- we do well with low-risk prostate cancer, we cured 95% of patients. Unfortunately, we didn't do very well with intermediate and high-risk prostate cancer even if you were at Memorial Sloan Kettering and getting treated by Michael Zelefsky. And what was the reason for this? Your prostate actually moves. So for the guys in the audience, your prostate is probably moving right now. And in the past, we never adjusted the radiation beam not until -- we had a CyberKnife and Accuray did a great job of building the technology that we actually track the prostate. Also, the radiation dose was inadequate because we all know that the bladder, the rectum and your penis are right next to your prostate and if you don't -- if you give a high dose to those areas, you can injure them. So you need really precise radiation that you have faith in if you're going to treat higher doses. And because I had a CyberKnife 17 years ago, I felt that I had the precision to treat men with 5 fractions of prostate cancer. And the things that would be found today, I mean I felt kind of good this week because after doing this for 17 years, we have our report of the PACE-B trial saying there is no difference between 5 fractions and 40 fractions of radiation. There is absolutely no reason to go for 40 fractions of radiation anymore. I feel 100% comfortable that I'm giving a great treatment with 5 large doses of radiation, even though the prostate moves. As many important people have shown prostate motion, you need to take it into track. Accuray has the best physicists and the best engineers in the world, in my opinion, and they have taught me how to use gold markers to track the prostate and adjust for 6 degrees of motion. And because we're adjusting for all 6 degrees of motion, we feel really comfortable that we can treat with really tight margins. and we're not missing the tumor when we're treating. We also can take rotation to account, which most other radiation machines cannot take rotations into account. Rotations are really important. Your prostate rotates on the Apex. And if you don't take rotations into account, you missed the targets. Now movement of the prostate can happen both continuously or it can have large movements in the prostate because the CyberKnife is imaging consistently every minute or so, if you have a large motion, you will know about it, and you will adjust for it. And you will do continuous tracking that's, in my opinion, absolutely required for giving a highly effective 5-fraction regimen for prostate cancer. And you can treat with smaller margins and you can have less toxicity to the bladder, less toxicity to the rectum, and these are important things. If you're a 70-year old guy living your life and making sure that you can have time to spend with your children, go out and travel the world, you don't want to be urinating on yourself or having frequent bowel movements. And I feel that I have complete faith that with the CyberKnife, I'm not going to cause these elderly gentleman to ruin their retirements. Because we have such accuracy, we can use small treatment margins, small treatment margins reduce toxicity. Don't let anybody else out there said that they can treat with smaller treatment margins than the CyberKnife. The CyberKnife is the most accurate radiation out there. We can treat with 3 or 5-millimeter margins. I am convinced that we can also treat with 2-millimeter margins. We don't -- you don't have failures in prostate cancer on the margin when you're treating with the CyberKnife. We need to probably work on protocols in the future for dose escalation, but we are not having marginal misses. And this is important because local failures happen when you have marginal misses, local failures happen 10 years down the road. So if you use an inadequate technology, you're not going to find out about your failures until 10 years down the road. I've been treating with the CyberKnife for 17 years. I've treated 2,300 patients. We don't have local failures due to inadequate dose in intermediate patients. So I feel very comfortable with our technology. I wasn't the first to do it. They started at Stanford. Another great thing about our technology is that any center can do it. The CyberKnife machine is almost idiot-proof. Anybody, any radiation oncologists in the world can start their prostate CyberKnife program tomorrow, and they'll be able to do an outstanding job and be able to treat prostate cancer in 5 fractions, they'll be able to sleep at night because they know that they're giving a good treatment. I love my job. I go to work every day knowing that I'm giving the best treatment for my patients. And Accuray did not like only just give us the machine, they sponsored a large trials showing that the fiber fraction approach is a great way to treat prostate cancer. And not only do they feel so confident in their technology that they give a higher dose to the prostate than other centers do. So they give 7.25 to the periphery of the prostate, but they're capable because of their accuracy of giving 8 grade x 5 to the center of the prostate and that's going to give us better long-term control. What they've shown in the PACE study, which is an amazing study from Europe is that comparing conventional fractionation to 5 fractions is that there is actually less toxicity when you use 5 fractions with the CyberKnife versus using other linear accelerators. The Royal Marsden is an outstanding institution. It's an academic institution. They did a great job with this trial, and they showed that the CyberKnife has less late toxicity. And what they've shown is that you can give 5 fractions. No one should be doing 40 fractions of radiation anymore. No one should be doing 25 fractions of radiation anymore for low to intermediate risk prostate cancer. It is criminal not to do 5 fractions in my opinion. And I'm actually lucky that I have Seth here with me today because he's the person who's shown how important correction for rotations are. This slide shows his work when he was at [indiscernible] with Jonathan [indiscernible] and Dr. [indiscernible] showing that if you don't correct for rotations, you get increased toxicity. And what does that mean to a 40-year-old guy, it means -- or a 70-year old guy, it means that they're running to the bathroom because they have bowel frequency urgency. I don't want 70-year-old guys running to the bathroom tripping, falling and breaking a hip because they have bowel urgency after treatment. And because we have such great technology, we can treat retreatments. We can do very complex treatment. So the CyberKnife allows the treatment of other -- of recurrent prostate cancer when no one else wants to do it because they don't want to take the risk that their technology isn't accurate enough. And this allows -- Dr. Fuller, who's a great guy who works in San Diego, who's treated many men with recurrent prostate cancer using the CyberKnife. He has shown that it's very safe. Amazing PSA outcomes. The PSA natives are spectacular as good as brachytherapy. And he's shown that you can do this all with very minimal toxicity. And if you're going to do treatments in the future that have even less toxicity, you have to do focal treatments and focal treatments require even more accuracy. Because we have submillimeter accuracy, I know that I can do focal treatments with the CyberKnife. And even if something moves if you're trying to do a focal treatment and the prostate is moving and you're not tracking it, you're going to miss the target. I have confidence with my CyberKnife that we're doing continuous tracking that we're going to hit the target. And we don't need -- with the CyberKnife, I don't think we need rectal spacers. So we don't need gels because we have such accuracy that we can treat with tight margins. I think every other user who's doing SBRT who doesn't have a CyberKnife, they probably need a gel between the prostate and the rectum. If you have a CyberKnife, you can have the confidence that you're treating with tight margins and you don't treat a lot of rectum, so you probably don't need the gel. And I'm actually happy that I got -- I'm one of the first people in the world that actually got to see the Radixact demos today at the Accuray meeting. I think it was a brilliant partnership, Accuray combining with AI Limbus because AI Limbus is a bunch of really smart young -- they are guys, by the way, smart young guys. And they are using automated contouring and they're going to make it really quick for the Radixact to adjust to daily changes in motion, and they showed me this week at their booth. And also, the Radixact is one is -- a tracking device. So it allows us to track the prostate not as good as the CyberKnife, but pretty good. So I think that for people who don't have a CyberKnife, the Radixact is going to be an excellent alternative for treating 5-fraction prostate. And I want to thank you guys for letting me be here. I've already learned I sat here for the last 30 minutes, and I've learned a ton about radiation oncology and the business of radiation oncology, and I want to thank you guys for bringing me here.

That was wonderful. Thank you, Sean. Our next speaker is Dr. Jon Lischalk. So Dr. Lischalk is the Medical Director of the NYC CyberKnife and Director of Research for the Department of Radiation Oncology at NYU Long Island School of Medicine where he's an assistant professor. Dr. Lischalk received both his undergraduate and medical degree from the University of Washington School of Medicine and completed a residency at Georgetown University Hospital where he served as a Chief Resident in his final year. Dr. Lischalk has authored over 40 peer-reviewed medical publications, book chapters and delivered numerous presentations on the use of stereotactic radiation therapy to address urologic, thoracic and intracranial malignancies. Prior to his tenure at the NYU Long Island School of Medicine, Dr. Lischalk led the thoracic and proton services at MedStar Georgetown and he was named a top doctor by Washingtonian Magazine. He is regarded as an authority on the use of radiation to treat oligometastatic disease and is a highly sought out lecturer to deliver talks on this topic. So thank you for joining us.

Thanks, Seth. Okay. So today, we're going to be talking about a pretty exciting space that's opened up in radiation oncology, and I think oncology generally settled a beautiful job kind showing the volume changes that we're expecting over time. I mean we've seen this change in conventional fractionation for a lot of disease sites moving into SBRT for lung cancer for breast cancer, for prostate cancer. And I think we're going to continue to see that. And the 2 spaces I want to focus on today are oligometastatic disease and lung cancer. So here are some disclosures. So I think Dr. Collins explain this perfectly. CyberKnife, we've been using for over several decades now. I've been using it for over a decade and Radixact are really perfect platforms to be able to deliver SBRT. And as the volume for SBRT increases, I think this is going to find its utilization increased. If you look at the next 5 to 10 years, SBRT overall, I think, is going to -- is really going to blow up. We've already seen it in the last 5 years, but focusing now on oligometastatic disease, what is this concept? Well, for a very long time, we've looked at Stage IV disease very differently than we do now. And we're starting to understand that metastatic cancer is a massive burden in the U.S. over 600,000 patients are living with Stage IV cancer in the U.S. And that's just for the first 6 most common cancers combined. So if you add in the rest of the cancers, this is probably close to 1 million patients just in the U.S. that are dealing with stage IV disease. But based on a number of big trials that have come out in the last 5 years, we're starting to realize that metastatic cancer is no longer this hopeless state and that utilizing radiation very aggressively can really change the outcomes dramatically for these patients. So using SBRT or SABR to deliver radiation very quickly to metastatic disease sites can extend the life expectancy for these patients, over 600,000 patients in the U.S. And the numbers are pretty dramatic here. So if you look at metastatic cancer, the 5-year overall survival based on this trial published out of Canada by [ Dr. Palmer ], the difference in survival was 42% versus just under 18%. And that's a huge impact. This has really been a panacea for our field. We're starting to look at Stage IV disease very differently with the utilization of SBRT in these patients. And what's very interesting about this is that radiation therapy now has stronger data supporting its efficacy than even surgery or other ablative therapies. RFA, cryo, things like that, really the level 1 evidence supports using SABR and SBRT to help prolong the lives of these patients. Now when we look a little bit closer at volume, the numbers are a little harder to tease out, but there are some recent publications that show oligometastatic disease, which is a subset of Stage IV lung cancers could be present in up to 50% of patients that are diagnosed with Stage IV disease. So that's a lot of patients. It's also going to be dependent on how we define oligometastatic disease. Right now, we define it as having 5 or fewer sites that are metastatic for a given patient. But based on a number of new trials that are going to be coming out in the next probably 5 to 10 years, that definition might even expand further maybe up to 10 metastatic sites, all of these sites receiving SABR. And this is another trial being conducted by [ Dr. Palmer ] in Canada, looking at using SABR, SBRT to all of these sites of disease and to improve overall survival, and that's their primary outcome in this trial. So if you kind of just look at the numbers here, SBRT for oligometastatic disease really may skyrocket in the next 5 to 10 years. I wouldn't be surprised if there's entire specialties in radiation oncology, entirely dedicated to specialized treatment for oligometastatic patients, 600,000 Stage IV patients plus up to 50% of them maybe more with oligometastatic disease at their diagnosis, treating up to 5 sites, maybe 10, depending on what the next SABR-COMET trial shows. You're looking at a lot of treatments for these patients and really a game changer across the board. So oligometastatic disease is definitely something that we're very excited about in the field. We're seeing more and more referrals for this. And I think it's going to dramatically improve the survival and quality of life for our patients. What about lung cancer? So we've been using SBRT for lung cancer for over a decade now. I trained to Georgetown with Dr. Collins and Dr. Brian Collins, who really pioneered utilizing CyberKnife to treat early-stage lung cancer. So it's been around for a very, very long time, but a few things have really changed dramatically in the last 5 to 10 years, where I think we're going to start treating quite a bit more lung cancer. Let's look at the burden of disease. So lung cancer is really just a dramatic burden on patients in the United States. It's really -- it's the #1 cause of cancer-related death by a long shot. The other 5 most common cancers combined actually don't equate to the mortality that lung cancer has. So we really have to do a better job and how are we going to do a better job. I think the big thing is going to be screening. Now there's a lot of screening tests for a variety of different cancers, colonoscopies, detect colon cancer, breast cancer is detected with mammograms and CTs are used now more and more to identify lung cancer in patients that are at high risk. Now this trial came out over a decade ago, it was published in the New England Journal of Medicine, and it shows that lung cancer mortality, if you use low-dose CT scans to screen for lung cancers is lower, and death from lung cancer actually goes down as well. And a few years ago, in Europe, a similar trial was replicated that showed the exact same thing that you could reduce cancer-related death. And most importantly, that you can take a disease side where 60% of the patients presentation are diagnosed with incurable cancer and pull them into a curable setting where you're treating earlier-stage disease. And that's what SBRT is used for. So between these 2 screening trials, I think we're going to start seeing a dramatic increase in lung cancer screening in the U.S. and abroad. So what do the numbers kind of look like here? Well, I think in the next decade, we're not only are we going to see an increase. We have to see an increase in lung cancer screening. A recent study out of this institution here showed that only 18% of patients that were eligible for lung cancer screening underwent low-dose CT scans. So that's a lot more patients that need to be screened for early-stage lung cancer. And how many patients is that? Quite a few. The American Lung Cancer Association actually estimates over 14 million patients currently meet the United States preventative task force recommendation for lung cancer screening. So we're going to see a big increase, and we're already seeing different institutions trying to implement more and more lung cancer screening for this patient population. So that is going to rise over the next 5 to 10 years. And that's where SBRT comes in. I mean if you're screening for these patients, a lot of the times you're screening an older patient population, sometimes frail, sometimes patients have a lot of cardiopulmonary disease. A lot of patients that really aren't eligible for surgery, opening up a chest taking out part of a lobe of a lung. That's a lot for somebody of that age and with those types of comorbidities. We already know SBRT cures patients with early-stage lung cancer. So we've been showing that over the last 15 years and all the data shows. The local control for lung cancer, such as this treated with SBRT with CyberKnife is over 90%. So we know SBRT works. And it's the standard of care in the medically inoperable setting. But in the next 5 to 10 years, we might even see it translate into the medically operable setting. So we kind of simultaneously have 2 things happening here. We're screening for more patients to identify more early-stage lung cancer. And we could have 3 randomized trials that show that SBRT is not inferior to surgery, and we'll be pulling even more patients into the SBRT setting. So these 3 trials that I listed here in the parentheses will be published in the next 10 years, and we'll be able to answer that question. So I think we are also going to see a huge rise in SBRT for early-stage lung cancer in the next 5 to 10 years. So if you take these 2 states and kind of put them together, with the revolution oligometastatic disease treatment paradigm kind of capturing an entire new subset of patients that we never treated before as well as the expansion of lung cancer screening. I really would predict that SBRT is going to really dramatically expand into new disease sites and for new patients in the next decade. Thank you.

Thank you, Dr. Lischalk . Our next speaker is Dr. Aghdam. Dr. Nima Aghdam is an esteemed expert in the treatment of central nervous system malignancies at Beth Israel Deaconess Medical Center, where he lectures on anatomy and physiology. He's an instructor of radiation oncology at the Harvard Medical School. Dr. Aghdam received his undergraduate education at UC Berkeley and received his medical degree from Georgetown University Hospital where he subsequently completed a residency in radiation medicine. Dr. Aghdam has published widely on the use of stereotactic body radiation therapy techniques involving CyberKnife robotic technologies. He maintains an extensive database on applying this technology towards the treatment of benign and malignant brain and skull-based lesions. We're absolutely delighted to welcome him today.

Thank you. Thank you, Seth, and thank you all for inviting me for talk today. I'm going to speak to you about 2 broad categories of central nervous system pathologies, primarily malignant with a focus on brain metastases followed by a few slides on topics of special interest to me, including benign tumors and benign conditions. So these are some of my disclosures. So the incident of brain metastasis is rising, and part of that is from what Dr. Lischalk alluded to it's that new systemic agents such as targeted therapies and immunotherapies are certainly increasing the survival of our patients with metastatic cancer. This is an incredible opportunity for all of us and many of our patients are delighted to live longer. But unfortunately, very few systemic therapy options are available for intracranial metastases. Because of the biology of the brain and because of the nature of these particular agents, the tumors in the brain still post a great deal of concern for many of us. And as patients live longer, the utility of radiosurgery remains critical in management of this population and CyberKnife has had a wonderful track record in taking care of patients in this space. I'd like to point out something about CyberKnife as I use it all the time, it is not merely a tool for radiation oncologists. It's a tool for a multidisciplinary effort to take care of our cancer patients. And that's a critical component of how we take care of patients with complex systems. We are not working in a silo. We work with neurosurgeons. We work with neuroradiologists, neuro-oncologists and developing a program around this wonderful device takes a small village, not only the people in this room, but also the folks who are within each individual hospitals from different disciplines. And that not only add value to the device, but it also makes the device a tool that is used by our team beyond merely radiation oncologists. CyberKnife advantages in this area are well storied and it minimizes the dose to the normal tissue by focusing the radiation to the small brain metastases. This has been shown to improve the quality of life and cognitive function of patients. There is excellent technical superiority in treating many brain metastases at the same time and over a period of time. And it is far more convenient for my patients as someone who had experience with alternative platforms. We find patients to be much more comfortable getting through this treatment with the mesh instead of a frame that gets screwed on their head. Making metastatic cancer a chronic illness is a motto that you've already heard from Dr. Lischalk. As patients with brain metastases had a median survival of somewhere around 9 to 14 months in the past, suddenly we see plethora of data suggesting that patients can live for years now with metastatic disease of the brain with routine imaging, timely detection and treatment of additional metastases and not only we add value to the patient's quality of life, but we truly make metastatic disease a chronic illness. CyberKnife has a wonderful track record. I use this device every day. My colleagues use this device every day. We have all treated brain mets. It is feasible to deploy this device in the community and have a fantastic radiosurgery product that's ready to go out of the box, and that's something that Sean alluded to with the prostate program. We moved to benign tumors. And although individually, there aren't many benign tumors. As a constellation, there is actually quite a few benign tumors of the brain that are treated with radiosurgery products, including CyberKnife. And meningioma is a large percentage of this, about 30% of brain tumors that grow from the outer lining of the brain. Although these are called benign, I would imagine nobody wants a growth in their brain. And real estate is quite expensive in the brain. So you find yourself pressing against very important individual components of the brain. And for that reason, my esteemed colleague, Dr. Sean Collins led this effort to treat patients with CyberKnife, one of the early adopters of this treatment. Over 5 treatments, you were able to get 100% local control of this disease. This type of treatment has been performed over and over again, there are centers of excellence that do this. And what makes this treatment special is that no one gets cut, the brain does not meet air. Patients may have side effects, but these side effects are typically minimal. And as we advance our imaging modalities, not only MRIs, but also new agents such as gallium dotatate we are able to refine this treatment modality. When we refine things, we need a device to match their refinement in imaging and CyberKnife truly operates an ideal platform to treat these complex meningiomas, especially near very important [indiscernible] in the base of skull. Another area of interest of mine and my colleagues is vestibular schwannoma. These are tumors that are in the cranial nerves that function as the conduit for sound into your brain. So this is what makes you hear. These tumors in the lining of the nerve sheath can be very small. They can be asymptomatic or they can make your deaf or at times they can compress the brain stem. What we have seen is that with the platform, such as CyberKnife, but in particular, CyberKnife, we can preserve the hearing of the patients while treating these patients with extremely high patient-reported satisfaction. Again, this statement I steal from Sean, it's not enough to treat our patients. We know how to treat cancer. We know how to treat brain tumors. We know how effective our modalities are. It's important for our patients to be satisfied with those treatment. You can cut someone open and scoop out that tumor. But there's significant morbidity associated with that, which we simply do not see with CyberKnife. Pituitary adenomas present another difficult treatment for our patients. I don't assume all of you guys are neuroradiologists, but unfortunately, pituitary is in a very inconvenient spot compressing the optic apparatus. We are talking about millimeters away from the most important nerves which I assume are in the base of skull. Your vision would be lost if the pituitary adenoma presses against it. And your vision could be equally lost if your treatment modality causes damage to that optic nerve. We've been fortunate enough to utilize CyberKnife for pituitary adenomas now for about 13 years in my current institution. I know that Sean has been using it for many years. And what we've seen is minimal toxicity with excellent local control both for functional pituitary tumors as well as nonfunctional ones. This comes at a real cost. Oftentimes, there are surgical complications with treatment of this particular disease at this particular location. You could have damage to the nerve for the vision. You can have damage to the vessels. You can have leakage of the fluid in your brain. You can cause permanent thirst and hunger. You can cause diabetes insipidus. These may seem like some abstract condition in a medical textbook, but we've all seen these as a consequence of surgery. Why I bring this up is that radiosurgery is truly a competitor to surgery in this space. And I think that it's important to make that point that we are not just taking over other types of radiation. But we are taking over as Sean's work and as Dr. Lischalk's work has shown, we're taking over the surgical space, which is becoming increasingly of interest to our patients. If we can offer them something that is not surgical I think that our patients would be grateful for it. Trigeminal neuralgia and AVMs are the final 2 conditions that I treat. And I really enjoy treating these because when you meet someone who feels that a sharp knife is piercing through their face, you start realizing that you are in this field to care for people to help them. These patients are suicidal, these patients are at the end of their wits. And I have managed several of these patients -- many patients with trigeminal neuralgia, and I know that Sean has treated many patients and the treatment is extremely effective. And I want to show you why this device is so particularly good for doing this type of treatment. As you can see, that's just mere millimeters away from some very important organs. The target itself is no more than 4 or 5 millimeters and radiosurgery with CyberKnife has shown itself to be extremely effective in controlling the pain in this patient population. I also treat arteriovenous malformation, which are an unfortunate misalignment of veins and arteries in the brain. CyberKnife has slowly taken market share away from other radiosurgery modalities. And the reason for that is because you get a very good platform to deliver this treatment without investing an enormous amount of time from the neurosurgeon and the radiation oncologist. And the other Dr. Collins has reported on the intermediate outcomes for CyberKnife for these patients, and he has had extremely good closure rate for these very complex and very dangerous conditions. The future direction is very clear to me. We are seeing an increase in volume of metastatic tumors, including metastatic brain tumors. There is increasing data supporting the use of CyberKnife and management of benign tumors of the brain and there's excellent data on the use of Cyberknife treating AVMs and trigeminal neuralgia, suggesting that the hardest CNS tumors and conditions can be routinely managed with CyberKnife. Thank you all for your attention.

So I am delighted to turn the podium over to Awais Mirza. Awais is a highly skilled and prominent radiation therapist and hospital administrator who joined Accuray and Awais heads our patient access and health economics arm for the Americas of Accuray. So Awais is going to chat a little bit now.

Thank you, Seth. As you have heard from our key opinion leaders, they have clearly articulated the direction in which the field of radiation oncology is moving towards. We are seeing an increase in the utilization of hypofractionation, which are shorter treatment sessions and stereotactic radiation therapy, which are 5 or less treatment sessions. Accuray believes that as the field continues to evolve, so should the payment rates, and our providers should be financially compensated accordingly. You have heard us talk about value-based health care for the past number of years. CMS released the radiation oncology alternative payment model in 2019 and immediately, Accuray became supportive of that initiative. However, this model was not adopted due to the concerns related to payment and the administrative burden that will be placed on providers. Accuray supports the basic principles of value-based health care which are listed on the screen here. Our solutions, CyberKnife and Radixact allow patients to have access to quality care in a shorter treatment course, which increases a patient's compliance and reduces patient's financial burden. Accuray systems provide safe treatments with improvements in imaging and the use of Synchrony. Accuray solutions paired with value-based health care allow providers to choose appropriate treatment option for their patients rather than making clinical decisions directed by model policies established by insurance companies. The goal for value-based health care is to allow the physician and the patient to decide on the best course of treatment for that specific patient. Accuray continues to advocate value-based health care in radiation oncology and is supportive of the latest radiation oncology case rate, also known as ROCR, which is proposed by ASTRO earlier this year. We are extremely fortunate to have Dr. Connie Mantz here to discuss more on value-based health care and ASTRO's ROCR policy. Dr. Connie Mantz is a radiation oncologist and Chief Physician Executive for a large radiation oncology group practice. He completed medical school and residency at the University of Chicago. In his career, Dr. Mantz has engaged in many health and government policy initiatives pertinent to radiation oncology, including the development of Medicare and commercial insurance coverage policies, development of new procedure and determination of payment rates. He has been a consultant to Medicare in all major commercial insurance companies on value-based payments and help create the first comprehensive bundled payment program in radiation oncology back in 2011 with Humana. This program has served as a basis for Medicare's radiation oncology payment model as well as Radiation Oncology's latest radiation oncology case rate model. I welcome Dr. Connie Mantz.

Thank you, Awais, thank you, Seth for inviting me to speak. And as Awais referenced, our topic for this part of the talk is recent trends that we've seen in the utilization of radiation therapy and in particular, how they come to ahead as it has to do with the thinking around the development of alternative payment models. And so disclosures and disclaimers, I have none. So our key takeaways, we'll focus on 3 topics: we'll review recent case mix and utilization trends in radiation oncology and project what the field may look like through the end of the decade. We'll discuss how these trends are contributing to the thinking that radiation oncology may be better served by an alternative payment model rather than fee-for-service. -- and we'll discuss a legislative proposal of a payment program named ROCR and compare it to Medicare's RO model, a different alternative payment program that has been recently put on indefinite hold. To look at recent trends, we use medical claims data for radiation oncology services between 2015 and 2021. Claims were organized into episodes of care covering all RO services furnished to patients during a 90-day period. Each episode was assigned a diagnosis and method of treatment. Medicare patient numbers according to treatment year and diagnosis and their growth rates are shown in the table. A few key observations we can make. RO largely provides its services to the Medicare age demographic. RO cases have increased by 2.2% per year on top of flat growth of Medicare beneficiaries. When we roll Medicare Advantage into traditional Medicare, Total Medicare enrollment has increased by 2.4% per year. We don't have access to Medicare advantage data, but we can reasonably extrapolate that overall RO patient growth is greater than presented here. The other key observation is that our high-volume cancer types, breast, lung, prostate and metastasis, which account for 70% of the total case mix are as a group, growing at a faster rate than the overall CAGR. When we project these trends to 2030 and forecast volume growth and case mix, we see a nearly 30% growth in patient volumes, largely driven by prostate and metastatic cases. Note that advanced technologies such as stereotactic therapy and IMRT are standards of care for many of these cancer types. And so from the perspective of the purchaser, future CapEx needs need to be allocated for systems that can deliver these advanced treatments well. And the improvements in treatment accuracy and precision enabled by these advanced technologies have promoted the use of fewer treatments for course. However, fewer treatments apply a downward pressure on revenues under fee-for-service, particularly for nonstereotactic treatments, where per unit pricing is less. At present, the growing demand for RO services buffers very effectively against declines in individual case revenue. To address the risk to individual case revenues, ASTRO and other stakeholders have looked to alternatives to fee-for-service to provide payment stability on a per case basis. Ideally, patient payments under a new model would be insensitive to the number of treatments prescribed and would better align financial incentives with best clinical practices where fewer treatments are supported by evidence and a new system should better than fee-for-service, adjust its payments to the inflationary effects on the cost of health care goods and services. ROCR or the Radiation Oncology Case Rate model is a proposal developed by ASTRO physicians and consultants as an alternative to fee-for-service. ROCR would issue a fixed base rate for each of the 15 most common cancer types treated with radiation therapy. The base rate would be calculated as a weighted average of total payments for each cancer type during the course of care. Included cases would be those treated by external beam therapy and stereotactic therapy. ROCR would also update base rates annually through inflationary adjustments. ROCR is a legislative proposal and not a proposal made directly to Medicare. As such, a minor savings adjustment would be needed and applied to the program's payments in order to receive a favorable cost score to support its passage. Here, we show our revenue projection that compares ROCR payments to current Medicare fee-for-service. The bar graph shows average case payments under fee-for-service in Blue and ROCR in Orange. After an initial period where payments are discounted to provide a required level of savings for congressional approval, ROCR payments stabilize and then begin to rise slowly, while fee-for-service payments continue their downward trend as fractionation is anticipated to continue to decline. This table shows total technical payments for all cases. ROCR outperforms fee-for-service by about $390 million over the 5-year period between 2024 and '28. ROCR differs from Medicare RO model most critically in terms of payment method and participation. Where the RO model would apply a negative adjustment annually to its base rates to reflect declining fee-for-service payments observed in the rest of Medicare, ROCR would completely uncouple from the fee-for-service system. Also, ROCR would eliminate the various discounts and withholds of the RO model to improve cash flow for the provider. To distribute the savings requirement more equitably, ROCR would involve 100% of the provider base, whereas the RO model would have randomly selected 30% to 40% of providers and imposed a full savings requirement on to them. Finally, ROCR would replace the administrative burden of quality data maintenance and reporting as would have been required under the RO model, with practice accreditation, a simpler to administer process and one that would better reflect actual clinical quality. And thank you, everyone, and that's it for my part.

We'd like to thank our key opinion leaders for sharing their insights on the evolving trends in radiation medicine. And as you've heard, we're highly confident that our technology puts us in a prime position to capitalize on these opportunities. It's my pleasure to welcome to the podium, Ali Pervaiz, who's our Chief Financial Officer.

Good afternoon, everyone, and thank you for joining our investor event. I'd like to start off by recapping our fiscal '23, which ended June 30 of this year, we had a very strong performance, both from an operational and financial standpoint despite all the macroeconomic headwinds related to supply chain constraints, inflation and foreign exchange headwinds. In FY '23, we had a historic revenue milestone with $448 million of revenue, which represents a 24% growth in system unit volume versus the prior year. Had it not been for the impact of foreign exchange, our revenue in FY '23 would have been approximately $18 million higher at $465 million, almost all of which would have contributed to adjusted EBITDA. We had an impressive 5% growth in our global installed base, which is in line with our service revenue growth once adjusted for the impact of foreign exchange headwinds, which is a good indicator that our efforts focused on our service business is starting to take shape as we believe this business will be a positive revenue and margin contributor going forward. In FY '23, we had a strong focus on working capital optimization and came out of the year with a healthy cash balance of $90 million and positive free cash flow. This, along with strong OpEx management, focus on a return on investment will really contribute to our margin expansion efforts over the next 3 years, which I'll speak to in greater detail. Lastly, we delivered adjusted EBITDA of $24 million, representing a 5% growth. It's very important to note that if we adjust this number for the impact of foreign exchange, which was roughly $18 million of the top line and inflation which was a $5 million headwind, we would have delivered an additional $15 million to $20 million of adjusted EBITDA, putting us north of $40 million. So despite the macro headwinds, we're proud of what our teams accomplished in fiscal year '23. Moving to fiscal year '24 and beyond. Our financial strategy is focused on 3 main pillars: number one, predictable revenue growth by focusing on bringing in high-quality orders that convert to revenue within 30 months, resulting in a high single-digit unit volume growth, which will further contribute to our service revenue growth. Secondly, margin expansion to unleash an EBITDA CAGR of 20% to 25% over the next 3 years, resulting in a doubling of adjusted EBITDA as a percentage of revenue over that time horizon. Lastly, strengthening the balance sheet by improving our cash position through working capital optimization and exploring avenues to improve our capital structure and reduce overall debt. As stated earlier, one of our biggest priorities going into fiscal year '24 and beyond is delivering predictable revenue growth. This will come in the form of the unit volume growth anticipated to have a 6% to 8% CAGR in the coming years, which will be fueled by our new innovations and our penetration into the value segment. This increase in installed base will help grow our service business over the coming years. And we anticipate our recurring revenue from service to go up from 42% today to the high 40s as a percentage of total revenue. Additionally, our enhanced customer-centric service solutions will really help drive our service revenue. Overall, we anticipate a 4% to 6% revenue CAGR over the next several years with balanced contribution from all of our regions as we penetrate into the value segment. Delivering margin expansion is another key priority over the next several years, and a lot of this effort has already been activated in fiscal year '23, and we will continue to work on it in fiscal year '24. Our margin expansion strategy is focused on 4 main pillars: First, pricing accretion. We have armed our commercial teams with enhanced tools and have aligned their incentives to optimize price and are starting to see early signs of more profitable orders contributing to our backlog. On the service side, we're looking at all of our contracts and are adjusting pricing due to inflation and also to drive the right profitability. This, coupled with customer-centric offerings will help drive service top line and margin growth. Additionally, we're focused on reducing our cost to serve by driving efforts to reduce parts consumption with better quality and through driving efficiency with our field service engineers. In terms of operational excellence, we have a big focus on COGS reduction by working with our suppliers and engineering teams to drive cost out. Lastly, we have a strong focus on driving cost discipline to ensure that every dollar we spend has the right ROI. This has been a cultural change that we feel is starting to yield the right results. All of our margin expansion strategies will help us deliver high single digit to 10% adjusted EBITDA as a percentage of revenue over the course of the next 3 years, which is a 20% to 25% CAGR and a doubling of adjusted EBITDA as a percentage of revenue. We anticipate having continued headwinds from foreign exchange and product mix as we penetrate into the value segment and expand to new markets, but see that being offset by volume growth in our margin expanding plans noted earlier. An important area to note is that we will likely see our product margins challenge in the near term related to our China joint venture accounting rules, which requires to defer 50% of our margins until our product makes it to the end user. -- but we'll see them come back to a steady state once volume picks up. Finally, we're focused on strengthening our balance sheet. By optimizing our working capital by increasing inventory turns and reduced DSO's, we recognize that cash is king and are maniacally focused on growing our cash reserves while paying down debt and generating free cash flow. Pulling all this together and coupling our financial strategy with a high-performing culture, a strong operating framework and strategic capital allocation, I believe that we can create some significant value for our customers, our shareholders and our employees. With that, I'd like to thank everyone for attending. I think we're going to open it up for Q&A.

Yes. Thank you. We are now ready to begin our Q&A session. I would like to invite the management team and our guest speakers to the stage. I do have a number of questions that have come in from our remote attendees, but as a reminder, if you are a remote attendee and you would like to ask a question, you can ask by typing it into the Ask a Question box. If you are here with us live and you would like to ask a question, Please allow us to bring you the microphone to ensure our remote attendees are able to hear your question. We will begin with a few of our remote questions here. Our first question and this one I'm going to direct to Dr. Sean Collins. What do you believe needs to be done to increase the use of SBRT for indications where there is already good clinical data?

That's an excellent question. I was actually hoping that the payment for the whole course of treatment would have gone through because I guarantee you if that model would have been moved forward a year or 2 ago, everybody would be getting 5 fractions of radiation therapy already. Me personally, I probably would have gotten to 2 fractions of radiation because I think that is the future of prostate SBRT as 2 fractions. But I guarantee you that most centers would see the benefit of the 5 fractions a lot more quickly if that model would have come through.

And this actually leads into one of our next questions, which I'd like to direct towards Dr. Connie Mantz. So how do we think that the radiation oncology community will respond to the ROCR model? Will it be a barrier or a catalyst to upgrading or purchasing new equipment?

And so first, I should state that for all the groups. -- whom we've discussed this model during this meeting and also other groups prior to this meeting, particularly the American Hospital Association and some other organizations representing facilities that the reaction to the model has been extremely favorable, that the stability of payment, that -- it appears to ensure, particularly for a high CapEx, high OpEx business, such as radiation therapy provides confidence in order to make the CapEx commitments that the field and its positions are going to be demanding as clinical data continue to accrue in favor of hypofractionated schedules and stereotactic treatment. So just to echo and amplify on Sean's point, it's a payment model like this that holds the provider and the facility owner of the equipment harbors from a financial perspective to allow the physician to use his/her best clinical judgment and prescribe as clinically indicated in his data support, shorter courses of treatment, including stereotactic therapy and many more applications that we see at present.

And one more for the management before we move on to some of our live questions that we have in the room. I mean, this one, I'll direct towards Suzanne Winter. Can you provide more detail on the impact of the Tomo C introduction in China?

Yes. No, absolutely. And I will start, and I'll hand it to Sandeep as well. The Tomo C product, first of all, it's our first jointly developed product; with our China JV partner, CNNC. We're very excited about this milestone of getting the clearance primarily because it will allow us now to participate in the fastest-growing and the largest part of a market that is growing in double digits. It's an area of the world where radiation therapy is not nearly at capacity. The number of linear accelerators per cancer patient is well below the World Health Organization recommendations. And if you were to go to China, you would see at 3 a.m. numbers of patients waiting in the waiting room to get radiation therapy. And so by participating in the Type B segment, it's fulfilling one of our major pillars, which patient access. And this is a product that is designed for throughput, efficiency, workflow to handle the masses of patients that need to receive radiation therapy but at the same time getting advanced radiation therapy. But I'll let Sandeep talk a little bit too just a little bit from a commercialization standpoint.

Sure. So we've already -- like I said earlier, we already started our commercial activation plan. And with the approval, regulatory approval, it kind of gives us an ability to start quoting. And by the time we actually start shipping, it will be another few months. But we are hoping that the reception that we have gotten so far through commercial activation is -- kind of gets converted to we picking up orders. We are geared up. Like I said, we have a customer-facing team in China that are reaching out to different provinces. And this is -- Type B essentially is a provincial market that we are entering as we speak. And it's a phenomenal level. The quota that China government puts out is every 5 years, and that quota is quite significant for us to enter this product with. We believe this is going to be an installation, quick installation but also a heavily service-oriented market. So we'll be preparing ourselves to not just enter the provincial market but also be able to service the market at the right levels.

Thank you, Sandeep. And I know we do have a few questions in the room. Maybe we can start with Marie.

Marie Thibault from BTIG, and thanks for hosting this event. Very interesting. I wanted to ask a question, it's probably for Ali. Maybe a 2-part question, a little bit on efforts on margins. You mentioned that product mix will be a headwind primarily from the value market. Can you remind us of pricing, how you're thinking about Tomo C as well as Helix and just how much of a differential there is on margins? And then I guess a follow-up, you mentioned product mix is going to be challenged. Near-term product margin will be challenged near term because of those accounting rules around China, what's near term? Is that 12 months, 18 months? How to think about some of that?

Yes. Thanks, Marie, for the question. I would say we are going to see a headwind from product mix as we penetrate into the value segment, as you've noted, and we do have different configurations that we're going to be offering, specifically in the China market for Tomo C. So the pricing is actually going to vary up and down the spectrum a little bit. And I think same is true for Helix, right? So depending upon kind of where we penetrate Helix first, those different regions have different pricing dynamics. And so we're going to make sure that we're pricing them in an optimal fashion. But I think what is really important to note is that at the end of the day, this is really going to help us out from our adjusted EBITDA and is really going to help expand our adjusted EBITDA as a percentage of revenue. And that's really what we're targeting through getting some of this value rich come through. And so that's really what we're excited about. When it comes to the second part of your question in terms of the deferral, so the way it works is that once we -- because we have this joint venture relationship, once we actually provide the product over to our joint venture partner and they manufacture it, then when it goes to the end customer, that's when we are able to obtain 50% of the remainder of margin. As they're coming online and building up their pipeline, that's just going to take a little bit of time. And so we think it's probably going to be challenged probably for the next 12 months or so. And then once we start to get volumes back up in steady state, it should be a nonissue.

And maybe another question in the room, Neil?