Dive Brief:

• ViewRay’s preliminary third quarter results beat analyst forecasts, suggesting fears about the impact of CMS’ bundled payment model may be overblown.

• In results posted Tuesday, ViewRay said it received eight new orders for its MRI-guided Linac MRIdian in the third quarter. Analysts at Jefferies expected just three orders. 

• The orders provide an early sign healthcare providers will continue buying radiation oncology devices despite uncertainty created by the proposed payment bundle.

Dive Insight:

The payment bundle has caused the radiation oncology sector concerns since CMS proposed it in July. Seeking to save Medicare $260 million over five years, CMS wants to tie payments to "measures of quality and patient experience."

Last month, trade group AdvaMed warned the plan "will put practices and hospitals at financial risk." A UBS survey of 121 physicians revealed one-third of radiation oncologists expect the bundle to negatively affect purchasing.

ViewRay went into the third quarter with its own problems, having slashed its sales guidance for the year in August. However, ViewRay’s unaudited third quarter results contain more positives. 

Sales came in at $20.9 million, comfortably beating the $15.3 million consensus of analysts tracked by Zacks. The results also featured positive signs for the future. ViewRay received eight new orders for MRIdian systems worth $35 million. 

Analysts at Jefferies expected ViewRay to receive three orders. After seeing ViewRay surpass that forecast, the analysts said the MR-Linac category is "not dead" and tried to gauge what the results mean for the sector. 

"The better performance in orders is indicative that demand for MR-Linac is real and did not wane from last [quarter]. The read here is mixed for competitors in that it could either indicate a rebound in category trends or another round in the seesaw order battle as the cycle remains early," analysts at Jefferies wrote in a note to investors. 

The analysts called the eight ViewRay orders are a positive sign for purchase trends at other companies including Varian and Accuray as the sector enters a period that could be disrupted by the CMS payment bundle. 

A clearer picture of the near-term impact of the payment bundle may appear when other companies in the radiation oncology sector share their results. Accuray is set to report its first quarter results on Oct. 29. Varian’s fourth quarter results are scheduled for Oct. 23.