Accuray Reports Fiscal 2020 First Quarter Financial Results

SUNNYVALE, Calif., Oct. 29, 2019 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported its financial results for the first quarter of fiscal 2020 ended September 30, 2019.

Recent Company Highlights

  • Gross orders increased 28 percent year over year to $78.5 million
  • 11 orders received from China, including 2 orders sourced from the China joint venture
  • Accuray systems named in 50 out of 58 Class A licenses awarded by the China Ministry of Health

"Our first quarter performance represented a solid start to our fiscal year with double digit gross order growth," said Joshua H. Levine, president and chief executive officer. "We are also very excited about Accuray systems named in 50 out of 58 Class A licenses recently awarded by the China National Health Commission which were announced on October 9, 2019. We need to remember that the process identified by the Ministry of Health requires a tender process following the license awards for all participating end user hospitals prior to being able to take receipt of a Type A device. This tender process has been put in place to define the transactional terms and conditions related to each hospital's equipment order and is not a competitive bidding situation that would result in changes in the specific device that the hospital has received the Type A license for. We expect that based on the timelines required for this tendering process, we would not begin to see revenue impact related to the China Type A awards until sometime in our fiscal 4th quarter, and we remain excited about the China market opportunity as a significant growth catalyst for our business."

Fiscal First Quarter Results

Gross orders totaled $78.5 million, an increase of 28 percent compared to $61.4 million for the prior year period. Backlog as of September 30, 2019 was $495.0 million, an increase of 7 percent compared to $461.9 million for the prior year period.

Total revenue was $89.6 million compared to $95.8 million for the prior year period. Product revenue totaled $37.6 million compared to $41.5 million, while service revenue totaled $52.0 million compared to $54.3 million.

Total gross profit for the fiscal 2020 first quarter was $32.9 million, or 36.8 percent of sales, comprised of product gross margin of 42.6 percent and service gross margin of 32.5 percent. This compares to total gross profit of $37.9 million, or 39.5 percent of sales, comprised of product gross margin of 40.9 percent and service gross margin of 38.5 percent for the prior fiscal year first quarter.

Operating expenses were $37.2 million, a decrease of 13 percent compared to $42.6 million in the prior fiscal year first quarter.

Net loss was $9.4 million, or $0.11 per share, compared to a net loss of $9.2 million, or $0.11 per share, for the prior fiscal year period.

Adjusted EBITDA for the first quarter of fiscal 2020 was a loss of $1.0 million, compared to $4.0 million in the prior fiscal period.

Cash, cash equivalents and short-term restricted cash were $86.7 million as of September 30, 2019 compared with $87.0 million as of June 30, 2019.

2020 Financial Guidance

The Company is reiterating its revenue and adjusted EBITDA guidance provided on August 15, 2019. Total revenue for fiscal year 2020 is expected to range between $410.0 and $420.0 million with revenue during the first half of the fiscal year expected to be approximately five to six percent below the first half of the prior fiscal year. The Company expects to generate revenue growth during the second half of fiscal year 2020 compared to the second half of the prior fiscal year. Adjusted EBITDA for fiscal year 2020 is expected to range between $19.0 to $24.0 million and include approximately $2.0 million of the Company's share of expected loss from the joint venture operations in China.

Conference Call Information

Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m. ET today to discuss results for the first fiscal quarter as well as recent corporate developments. Conference call dial-in information is as follows: 

  • U.S. callers: (855) 867-4103
  • International callers: (262) 912-4764
  • Conference ID Number (U.S. and international): 4191278

Individuals interested in listening to the live conference call via the Internet may do so by logging on to Accuray's website, www.accuray.com. In addition, a taped replay of the conference call will be available beginning approximately two hours after the call's conclusion and available for seven days. The replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International), Conference ID: 4191278. An archived webcast will also be available at Accuray's website until Accuray announces its results for the second quarter of fiscal 2020.

Use of Non-GAAP Financial Measures

Accuray has supplemented its GAAP net loss with a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization and stock-based compensation ("adjusted EBITDA").  Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of the company and facilitates a meaningful comparison of results for current periods with previous operating results.  A reconciliation of GAAP net loss (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedule below.

There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.  These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures.  Investors and potential investors should consider non-GAAP financial measures only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP.

About Accuray

Accuray Incorporated (Nasdaq: ARAY) develops, manufactures and sells radiotherapy systems that are intended to make cancer treatments shorter, safer, personalized and more effective, ultimately enabling patients to live longer, better lives. Our radiation treatment delivery systems in combination with fully-integrated software solutions set the industry standard for precision and cover the full range of radiation therapy and radiosurgery procedures. For more information, please visit www.accuray.com.

Safe Harbor Statement

Statements made in this press release that are not statements of historical fact are forward-looking statements and are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements in this press release relate, but are not limited, to the company's future results of operations, including management's expectations regarding revenue and adjusted EBITDA; expectations regarding our competitive position related to Class A licenses; expectations related to revenue growth; expectations related to our market opportunity in China and its ability to grow our business; and the company's leadership position in radiation oncology innovation and technologies.  These forward-looking statements involve risks and uncertainties.  If any of these risk or uncertainties materialize, or if any of the company's assumptions prove incorrect, actual results could differ materially from the results express or implied by these forward-looking statements.  These risks and uncertainties include, but are not limited to, the company's ability to achieve widespread market acceptance of its products, including new product offerings; the company's ability to develop new products or enhance existing products to meet customers' needs and compete favorably in the market; the company's ability to effectively manage its growth; the company's ability to maintain or increase its gross margins on product sales and services; delays in regulatory approvals or the development or release of new offerings; the company's ability to meet the covenants under its credit facilities; the company's ability to convert backlog to revenue; risks and uncertainties related to future China Class A and B license announcement; and such other risks identified under the heading "Risk Factors" in the company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on August 23, 2019 and as updated periodically with the company's other filings with the SEC.

Forward-looking statements speak only as of the date the statements are made and are based on information available to the company at the time those statements are made and/or management's good faith belief as of that time with respect to future events.  The company assumes no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not put undue reliance on any forward-looking statements.

Financial Tables to Follow

Accuray Incorporated


Consolidated Statements of Operations


(in thousands, except per share data)


(Unaudited)






Three Months Ended

September 30,




2019



2018


Gross Orders


$

78,487



$

61,414


Net Orders



38,981




24,911


Order Backlog



495,029




461,876


Net revenue:









Products


$

37,605



$

41,517


Services



51,972




54,312


Total net revenue



89,577




95,829


Cost of revenue:









Cost of products



21,570




24,524


Cost of services



35,064




33,426


Total cost of revenue



56,634




57,950


Gross profit



32,943




37,879


Operating expenses:









Research and development



13,341




13,889


Selling and marketing



13,266




13,036


General and administrative



10,616




15,642


Total operating expenses



37,223




42,567


Loss from operations



(4,280)




(4,688)


Other expense, net



(4,439)




(3,983)


Loss before provision for income taxes



(8,719)




(8,671)


Provision for income taxes



637




535


Net loss


$

(9,356)



$

(9,206)


Net loss per share - basic and diluted


$

(0.11)



$

(0.11)


Weighted average common shares used in

   computing loss per share:









Basic and diluted



88,772




86,479


 

Accuray Incorporated


Consolidated Balance Sheets


(in thousands)


(Unaudited)






September 30,



June 30,




2019



2019


Assets









Current assets:









Cash and cash equivalents


$

80,911



$

76,798


Restricted cash



5,751




10,218


Accounts receivable, net



104,684




111,885


Inventories



129,233




120,823


Prepaid expenses and other current assets



20,500




24,205


Deferred cost of revenue



148




146


Total current assets



341,227




344,075


Property and equipment, net



16,682




17,122


Goodwill



57,657




57,770


Intangible assets, net



643




679


Operating lease right-of-use assets



28,864




-


Other assets



18,674




18,535


Total assets


$

463,747



$

438,181


Liabilities and equity









Current liabilities:









Accounts payable


$

23,621



$

29,562


Accrued compensation



21,578




31,150


Operating lease liabilities, current



7,092




-


Other accrued liabilities



25,847




32,742


Customer advances



18,413




20,395


Deferred revenue



79,596




78,332


Total current liabilities



176,147




192,181


Long-term liabilities:









Long-term other liabilities



6,344




9,646


Deferred revenue



26,273




26,639


Operating lease liabilities, non-current



25,549




-


Long-term debt



188,460




159,844


Total liabilities



422,773




388,310


Equity:









Common stock



89




89


Additional paid-in capital



536,809




535,332


Accumulated other comprehensive loss



(1,028)




(10)


Accumulated deficit



(494,896)




(485,540)


Total equity



40,974




49,871


Total liabilities and equity


$

463,747



$

438,181


 

Accuray Incorporated


Reconciliation of GAAP Net Loss to Adjusted Earnings Before Interest, Taxes, Depreciation,


Amortization and Stock-Based Compensation (Adjusted EBITDA)


(in thousands)


(Unaudited)






Three Months Ended

September 30,




2019



2018


GAAP net loss


$

(9,356)



$

(9,206)


Depreciation and amortization (a)



1,851




2,129


Stock-based compensation



1,700




3,212


Interest expense, net (b)



4,200




3,592


Impairment charge (c)



-




3,707


Provision for income taxes



637




535


Adjusted EBITDA


$

(968)



$

3,969



(a) consists of depreciation, primarily on property and equipment as well as amortization of intangible assets.

(b) consists primarily of interest expense associated with our outstanding debt.

(c) consists of a one-time accounts receivable impairment charge related to one customer.

 

Accuray Incorporated


Forward-Looking Guidance


Reconciliation of Projected Net Loss to Projected Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based Compensation (Adjusted EBITDA)


(in thousands)


(Unaudited)






Twelve Months Ending

June 30, 2020




From



To


GAAP net loss


$

(17,500)



$

(13,500)


Depreciation and amortization (a)



7,200




8,000


Stock-based compensation



12,100




12,100


Interest expense, net (b)



15,400




15,400


Provision for income taxes



1,800




2,000


Adjusted EBITDA


$

19,000



$

24,000



(a) consists of depreciation, primarily on property and equipment as well as amortization of intangible assets.

(b) consists of interest expense associated with outstanding debt.

 

Michael Polyviou

Beth Kaplan

Investor Relations, EVC Group

Public Relations Director, Accuray

+1 (732) 933-2754

+1 (408) 789-4426

mpolyviou@evcgroup.com

bkaplan@accuray.com

 

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SOURCE Accuray Incorporated

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