SUNNYVALE, Calif., Jan. 28, 2016 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) announced today financial results for the second fiscal quarter and six months ended December 31, 2015.
Fiscal Second Quarter Highlights
- Gross orders were $67.1 million; single and dual vault sites comprised more than 50 percent of total TomoTherapy® System orders; replacement orders to existing accounts comprised approximately 15 percent of all system orders
- Total revenue was $108.9 million, an increase of 11 percent year-over-year or 15 percent on a constant currency basis
- Gross profit margins expanded sequentially to 39.1 percent from 37.8 percent
- Operating income was near breakeven compared to a loss of $3.6 million in the prior year
- Adjusted EBITDA was $6.8 million compared to $3.7 million in the prior year
- Cash, cash equivalents and investments increased $2.7 million compared to a decrease of $1.9 million in the prior year
"In the second quarter we achieved an all time high revenue quarter and near breakeven operating income, demonstrating that we are continuing to execute on each of our strategic commercial initiatives. Based on our commercial momentum, we expect that order and revenue growth in the second half of the fiscal year will be at levels well above overall market growth," said Joshua H. Levine, president and chief executive officer of Accuray. "Additionally, in January 2016 we took steps to improve our capital structure by closing on a $70 million senior secured loan and subsequently retiring $63.4 million of convertible notes which were to mature in August 2016. We believe this demonstrates confidence on the part of the financial community in our ability to execute our commercial strategies and drive positive EBITDA. With the retirement of the notes and our intent to pay the remaining convertible notes in cash we have reduced potential dilution by 10.6 million shares of our common stock."
Financial Highlights
Gross product orders totaled $67.1 million for the second fiscal quarter. Ending product backlog was $366.7 million.
Total revenue was $108.9 million, an increase of 11 percent from the prior fiscal year second quarter and an increase of 15 percent on a constant currency basis. The Americas region total revenue was $51.0 million and total revenue outside of the Americas region was $57.9 million. Product revenue increased 17 percent to $55.8 million while service revenue increased 5 percent to $53.1 million.
Total gross profit was $42.6 million or 39 percent of sales, comprised of product gross margin of 41 percent and service gross margin of 37 percent. This compares to total gross margin of 39 percent, product gross margin of 43 percent and service gross margin of 36 percent for the prior fiscal year second quarter. On a constant currency basis, total gross margin for the second quarter of fiscal 2016 was 41 percent.
Operating expenses were $42.7 million, an increase of 1 percent compared with $42.1 million in the prior fiscal second quarter. The increase was primarily due to higher legal expenses, related to the amended award of $2.1 million for damages to the Company's former China distributor as well as increased research and development expenses to support ongoing product development efforts. These increases were partially offset by reduced compensation related expenses in sales and marketing and general and administrative functions.
In November 2015 Accuray's former distributor in China was awarded an interim award for damages of approximately $3.4 million. In January 2016, the International Chamber of Commerce International Court of Arbitration revised the award based on a clerical error they believe occurred in their calculation of the maximum amount of damages.
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