Accuray Reports Fiscal 2020 First Quarter Financial Results

Accuray Incorporated (NASDAQ: ARAY) today reported its financial results for the first quarter of fiscal 2020 ended September 30, 2019.

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

Accuray Incorporated (PRNewsFoto/Accuray Incorporated) (PRNewsFoto/Accuray Incorporated)

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


Company Codes: NASDAQ-NMS:ARAY
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