Accuray Reports Third Quarter Fiscal 2021 Financial Results

SUNNYVALE, Calif., April 27, 2021 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported its financial results for the third quarter of fiscal 2021 ended March 31, 2021.

Third Quarter Fiscal 2021 Summary

  • Net revenue of $102.6 million including $24.9 million of system revenue in China
  • Gross orders of $87.4 million, an increase of 16 percent from the second quarter of fiscal 2021
  • GAAP operating income of $4.4 million, GAAP net loss of $0.4 million, and Adjusted EBITDA of $8.7 million
  • Received Shonin regulatory approval in Japan for ClearRT™ Helical kVCT Imaging for the Radixact® System

"Our third quarter performance continues to reflect the positive momentum our business is making despite the headwinds created by the COVID-19 environment," said Josh Levine, President and CEO of Accuray. "Highlights from our third quarter performance include the continued ramp of China Type A system revenue, excellent progress in the phased introduction of ClearRT Helical kVCT Imaging platform for the Radixact System including regulatory approval in Japan and the continued adoption of our latest innovations like Synchrony real-time motion tracking and delivery adaptation on Radixact and our latest generation Cyberknife S7 system. Additionally, as announced yesterday, we are very excited to have Dr. Jean-Phillipe Pignol join us as Chief Medical and Technology Officer as we continue to build out our executive leadership team."

Fiscal Third Quarter Results

Gross orders totaled $87.4 million compared to $106.0 million for the same prior fiscal year period. Backlog as of March 31, 2021 was $610.8 million, an increase of 7 percent compared to $569.9 million for the same prior fiscal year period.

Total net revenue was $102.6 million compared to $99.5 million in the same prior fiscal year period. Product revenue totaled $47.4 million compared to $45.5 million in the same prior fiscal year period, while service revenue totaled $55.1 million compared to $54.0 million in the same prior fiscal year period.

Total gross profit for the fiscal 2021 third quarter was $39.5 million, or 38.5 percent of net revenue, comprised of product gross margin of 41.6 percent of product revenue and service gross margin of 35.9 percent of service revenue. This compares to total gross profit of $39.1 million, or 39.3 percent of net revenue, comprised of product gross margin of 39.4 percent of product revenue and service gross margin of 39.2 percent of service revenue in the same prior fiscal year third quarter.

Operating expenses were $35.1 million, an increase of 13 percent compared to $31.2 million in the same prior fiscal year third quarter.

Net loss was $0.4 million, or $0 per share, compared to a net income of $2.6 million, or $0.3 per share, in the same prior fiscal year period.

Adjusted EBITDA for the third fiscal quarter of 2021 was $8.7 million compared to $11.3 million in the same prior fiscal year period.

Cash, cash equivalents and short-term restricted cash were $130.1 million as of March 31, 2021 compared with $116.0 million as of December 31, 2020.

Fiscal Nine Months Results

For the nine months ended March 31, 2021, gross orders totaled $213.3 million compared to $283.0 million in the same prior fiscal year period. Ending product backlog was $610.8 million, approximately 7 percent higher than backlog at the end of the prior fiscal year third quarter.

Total net revenue for the nine months ended March 31, 2021 was $285.4 million compared to $288.0 million in the same prior fiscal year period. Product revenue for the nine months ended March 31, 2021 totaled $120.5 million compared to $126.9 million, while service revenue totaled $164.9 million compared to $161.1 million in the same prior fiscal year period.

Total gross profit for the nine months ended March 31, 2021 was $115.8 million, or 40.6 percent of net revenue, comprised of product gross margin of 42.6 percent of product revenue and service gross margin of 39.1 percent of service revenue. This compares to total gross profit of $110.0 million, or 38.2 percent of net revenue, comprised of product gross margin of 41.9 percent of product revenue and service gross margin of 35.2 percent of service revenue in the same prior fiscal year period.

Operating expenses for the nine months ended March 31, 2021 were $97.7 million, a decrease of 5 percent compared with $102.7 million in the same prior fiscal year period.

Net income was $4.8 million, or $0.05 per share, for the nine months ended March 31, 2021, compared to net income of $4.0 million, or $0.04 per share, in the same prior fiscal year period. The prior year nine month period ended March 31, 2020 included a non-cash, one-off gain of $13.0 million related to the value of the Company's capital contribution to the Company's China joint venture. The gain was recorded as non-operating, other income in the prior fiscal year second quarter.

Adjusted EBITDA for the nine months ended March 31, 2021 was $31.3 million, compared to $17.4 million in the prior fiscal year period, which excludes the non-cash, one-off gain related to the Company's capital contribution to the China joint venture recorded in the prior fiscal year second quarter.

Financial Guidance

The impact of the COVID-19 pandemic on Accuray's fiscal 2021 results remains uncertain. Given the continued evolution of the COVID-19 pandemic and the uncertainty surrounding its impact on the global economy and the healthcare industry, Accuray believes it is prudent to refrain from providing financial guidance for fiscal year 2021.

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 third quarter of fiscal 2021 as well as recent corporate developments. Conference call dial-in information is as follows:

  • U.S. callers: (833) 316-0563
  • International callers: (412) 317-5747

Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Investor Relations section of Accuray's website, www.accuray.com.

In addition, a taped replay of the conference call will be available beginning approximately one hour after the call's conclusion and will be available for seven days. The replay number is (877) 344-7529 (USA), or (412) 317-0088 (International), Conference ID: 10154473. An archived webcast will also be available at Accuray's website until Accuray announces its results for the fourth quarter of fiscal 2021.

Use of Non-GAAP Financial Measures

Accuray has supplemented its GAAP net income (loss) with a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization, gain on contribution to equity method investment in joint venture 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 income (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedules below.

There are limitations in using 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 is committed to expanding the powerful potential of radiation therapy to improve as many lives as possible. We invent unique, market-changing solutions that are designed to deliver radiation treatments for even the most complex cases—while making commonly treatable cases even easier—to meet the full spectrum of patient needs. We are dedicated to continuous innovation in radiation therapy for oncology, neuro-radiosurgery, and beyond, as we partner with clinicians and administrators, empowering them to help patients get back to their lives, faster. Accuray is headquartered in Sunnyvale, California, with facilities worldwide.

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 expectations regarding operating expense, gross orders, order volume and age-outs; expectations regarding the effect of the COVID-19 pandemic on the Company; expectations regarding future sales in China; expectations regarding the Company's China joint venture, including the timing of and ability to drive revenue conversion and introduce a Type B product to the market in China as well as the operating impact of the joint venture on the Company's income statement; expectations regarding the Company's product innovations and developments, including expectations related to future regulatory approvals; expectations regarding the Company's product portfolio, the clinical impact and value proposition of those products on our customers, and market adoption of such products, including with respect to the Company's Synchrony on Radixact, CyberKnife S7 System and Clear RT Helical kVCT Imaging upgrades as well as other strategic product innovations; expectations regarding the commercial launch of Clear RT Helical kVCT Imaging; expectations regarding the Company's catalysts for long-term growth; expectations regarding the executive leadership team and its ability to execute the Company's strategic growth; expectations regarding the future of radiotherapy treatment; 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 effect of the COVID-19 pandemic on the operations of the Company and those of its customers and suppliers; the Company's ability to achieve widespread market acceptance of its products, including new product and software 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 integrate and execute the joint venture, the Company's ability to realize the expected benefits of the joint venture; the ability of customers in China to obtain Class A or B user licenses to purchase radiotherapy systems; risks inherent in international operations; 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; and such other risks identified under the heading "Risk Factors" in the Company's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on February 1, 2021 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

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 
   

Three Months Ended

March 31,

   

Nine Months Ended

March 31,

 
   

2021

   

2020

   

2021

   

2020

 

Gross Orders

 

$

87,365

   

$

105,959

   

$

213,258

   

$

283,002

 

Net Orders

   

62,826

     

76,652

     

128,843

     

205,537

 

Order Backlog

   

610,795

     

569,901

     

610,795

     

569,901

 

Net revenue:

                               

Products

 

$

47,439

   

$

45,527

   

$

120,502

   

$

126,892

 

Services

   

55,123

     

54,021

     

164,851

     

161,059

 

Total net revenue

   

102,562

     

99,548

     

285,353

     

287,951

 

Cost of revenue:

                               

Cost of products

   

27,709

     

27,573

     

69,237

     

73,661

 

Cost of services

   

35,311

     

32,842

     

100,340

     

104,314

 

Total cost of revenue

   

63,020

     

60,415

     

169,577

     

177,975

 

Gross profit

   

39,542

     

39,133

     

115,776

     

109,976

 

Operating expenses:

                               

Research and development

   

13,268

     

11,164

     

37,372

     

37,569

 

Selling and marketing

   

10,567

     

11,106

     

29,813

     

35,699

 

General and administrative

   

11,281

     

8,894

     

30,498

     

29,396

 

Total operating expenses

   

35,116

     

31,164

     

97,683

     

102,664

 

Income from operations

   

4,426

     

7,969

     

18,093

     

7,312

 

Income (loss) on equity investment, net

   

(68)

     

222

     

1,021

     

222

 

Other income (expense), net

   

(4,027)

     

(5,281)

     

(12,981)

     

(1,954)

 

Income before provision for income taxes

   

331

     

2,910

     

6,133

     

5,580

 

Provision for income taxes

   

721

     

285

     

1,352

     

1,601

 

Net income (loss)

 

$

(390)

   

$

2,625

   

$

4,781

   

$

3,979

 

Net income (loss) per share - basic

 

$

(0.00)

   

$

0.03

   

$

0.05

   

$

0.04

 

Net income (loss) per share - diluted

 

$

(0.00)

   

$

0.03

   

$

0.05

   

$

0.04

 

Weighted average common shares used in

computing income (loss) per share:

                               

Basic

   

93,123

     

90,476

     

92,106

     

89,585

 

Diluted

   

93,123

     

90,855

     

93,422

     

90,429

 

Accuray Incorporated

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 
   

March 31,

   

June 30,

 
   

2021

   

2020

 

Assets

               

Current assets:

               

Cash and cash equivalents

 

$

126,335

   

$

107,577

 

Restricted cash

   

3,811

     

997

 

Accounts receivable, net

   

69,914

     

90,599

 

Inventories

   

136,854

     

134,374

 

Prepaid expenses and other current assets

   

21,030

     

21,227

 

Deferred cost of revenue

   

1,440

     

2,712

 

Total current assets

   

359,384

     

357,486

 

Property and equipment, net

   

12,327

     

15,349

 

Investment in joint venture

   

16,579

     

13,929

 

Goodwill

   

57,909

     

57,717

 

Intangible assets, net

   

492

     

663

 

Operating lease right-of-use assets

   

24,066

     

28,647

 

Other assets

   

16,069

     

17,136

 

Total assets

 

$

486,826

   

$

490,927

 

Liabilities and equity

               

Current liabilities:

               

Accounts payable

 

$

17,869

   

$

23,126

 

Accrued compensation

   

21,217

     

17,963

 

Operating lease liabilities, current

   

8,455

     

8,224

 

Other accrued liabilities

   

22,745

     

27,180

 

Customer advances

   

23,231

     

22,571

 

Deferred revenue

   

80,677

     

83,207

 

Short-term debt

   

18,942

     

 

Total current liabilities

   

193,136

     

182,271

 

Long-term other liabilities

   

8,950

     

7,416

 

Deferred revenue

   

23,212

     

24,125

 

Operating lease liabilities, non-current

   

18,888

     

24,173

 

Long-term debt

   

164,090

     

189,307

 

Total liabilities

   

408,276

     

427,292

 

Equity:

               

Common stock

   

93

     

91

 

Additional paid-in capital

   

554,673

     

545,741

 

Accumulated other comprehensive income (loss)

   

716

     

(484)

 

Accumulated deficit

   

(476,932)

     

(481,713)

 

Total equity

   

78,550

     

63,635

 

Total liabilities and equity

 

$

486,826

   

$

490,927

 

Accuray Incorporated

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

Amortization and Stock-Based Compensation (Adjusted EBITDA)

(in thousands)

(Unaudited)

 
   

Three Months Ended

March 31,

   

Nine Months Ended

March 31,

 
   

2021

   

2020

   

2021

   

2020

 

GAAP net income (loss)

 

$

(390)

   

$

2,625

   

$

4,781

   

$

3,979

 

Depreciation and amortization

   

1,577

     

1,869

     

4,890

     

5,566

 

Stock-based compensation

   

2,489

     

2,016

     

7,097

     

5,865

 

Interest expense, net

   

4,320

     

4,513

     

13,143

     

13,396

 

Gain on contribution to equity method investment in joint venture (a)

   

     

     

     

(12,965)

 

Provision for income taxes

   

721

     

285

     

1,352

     

1,601

 

Adjusted EBITDA

 

$

8,717

   

$

11,308

   

$

31,263

   

$

17,442

 
                             

(a) Consists of non-cash gain related to the value of the Company's capital contribution to the China joint venture.

Joe Diaz

     

Beth Kaplan

Investor Relations, Lytham Partners

     

Public Relations Director, Accuray

+1 (602) 717-7804

     

+1 (408) 789-4426

jdiaz@accuray.com

     

bkaplan@accuray.com

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SOURCE Accuray Incorporated


Company Codes: NASDAQ-NMS:ARAY

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