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Accuray Reports Fourth Quarter and Fiscal 2019 Financial Results

SUNNYVALE, Calif., Aug. 15, 2019 /PRNewswire/ -- Accuray Incorporated (ARAY) today reported financial results for the fourth quarter and fiscal year ended June 30, 2019.

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

Q4 Fiscal 2019 and Recent Operating Highlights

  • Revenue increased 3 percent to $117.4 million, the highest ever quarterly revenue reported; Gross orders increased to $97.2 million
  • $3.3 million of operating profit, which grew 5 percent
  • Signed first multi-system order bundling Accuray and RaySearch Laboratories product and software offerings
  • Signed first upgrade order for Synchrony motion tracking and correction technology for Radixact

Fiscal Year 2019 Highlights

  • Gross orders increased 12 percent year-over-year to $342.3 million
  • Revenue increased 3 percent over the prior fiscal year to $418.8 million
  • Recorded first full year of operating profit since 2011

"From all perspectives, fiscal 2019 was a very successful year," said Joshua H. Levine, president and chief executive officer. "We generated 12 percent gross order growth for the year while our efforts to increase efficiencies led to the Company's first operating profit since 2011. Additionally, we set a new quarterly revenue record during the fourth quarter. From a strategic growth perspective, we advanced our opportunities in China which is the world's fastest growing radiotherapy market. It should be noted that our progress during fiscal 2019 came without significant revenue contribution from the China market as the process for awarding and issuing Class A and B user licenses for radiotherapy systems is still in an early phase."

Q4 Fiscal 2019 Financial Highlights


Gross product orders totaled $97.2 million for the fourth quarter of fiscal 2019 compared to $96.4 million for the prior fiscal year fourth quarter. Ending order backlog was $495.6 million, approximately 4 percent higher than at the end of the prior fiscal year.


Total revenue was $117.4 million, an increase of 3 percent compared to $113.8 million in the prior fiscal year fourth quarter. Product revenue totaled $60.6 million compared to $54.6 million in the prior fiscal year fourth quarter, while service revenue totaled $56.8 million compared to $59.2 million in the prior fiscal year fourth quarter.

Total gross profit for the fourth quarter of fiscal 2019 was $45.9 million or approximately 39.1 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.4 percent. This compares to total gross profit of $48.0 million or 42.2 percent of sales, comprised of product gross margin of 47.4 percent and service gross margin of 37.4 percent for the prior fiscal year fourth quarter.

Net loss was $1.4 million, or $0.02 per share, for the fourth quarter of fiscal 2019, compared to a net loss of $0.9 million, or $0.01 per share, for the fourth quarter of fiscal 2018.

Adjusted EBITDA for the fourth quarter of fiscal 2019 was $8.9 million, compared to $7.8 million in the prior fiscal year fourth quarter.

Cash, cash equivalents, investments and short-term restricted cash were $87.0 million as of June 30, 2019, an increase of $22.4 million from March 31, 2019.

Fiscal Year 2019 Highlights


For the fiscal year ended June 30, 2019, gross product orders totaled $342.3 million, representing growth of 12 percent compared to the prior fiscal year period.


Total revenue was $418.8 million compared to $404.9 million in the prior fiscal year period. Product revenue totaled $196.7 million compared to $183.9 million in the prior fiscal year period, while service revenue totaled $222.1 million compared to $221.0 million from the prior fiscal year period.

Total gross profit for the year ended June 30, 2019 was $162.7 million or 38.8 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.2 percent. This compares to total gross profit of $161.7 million or 39.9 percent of sales, comprised of product gross margin of 44.0 percent and service gross margin of 36.6 percent for the same prior fiscal year period.

Operating expenses were $162.1 million, a decrease of 2 percent compared to $165.5 million in the prior fiscal year period.

Net loss was $16.4 million, or $0.19 per share, for the fiscal year ended June 30, 2019, compared to a net loss of $23.9 million, or $0.28 per share, for the prior fiscal year period.

Adjusted EBITDA for the fiscal year ended June 30, 2019 was $23.7 million, compared to $17.1 million in the prior fiscal year period.

2020 Financial Guidance


The Company is introducing guidance for fiscal year 2020 as follows: 


  • Total revenue is expected to range between $410.0 million to $420.0 million due to the expected delay in timing of Class A system revenue with total revenue during the first half of the year expected to be slightly below fiscal 2019 levels. The total revenue range includes the impact of 25% Chinese tariffs currently in place
  • Adjusted EBITDA is expected to range between $19.0 million to $24.0 million, including a loss of approximately $2 million from our China joint venture equity interest

Guidance for non-GAAP financial measures excludes depreciation and amortization, stock-based compensation expense, interest expense, net and provision for income taxes.  For more information regarding the non-GAAP financial measures discussed in this press release, please see "Use of Non-GAAP Financial Measures" below.

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 fourth quarter and fiscal 2019 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): 3297842

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: 3297842. An archived webcast will also be available at Accuray's website until Accuray announces its results for the first 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 (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 future sales in China and the impact of tariffs in China; expectations regarding our Chinese joint venture; expectations regarding the company's product portfolio; 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 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 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 May 9, 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.

Michael Polyviou

Beth Kaplan

Investor Relations, EVC Group

Public Relations Director, Accuray

+1 (732) 933-2755

+1 (408) 789-4426

mpolyviou@evcgroup.com

bkaplan@accuray.com

Financial Tables to Follow

Accuray Incorporated

Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)




Three Months Ended

June 30,



Twelve Months Ended

June 30,



2019



2018



2019



2018

Gross Orders


$

97,166



$

96,442



$

342,321



$

304,903

Net Orders



64,364




64,967




218,263




209,534

Order Backlog



495,627




478,482




495,627




478,482

Net revenue:
















Products


$

60,646



$

54,632



$

196,665



$

183,898

Services



56,771




59,154




222,120




220,999

Total net revenue



117,417




113,786




418,785




404,897

Cost of revenue:
















Cost of products



35,956




28,747




116,711




103,038

Cost of services



35,535




37,054




139,423




140,164

Total cost of revenue



71,491




65,801




256,134




243,202

Gross profit



45,926




47,985




162,651




161,695

Operating expenses:
















Research and development



16,051




14,588




56,493




57,251

Selling and marketing



14,920




16,864




55,998




60,105

General and administrative



11,697




13,440




49,577




48,136

Total operating expenses



42,668




44,892




162,068




165,492

Income (loss) from operations



3,258




3,093




583




(3,797)

Other expense, net



(3,794)




(4,450)




(14,927)




(19,224)

Loss before provision for income taxes



(536)




(1,357)




(14,344)




(23,021)

Provision for (benefit from) income taxes



864




(411)




2,086




878

Net loss


$

(1,400)



$

(946)



$

(16,430)



$

(23,899)

Net loss per share - basic and diluted


$

(0.02)



$

(0.01)



$

(0.19)



$

(0.28)

Weighted average common shares used in computing loss per share:
















Basic and diluted



88,202




85,677




87,465




84,893

 

Accuray Incorporated

Consolidated Balance Sheets

(in thousands)

(Unaudited)




June 30,



June 30,



2019



2018

Assets








Current assets:








Cash and cash equivalents


$

76,798



$

83,083

Restricted cash



10,218




9,830

Accounts receivable, net



111,885




65,994

Inventories



120,823




108,540

Prepaid expenses and other current assets



24,205




15,569

Deferred cost of revenue



146




1,141

Total current assets



344,075




284,157

Property and equipment, net



17,122




23,698

Goodwill



57,770




57,855

Intangible assets, net



679




821

Other assets



18,535




12,196

Total assets


$

438,181



$

378,727

Liabilities and equity








Current liabilities:








Accounts payable


$

29,562



$

19,694

Accrued compensation



31,150




28,992

Other accrued liabilities



32,742




22,448

Customer advances



20,395




22,896

Deferred revenue



78,332




75,404

Total current liabilities



192,181




169,434

Long-term liabilities:








Long-term other liabilities



9,646




8,608

Deferred revenue



26,639




20,976

Long-term debt



159,844




131,077

Total liabilities



388,310




330,095

Equity:








Common stock



89




86

Additional paid-in capital



535,332




521,738

Accumulated other comprehensive income (loss)



(10)




1,093

Accumulated deficit



(485,540)




(474,285)

Total equity



49,871




48,632

Total liabilities and equity


$

438,181



$

378,727

 

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

June 30,



Twelve Months Ended

June 30,



2019



2018



2019



2018

GAAP net loss


$

(1,400)



$

(946)



$

(16,430)



$

(23,899)

Amortization of intangibles



36




36




144




143

Depreciation (a)



2,142




2,309




8,122




9,589

Stock-based compensation



2,822




3,215




10,601




12,289

Interest expense, net (b)



3,973




3,627




15,015




18,087

Impairment charge (c)



-




-




3,707




-

Cost savings initiative (d)



511




-




1,509




-

Gain on lease termination (e)



-




-




(1,007)




-

Provision for (benefit from) income taxes



864




(411)




2,086




878

Adjusted EBITDA


$

8,948



$

7,830



$

23,747



$

17,087





(a)

consists of depreciation, primarily on property and equipment.

(b) 

consists primarily of interest expense associated with our outstanding debt and non-cash loss on extinguishment of debt.

(c) 

consists of a one-time accounts receivable impairment charge related to one customer in the first quarter of 2019.

(d) 

consists of costs associated with a staff reduction.

(e) 

consists of a non-cash reversal of deferred rent related to a facility lease that was terminated.

 

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 intangibles.

(b) 

consists primarily of interest expense associated with outstanding debt.

 

Cision

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