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. Accuray incurred an additional $2.1
million in expenses related to this amended award in the
second quarter of fiscal 2016. The remaining issue to be finalized
in the arbitration relates to the payment of attorneys'
fees.
Net loss improved to $6.0 million,
or $0.08 per share, for the second
quarter of fiscal 2016, compared to a net loss of $10.0 million, or $0.13 per share, for the second quarter of fiscal
2015.
Adjusted EBITDA for the second quarter of fiscal 2016 was
$6.8 million, compared to
$3.7 million in the second quarter of
the prior fiscal year.
Cash, cash equivalents and investments were $155.8 million as of December 31, 2015, an increase of $2.7 million from September 30, 2015.
Six Month Highlights
For the six months ended
December 31, 2015, total revenue
reached $198.5 million, representing
an increase of 10 percent or 14 percent on a constant currency
basis, from the comparable period of fiscal year 2015.
Product revenue for the six month period was $95.8 million, representing an increase of 19
percent while service revenue was $102.8
million, representing 3% growth over the comparable prior
fiscal year period.
Gross profit margin for the six months ended December 31, 2015 was 39 percent, comprised of
product gross margin of 42 percent and service gross margin of 35
percent. This compares to total gross margin of 37 percent
for the comparable prior fiscal year period.
Operating expenses were $83.8
million for the six months ended December 31, 2015, compared with $85.2 million in the comparable prior fiscal year
period.
Net loss for the six months ended December 31, 2015 was $19.1 million, or $0.24 per share, compared to a net loss of
$31.6 million, or $0.41 per share, for the comparable prior fiscal
year period.
Adjusted EBITDA for the six months ended December 31, 2015 was a positive $5.7 million, compared to a loss of $4.8 million in the comparable prior fiscal year
period.
Cash, cash equivalents, and investments increased $11.9 million from June
30, 2015.
2016 Financial Guidance
Accuray reaffirmed previously provided financial guidance for
fiscal 2016. Total revenue is expected to be between $395 million to $410 million and adjusted EBITDA
is expected to range between $25 million to
$35 million. Accuray continues to expect that gross orders
for the fiscal year will be approximately $295 million, which would represent a 10 percent
increase year over year.
This financial guidance is unchanged from that provided on
January 11, 2016.
Conference Call Information
Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m.
ET today to discuss these results. 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): 19257397
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 dial-up replay of the
conference call will be available beginning January 28, 2016 at 5:00
p.m. PT/8:00 p.m. ET and
ending February 4, 2016. The
replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International),
Conference ID: 19257397.
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 more 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.
Accuray presents certain measures, such as period-over-period
revenue growth, on a constant currency basis, which excludes the
effects of foreign currency translation. Due to the
continuing strengthening of the U.S. dollar against foreign
currencies and the overall variability of foreign exchange rates
from period to period, management uses these measures on a constant
currency basis to evaluate period-over-period operating
performance. Measures presented on a constant currency basis
are calculated by translating current period results at prior
period monthly average exchange rates.
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) is a
radiation oncology company that develops, manufactures and sells
precise, innovative treatment solutions that set the standard of
care with the aim of helping patients live longer, better lives.
The company's leading-edge technologies deliver the full
range of radiation therapy and radiosurgery treatments. 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 growth in
orders, gross profit margins, revenues and adjusted EBITDA, ability
to meet financial targets, and Accuray's leadership position in
radiation oncology innovation and technologies.
Forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from
expectations, including but not limited to: the company's ability
to convert backlog to revenue; the success of the adoption of our
CyberKnife and TomoTherapy Systems; the company's ability to manage
its expenses; continuing uncertainty in the global economic
environment; and other risks detailed from time to time under the
heading "Risk Factors" in the company's report on Form 10-K, which
was filed on August 28, 2015, the company's report on Form
10-Q, which was filed on November 5,
2015 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
December 31,
|
|
Six Months Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Gross
Orders
|
$ 67,078
|
|
$ 72,261
|
|
$ 132,006
|
|
$ 131,024
|
Net Orders
|
42,679
|
|
41,474
|
|
87,478
|
|
73,756
|
Order
Backlog
|
366,668
|
|
357,831
|
|
366,668
|
|
357,831
|
|
|
|
|
|
|
|
|
Net
revenue:
|
|
|
|
|
|
|
|
Products
|
$ 55,759
|
|
$ 47,650
|
|
$ 95,754
|
|
$ 80,665
|
Services
|
53,153
|
|
50,505
|
|
102,789
|
|
99,871
|
Total net
revenue
|
108,912
|
|
98,155
|
|
198,543
|
|
180,536
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Cost of
products
|
32,717
|
|
27,171
|
|
55,734
|
|
47,836
|
Cost of
services
|
33,624
|
|
32,495
|
|
66,340
|
|
66,410
|
Total cost of
revenue
|
66,341
|
|
59,666
|
|
122,074
|
|
114,246
|
Gross
profit
|
42,571
|
|
38,489
|
|
76,469
|
|
66,290
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
14,931
|
|
13,917
|
|
29,227
|
|
28,066
|
Selling and
marketing
|
15,076
|
|
15,802
|
|
28,493
|
|
33,776
|
General and
administrative
|
12,688
|
|
12,361
|
|
26,104
|
|
23,311
|
Total operating
expenses
|
42,695
|
|
42,080
|
|
83,824
|
|
85,153
|
Loss from
operations
|
(124)
|
|
(3,591)
|
|
(7,355)
|
|
(18,863)
|
Other expense,
net
|
(5,070)
|
|
(5,528)
|
|
(10,161)
|
|
(10,989)
|
Loss before provision
for income taxes
|
(5,194)
|
|
(9,119)
|
|
(17,516)
|
|
(29,852)
|
Provision for income
taxes
|
833
|
|
873
|
|
1,537
|
|
1,790
|
Net loss
|
$ (6,027)
|
|
$ (9,992)
|
|
$ (19,053)
|
|
$ (31,642)
|
|
|
|
|
|
|
|
|
Net loss per share -
basic and diluted
|
$ (0.08)
|
|
$ (0.13)
|
|
$ (0.24)
|
|
$ (0.41)
|
Weighted average
common shares used in computing loss per share:
|
|
|
|
|
|
|
|
Basic and
diluted
|
80,346
|
|
77,924
|
|
80,053
|
|
77,607
|
Accuray
Incorporated
|
Consolidated
Balance Sheets
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
December
31,
|
|
June
30,
|
|
2015
|
|
2015
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$ 88,451
|
|
$ 79,551
|
Investments
|
67,304
|
|
64,306
|
Restricted
cash
|
2,596
|
|
3,734
|
Accounts
receivable, net
|
66,044
|
|
77,727
|
Inventories
|
111,513
|
|
106,151
|
Prepaid
expenses and other current assets
|
13,598
|
|
15,991
|
Deferred cost
of revenue
|
8,834
|
|
6,869
|
Total current
assets
|
358,340
|
|
354,329
|
Property and
equipment, net
|
29,550
|
|
31,829
|
Goodwill
|
57,892
|
|
58,054
|
Intangible
assets, net
|
11,587
|
|
15,564
|
Deferred cost
of revenue
|
2,152
|
|
1,500
|
Other
assets
|
13,804
|
|
8,695
|
Total
assets
|
$
473,325
|
|
$ 469,971
|
Liabilities
and equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$ 19,561
|
|
$ 13,096
|
Accrued
compensation
|
20,484
|
|
21,934
|
Other accrued
liabilities
|
23,839
|
|
18,720
|
Short-term
debt
|
96,551
|
|
-
|
Customer
advances
|
19,377
|
|
19,385
|
Deferred
revenue
|
94,386
|
|
96,780
|
Total current
liabilities
|
274,198
|
|
169,915
|
Long-term
liabilities:
|
|
|
|
Long-term other
liabilities
|
10,829
|
|
10,934
|
Deferred
revenue
|
17,257
|
|
10,489
|
Long-term
debt
|
110,172
|
|
202,853
|
Total
liabilities
|
412,456
|
|
394,191
|
Commitment and
contingencies
|
|
|
|
Equity:
|
|
|
|
Common
stock
|
81
|
|
79
|
Additional
paid-in capital
|
476,387
|
|
471,430
|
Accumulated
other comprehensive loss
|
(1,243)
|
|
(426)
|
Accumulated
deficit
|
(414,356)
|
|
(395,303)
|
Total
equity
|
60,869
|
|
75,780
|
Total
liabilities and equity
|
$
473,325
|
|
$ 469,971
|
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
December 31,
|
|
Six
Months Ended December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
GAAP net
loss
|
$ (6,027)
|
|
$ (9,992)
|
|
$ (19,053)
|
|
$ (31,642)
|
Amortization of intangibles (a)
|
1,988
|
|
1,988
|
|
3,976
|
|
3,976
|
Depreciation (b)
|
2,514
|
|
2,994
|
|
5,085
|
|
5,984
|
Stock-based compensation (c)
|
3,365
|
|
3,854
|
|
5,879
|
|
7,127
|
Interest
expense, net (d)
|
4,138
|
|
4,023
|
|
8,294
|
|
8,011
|
Provision for income taxes
|
833
|
|
873
|
|
1,537
|
|
1,790
|
Adjusted
EBITDA
|
$ 6,811
|
|
$ 3,740
|
|
$ 5,718
|
|
$ (4,754)
|
(a)
|
consists of
amortization of intangibles - developed
technology.
|
(b)
|
consists of
depreciation, primarily on property and equipment.
|
(c)
|
consists of
stock-based compensation in accordance with ASC
718.
|
(d)
|
consists primarily of
interest income from available-for-sale securities and interest
expense associated with our convertible notes.
|
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, 2016
|
|
From
|
|
To
|
GAAP net
loss
|
$ (28,200)
|
|
$ (18,300)
|
Amortization of intangibles (a)
|
7,950
|
|
7,950
|
Depreciation (b)
|
10,850
|
|
10,850
|
Stock-based compensation (c)
|
14,100
|
|
14,100
|
Interest
expense, net (d)
|
17,300
|
|
17,300
|
Provision for income taxes
|
3,000
|
|
3,100
|
Adjusted
EBITDA
|
$ 25,000
|
|
$ 35,000
|
(a)
|
consists of
amortization of intangibles - developed technology.
|
(b)
|
consists of
depreciation, primarily on property and equipment.
|
(c)
|
consists of
stock-based compensation in accordance with ASC
718.
|
(d)
|
consists primarily of
interest income from available-for-sale securities and interest
expense associated with our convertible notes.
|
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SOURCE Accuray Incorporated