SUNNYVALE, Calif., Jan. 22, 2019 /PRNewswire/ -- Accuray
Incorporated (NASDAQ: ARAY) today reported its financial results
for the second quarter of fiscal 2019 ended December 31, 2018.
Fiscal Second Quarter Highlights
- Gross orders increased 29 percent year over year to a record
$100.2 million
- 16 orders received from China
in the quarter
- Net orders increased 31 percent year over year to $69.2 million, and Backlog ended at $482.2M
- Revenue increased 2 percent year over year to $102.3 million
- Received FDA 510(k) application approval for motion management
on Radixact
"Our second quarter gross order performance was an all-time high
for the Company," said Joshua H.
Levine, President & Chief Executive Officer. "Our 29%
gross order growth was driven by the China Ministry of Health's
long-awaited issuance of new license quotas for Class A and Class B
radiation systems in late October
2018, a sequential rebound in CyberKnife orders, and
continued strength in Radixact demand worldwide. Going forward, we
believe Accuray is well positioned to win additional orders under
the new quotas as the process for hospitals to secure licenses is
activated. At the same time, we continued to make progress in our
efforts to establish a joint venture in China that we believe will expand our ability
to meet demand for Class B systems. From a financial perspective
during the quarter, Accuray grew revenue, generated adjusted
EBITDA, executed our plan designed to realize $15 million in annualized cost savings and moved
closer to our goal of achieving GAAP net income profitability."
"We also continued to advance our product roadmap. During the
quarter we received FDA approval for our 510(k) application for
motion synchronization capability, called Synchrony, on our
Radixact treatment platform. Just as we have with our CyberKnife
system, Radixact with Synchrony will automatically ensure beam
synchronization with tumor motion or movement, enabling tighter
dosing margins that spare healthy tissue and provides precise,
efficient treatments. With Synchrony on Radixact, Accuray will
have the only two radiotherapy systems able to provide true motion
tracking and beam synchronization and correction during
treatment."
Fiscal Second Quarter Results
Total revenue was $102.3 million
compared to $100.3 million in the
prior fiscal year second quarter. Product revenue totaled
$48.1 million compared to
$47.1 million in the prior fiscal
year second quarter, while service revenue totaled $54.3 million compared to $53.2 million in the prior fiscal year second
quarter.
Total gross profit for the 2019 fiscal second quarter was
$38.4 million, or 37.5 percent of
revenue, comprised of product gross margin of 39.5 percent and
service gross margin of 35.7 percent. This compares to total
gross profit of $39.4 million, or
39.2 percent of revenue, comprised of product gross margin of 43.0
percent and service gross margin of 35.9 percent for the prior
fiscal year second quarter. The decrease in product gross margin
was primarily driven by product mix, with a larger percentage of
sales attributable to the TomoTherapy platform in the 2019 fiscal
second quarter.
Operating expenses were $39.2
million, a decrease of 3 percent compared with $40.4 million in the prior fiscal year second
quarter. The decrease was driven by lower research and development
and general and administrative expense, offset by approximately
$0.6 million in severance costs
associated with the Company's previously announced cost reduction
initiative.
Net loss was $4.6 million, or
$0.05 per share, for the 2019 fiscal
second quarter, compared to a net loss of $4.7 million, or $0.06 per share, for the 2018 fiscal second
quarter.
Adjusted EBITDA for the 2019 fiscal second quarter was
$4.1 million, compared to
$4.8 million in the prior fiscal year
second quarter.
Cash, cash equivalents, investments and short-term restricted
cash were $64.6 million as of
December 31, 2018 compared to
$70.5 million as of September 30, 2018. The decrease was primarily
driven by the timing of accounts receivable collections.
Fiscal Six Month Results
For the six months ended December 31,
2018, gross product orders totaled $161.6 million compared to $133.6 million for the same prior fiscal year
period. Ending product backlog was $482.2
million, approximately 2 percent higher than backlog at the
end of the prior fiscal year second quarter.
Total revenue for the six months ended December 31, 2018 was $198.1 million compared to $191.3 million in the same prior fiscal year
period. Product revenue for the six months ended December 31, 2018 totaled $89.6 million compared to $86.0 million, while service revenue totaled
$108.6 million compared to
$105.3 million in the same prior
fiscal year period. The increase in product revenue was
primarily due to an increase in sales of Radixact systems. The
increase in service revenue is primarily driven by continued
installed base growth.
Total gross profit for the six months ended December 31, 2018 was $76.3 million, or 38.5 percent of revenue,
comprised of product gross margin of 40.2 percent and service gross
margin of 37.1 percent. This compares to total gross profit
of $77.5 million, or 40.5 percent of
revenue, comprised of product gross margin of 43.1 percent and
service gross margin of 38.4 percent for the same prior fiscal year
period. The decrease in product gross margin stemmed from
product mix, with fewer CyberKnife systems sold in the first half
of fiscal 2019.
Operating expenses for the six months ended December 31, 2018 were $81.8 million, an increase of 2 percent compared
with $80.5 million in the same prior
fiscal year period. The increase is primarily due to a
one-time receivable impairment charge and approximately
$0.6 million severance charge related
to a cost reduction initiative recorded in the first half of fiscal
2019.
Net loss was $13.8 million, or
$0.16 per share, for the six months
ended December 31, 2018, compared to
a net loss of $14.1 million, or
$0.17 per share, for the same prior
fiscal year period.
Adjusted EBITDA for the six months ended December 31, 2018 was $8.1
million, compared to $7.9
million in the prior fiscal year period.
2019 Financial Guidance
The company is reaffirming its fiscal year 2019 guidance
provided on October 30, 2018. Details
are summarized as follows:
- Revenue: Product revenue growth is expected to range between 4
and 8 percent and service revenue is expected to grow approximately
2 percent, resulting in total revenue of between $415 million to $425
million, which would represent 3 to 5 percent growth year
over year; and
- Adjusted EBITDA: $23.0 million to
$29.0 million representing growth of
approximately 35 percent to 70 percent year over year.
Guidance for non-GAAP financial measures excludes amortization
of intangibles, depreciation, 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 its fiscal second
quarter results and 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): 5538239
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: 5538239. An archived webcast will also be available
at Accuray's website.
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 financial statement tables included in the schedule
below.
There are limitations in using this non-GAAP financial measure
because it is 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 revenue and adjusted EBITDA; expectations related to GAAP
net income profitability and sales growth; expectations regarding
order growth in China;
expectations regarding the impact of establishing a joint venture
in China; expectations regarding
the impact of our recent cost savings initiative; 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 the company's ability to take advantage of the 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 24, 2018, the
company's report on Form 10-Q, which was filed on November 6, 2018, 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.
Doug Sherk
|
Beth
Kaplan
|
Investor Relations,
EVC Group
|
Public Relations
Director, Accuray
|
+1 (415)
652-9100
|
+1 (408)
789-4426
|
dsherk@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
December
31,
|
|
Six Months
Ended
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Gross
Orders
|
$
|
100,169
|
|
$
|
77,908
|
|
$
|
161,583
|
|
$
|
133,555
|
Net Orders
|
|
69,202
|
|
|
52,649
|
|
|
94,113
|
|
|
103,687
|
Order
Backlog
|
|
482,230
|
|
|
470,511
|
|
|
482,230
|
|
|
470,511
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
$
|
48,051
|
|
$
|
47,106
|
|
$
|
89,568
|
|
$
|
86,022
|
Services
|
|
54,267
|
|
|
53,223
|
|
|
108,579
|
|
|
105,257
|
Total net
revenue
|
|
102,318
|
|
|
100,329
|
|
|
198,147
|
|
|
191,279
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
products
|
|
29,062
|
|
|
26,857
|
|
|
53,586
|
|
|
48,959
|
Cost of
services
|
|
34,876
|
|
|
34,117
|
|
|
68,302
|
|
|
64,859
|
Total cost of
revenue
|
|
63,938
|
|
|
60,974
|
|
|
121,888
|
|
|
113,818
|
Gross
profit
|
|
38,380
|
|
|
39,355
|
|
|
76,259
|
|
|
77,461
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
13,640
|
|
|
14,664
|
|
|
27,529
|
|
|
28,757
|
Selling and
marketing
|
|
15,139
|
|
|
13,872
|
|
|
28,175
|
|
|
28,629
|
General and
administrative
|
|
10,469
|
|
|
11,836
|
|
|
26,111
|
|
|
23,144
|
Total operating
expenses
|
|
39,248
|
|
|
40,372
|
|
|
81,815
|
|
|
80,530
|
Loss from
operations
|
|
(868)
|
|
|
(1,017)
|
|
|
(5,556)
|
|
|
(3,069)
|
Other expense,
net
|
|
(3,321)
|
|
|
(3,738)
|
|
|
(7,304)
|
|
|
(10,309)
|
Loss before provision
for income taxes
|
|
(4,189)
|
|
|
(4,755)
|
|
|
(12,860)
|
|
|
(13,378)
|
Provision for (benefit
from) income taxes
|
|
451
|
|
|
(36)
|
|
|
986
|
|
|
723
|
Net loss
|
$
|
(4,640)
|
|
$
|
(4,719)
|
|
$
|
(13,846)
|
|
$
|
(14,101)
|
Net loss per share -
basic and diluted
|
$
|
(0.05)
|
|
$
|
(0.06)
|
|
$
|
(0.16)
|
|
$
|
(0.17)
|
Weighted average
common shares used in computing
loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
87,237
|
|
|
84,586
|
|
|
86,858
|
|
|
84,167
|
Accuray
Incorporated
|
Consolidated
Balance Sheets
|
(in
thousands)
|
(Unaudited)
|
|
|
December
31,
|
|
June
30,
|
|
2018
|
|
2018
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
59,428
|
|
$
|
83,083
|
Restricted
cash
|
|
5,182
|
|
|
9,830
|
Accounts receivable,
net
|
|
86,333
|
|
|
65,994
|
Inventories
|
|
119,494
|
|
|
108,540
|
Prepaid expenses and
other current assets
|
|
18,476
|
|
|
15,569
|
Deferred cost of
revenue
|
|
273
|
|
|
1,141
|
Total current
assets
|
|
289,186
|
|
|
284,157
|
Property and
equipment, net
|
|
21,103
|
|
|
23,698
|
Goodwill
|
|
57,764
|
|
|
57,855
|
Intangible assets,
net
|
|
750
|
|
|
821
|
Other
assets
|
|
17,270
|
|
|
12,196
|
Total
assets
|
$
|
386,073
|
|
$
|
378,727
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
31,396
|
|
$
|
19,694
|
Accrued
compensation
|
|
20,883
|
|
|
28,992
|
Other accrued
liabilities
|
|
24,101
|
|
|
22,448
|
Customer
advances
|
|
19,900
|
|
|
22,896
|
Deferred
revenue
|
|
72,726
|
|
|
75,404
|
Total current
liabilities
|
|
169,006
|
|
|
169,434
|
Long-term
liabilities:
|
|
|
|
|
|
Long-term other
liabilities
|
|
10,693
|
|
|
8,608
|
Deferred
revenue
|
|
23,406
|
|
|
20,976
|
Long-term
debt
|
|
136,823
|
|
|
131,077
|
Total
liabilities
|
|
339,928
|
|
|
330,095
|
Equity:
|
|
|
|
|
|
Common
stock
|
|
88
|
|
|
86
|
Additional paid-in
capital
|
|
528,254
|
|
|
521,738
|
Accumulated other
comprehensive income
|
|
759
|
|
|
1,093
|
Accumulated
deficit
|
|
(482,956)
|
|
|
(474,285)
|
Total
equity
|
|
46,145
|
|
|
48,632
|
Total liabilities and
equity
|
$
|
386,073
|
|
$
|
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
December
31,
|
|
Six Months
Ended
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
GAAP net
loss
|
$
|
(4,640)
|
|
$
|
(4,719)
|
|
$
|
(13,846)
|
|
$
|
(14,101)
|
Amortization of
intangibles
|
|
36
|
|
|
35
|
|
|
72
|
|
|
71
|
Depreciation
(a)
|
|
2,009
|
|
|
2,458
|
|
|
4,102
|
|
|
4,936
|
Stock-based
compensation
|
|
1,687
|
|
|
3,438
|
|
|
4,899
|
|
|
5,870
|
Interest expense, net
(b)
|
|
3,593
|
|
|
3,578
|
|
|
7,185
|
|
|
10,398
|
Impairment charge
(c)
|
|
-
|
|
|
-
|
|
|
3,707
|
|
|
-
|
Cost savings
initiative (d)
|
|
998
|
|
|
-
|
|
|
998
|
|
|
-
|
Provision for (benefit
from) income taxes
|
|
451
|
|
|
(36)
|
|
|
986
|
|
|
723
|
Adjusted
EBITDA
|
$
|
4,134
|
|
$
|
4,754
|
|
$
|
8,103
|
|
$
|
7,897
|
_____________________________
|
(a) consists of
depreciation, primarily on property and equipment.
|
(b) consists
primarily of interest income from available-for-sale securities,
interest expense associated with outstanding debt and non-cash loss
on extinguishment of debt.
|
(c) consists of
a one-time accounts receivable impairment charge related to one
customer.
|
(d) consists of costs
associated with a staff reduction recorded in the fiscal second
quarter of 2019.
|
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,
2019
|
|
From
|
|
To
|
GAAP net
loss
|
$
|
(20,000)
|
|
$
|
(14,000)
|
Depreciation and
amortization (a)
|
|
9,600
|
|
|
9,600
|
Stock-based
compensation
|
|
11,500
|
|
|
11,500
|
Impairment charge
(b)
|
|
3,700
|
|
|
3,700
|
Cost savings
initiative (c)
|
|
1,500
|
|
|
1,500
|
Interest expense, net
(d)
|
|
14,600
|
|
|
14,600
|
Provision for income
taxes
|
|
2,100
|
|
|
2,100
|
Adjusted
EBITDA
|
$
|
23,000
|
|
$
|
29,000
|
_____________________________
|
(a) consists of
depreciation, primarily on property and equipment as well as
amortization of intangibles.
|
(b) consists of
a one-time accounts receivable impairment charge related to one
customer in the first quarter of 2019.
|
(c) consists of costs
associated with a staff reduction initiated in the fiscal second
quarter of 2019.
|
(d) consists
primarily of interest expense associated with outstanding
debt.
|
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SOURCE Accuray Incorporated