SUNNYVALE, Calif., Jan. 28, 2020 /PRNewswire/ -- Accuray
Incorporated (NASDAQ: ARAY) today reported its financial results
for the second quarter of fiscal 2020 ended December 31, 2019.
Recent Company Highlights
- Gross orders of $98.6 million,
including 11 orders from China
- Net orders of $89.9 million, an
increase of 30% year over year
- Total backlog increased 12 percent year over year to
$539.4 million
- Net revenue of $98.8 million, net
income of $10.7 million, Adjusted
EBITDA of $7.1 million
"Financial and operational results for our second fiscal quarter
and for the first half of fiscal year 2020 were solid," commented
Joshua H. Levine, president and
chief executive officer of Accuray. "Gross orders for the second
quarter exceeded our internal expectations heading into the
quarter, including a solid order contribution from China. We
expect revenue growth to improve in the second half of fiscal 2020
as we believe revenue recognition of China Type A systems will
start in our fourth fiscal quarter. In addition, we have confirmed
that the tariff exemption for medical linear accelerators is
applicable to all of our systems. We believe that this
exemption will support our commercial momentum and expand access to
our innovative radiation therapy solutions for hospitals and
patients in China. In light of recent events with the
coronavirus outbreak in China, we
do not believe that the outbreak affects the longer-term demand
outlook for radiotherapy equipment in China. China
remains the world's fastest growing market for radiation oncology
systems where we have a highly differentiated strategy to drive
significant revenue growth in the coming years."
Fiscal Second Quarter Results
Gross orders totaled $98.6 million
compared to $100.2 million for the
prior year period. Backlog as of December
31, 2019 was $539.4 million,
an increase of 12 percent compared to $482.2
million for the prior year period.
Total net revenue was $98.8
million compared to $102.3
million for the prior year period. Product revenue totaled
$43.8 million compared to
$48.1 million in the same prior
fiscal year period, while service revenue totaled $55.1 million compared to $54.3 million in the same prior fiscal year
period.
Total gross profit for the fiscal 2020 second quarter was
$37.9 million, or 38.4 percent of net
revenue, comprised of product gross margin of 44.0 percent of
product revenue and service gross margin of 33.9 percent of service
revenue. This compares to total gross profit of $38.4 million, or 37.5 percent of net revenue,
comprised of product gross margin of 39.5 percent of product
revenue and service gross margin of 35.7 percent of service revenue
for the prior fiscal year second quarter.
Operating expenses were $34.3
million, a decrease of 13 percent compared to $39.2 million in the prior fiscal year second
quarter.
Net income was $10.7 million, or
$0.12 per share, compared to a net
loss of $4.6 million, or ($0.05) per share, for the prior fiscal year
period. Net income included a non-cash, special gain of
$13.0 million related to the value of
the Company's capital contribution to the China joint venture in exchange for the
Company's 49% equity interest in the joint venture. This gain was
recorded as non-operating, other income in the second quarter.
Adjusted EBITDA, which excludes the non-cash, special gain
related to the Company's capital contribution to the China joint venture, for the second quarter of
fiscal 2020 was $7.1 million,
compared to $4.1 million in the prior
fiscal period.
Cash, cash equivalents and short-term restricted cash were
$99.1 million as of December 31, 2019 compared with $86.7 million as of September 30, 2019.
Fiscal Six Months Results
For the six months ended December 31,
2019, gross product orders totaled $177.0 million compared to $161.6 million for the same prior fiscal year
period. Ending product backlog was $539.4
million, approximately 12 percent higher than backlog at the
end of the prior fiscal year second quarter.
Total net revenue for the six months ended December 31, 2019 was $188.4 million compared to $198.1 million in the same prior fiscal year
period. Product revenue for the six months ended December 31, 2019 totaled $81.4 million compared to $89.6 million, while service revenue totaled
$107.0 million compared to
$108.6 million in the same prior
fiscal year period.
Total gross profit for the six months ended December 31, 2019 was $70.8 million, or 37.6 percent of net revenue,
comprised of product gross margin of 43.4 percent of product
revenue and service gross margin of 33.2 percent of service
revenue. This compares to total gross profit of $76.3 million, or 38.5 percent of net revenue,
comprised of product gross margin of 40.2 percent of product
revenue and service gross margin of 37.1 percent of service revenue
for the same prior fiscal year period.
Operating expenses for the six months ended December 31, 2019 were $71.5 million, a decrease of 13 percent compared
with $81.8 million in the same prior
fiscal year period.
Net income was $1.4 million, or
$0.02 per share, for the six months
ended December 31, 2019, compared to
a net loss of $13.8 million, or
($0.16) per share, for the same prior
fiscal year period. Net income included a non-cash, special gain of
$13.0 million related to the value of
the Company's capital contribution to the China joint venture in exchange for the
Company's 49% equity interest in the joint venture. This gain was
recorded as non-operating, other income in the second quarter.
Adjusted EBITDA for the six months ended December 31, 2019 was $6.1
million, compared to $8.1
million in the prior fiscal year period.
2020 Financial Guidance
The Company is reaffirming revenue guidance provided on
August 15, 2019 and updating adjusted
EBITDA guidance for fiscal year 2020. Total revenue for fiscal year
2020 is expected to range between $410.0 and $420.0
million. 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 $21.0 to
$26.0 million, which includes
approximately $1.0 million of the
Company's share of expected loss from the joint venture operations
in China. This is adjusted from
the previous range of $19.0 million
to $24.0 million.
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 second 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): 8598970
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: 8598970. An archived webcast will also be available
at Accuray's website until Accuray announces its results for the
third 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"). The calculation of adjusted EBITDA also excludes
certain non-recurring, irregular and one-time items, including the
non-cash, special gain related to Accuray's capital contribution to
the China joint venture, a
one-time accounts receivable impairment charge and costs associated
with a one-time cost savings initiative. 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 gross
orders and improvement in revenue growth; expectations regarding
recognition of revenue from China Type A systems; expectations
related to the growth of China's
radiation oncology market; expectations related to the Company's
market opportunity in China and
its ability to grow the business; expectations regarding the tariff
exemption for medical linear accelerators; expectations regarding
the effect of the 2019 Novel Coronavirus outbreak; 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
effectively integrate and execute the joint venture; the Company's
ability to realize the expected benefits of the joint venture;
risks and uncertainties related to future Type A and B license
announcements in China; risks
inherent in international operations; risks and uncertainties
related to the 2019 Novel Coronavirus and its effects on the
Company's operations in China and
the operations of its customers; risks and uncertainties related to
international tariffs and tariff exemptions; the Company's ability
to effectively manage its growth; 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 November 6, 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
December
31,
|
|
|
Six Months
Ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Gross
Orders
|
|
$
|
98,556
|
|
|
$
|
100,169
|
|
|
$
|
177,043
|
|
|
$
|
161,583
|
|
Net Orders
|
|
|
89,904
|
|
|
|
69,202
|
|
|
|
128,885
|
|
|
|
94,113
|
|
Order
Backlog
|
|
|
539,357
|
|
|
|
482,230
|
|
|
|
539,357
|
|
|
|
482,230
|
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
43,760
|
|
|
$
|
48,051
|
|
|
$
|
81,365
|
|
|
$
|
89,568
|
|
Services
|
|
|
55,066
|
|
|
|
54,267
|
|
|
|
107,038
|
|
|
|
108,579
|
|
Total net
revenue
|
|
|
98,826
|
|
|
|
102,318
|
|
|
|
188,403
|
|
|
|
198,147
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
products
|
|
|
24,518
|
|
|
|
29,062
|
|
|
|
46,088
|
|
|
|
53,586
|
|
Cost of
services
|
|
|
36,408
|
|
|
|
34,876
|
|
|
|
71,472
|
|
|
|
68,302
|
|
Total cost of
revenue
|
|
|
60,926
|
|
|
|
63,938
|
|
|
|
117,560
|
|
|
|
121,888
|
|
Gross
profit
|
|
|
37,900
|
|
|
|
38,380
|
|
|
|
70,843
|
|
|
|
76,259
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
13,064
|
|
|
|
13,640
|
|
|
|
26,405
|
|
|
|
27,529
|
|
Selling and
marketing
|
|
|
11,327
|
|
|
|
15,139
|
|
|
|
24,593
|
|
|
|
28,175
|
|
General and
administrative
|
|
|
9,886
|
|
|
|
10,469
|
|
|
|
20,502
|
|
|
|
26,111
|
|
Total operating
expenses
|
|
|
34,277
|
|
|
|
39,248
|
|
|
|
71,500
|
|
|
|
81,815
|
|
Income (loss) from
operations
|
|
|
3,623
|
|
|
|
(868)
|
|
|
|
(657)
|
|
|
|
(5,556)
|
|
Other income
(expense), net
|
|
|
7,766
|
|
|
|
(3,321)
|
|
|
|
3,327
|
|
|
|
(7,304)
|
|
Income (loss) before
provision for income taxes
|
|
|
11,389
|
|
|
|
(4,189)
|
|
|
|
2,670
|
|
|
|
(12,860)
|
|
Provision for income
taxes
|
|
|
679
|
|
|
|
451
|
|
|
|
1,316
|
|
|
|
986
|
|
Net income
(loss)
|
|
$
|
10,710
|
|
|
$
|
(4,640)
|
|
|
$
|
1,354
|
|
|
$
|
(13,846)
|
|
Net income (loss) per
share - basic
|
|
$
|
0.12
|
|
|
$
|
(0.05)
|
|
|
$
|
0.02
|
|
|
$
|
(0.16)
|
|
Net income (loss) per
share - diluted
|
|
$
|
0.12
|
|
|
$
|
(0.05)
|
|
|
$
|
0.02
|
|
|
$
|
(0.16)
|
|
Weighted average
common shares used in
computing income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
89,517
|
|
|
|
87,237
|
|
|
|
89,145
|
|
|
|
86,858
|
|
Diluted
|
|
|
90,279
|
|
|
|
87,237
|
|
|
|
90,095
|
|
|
|
86,858
|
|
Accuray
Incorporated
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
(Unaudited)
|
|
|
|
December
31,
|
|
|
June
30,
|
|
|
|
2019
|
|
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
96,420
|
|
|
$
|
76,798
|
|
Restricted
cash
|
|
|
2,648
|
|
|
|
10,218
|
|
Accounts receivable,
net
|
|
|
87,734
|
|
|
|
111,885
|
|
Inventories
|
|
|
131,253
|
|
|
|
120,823
|
|
Prepaid expenses and
other current assets
|
|
|
20,320
|
|
|
|
24,205
|
|
Deferred cost of
revenue
|
|
|
140
|
|
|
|
146
|
|
Total current
assets
|
|
|
338,515
|
|
|
|
344,075
|
|
Property and
equipment, net
|
|
|
16,977
|
|
|
|
17,122
|
|
Goodwill
|
|
|
57,740
|
|
|
|
57,770
|
|
Intangible assets,
net
|
|
|
607
|
|
|
|
679
|
|
Operating lease
right-of-use assets
|
|
|
31,110
|
|
|
|
—
|
|
Other
assets
|
|
|
34,524
|
|
|
|
18,535
|
|
Total
assets
|
|
$
|
479,473
|
|
|
$
|
438,181
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
22,062
|
|
|
$
|
29,562
|
|
Accrued
compensation
|
|
|
22,308
|
|
|
|
31,150
|
|
Operating lease
liabilities, current
|
|
|
7,598
|
|
|
|
—
|
|
Other accrued
liabilities
|
|
|
28,686
|
|
|
|
32,742
|
|
Customer
advances
|
|
|
18,231
|
|
|
|
20,395
|
|
Deferred
revenue
|
|
|
79,599
|
|
|
|
78,332
|
|
Total current
liabilities
|
|
|
178,484
|
|
|
|
192,181
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term other
liabilities
|
|
|
6,717
|
|
|
|
9,646
|
|
Deferred
revenue
|
|
|
27,242
|
|
|
|
26,639
|
|
Operating lease
liabilities, non-current
|
|
|
27,166
|
|
|
|
—
|
|
Long-term
debt
|
|
|
183,864
|
|
|
|
159,844
|
|
Total
liabilities
|
|
|
423,473
|
|
|
|
388,310
|
|
Equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
90
|
|
|
|
89
|
|
Additional paid-in
capital
|
|
|
540,247
|
|
|
|
535,332
|
|
Accumulated other
comprehensive loss
|
|
|
(151)
|
|
|
|
(10)
|
|
Accumulated
deficit
|
|
|
(484,186)
|
|
|
|
(485,540)
|
|
Total
equity
|
|
|
56,000
|
|
|
|
49,871
|
|
Total liabilities and
equity
|
|
$
|
479,473
|
|
|
$
|
438,181
|
|
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
December
31,
|
|
|
Six Months
Ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
GAAP net income
(loss)
|
|
$
|
10,710
|
|
|
$
|
(4,640)
|
|
|
$
|
1,354
|
|
|
$
|
(13,846)
|
|
Depreciation and
amortization
|
|
|
1,846
|
|
|
|
2,045
|
|
|
|
3,697
|
|
|
|
4,174
|
|
Stock-based
compensation
|
|
|
2,149
|
|
|
|
1,687
|
|
|
|
3,849
|
|
|
|
4,899
|
|
Interest expense,
net
|
|
|
4,683
|
|
|
|
3,593
|
|
|
|
8,883
|
|
|
|
7,185
|
|
Gain on contribution
to equity method investment in joint venture (a)
|
|
|
(12,965)
|
|
|
|
—
|
|
|
|
(12,965)
|
|
|
|
—
|
|
Impairment charge
(b)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,707
|
|
Cost savings
initiative (c)
|
|
|
—
|
|
|
|
998
|
|
|
|
—
|
|
|
|
998
|
|
Provision for income
taxes
|
|
|
679
|
|
|
|
451
|
|
|
|
1,316
|
|
|
|
986
|
|
Adjusted
EBITDA
|
|
$
|
7,102
|
|
|
$
|
4,134
|
|
|
$
|
6,134
|
|
|
$
|
8,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) consists of
non-cash gain related to the value of the Company's capital
contribution to the China joint venture.
|
(b) consists of
a one-time accounts receivable impairment charge related to one
customer.
|
(c) 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 Income (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
|
|
$
|
(4,000)
|
|
|
$
|
1,000
|
|
Depreciation and
amortization
|
|
|
8,300
|
|
|
|
8,300
|
|
Stock-based
compensation
|
|
|
8,700
|
|
|
|
8,700
|
|
Interest expense,
net
|
|
|
18,100
|
|
|
|
18,100
|
|
Gain on contribution
to equity method investment in joint venture (a)
|
|
|
(13,000)
|
|
|
|
(13,000)
|
|
Provision for income
taxes
|
|
|
2,900
|
|
|
|
2,900
|
|
Adjusted
EBITDA
|
|
$
|
21,000
|
|
|
$
|
26,000
|
|
|
|
|
|
|
|
|
|
|
(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)
889-9700
|
+1 (408)
789-4426
|
diaz@lythampartners.com
|
bkaplan@accuray.com
|
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SOURCE Accuray Incorporated