SUNNYVALE, Calif., April 28, 2020 /PRNewswire/ -- Accuray
Incorporated (NASDAQ: ARAY) today reported its financial results
for the third quarter of fiscal 2020 ended March 31, 2020.
Recent Company Highlights
- Gross orders increased 27% year-over-year to $106.0 million, including 11 orders from
China
- Net orders of $76.7 million, an increase of 28%
year-over-year
- Total backlog increased 15% year-over-year to $569.9 million
- Net revenue of $99.5 million, net income of $2.6
million, Adjusted EBITDA of $11.3 million
"Despite the economic upheaval around the world, Accuray, from
an operational standpoint, had a solid third fiscal quarter,"
commented Joshua H. Levine,
president and chief executive officer of Accuray. "Gross orders
increased 27% year-over-year to $106
million compared to $84
million in the comparable quarter last year. Order momentum
was evident in all but one of our regions. The Americas delivered
its third consecutive quarter of double-digit or higher,
year-over-year revenue growth. Gross orders in Europe, the Middle
East and Asia increased 15%
on a year-over-year basis. Our sales team did a great job in
generating new orders during the third quarter."
"Revenue in the third quarter totaled $99.5 million, despite seeing our revenue
conversion timing impacted by the COVID-19 pandemic in the month of
March, when travel restrictions and lockdowns in certain markets
went into effect. As a result, we view the impact to revenue
conversion of certain orders during the quarter as 'timing
related'."
Mr. Levine continued, "In China, we booked 11 new orders across
both Type A and B products, 7 of which were through our
China joint venture. We are
pleased with the progress that the joint venture has made both
commercially and operationally."
"We ended the quarter with cash, cash equivalents, and
short-term restricted cash totaling $92
million. We remain very focused on cash flow management in
this current environment and have taken actions to reduce cash
operating expenses without impacting the future commercial
trajectory of the business or our ability to service our
customers."
Fiscal Third Quarter Results
Gross orders totaled $106.0
million compared to $83.6
million for the same prior fiscal year period. Backlog as of
March 31, 2020 was $569.9 million, an increase of 15 percent
compared the same prior fiscal year period.
Total net revenue was $99.5
million compared to $103.2
million for the same prior fiscal year period. Product
revenue totaled $45.5 million
compared to $46.5 million in the same
prior fiscal year period, while service revenue totaled
$54.0 million compared to
$56.8 million in the same prior
fiscal year period.
Total gross profit for the fiscal 2020 third quarter was
$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 39.3 percent of service
revenue. This compares to total gross profit of $40.5 million, or 39.2 percent of net revenue,
comprised of product gross margin of 41.5 percent of product
revenue and service gross margin of 37.3 percent of service revenue
for the prior fiscal year third quarter.
Operating expenses were $31.2
million, a decrease of 17 percent compared to $37.6 million in the prior fiscal year third
quarter.
Net income was $2.6 million, or
$0.03 per share, compared to a net
loss of $1.2 million, or $(0.01) per share, for the same prior fiscal year
period.
Adjusted EBITDA for the third quarter of fiscal 2020 was
$11.3 million, compared to
$6.7 million in the same prior fiscal
year period.
Cash, cash equivalents and short-term restricted cash were
$91.6 million as of March 31, 2020, compared to $99.1 million as of December 31, 2019.
Fiscal Nine Months Results
For the nine months ended March 31,
2020, gross product orders totaled $283.0 million compared to $245.2 million for the same prior fiscal year
period. Ending product backlog was $569.9
million, approximately 15 percent higher than backlog at the
end of the prior fiscal year third quarter.
Total net revenue for the nine months ended March 31, 2020 was $288.0
million, a decrease of 4 percent compared to $301.4 million in the same prior fiscal year
period. Product revenue for the nine months ended March 31, 2020 totaled $126.9 million compared to $136.0 million in the same prior fiscal year
period, while service revenue totaled $161.1
million, compared to $165.3
million in the same prior fiscal year period.
Total gross profit for the nine months ended March 31, 2020 was $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. This
compares to total gross profit of $116.7
million, or 38.7 percent of net revenue, comprised of
product gross margin of 40.6 percent of product revenue and service
gross margin of 37.2 percent of service revenue for the same prior
fiscal year period.
Operating expenses for the nine months ended March 31, 2020 were $102.7
million, a decrease of 14 percent compared to $119.4 million in the same prior fiscal year
period.
Net income was $4.0 million, or
$0.04 per share, for the nine months
ended March 31, 2020, compared to a
net loss of $15.0 million, or
$(0.17) 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 its 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 of
fiscal 2020.
Adjusted EBITDA for the nine months ended March 31, 2020 was $17.4
million, compared to $14.8
million in the same prior fiscal year period.
Withdrawal of 2020 Financial Guidance
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 withdraw its
previous full fiscal year 2020 financial guidance regarding revenue
and adjusted EBITDA. The company is carefully monitoring the
pandemic and the impact on its business; however, given the
uncertainty regarding the pandemic's spread, duration, and impact,
the company is currently unable to predict the extent to which the
COVID-19 pandemic will impact its future operations and financial
results.
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 fiscal quarter as
well as recent corporate developments. Conference call dial-in
information is as follows:
- U.S. callers: (877) 270-2148
- International callers: (412) 902-6510
- Conference ID Number (U.S. and international): 10142781
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 one hour after the call's
conclusion and available for seven days. The replay telephone
number is (877) 344-7529 (USA) or
(412) 317-0088 (International), Conference ID: 10142781. An
archived webcast will also be available at Accuray's website until
Accuray announces its results for the fourth 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 and a non-cash reversal of
deferred rent related to a lease termination. 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/(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 Accuray'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; expectations regarding the effect of the
COVID-19 pandemic on the Company; the Company's ability to reduce
cash operating expenses; expectations related to the Company's
market opportunity in China as
well as timing of recognition of revenue from China; 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, risks related to the effect of the
COVID-19 pandemic, or the perception of its effects, on the
Company's operations and the operations of its customers and
suppliers; 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; 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 February 4, 2020 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.
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
|
Financial Tables to Follow
Accuray
Incorporated
|
Consolidated
Statements of Operations
|
(in thousands, except
per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Gross
Orders
|
|
$
|
105,959
|
|
|
$
|
83,571
|
|
|
$
|
283,002
|
|
|
$
|
245,154
|
|
Net Orders
|
|
|
76,652
|
|
|
|
59,786
|
|
|
|
205,537
|
|
|
|
153,899
|
|
Order
Backlog
|
|
|
569,901
|
|
|
|
493,870
|
|
|
|
569,901
|
|
|
|
493,870
|
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
45,527
|
|
|
$
|
46,451
|
|
|
$
|
126,892
|
|
|
$
|
136,019
|
|
Services
|
|
|
54,021
|
|
|
|
56,770
|
|
|
|
161,059
|
|
|
|
165,349
|
|
Total net
revenue
|
|
|
99,548
|
|
|
|
103,221
|
|
|
|
287,951
|
|
|
|
301,368
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
products
|
|
|
27,573
|
|
|
|
27,169
|
|
|
|
73,661
|
|
|
|
80,755
|
|
Cost of
services
|
|
|
32,842
|
|
|
|
35,586
|
|
|
|
104,314
|
|
|
|
103,888
|
|
Total cost of
revenue
|
|
|
60,415
|
|
|
|
62,755
|
|
|
|
177,975
|
|
|
|
184,643
|
|
Gross
profit
|
|
|
39,133
|
|
|
|
40,466
|
|
|
|
109,976
|
|
|
|
116,725
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
11,164
|
|
|
|
12,913
|
|
|
|
37,569
|
|
|
|
40,442
|
|
Selling and
marketing
|
|
|
11,106
|
|
|
|
12,903
|
|
|
|
35,699
|
|
|
|
41,078
|
|
General and
administrative
|
|
|
8,894
|
|
|
|
11,769
|
|
|
|
29,396
|
|
|
|
37,880
|
|
Total operating
expenses
|
|
|
31,164
|
|
|
|
37,585
|
|
|
|
102,664
|
|
|
|
119,400
|
|
Income (loss) from
operations
|
|
|
7,969
|
|
|
|
2,881
|
|
|
|
7,312
|
|
|
|
(2,675)
|
|
Gain on equity
investment
|
|
|
222
|
|
|
|
-
|
|
|
|
222
|
|
|
|
-
|
|
Other expense,
net
|
|
|
(5,281)
|
|
|
|
(3,829)
|
|
|
|
(1,954)
|
|
|
|
(11,133)
|
|
Income/(loss) before
provision for income taxes
|
|
|
2,910
|
|
|
|
(948)
|
|
|
|
5,580
|
|
|
|
(13,808)
|
|
Provision for income
taxes
|
|
|
285
|
|
|
|
236
|
|
|
|
1,601
|
|
|
|
1,222
|
|
Net
income/(loss)
|
|
$
|
2,625
|
|
|
$
|
(1,184)
|
|
|
$
|
3,979
|
|
|
$
|
(15,030)
|
|
Net income/(loss) per
share - basic
|
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
$
|
0.04
|
|
|
$
|
(0.17)
|
|
Net income/(loss) per
share - diluted
|
|
$
|
0.03
|
|
|
$
|
(0.01)
|
|
|
$
|
0.04
|
|
|
$
|
(0.17)
|
|
Weighted average
common shares used in
computing income/(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
90,476
|
|
|
|
87,962
|
|
|
|
89,585
|
|
|
|
87,220
|
|
Diluted
|
|
|
90,855
|
|
|
|
87,962
|
|
|
|
90,429
|
|
|
|
87,220
|
|
Accuray
Incorporated
|
Condensed
Consolidated Balance Sheets
|
(in
thousands)
|
(Unaudited)
|
|
|
|
March
31,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
89,742
|
|
|
$
|
76,798
|
|
Restricted
cash
|
|
|
1,851
|
|
|
|
10,218
|
|
Accounts receivable,
net
|
|
|
102,685
|
|
|
|
111,885
|
|
Inventories
|
|
|
136,277
|
|
|
|
120,823
|
|
Prepaid expenses and
other current assets
|
|
|
21,267
|
|
|
|
24,205
|
|
Deferred cost of
revenue
|
|
|
190
|
|
|
|
146
|
|
Total current
assets
|
|
|
352,012
|
|
|
|
344,075
|
|
Property and
equipment, net
|
|
|
16,302
|
|
|
|
17,122
|
|
Investment in joint
venture
|
|
|
15,018
|
|
|
|
-
|
|
Goodwill
|
|
|
57,701
|
|
|
|
57,770
|
|
Intangible assets,
net
|
|
|
720
|
|
|
|
679
|
|
Operating lease
right-of-use assets
|
|
|
30,125
|
|
|
|
—
|
|
Other
assets
|
|
|
18,111
|
|
|
|
18,535
|
|
Total
assets
|
|
$
|
489,989
|
|
|
$
|
438,181
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
26,530
|
|
|
$
|
29,562
|
|
Accrued
compensation
|
|
|
19,419
|
|
|
|
31,150
|
|
Operating lease
liabilities, current
|
|
|
7,768
|
|
|
|
—
|
|
Other accrued
liabilities
|
|
|
25,739
|
|
|
|
32,742
|
|
Customer
advances
|
|
|
18,009
|
|
|
|
20,395
|
|
Deferred
revenue
|
|
|
82,943
|
|
|
|
78,332
|
|
Total current
liabilities
|
|
|
180,408
|
|
|
|
192,181
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term other
liabilities
|
|
|
6,597
|
|
|
|
9,646
|
|
Deferred
revenue
|
|
|
26,563
|
|
|
|
26,639
|
|
Operating lease
liabilities, non-current
|
|
|
25,881
|
|
|
|
—
|
|
Long-term
debt
|
|
|
190,663
|
|
|
|
159,844
|
|
Total
liabilities
|
|
|
430,112
|
|
|
|
388,310
|
|
Equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
91
|
|
|
|
89
|
|
Additional paid-in
capital
|
|
|
542,126
|
|
|
|
535,332
|
|
Accumulated other
comprehensive loss
|
|
|
(779)
|
|
|
|
(10)
|
|
Accumulated
deficit
|
|
|
(481,561)
|
|
|
|
(485,540)
|
|
Total
equity
|
|
|
59,877
|
|
|
|
49,871
|
|
Total liabilities and
equity
|
|
$
|
489,989
|
|
|
$
|
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
March
31,
|
|
|
Nine Months
Ended
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
GAAP net
income/(loss)
|
|
$
|
2,625
|
|
|
$
|
(1,184)
|
|
|
$
|
3,979
|
|
|
$
|
(15,030)
|
|
Depreciation and
amortization
|
|
|
1,869
|
|
|
|
1,914
|
|
|
|
5,566
|
|
|
|
6,088
|
|
Stock-based
compensation
|
|
|
2,016
|
|
|
|
2,880
|
|
|
|
5,865
|
|
|
|
7,779
|
|
Interest expense,
net
|
|
|
4,513
|
|
|
|
3,857
|
|
|
|
13,396
|
|
|
|
11,042
|
|
Gain on contribution
to equity method investment in joint venture (a)
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,965)
|
|
|
|
—
|
|
Impairment charge
(b)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,707
|
|
Cost savings
initiative (c)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
998
|
|
Gain on lease
termination (d)
|
|
|
—
|
|
|
|
(1,007)
|
|
|
|
—
|
|
|
|
(1,007)
|
|
Provision for income
taxes
|
|
|
285
|
|
|
|
236
|
|
|
|
1,601
|
|
|
|
1,222
|
|
Adjusted
EBITDA
|
|
$
|
11,308
|
|
|
$
|
6,696
|
|
|
$
|
17,442
|
|
|
$
|
14,799
|
|
(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.
|
(d)
|
consists of a
non-cash reversal of deferred rent related to a facility lease that
was terminated.
|
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SOURCE Accuray Incorporated