SUNNYVALE, Calif., April 23, 2019 /PRNewswire/ -- Accuray
Incorporated (NASDAQ: ARAY) today reported its financial results
for the third quarter of fiscal 2019 ended March 31, 2019.
Fiscal Third Quarter Highlights
- Gross orders increased 12 percent year over year to
$83.6 million
- Ending backlog increased 5 percent year over year to
$493.9 million
- Revenue increased 3 percent year over year to $103.2 million
- Operating expense decreased 6 percent year over year to
$37.6 million
- China joint venture granted
business license
"We continued to execute our commercial plan during the third
quarter and generated a 12 percent increase in gross order growth,"
said Joshua H. Levine, President
& Chief Executive Officer. "This was our fourth consecutive
quarter of double-digit gross order growth, which was driven by
continued momentum in China as
well as competitive system replacements. In addition, we
substantially completed the $15
million cost savings initiative announced in our fiscal
second quarter and expect to realize the full benefit from this
effort in fiscal 2020.
"During our third quarter, we made progress in operationalizing
our China joint venture agreement
signed in late January as well as executing our product development
roadmap. The roadmap is focused on increasing the speed and utility
of our devices while extending our historical strength in the
precision of our treatments. Our VOLO Optimizer software, which
reduces CyberKnife treatment times by up to 50%, has already been
deployed on approximately 30% of our compatible CyberKnife
installed base. Additionally, our Synchrony motion synchronization
capability software for Radixact will be launched at ESTRO next
week. Combined, we believe our strategies are positioning Accuray
for consistent long-term growth."
Fiscal Third Quarter Results
Total revenue was $103.2 million
compared to $99.8 million in the
prior fiscal year third quarter. Product revenue totaled
$46.5 million compared to
$43.2 million in the prior fiscal
year third quarter, while service revenue totaled $56.8 million compared to $56.6 million in the prior fiscal year third
quarter.
Total gross profit for the 2019 fiscal third quarter was
$40.5 million, or 39.2 percent of
revenue, comprised of product gross margin of 41.5 percent and
service gross margin of 37.3 percent. This compares to total
gross profit of $36.2 million, or
36.3 percent of revenue, comprised of product gross margin of 41.4
percent and service gross margin of 32.4 percent for the prior
fiscal year third quarter. The increase in service gross margin was
primarily driven by higher parts consumption in the prior year
period.
Total operating expenses were $37.6
million, a decrease of 6 percent compared with $40.1 million in the prior fiscal year third
quarter. The decrease was primarily driven by lower headcount
costs, and a $0.8 million non-cash
benefit related to a facility lease termination.
Net loss was $1.2 million, or
$0.01 per share, for the 2019 fiscal
third quarter, compared to a net loss of $8.9 million, or $0.10 per share, for the prior fiscal year third
quarter.
Adjusted EBITDA for the 2019 fiscal third quarter was
$6.7 million, compared to
$1.4 million in the prior fiscal year
third quarter.
Total cash, cash equivalents, and short-term restricted cash
were $64.6 million as of March 31, 2019 compared to $64.6 million as of December 31, 2018.
Fiscal Nine Month Results
For the nine months ended March 31,
2019, gross product orders totaled $245.2 million compared to $208.5 million for the same prior fiscal year
period. Ending product backlog was $493.8
million, approximately 5 percent higher than backlog at the
end of the prior fiscal year third quarter.
Total revenue for the nine months ended March 31, 2018 was $301.4
million compared to $291.1
million in the same prior fiscal year period. Product
revenue for the nine months ended March 31,
2019 totaled $136.0 million
compared to $129.3 million in the
same prior fiscal year period, while service revenue for the nine
months ended March 31, 2019 totaled
$165.3 million compared to
$161.8 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 nine months ended March 31, 2019 was $116.7
million, or 38.7 percent of revenue, comprised of product
gross margin of 40.6 percent and service gross margin of 37.2
percent. This compares to total gross profit of $113.7 million, or 39.1 percent of revenue,
comprised of product gross margin of 42.5 percent and service gross
margin of 36.3 percent for the same prior fiscal year period.
The decrease in product gross margin stemmed from changes in
product mix, with fewer CyberKnife systems sold in the first nine
months of fiscal 2019.
Total operating expenses for the nine months ended March 31, 2019 were $119.4
million, a decrease of 1 percent compared with $120.6 million in the same prior fiscal year
period.
Net loss was $15.0 million, or
$0.17 per share, for the nine months
ended March 31, 2019, compared to a
net loss of $23.0 million, or
$0.27 per share, for the same prior
fiscal year period.
Adjusted EBITDA for the nine months ended March 31, 2019 was $14.8
million, compared to $9.3
million in the prior fiscal year period.
2019 Financial Guidance
The company is updating 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.
- Adjusted EBITDA: $23.0 million to
$29.0 million, which would represent
growth of approximately 35 percent to 70 percent year over
year.
- Achievement of the higher end of the range for revenue and
adjusted EBITDA is dependent on the timing of Class A and Class B
user license issuances in China
and conversion of those orders to revenue.
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 third
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): 1788894
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: 1788894. 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, stock-based compensation, impairment charges,
expenses related to a cost savings initiative, and gain on lease
termination ("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 regarding the
grant of Class A and Class B user licenses in China; expectations regarding operationalizing
our joint venture in China;
expectations regarding our product development roadmap;
expectations regarding the impact of our recent cost savings
initiative; expectations regarding the deployment of the VOLO
Optimizer software and launch of the Synchrony motion
synchronization software; the company's ability to develop
consistent long-term growth; 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
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 operationalizing the
China joint venture and the
company's ability to take advantage of the China Class A and B user
license announcement; the company's limited long-term clinical data
supporting the safety and efficacy of its products, including new
product offerings; and such other risks identified under the
heading "Risk Factors" in the company's Quarterly Report on Form
10-Q, which was filed with the Securities and Exchange Commission
(the "SEC") on February 8, 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.
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
March 31,
|
|
|
Nine Months
Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Gross
Orders
|
|
$
|
83,571
|
|
|
$
|
74,906
|
|
|
$
|
245,154
|
|
|
$
|
208,461
|
|
Net Orders
|
|
|
59,786
|
|
|
|
40,880
|
|
|
|
153,899
|
|
|
|
144,567
|
|
Order
Backlog
|
|
|
493,870
|
|
|
|
468,147
|
|
|
|
493,870
|
|
|
|
468,147
|
|
Net
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
46,451
|
|
|
$
|
43,244
|
|
|
$
|
136,019
|
|
|
$
|
129,266
|
|
Services
|
|
|
56,770
|
|
|
|
56,588
|
|
|
|
165,349
|
|
|
|
161,845
|
|
Total net
revenue
|
|
|
103,221
|
|
|
|
99,832
|
|
|
|
301,368
|
|
|
|
291,111
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
products
|
|
|
27,169
|
|
|
|
25,332
|
|
|
|
80,755
|
|
|
|
74,291
|
|
Cost of
services
|
|
|
35,586
|
|
|
|
38,251
|
|
|
|
103,888
|
|
|
|
103,110
|
|
Total cost of
revenue
|
|
|
62,755
|
|
|
|
63,583
|
|
|
|
184,643
|
|
|
|
177,401
|
|
Gross
profit
|
|
|
40,466
|
|
|
|
36,249
|
|
|
|
116,725
|
|
|
|
113,710
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
12,913
|
|
|
|
13,906
|
|
|
|
40,442
|
|
|
|
42,663
|
|
Selling and
marketing
|
|
|
12,903
|
|
|
|
14,612
|
|
|
|
41,078
|
|
|
|
43,241
|
|
General and
administrative
|
|
|
11,769
|
|
|
|
11,552
|
|
|
|
37,880
|
|
|
|
34,696
|
|
Total operating
expenses
|
|
|
37,585
|
|
|
|
40,070
|
|
|
|
119,400
|
|
|
|
120,600
|
|
Income/(loss) from
operations
|
|
|
2,881
|
|
|
|
(3,821)
|
|
|
|
(2,675)
|
|
|
|
(6,890)
|
|
Other expense,
net
|
|
|
(3,829)
|
|
|
|
(4,465)
|
|
|
|
(11,133)
|
|
|
|
(14,774)
|
|
Loss before provision
for income taxes
|
|
|
(948)
|
|
|
|
(8,286)
|
|
|
|
(13,808)
|
|
|
|
(21,664)
|
|
Provision for income
taxes
|
|
|
236
|
|
|
|
566
|
|
|
|
1,222
|
|
|
|
1,289
|
|
Net loss
|
|
$
|
(1,184)
|
|
|
$
|
(8,852)
|
|
|
$
|
(15,030)
|
|
|
$
|
(22,953)
|
|
Net loss per share -
basic and diluted
|
|
$
|
(0.01)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.17)
|
|
|
$
|
(0.27)
|
|
Weighted average
common shares used in computing
loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
87,962
|
|
|
|
85,459
|
|
|
|
87,220
|
|
|
|
84,594
|
|
Accuray
Incorporated
|
Consolidated
Balance Sheets
|
(in
thousands)
|
(Unaudited)
|
|
|
|
March
31,
|
|
|
June
30,
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
62,509
|
|
|
$
|
83,083
|
|
Restricted
cash
|
|
|
2,103
|
|
|
|
9,830
|
|
Accounts receivable,
net
|
|
|
99,774
|
|
|
|
65,994
|
|
Inventories
|
|
|
124,433
|
|
|
|
108,540
|
|
Prepaid expenses and
other current assets
|
|
|
21,452
|
|
|
|
15,569
|
|
Deferred cost of
revenue
|
|
|
157
|
|
|
|
1,141
|
|
Total current
assets
|
|
|
310,428
|
|
|
|
284,157
|
|
Property and
equipment, net
|
|
|
20,265
|
|
|
|
23,698
|
|
Goodwill
|
|
|
57,813
|
|
|
|
57,855
|
|
Intangible assets,
net
|
|
|
714
|
|
|
|
821
|
|
Other
assets
|
|
|
16,914
|
|
|
|
12,196
|
|
Total
assets
|
|
$
|
406,134
|
|
|
$
|
378,727
|
|
Liabilities and
equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
25,392
|
|
|
$
|
19,694
|
|
Accrued
compensation
|
|
|
27,082
|
|
|
|
28,992
|
|
Other accrued
liabilities
|
|
|
26,945
|
|
|
|
22,448
|
|
Customer
advances
|
|
|
22,822
|
|
|
|
22,896
|
|
Deferred
revenue
|
|
|
78,833
|
|
|
|
75,404
|
|
Total current
liabilities
|
|
|
181,074
|
|
|
|
169,434
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term other
liabilities
|
|
|
8,168
|
|
|
|
8,608
|
|
Deferred
revenue
|
|
|
23,291
|
|
|
|
20,976
|
|
Long-term
debt
|
|
|
145,957
|
|
|
|
131,077
|
|
Total
liabilities
|
|
|
358,490
|
|
|
|
330,095
|
|
Equity:
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
88
|
|
|
|
86
|
|
Additional paid-in
capital
|
|
|
531,207
|
|
|
|
521,738
|
|
Accumulated other
comprehensive income
|
|
|
489
|
|
|
|
1,093
|
|
Accumulated
deficit
|
|
|
(484,140)
|
|
|
|
(474,285)
|
|
Total
equity
|
|
|
47,644
|
|
|
|
48,632
|
|
Total liabilities and
equity
|
|
$
|
406,134
|
|
|
$
|
378,727
|
|
Accuray
Incorporated
|
Reconciliation of
GAAP Net Loss to Adjusted EBITDA
|
(in
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
Nine Months
Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
GAAP net
loss
|
|
$
|
(1,184)
|
|
|
$
|
(8,852)
|
|
|
$
|
(15,030)
|
|
|
$
|
(22,953)
|
|
Amortization of
intangibles
|
|
|
36
|
|
|
|
36
|
|
|
|
108
|
|
|
|
107
|
|
Depreciation
(a)
|
|
|
1,878
|
|
|
|
2,344
|
|
|
|
5,980
|
|
|
|
7,280
|
|
Stock-based
compensation
|
|
|
2,880
|
|
|
|
3,204
|
|
|
|
7,779
|
|
|
|
9,074
|
|
Interest expense, net
(b)
|
|
|
3,857
|
|
|
|
4,062
|
|
|
|
11,042
|
|
|
|
14,460
|
|
Impairment charge
(c)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,707
|
|
|
|
-
|
|
Cost savings
initiative (d)
|
|
|
-
|
|
|
|
-
|
|
|
|
998
|
|
|
|
-
|
|
Gain on lease
termination (e)
|
|
|
(1,007)
|
|
|
|
-
|
|
|
|
(1,007)
|
|
|
|
-
|
|
Provision for income
taxes
|
|
|
236
|
|
|
|
566
|
|
|
|
1,222
|
|
|
|
1,289
|
|
Adjusted
EBITDA
|
|
$
|
6,696
|
|
|
$
|
1,360
|
|
|
$
|
14,799
|
|
|
$
|
9,257
|
|
|
|
|
|
|
|
|
(a) consists of
depreciation, primarily on property and equipment.
|
(b) consists
primarily of interest income, 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.
|
(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 EBITDA
|
(in
thousands)
|
(Unaudited)
|
|
|
|
Twelve Months
Ending
June 30, 2019
|
|
|
|
From
|
|
|
To
|
|
GAAP net
loss
|
|
$
|
(16,700)
|
|
|
$
|
(10,700)
|
|
Depreciation and
amortization (a)
|
|
|
8,400
|
|
|
|
8,400
|
|
Stock-based
compensation
|
|
|
11,000
|
|
|
|
11,000
|
|
Impairment charge
(b)
|
|
|
3,700
|
|
|
|
3,700
|
|
Cost savings
initiative (c)
|
|
|
1,500
|
|
|
|
1,500
|
|
Gain on lease
termination (d)
|
|
|
(1,000)
|
|
|
|
(1,000)
|
|
Interest expense, net
(e)
|
|
|
14,400
|
|
|
|
14,400
|
|
Provision for income
taxes
|
|
|
1,700
|
|
|
|
1,700
|
|
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 of a
non-cash reversal of deferred rent related to a facility lease that
was terminated.
|
(e) consists
primarily of interest expense associated with outstanding
debt.
|
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SOURCE Accuray Incorporated