aray-8k_20210427.htm
false 0001138723 0001138723 2021-04-27 2021-04-27

 

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 27, 2021

 

 

ACCURAY INCORPORATED

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of incorporation)

 

001-33301

 

20-8370041

(Commission File Number)

 

(IRS Employer Identification No.)

 

1310 Chesapeake Terrace
Sunnyvale, California 94089

(Address of principal executive offices, including Zip Code)

 

Registrant’s telephone number, including area code: (408) 716-4600

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.001 per share

 

ARAY

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


 

 

Item 2.02. Results of Operations and Financial Condition.

 

On April 27, 2021, Accuray Incorporated (the “Company”) issued a press release announcing its financial results for the third fiscal quarter ended March 31, 2021. A copy of the Company’s press release dated April 27, 2021, titled “Accuray Reports Fiscal 2021 Third Quarter Financial Results” is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The foregoing information (including the exhibit hereto) is being furnished under “Item 2.02 Results of Operations and Financial Condition” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)  Exhibits.

 

 

Exhibit No.

 

Description

99.1

 

Press release dated April 27, 2021, titled “Accuray Reports Fiscal 2021 Third Quarter Financial Results”

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

ACCURAY INCORPORATED

 

 

 

Dated: April 27, 2021

By:

/s/ Shig Hamamatsu

 

 

Shig Hamamatsu

 

 

Senior Vice President & Chief Financial Officer

 

3

aray-ex991_6.htm

Exhibit 99.1

 

 

 

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

 

Accuray Reports Third Quarter Fiscal 2021 Financial Results

 

SUNNYVALE, Calif., April 27, 2021 — Accuray Incorporated (NASDAQ: ARAY) today reported its financial results for the third quarter of fiscal 2021 ended March 31, 2021.

 

Third Quarter Fiscal 2021 Summary

 

 

Net revenue of $102.6 million including $24.9 million of system revenue in China

 

Gross orders of $87.4 million, ending backlog of $610.8 million, an increase of 7 percent from March 31, 2020

 

GAAP operating income of $4.4 million and GAAP net loss of $0.4 million compared to GAAP operating income of $8.0 million and GAAP net income of $2.6 million in the prior year third quarter

 

Received 510(k) FDA clearance for ClearRT™ Helical kVCT Imaging for the Radixact® System

 

“Our second quarter performance continues to reflect the positive momentum our business is making despite the headwinds created by the COVID-19 environment, said Josh Levine, President and CEO of Accuray. “Highlights from our second quarter performance include the beginning of system revenue conversion related to the Type A radiotherapy licenses in China as well as receiving 510(k) FDA clearance of our ClearRT Helical kVCT Imaging platform for the Radixact System. We are pleased with the continued resilience and commercial cadence that our business is exhibiting as well as the recent product innovation/upgrades coming through our development pipeline. We believe the additions of the Cyberknife S7 System, Synchrony on Radixact, and ClearRT Helical kVCT Imaging to our portfolio will have meaningful clinical impact for our customers and we look forward to the adoption of these important features and the functional improvement they represent in clinical practice.”

 

Fiscal Third Quarter Results

Gross orders totaled $87.4 million compared to $106.0 million for the prior fiscal year period. Backlog as of March 31, 2020 was $610.8 million, an increase of 7 percent compared to $569.9 million for the prior fiscal year period.

Total net revenue was $102.6 million compared to $99.5 million in the same prior fiscal year period. Product revenue totaled $47.4 million compared to $45.5 million in the same prior fiscal year period, while service revenue totaled $55.1 million compared to $54.0 million in the same prior fiscal year period.

Total gross profit for the fiscal 2021 third quarter was $39.5 million, or 38.5 percent of net revenue, comprised of product gross margin of 41.6 percent of product revenue and service gross margin of 35.9 percent of service revenue. This compares to total gross profit of $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 39.2 percent of service revenue in the prior fiscal year second quarter.

Operating expenses were $35.1 million, an increase of 13 percent compared to $31.2 million in the prior fiscal year third quarter.

 

Net loss was $0.4 million, or $0 per share, compared to a net income of $2.6 million, or $0.3 per share, in the same prior fiscal year period. 


Adjusted EBITDA for the third fiscal quarter 2021 was $8.8 million compared to $11.3 million in the same prior fiscal year period.

Cash, cash equivalents and short-term restricted cash were $130.1 million as of December 31, 2020 compared with $116.0 million as of December 31, 2020.

Fiscal Nine Months Results


 

For the nine months ended March 31, 2021, gross product orders totaled $213.3 million compared to $283.0 million in the same prior fiscal year period. Ending product backlog was $610.8 million, approximately 7 percent higher than backlog at the end of the prior fiscal year third quarter.

 

Total net revenue for the nine months ended March 31, 2021 was $285.4 million compared to $288.0 million in the same prior fiscal year period. Product revenue for the nine months ended March 31, 2021 totaled $120.5 million compared to $126.9 million, while service revenue totaled $164.9 million compared to $161.1 million in the same prior fiscal year period.

 

Total gross profit for the nine months ended March 31, 2021 was $115.8 million, or 40.6 percent of net revenue, comprised of product gross margin of 42.6 percent of product revenue and service gross margin of 39.1 percent of service revenue. This compares to total gross profit of $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 in the same prior fiscal year period.

 

Operating expenses for the nine months ended March 31, 2021 were $97.7 million, a decrease of 5 percent compared with $102.7 million in the same prior fiscal year period.

 

Net income was $4.8 million, or $0.05 per share, for the nine months ended March 31, 2021, compared to net income of $4.0 million, or $0.04 per share, in the same prior fiscal year period. The prior year nine months period ended March 31, 2020 included a non-cash, special gain of $13.0 million related to the value of the Company’s capital contribution to the Company’s China joint venture. The gain was recorded as non-operating, other income in the prior fiscal year second quarter.

 

Adjusted EBITDA for the nine months ended March 31, 2021 was $22.9 million, compared to $17.4 million in the prior fiscal year period, which excludes the non-cash, special gain related to the Company’s capital contribution to the China joint venture recorded in the prior fiscal year second quarter.

 

 

Financial Guidance

The impact of the COVID-19 pandemic on Accuray’s fiscal 2021 results remains uncertain. 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 refrain from providing financial guidance for fiscal year 2021.

 

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 quarter of fiscal 2021 as well as recent corporate developments. Conference call dial-in information is as follows:

 

U.S. callers: (833) 316-0563

 

International callers: (412) 317-5747


Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Investor Relations section of 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 will be available for seven days. The replay number is (877) 344-7529 (USA), or (412) 317-0088 (International), Conference ID: 10154473.An archived webcast will also be available at Accuray’s website until Accuray announces its results for the fourth quarter of fiscal 2021.


 

Use of Non-GAAP Financial Measures

 

Accuray has supplemented its GAAP net income (loss) with a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization, gain on contribution to equity method investment in joint venture 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 income (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedules below.

 

There are limitations in using 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 expectations regarding gross orders, order volume and age-outs; expectations regarding the effect of the COVID-19 pandemic on the Company; the Company’s ability to adapt and make the necessary adjustments to compete and operate effectively; the Company’s continued resilience and ability to continue to realize the benefits of working capital management and cash preservation activities; expectations regarding future sales in China; expectations regarding the Company’s Chinese joint venture, including the timing of and ability to drive revenue conversion and introduce a Type B product to the market in China as well as the operating impact of the joint venture on the Company’s income statement; expectations regarding the Company’s product innovations and developments, including expectations related to future regulatory approvals; expectations regarding the Company’s product portfolio, the clinical impact and value of those products on our customers, and market adoption of such products, including with respect to the Company’s Synchrony on Radixact, CyberKnife S7 System and Clear RT Helical kVCT Imaging upgrades as well as other strategic product innovations; expectations regarding the commercial launch of Clear RT Helical kVCT Imaging; expectations regarding the new Centers for Medicare and Medicaid Services alternative payment model and reimbursement schedule; expectations regarding the future of radiotherapy treatment; 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 effect of the COVID-19 pandemic on the operations of the Company and those of its customers and suppliers; 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 integrate and execute the joint venture, the Company’s ability to realize the expected benefits of the joint venture; the ability of customers in China to obtain Class A or B user licenses to purchase radiotherapy systems; risks inherent in international operations; 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; 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 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.

 

 

###

 

Financial Tables to Follow

 

 


 

 Accuray Incorporated

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Gross Orders

 

$

87,365

 

 

$

105,959

 

 

$

213,258

 

 

$

283,002

 

Net Orders

 

 

62,826

 

 

 

76,652

 

 

 

128,843

 

 

 

205,537

 

Order Backlog

 

 

610,795

 

 

 

569,901

 

 

 

610,795

 

 

 

569,901

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

47,439

 

 

$

45,527

 

 

$

120,502

 

 

$

126,892

 

Services

 

 

55,123

 

 

 

54,021

 

 

 

164,851

 

 

 

161,059

 

Total net revenue

 

 

102,562

 

 

 

99,548

 

 

 

285,353

 

 

 

287,951

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products

 

 

27,709

 

 

 

27,573

 

 

 

69,237

 

 

 

73,661

 

Cost of services

 

 

35,311

 

 

 

32,842

 

 

 

100,340

 

 

 

104,314

 

Total cost of revenue

 

 

63,020

 

 

 

60,415

 

 

 

169,577

 

 

 

177,975

 

Gross profit

 

 

39,542

 

 

 

39,133

 

 

 

115,776

 

 

 

109,976

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

13,268

 

 

 

11,164

 

 

 

37,372

 

 

 

37,569

 

Selling and marketing

 

 

10,567

 

 

 

11,106

 

 

 

29,813

 

 

 

35,699

 

General and administrative

 

 

11,281

 

 

 

8,894

 

 

 

30,498

 

 

 

29,396

 

Total operating expenses

 

 

35,116

 

 

 

31,164

 

 

 

97,683

 

 

 

102,664

 

Income from operations

 

 

4,426

 

 

 

7,969

 

 

 

18,093

 

 

 

7,312

 

Income (loss) on equity investment, net

 

 

(68

)

 

 

222

 

 

 

1,021

 

 

 

222

 

Other income (expense), net

 

 

(4,027

)

 

 

(5,281

)

 

 

(12,981

)

 

 

(1,954

)

Income before provision for income taxes

 

 

331

 

 

 

2,910

 

 

 

6,133

 

 

 

5,580

 

Provision for income taxes

 

 

721

 

 

 

285

 

 

 

1,352

 

 

 

1,601

 

Net income (loss)

 

$

(390

)

 

$

2,625

 

 

$

4,781

 

 

$

3,979

 

Net income (loss) per share - basic

 

$

(0.00

)

 

$

0.03

 

 

$

0.05

 

 

$

0.04

 

Net income (loss) per share - diluted

 

$

(0.00

)

 

$

0.03

 

 

$

0.05

 

 

$

0.04

 

Weighted average common shares used in

   computing income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

93,123

 

 

 

90,476

 

 

 

92,106

 

 

 

89,585

 

Diluted

 

 

93,123

 

 

 

90,855

 

 

 

93,422

 

 

 

90,429

 

 

 

 

 


 

Accuray Incorporated

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

 

 

March 31,

 

 

June 30,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

126,335

 

 

$

107,577

 

Restricted cash

 

 

3,811

 

 

 

997

 

Accounts receivable, net

 

 

69,914

 

 

 

90,599

 

Inventories

 

 

136,854

 

 

 

134,374

 

Prepaid expenses and other current assets

 

 

21,030

 

 

 

21,227

 

Deferred cost of revenue

 

 

1,440

 

 

 

2,712

 

Total current assets

 

 

359,384

 

 

 

357,486

 

Property and equipment, net

 

 

12,327

 

 

 

15,349

 

Investment in joint venture

 

 

16,579

 

 

 

13,929

 

Goodwill

 

 

57,909

 

 

 

57,717

 

Intangible assets, net

 

 

492

 

 

 

663

 

Operating lease right-of-use assets

 

 

24,066

 

 

 

28,647

 

Other assets

 

 

16,069

 

 

 

17,136

 

Total assets

 

$

486,826

 

 

$

490,927

 

Liabilities and equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

17,869

 

 

$

23,126

 

Accrued compensation

 

 

21,217

 

 

 

17,963

 

Operating lease liabilities, current

 

 

8,455

 

 

 

8,224

 

Other accrued liabilities

 

 

22,745

 

 

 

27,180

 

Customer advances

 

 

23,231

 

 

 

22,571

 

Deferred revenue

 

 

80,677

 

 

 

83,207

 

Short-term debt

 

 

18,942

 

 

 

 

Total current liabilities

 

 

193,136

 

 

 

182,271

 

Long-term other liabilities

 

 

8,950

 

 

 

7,416

 

Deferred revenue

 

 

23,212

 

 

 

24,125

 

Operating lease liabilities, non-current

 

 

18,888

 

 

 

24,173

 

Long-term debt

 

 

164,090

 

 

 

189,307

 

Total liabilities

 

 

408,276

 

 

 

427,292

 

Equity:

 

 

 

 

 

 

 

 

Common stock

 

 

93

 

 

 

91

 

Additional paid-in capital

 

 

554,673

 

 

 

545,741

 

Accumulated other comprehensive income (loss)

 

 

716

 

 

 

(484

)

Accumulated deficit

 

 

(476,932

)

 

 

(481,713

)

Total equity

 

 

78,550

 

 

 

63,635

 

Total liabilities and equity

 

$

486,826

 

 

$

490,927

 

 

 

 


 

Accuray Incorporated

Reconciliation of GAAP Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation,

Amortization and Stock-Based Compensation (Adjusted EBITDA)

(in thousands)

(Unaudited)

 

 

 

 

March Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

GAAP net income

 

$

(390

)

 

$

2,625

 

 

$

4,781

 

 

$

3,979

 

Depreciation and amortization

 

 

1,663

 

 

 

1,869

 

 

 

3,313

 

 

 

5,566

 

Stock-based compensation

 

 

2,364

 

 

 

2,016

 

 

 

4,608

 

 

 

5,865

 

Interest expense, net

 

 

4,430

 

 

 

4,513

 

 

 

8,823

 

 

 

13,396

 

Gain on contribution to equity method investment in joint venture (a)

 

 

 

 

 

 

 

 

 

 

 

(12,965

)

Provision for income taxes

 

 

721

 

 

 

285

 

 

 

1,352

 

 

 

1,601

 

Adjusted EBITDA

 

$

8,788

 

 

$

11,308

 

 

$

22,877

 

 

$

17,442

 

 

_____________________________________________________________________

(a) Consists of non-cash gain related to the value of the Company’s capital contribution to the China joint venture.