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): August 15, 2019
ACCURAY INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
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001-33301 |
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20-8370041 |
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(Commission File Number) |
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(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:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, par value $0.001 per share |
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ARAY |
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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 August 15, 2019, Accuray Incorporated (the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended June 30, 2019. A copy of the Company’s press release dated August 15, 2019, titled “Accuray Reports Fourth Quarter and Fiscal 2019 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.
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Exhibit No. |
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Description |
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99.1 |
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2
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.
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ACCURAY INCORPORATED |
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Dated: August 15, 2019 |
By: |
/s/ Shig Hamamatsu |
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Shig Hamamatsu |
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Senior Vice President & Chief Financial Officer |
3
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Michael Polyviou |
Beth Kaplan |
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Investor Relations, EVC Group |
Public Relations Director, Accuray |
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+1 (732) 933-2755 |
+1 (408) 789-4426 |
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mpolyviou@evcgroup.com |
bkaplan@accuray.com |
Accuray Reports Fourth Quarter and Fiscal 2019 Financial Results
SUNNYVALE, Calif., August 15, 2019 — Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and fiscal year ended June 30, 2019.
Q4 Fiscal 2019 and Recent Operating Highlights
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• |
Revenue increased 3 percent to $117.4 million, the highest ever quarterly revenue reported; Gross orders increased to $97.2 million |
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• |
$3.3 million of operating profit, which grew 5 percent |
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• |
Signed first multi-system order bundling Accuray and RaySearch Laboratories product and software offerings |
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Signed first upgrade order for Synchrony motion tracking and correction technology for Radixact |
Fiscal Year 2019 Highlights
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Gross orders increased 12 percent year-over-year to $342.3 million |
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Revenue increased 3 percent over the prior fiscal year to $418.8 million |
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Recorded first full year of operating profit since 2011 |
“From all perspectives, fiscal 2019 was a very successful year,” said Joshua H. Levine, president and chief executive officer. “We generated 12 percent gross order growth for the year while our efforts to increase efficiencies led to the Company’s first operating profit since 2011. Additionally, we set a new quarterly revenue record during the fourth quarter. From a strategic growth perspective, we advanced our opportunities in China which is the world’s fastest growing radiotherapy market. It should be noted that our progress during fiscal 2019 came without significant revenue contribution from the China market as the process for awarding and issuing Class A and B user licenses for radiotherapy systems is still in an early phase.”
Q4 Fiscal 2019 Financial Highlights
Gross product orders totaled $97.2 million for the fourth quarter of fiscal 2019 compared to $96.4 million for the prior fiscal year fourth quarter. Ending order backlog was $495.6 million, approximately 4 percent higher than at the end of the prior fiscal year.
Total revenue was $117.4 million, an increase of 3 percent compared to $113.8 million in the prior fiscal year fourth quarter. Product revenue totaled $60.6 million compared to $54.6 million in the prior fiscal year fourth quarter, while service revenue totaled $56.8 million compared to $59.2 million in the prior fiscal year fourth quarter.
Total gross profit for the fourth quarter of fiscal 2019 was $45.9 million or approximately 39.1 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.4 percent. This compares to total gross profit of $48.0 million or 42.2 percent of sales, comprised of product gross margin of 47.4 percent and service gross margin of 37.4 percent for the prior fiscal year fourth quarter.
Net loss was $1.4 million, or $0.02 per share, for the fourth quarter of fiscal 2019, compared to a net loss of $0.9 million, or $0.01 per share, for the fourth quarter of fiscal 2018.
Adjusted EBITDA for the fourth quarter of fiscal 2019 was $8.9 million, compared to $7.8 million in the prior fiscal year fourth quarter.
Cash, cash equivalents, investments and short-term restricted cash were $87.0 million as of June 30, 2019, an increase of $22.4 million from March 31, 2019.
Fiscal Year 2019 Highlights
For the fiscal year ended June 30, 2019, gross product orders totaled $342.3 million, representing growth of 12 percent compared to the prior fiscal year period.
Total revenue was $418.8 million compared to $404.9 million in the prior fiscal year period. Product revenue totaled $196.7 million compared to $183.9 million in the prior fiscal year period, while service revenue totaled $222.1 million compared to $221.0 million from the prior fiscal year period.
Total gross profit for the year ended June 30, 2019 was $162.7 million or 38.8 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.2 percent. This compares to total gross profit of $161.7 million or 39.9 percent of sales, comprised of product gross margin of 44.0 percent and service gross margin of 36.6 percent for the same prior fiscal year period.
Operating expenses were $162.1 million, a decrease of 2 percent compared to $165.5 million in the prior fiscal year period.
Net loss was $16.4 million, or $0.19 per share, for the fiscal year ended June 30, 2019, compared to a net loss of $23.9 million, or $0.28 per share, for the prior fiscal year period.
Adjusted EBITDA for the fiscal year ended June 30, 2019 was $23.7 million, compared to $17.1 million in the prior fiscal year period.
2020 Financial Guidance
The Company is introducing guidance for fiscal year 2020 as follows:
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Total revenue is expected to range between $410.0 million to $420.0 million due to the expected delay in timing of Class A system revenue with total revenue during the first half of the year expected to be slightly below fiscal 2019 levels. The total revenue range includes the impact of 25% Chinese tariffs currently in place |
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Adjusted EBITDA is expected to range between $19.0 million to $24.0 million, including a loss of approximately $2 million from our China joint venture equity interest |
Guidance for non-GAAP financial measures excludes depreciation and amortization, 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 results for the fourth quarter and fiscal 2019 as well as recent corporate developments. Conference call dial-in information is as follows:
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U.S. callers: (855) 867-4103 |
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International callers: (262) 912-4764 |
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Conference ID Number (U.S. and international): 3297842 |
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: 3297842. An archived webcast will also be available at Accuray’s website until Accuray announces its results for the first 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”). 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 future sales in China and the impact of tariffs in China; expectations regarding our Chinese joint venture; expectations regarding the company’s product portfolio; 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 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 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 May 9, 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
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
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Three Months Ended June 30, |
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Twelve Months Ended June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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Gross Orders |
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$ |
97,166 |
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$ |
96,442 |
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$ |
342,321 |
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$ |
304,903 |
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Net Orders |
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64,364 |
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64,967 |
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218,263 |
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209,534 |
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Order Backlog |
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495,627 |
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478,482 |
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495,627 |
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478,482 |
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Net revenue: |
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Products |
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$ |
60,646 |
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$ |
54,632 |
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$ |
196,665 |
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$ |
183,898 |
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Services |
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56,771 |
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59,154 |
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222,120 |
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220,999 |
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Total net revenue |
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117,417 |
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113,786 |
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418,785 |
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404,897 |
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Cost of revenue: |
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Cost of products |
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35,956 |
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28,747 |
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116,711 |
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103,038 |
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Cost of services |
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35,535 |
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37,054 |
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139,423 |
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140,164 |
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Total cost of revenue |
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71,491 |
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65,801 |
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256,134 |
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243,202 |
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Gross profit |
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45,926 |
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47,985 |
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162,651 |
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161,695 |
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Operating expenses: |
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Research and development |
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16,051 |
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14,588 |
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56,493 |
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57,251 |
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Selling and marketing |
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14,920 |
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16,864 |
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55,998 |
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60,105 |
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General and administrative |
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11,697 |
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13,440 |
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49,577 |
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48,136 |
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Total operating expenses |
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42,668 |
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44,892 |
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162,068 |
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165,492 |
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Income (loss) from operations |
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3,258 |
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3,093 |
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583 |
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(3,797 |
) |
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Other expense, net |
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(3,794 |
) |
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(4,450 |
) |
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(14,927 |
) |
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(19,224 |
) |
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Loss before provision for income taxes |
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(536 |
) |
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(1,357 |
) |
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(14,344 |
) |
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(23,021 |
) |
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Provision for (benefit from) income taxes |
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864 |
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(411 |
) |
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2,086 |
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|
878 |
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Net loss |
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$ |
(1,400 |
) |
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$ |
(946 |
) |
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$ |
(16,430 |
) |
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$ |
(23,899 |
) |
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Net loss per share - basic and diluted |
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$ |
(0.02 |
) |
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$ |
(0.01 |
) |
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$ |
(0.19 |
) |
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$ |
(0.28 |
) |
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Weighted average common shares used in computing loss per share: |
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Basic and diluted |
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88,202 |
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85,677 |
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87,465 |
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84,893 |
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Consolidated Balance Sheets
(in thousands)
(Unaudited)
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June 30, |
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June 30, |
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2019 |
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2018 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
76,798 |
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$ |
83,083 |
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Restricted cash |
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10,218 |
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9,830 |
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Accounts receivable, net |
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111,885 |
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65,994 |
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Inventories |
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120,823 |
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108,540 |
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Prepaid expenses and other current assets |
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24,205 |
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15,569 |
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Deferred cost of revenue |
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146 |
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1,141 |
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Total current assets |
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344,075 |
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284,157 |
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Property and equipment, net |
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17,122 |
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23,698 |
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Goodwill |
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57,770 |
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57,855 |
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Intangible assets, net |
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|
679 |
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|
821 |
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Other assets |
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18,535 |
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|
12,196 |
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Total assets |
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$ |
438,181 |
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$ |
378,727 |
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Liabilities and equity |
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Current liabilities: |
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Accounts payable |
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$ |
29,562 |
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$ |
19,694 |
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Accrued compensation |
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31,150 |
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|
28,992 |
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Other accrued liabilities |
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32,742 |
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22,448 |
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Customer advances |
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20,395 |
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22,896 |
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Deferred revenue |
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78,332 |
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|
75,404 |
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Total current liabilities |
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192,181 |
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|
169,434 |
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Long-term liabilities: |
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Long-term other liabilities |
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|
9,646 |
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|
8,608 |
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Deferred revenue |
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26,639 |
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|
20,976 |
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Long-term debt |
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159,844 |
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|
131,077 |
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Total liabilities |
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388,310 |
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|
|
330,095 |
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Equity: |
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|
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Common stock |
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|
89 |
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|
|
86 |
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Additional paid-in capital |
|
|
535,332 |
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|
521,738 |
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Accumulated other comprehensive income (loss) |
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|
(10 |
) |
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|
1,093 |
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Accumulated deficit |
|
|
(485,540 |
) |
|
|
(474,285 |
) |
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Total equity |
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|
49,871 |
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|
|
48,632 |
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Total liabilities and equity |
|
$ |
438,181 |
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$ |
378,727 |
|
Reconciliation of GAAP Net Loss to Adjusted Earnings Before Interest, Taxes, Depreciation,
Amortization and Stock-Based Compensation (Adjusted EBITDA)
(in thousands)
(Unaudited)
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Three Months Ended June 30, |
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Twelve Months Ended June 30, |
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2019 |
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2018 |
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2019 |
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2018 |
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||||
|
GAAP net loss |
|
$ |
(1,400 |
) |
|
$ |
(946 |
) |
|
$ |
(16,430 |
) |
|
$ |
(23,899 |
) |
|
Amortization of intangibles |
|
|
36 |
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|
|
36 |
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|
|
144 |
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|
|
143 |
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Depreciation (a) |
|
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2,142 |
|
|
|
2,309 |
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|
|
8,122 |
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|
|
9,589 |
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|
Stock-based compensation |
|
|
2,822 |
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|
|
3,215 |
|
|
|
10,601 |
|
|
|
12,289 |
|
|
Interest expense, net (b) |
|
|
3,973 |
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|
|
3,627 |
|
|
|
15,015 |
|
|
|
18,087 |
|
|
Impairment charge (c) |
|
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- |
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- |
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|
|
3,707 |
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|
|
- |
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Cost savings initiative (d) |
|
|
511 |
|
|
|
- |
|
|
|
1,509 |
|
|
|
- |
|
|
Gain on lease termination (e) |
|
|
- |
|
|
|
- |
|
|
|
(1,007 |
) |
|
|
- |
|
|
Provision for (benefit from) income taxes |
|
|
864 |
|
|
|
(411 |
) |
|
|
2,086 |
|
|
|
878 |
|
|
Adjusted EBITDA |
|
$ |
8,948 |
|
|
$ |
7,830 |
|
|
$ |
23,747 |
|
|
$ |
17,087 |
|
(a) consists of depreciation, primarily on property and equipment.
(b) consists primarily of interest expense associated with our outstanding debt and non-cash loss on extinguishment of debt.
(c) consists of a one-time accounts receivable impairment charge related to one customer in the first quarter of 2019.
(d) consists of costs associated with a staff reduction.
(e) consists of a non-cash reversal of deferred rent related to a facility lease that was terminated.
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, 2020 |
|
|||||
|
|
|
From |
|
|
To |
|
||
|
GAAP net loss |
|
$ |
(17,500 |
) |
|
$ |
(13,500 |
) |
|
Depreciation and amortization (a) |
|
|
7,200 |
|
|
|
8,000 |
|
|
Stock-based compensation |
|
|
12,100 |
|
|
|
12,100 |
|
|
Interest expense, net (b) |
|
|
15,400 |
|
|
|
15,400 |
|
|
Provision for income taxes |
|
|
1,800 |
|
|
|
2,000 |
|
|
Adjusted EBITDA |
|
$ |
19,000 |
|
|
$ |
24,000 |
|
(a) consists of depreciation, primarily on property and equipment as well as amortization of intangibles.
(b) consists primarily of interest expense associated with outstanding debt.