Accuray Generates 10% Year-Over-Year Gross Order Growth in First Quarter

October 29, 2015 at 4:01 PM EDT
Commercial Momentum Continues; Management Reaffirms Fiscal 2016 Guidance

SUNNYVALE, Calif., Oct. 29, 2015 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) announced today financial results for the fiscal first quarter ended September 30, 2015.

Fiscal First Quarter Highlights

  • Gross orders were $64.9 million, representing 10 percent year-over-year growth or 18 percent on a constant currency basis
  • Total revenue was $89.6 million, an increase of 9 percent year-over-year or 12 percent on a constant currency basis
  • Gross profit margin expanded to 38 percent from 34 percent in the prior year period, driven by both improved product and service margins
  • Adjusted EBITDA was a positive $2.3 million compared to a negative $8.5 million in the prior year, representing a $10.8 million improvement
  • Cash and investments increased $9.2 million compared to a $19.2 million decrease in the prior year quarter
  • Single and dual vault sites comprised more than 50 percent of total TomoTherapy® System orders

"We executed on our commercial strategies during the first quarter, resulting in continued momentum in order activity and improvements in overall financial performance," said Joshua H. Levine, president and chief executive officer of Accuray. "Our team focused on positioning the TomoTherapy System as a mainstream device, which led to more than 50 percent of its orders during the quarter being placed by sites with single or dual vaults.  At the same time, we continued to see order momentum for the CyberKnife® M6™ with the InCise™ Multileaf Collimator as our first installation sites demonstrated its ability to provide extremely precise treatments in significantly reduced time for an expanded patient population." 

Financial Highlights

Gross product orders totaled $64.9 million for the 2016 fiscal first quarter, an increase of $6.1 million or 10 percent from the first quarter of the prior fiscal year. On a constant currency basis, gross product orders increased 18 percent from the prior fiscal year first quarter.  Ending product backlog was $379.8 million, approximately 4 percent higher than backlog at the end of the prior fiscal year first quarter. 

Total revenue was $89.6 million, an improvement of 9 percent from the prior fiscal year first quarter and an increase of 12 percent on a constant currency basis.  The Americas region total revenue was $45.3 million and total revenue outside of the Americas region was $44.3 million.  Product revenue increased 21 percent to $40.0 million while service revenue totaled $49.6 million, which was a slight increase compared to the prior year.

Total gross profit for the fiscal first quarter of 2016 was $33.9 million or 37.8 percent of sales, comprised of product gross margin of 42.5 percent and service gross margin of 34.1 percent.  This compares to total gross margin of 33.7 percent, product gross margin of 37.4 percent and service gross margin of 31.3 percent for the prior fiscal year first quarter.  On a constant currency basis, total gross margin for the first quarter of fiscal 2016 was 38.6 percent.

Operating expenses were $37.7 million, a decrease of 12 percent compared with $43.1 million in the prior fiscal first quarter. The decrease was primarily because of timing of tradeshow related expenses in sales and marketing, as well as reduced compensation related expenses in sales and marketing and general and administrative functions, offset by a slight increase in research and development to support ongoing product development efforts.

Net loss improved to $9.6 million, or $0.12 per share, for the first quarter of fiscal 2016, compared to a net loss of $21.7 million, or $0.28 per share, for the first quarter of fiscal 2015. 

Adjusted EBITDA for the first quarter of fiscal 2016 was a positive $2.3 million, compared to an $8.5 million loss in the first quarter of the prior fiscal year.

Cash, cash equivalents, and investments were $153.1 million as of September 30, 2015, an increase of $9.2 million from June 30, 2015.

2016 Financial Guidance

Accuray reaffirmed its financial guidance for fiscal 2016 on total revenue of $395 million to $410 million and adjusted EBITDA of $25 million to $35 million.

This financial guidance is unchanged from that provided on August 20, 2015.

Conference Call Information  

Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m. ET today to discuss these results.  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): 55674990

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 dial-up replay of the conference call will be available beginning October 29, 2015 at 5:00 p.m. PT/8:00 p.m. ET and ending November 6, 2015.  The replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International), Conference ID: 55674990.

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 more 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.

Accuray presents certain measures, such as period-over-period revenue growth, on a constant currency basis, which excludes the effects of foreign currency translation.  Due to the continuing strengthening of the U.S. dollar against foreign currencies and the overall variability of foreign exchange rates from period to period, management uses these measures on a constant currency basis to evaluate period-over-period operating performance.  Measures presented on a constant currency basis are calculated by translating current period results at prior period monthly average exchange rates.

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) 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 for revenue and adjusted EBITDA in fiscal 2016.  Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: the company's ability to convert backlog to revenue; the success of the adoption of our CyberKnife and TomoTherapy Systems; the company's ability to manage its expenses; continuing uncertainty in the global economic environment; and other risks detailed from time to time under the heading "Risk Factors" in the company's report on Form 10-K, which was filed on August 28, 2015 and as updated periodically with the company's other filings with the SEC.

Forward-looking statements speak only as of the date the statements are made and are based on information available to the company at the time those statements are made and/or management's good faith belief as of that time with respect to future events.  The company assumes no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.  Accordingly, investors should not put undue reliance on any forward-looking statements.

Financial Tables to Follow

 

Accuray Incorporated
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited) 

Three Months Ended
September 30,

2015

2014




Gross Orders

$64,928

$  58,763

Net Orders

44,799

32,282

Order Backlog

379,792

364,007




Net revenue:


Products 

$39,995

$  33,015

Services 

49,636

49,366

Total net revenue 

89,631

82,381

Cost of revenue:


Cost of products 

23,017

20,665

Cost of services 

32,716

33,915

Total cost of revenue 

55,733

54,580

Gross profit 

33,898

27,801

Operating expenses:


Research and development 

14,296

14,149

Selling and marketing 

13,417

17,974

General and administrative 

10,028

10,950

Total operating expenses 

37,741

43,073

Loss from operations

(3,843)

(15,272)

Other expense, net

(5,091)

(5,461)

Loss before provision for income taxes

(8,934)

(20,733)

Provision for income taxes

704

917

Net loss

$ (9,638)

$(21,650)




Net loss per share - basic and diluted

$   (0.12)

$    (0.28)

Weighted average common shares used in computing loss per share:


Basic and diluted

79,760

77,290

 

Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited) 


 September 30, 

 June 30, 


2015

2015

 Assets 



 Current assets: 



 Cash and cash equivalents 

$         85,584

$   79,551

 Investments 

67,513

64,306

 Restricted cash 

3,795

3,734

 Accounts receivable, net 

56,636

77,727

 Inventories 

113,798

106,151

 Prepaid expenses and other current assets 

16,527

15,991

 Deferred cost of revenue 

6,799

6,869

 Total current assets 

350,652

354,329

 Property and equipment, net 

29,482

31,829

 Goodwill 

57,965

58,054

 Intangible assets, net 

13,576

15,564

 Deferred cost of revenue 

2,264

1,500

 Other assets 

7,863

8,695

 Total assets 

$          461,802

$    469,971

 Liabilities and equity 



 Current liabilities: 



 Accounts payable 

$         13,652

$   13,096

 Accrued compensation 

18,377

21,934

 Other accrued liabilities 

19,115

18,720

 Short-term debt 

95,134

-

 Customer advances 

22,949

19,385

 Deferred revenue 

90,719

96,780

 Total current liabilities 

259,946

169,915

 Long-term liabilities: 



 Long-term other liabilities 

10,761

10,934

 Deferred revenue 

13,938

10,489

 Long-term debt 

109,639

202,853

 Total liabilities 

394,284

394,191

 Commitment and contingencies 



 Equity: 



 Common stock 

80

79

 Additional paid-in capital 

473,025

471,430

 Accumulated other comprehensive loss 

(646)

(426)

 Accumulated deficit 

(404,941)

(395,303)

 Total equity 

67,518

75,780

 Total liabilities and equity 

$          461,802

$    469,971

 


 Accuray Incorporated 

 Reconciliation of GAAP net loss to Adjusted Earnings Before Interest, Taxes, Depreciation, 

 Amortization and Stock-Based Compensation (Adjusted EBITDA) 

 (In thousands) 

 (Unaudited) 





Three Months Ended
September 30,

2015

2014

 GAAP net loss 

$ (9,638)

$ (21,650)

   Amortization of intangibles (a) 

1,988

1,988

   Depreciation (b) 

2,571

2,990

   Stock-based compensation (c) 

2,514

3,273

   Interest expense, net (d) 

4,156

3,988

   Provision for income taxes 

704

917

 Adjusted EBITDA 

$  2,295

$   (8,494)

 (a) consists of amortization of intangibles - developed technology 

 (b) consists of depreciation, primarily on property and equipment 

 (c) consists of stock-based compensation in accordance with ASC 718 

 (d) consists primarily of interest income from available-for-sale securities and interest expense
       associated with our convertible notes 

 



 Accuray Incorporated 

 Forward-Looking Guidance 

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

 Amortization and Stock-Based Compensation (Adjusted EBITDA) 

 (In thousands) 

 (Unaudited) 





Twelve Months Ending June 30, 2016

From

To

 GAAP net loss 

$ (28,200)

$ (18,300)

   Amortization of intangibles (a) 

7,950

7,950

   Depreciation (b) 

10,850

10,850

   Stock-based compensation (c) 

14,100

14,100

   Interest expense, net (d) 

17,300

17,300

   Provision for income taxes 

3,000

3,100

 Adjusted EBITDA 

$  25,000

$  35,000

 (a) consists of amortization of intangibles - developed technology 

 (b) consists of depreciation, primarily on property and equipment 

 (c) consists of stock-based compensation in accordance with ASC 718 

 (d) consists primarily of interest income from available-for-sale securities and interest expense associated with
      our convertible notes 

 

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SOURCE Accuray

Doug Sherk, Investor Relations, EVC Group, +1 (415) 652-9100, dsherk@evcgroup.com; or Beth Kaplan, Public Relations Director, Accuray, +1 (408) 789-4426, bkaplan@accuray.com