Accuray Reports Fiscal 2020 Third Quarter Financial Results

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.

Accuray Incorporated (PRNewsFoto/Accuray Incorporated) (PRNewsFoto/Accuray Incorporated)

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

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