Full Press Release Details
Accuray Generates 14% Year-Over-Year Gross Order Growth During Fourth Quarter
Reports Financial Results for Fourth Quarter and Fiscal 2015, Introduces Fiscal 2016 Guidance
SUNNYVALE, Calif., August 20, 2015 Accuray Incorporated (NASDAQ: ARAY) announced today financial results for the fiscal fourth quarter and fiscal year ended June 30, 2015.
Fiscal Fourth Quarter Highlights
Gross orders were $84.9 million, representing 14 percent year-over-year growth or 20 percent on a constant currency basis
Total revenue was $101.8 million, relatively flat year-over-year but an increase of 5 percent on a constant currency basis
Total gross profit margins expanded to 40 percent from 38 percent in the prior fiscal year fourth quarter
Adjusted EBITDA was $6.7 million compared to $2.5 million in the prior fiscal year fourth quarter
CyberKnife System gross product orders were the highest in four years, following launch of the InCise Multileaf Collimator (MLC)
Sites with single and dual vaults comprised 48 percent of total TomoTherapy System orders
Three system orders received from Group Purchasing Organizations went to backlog
Four additional licenses for Accuray systems awarded to hospitals by the China NHFPC
Our team finished the year with strong momentum globally as we executed on our core strategies for driving consistent growth, said Joshua H. Levine, president and chief executive officer of Accuray. We successfully launched the InCise MLC for the CyberKnife System, continued to gain traction with our TomoTherapy System positioning, began to see results from our domestic GPO/strategic account selling initiative and continued to expand on our success in China. Underlying these achievements was a focus on our customers who continued to report industry leading customer satisfaction with regard to Accuray equipment.
Financial Highlights
Gross product orders totaled $84.9 million for the 2015 fiscal fourth quarter, an increase of $10.4 million or 14 percent from the fourth quarter of the prior fiscal year. On a constant currency basis, gross product orders increased 20 percent from the prior fiscal year fourth quarter. Ending product backlog was $375.0 million, approximately 3 percent higher than backlog at the end of the prior fiscal year fourth quarter, or a growth of 10 percent on a constant currency basis.
Total revenue was $101.8 million, which was relatively flat from the prior fiscal year fourth quarter but an increase of 5 percent on a constant currency basis. The Americas region total revenue was $37.2 million and total revenue outside of the Americas region was $64.6 million. Product revenue totaled $51.7 million while service revenue totaled $50.1 million, both of which were relatively flat from the fiscal 2014 fourth quarter.
Total gross profit for the 2015 fiscal fourth quarter was $40.5 million or 40 percent of sales, comprised of product gross margin of 43 percent and service gross margin of 36 percent. This compares to total gross margin of 38 percent, product gross margin of 45 percent and service gross margin of 31 percent for the prior fiscal year fourth quarter. On a constant currency basis, total gross margin for the fourth quarter of fiscal 2015 was 42 percent.
Operating expenses were $41.9 million, a decrease of 3 percent compared with $43.1 million in the prior fiscal fourth quarter. The decrease was primarily due to lower sales and marketing costs, partially offset by increased research and development costs to support ongoing product development efforts.
Net loss was $5.6 million, or $0.07 per share, for the fourth quarter of fiscal 2015, compared to a net loss of $9.8 million, or $0.13 per share, for the fourth quarter of fiscal 2014.
Adjusted EBITDA for the fourth quarter of fiscal 2015 was $6.7 million, compared to $2.5 million in the prior fiscal year fourth quarter.
Cash, cash equivalents, and investments were $143.9 million as of June 30, 2015, a decrease of $5.8 million from March 31, 2015.
Fiscal Year Highlights
For the fiscal year ended June 30, 2015, total revenue was $379.8 million, representing an increase of 3 percent, or 7 percent on a constant currency basis, from fiscal year 2014. The Americas region revenue was $174.0 million, an increase of 11 percent. Revenue outside the Americas region was $205.8 million, a decrease of 3 percent as reported, but an increase of 3 percent on a constant currency basis. Product revenue for fiscal 2015 was $178.7 million, representing an increase of 3 percent from the prior fiscal year while service revenue was $201.1 million, also representing 3 percent growth from the prior fiscal year.
Gross profit margin for the year ended June 30, 2015 was 38 percent, comprised of product gross margin of 42 percent and service gross margin of 35 percent. This compares to total gross margin of 39 percent for the prior fiscal year. Total gross margin for the year ended June 30, 2015 was 40 percent on a constant currency basis.
Operating expenses were $164.6 million for the fiscal year ended June 30, 2015, compared with $160.9 million in fiscal year 2014.
Net loss for the fiscal year ended June 30, 2015 was $40.2 million, or $0.51 per share, compared to a net loss of $35.4 million, or $0.47 per share, for the prior fiscal year.
Adjusted EBITDA for the fiscal year ended June 30, 2015 was $11.8 million, compared to $13.3 million in the prior fiscal year.
2016 Financial Guidance
Revenue: Accuray expects fiscal 2016 revenue to be in the range of $395 million to $410 million. This represents growth of 4 percent to 8 percent over revenue in fiscal 2015. Revenue by quarter as a percent of total year is expected to be similar to fiscal 2015.
Adjusted EBITDA: Accuray expects fiscal 2016 adjusted EBITDA to be in the range of $25 million to $35 million. This represents growth of 112 percent to 197 percent over adjusted EBITDA in fiscal 2015, reflecting flat to moderately improving gross margins and ongoing expense control.
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): 3203995
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 August 20, 2015 at 5:00 p.m. PT/8:00 p.m. ET and ending August 28, 2015. The replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International), Conference ID: 3203995.
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.
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 29, 2014, the company s reports on Form 10-Q which were filed on November 7, 2014, February 6, 2015 and May 7, 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)
| Three Months Ended June 30, | Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Gross Orders | $ | 84,862 | $ | 74,492 | $ | 267,777 | $ | 263,352 | |||||
| Net Orders | 79,304 | 62,967 | 188,997 | 221,018 | |||||||||
| Order Backlog | 375,028 | 364,742 | 375,028 | 364,742 | |||||||||
| Net revenue: | |||||||||||||
| Products | $ | 51,684 | $ | 51,846 | $ | 178,710 | $ | 173,607 | |||||
| Services | 50,066 | 50,154 | 201,091 | 195,812 | |||||||||
| Total net revenue | 101,750 | 102,000 | 379,801 | 369,419 | |||||||||
| Cost of revenue: | |||||||||||||
| Cost of products | 29,381 | 28,756 | 104,549 | 97,592 | |||||||||
| Cost of services | 31,917 | 34,797 | 129,850 | 129,027 | |||||||||
| Total cost of revenue | 61,298 | 63,553 | 234,399 | 226,619 | |||||||||
| Gross profit | 40,452 | 38,447 | 145,402 | 142,800 | |||||||||
| Operating expenses: | |||||||||||||
| Research and development | 14,850 | 13,576 | 55,752 | 53,724 | |||||||||
| Selling and marketing | 15,677 | 17,859 | 62,440 | 61,885 | |||||||||
| General and administrative | 11,403 | 11,679 | 46,379 | 45,335 | |||||||||
| Total operating expenses | 41,930 | 43,114 | 164,571 | 160,944 | |||||||||
| Loss from operations | (1,478 | ) | (4,667 | ) | (19,169 | ) | (18,144 | ) | |||||
| Other expense, net | (4,014 | ) | (4,669 | ) | (18,621 | ) | (14,216 | ) | |||||
| Loss before provision for income taxes | (5,492 | ) | (9,336 | ) | (37,790 | ) | (32,360 | ) | |||||
| Provision for income taxes | 108 | 473 | 2,419 | 3,088 | |||||||||
| Net loss | $ | (5,600 | ) | $ | (9,809 | ) | $ | (40,209 | ) | $ | (35,448 | ) | |
| Net loss per share - basic and diluted | $ | (0.07 | ) | $ | (0.13 | ) | $ | (0.51 | ) | $ | (0.47 | ) | |
| Weighted average common shares used in computing loss per share: | |||||||||||||
| Basic and diluted | 79,170 | 76,879 | 78,277 | 75,804 |
Accuray Incorporated
Consolidated Balance Sheets
| June 30, | June 30, | ||||||
| 2015 | 2014 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 79,551 | $ | 92,346 | |||
| Investments | 64,306 | 79,553 | |||||
| Restricted cash | 3,734 | 1,492 | |||||
| Accounts receivable, net | 77,727 | 72,152 | |||||
| Inventories | 106,151 | 87,752 | |||||
| Prepaid expenses and other current assets | 15,991 | 17,873 | |||||
| Deferred cost of revenue | 6,869 | 13,302 | |||||
| Total current assets | 354,329 | 364,470 | |||||
| Property and equipment, net | 31,829 | 34,391 | |||||
| Goodwill | 58,054 | 58,091 | |||||
| Intangible assets, net | 15,564 | 23,517 | |||||
| Deferred cost of revenue | 1,500 | 2,899 | |||||
| Other assets | 8,695 | 11,820 | |||||
| Total assets | $ | 469,971 | $ | 495,188 | |||
| Liabilities and equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 13,096 | $ | 15,639 | |||
| Accrued compensation | 21,934 | 32,569 | |||||
| Other accrued liabilities | 18,720 | 24,464 | |||||
| Customer advances | 19,385 | 19,804 | |||||
| Deferred revenue | 96,780 | 92,093 | |||||
| Total current liabilities | 169,915 | 184,569 | |||||
| Long-term liabilities: | |||||||
| Long-term other liabilities | 10,934 | 6,593 | |||||
| Deferred revenue | 10,489 | 9,866 | |||||
| Long-term debt | 202,853 | 195,612 | |||||
| Total liabilities | 394,191 | 396,640 | |||||
| Commitment and contingencies | |||||||
| Equity: | |||||||
| Common stock | 79 | 77 | |||||
| Additional paid-in capital | 471,430 | 451,750 | |||||
| Accumulated other comprehensive income (loss) | (426 | ) | 1,815 | ||||
| Accumulated deficit | (395,303 | ) | (355,094 | ) | |||
| Total equity | 75,780 | 98,548 | |||||
| Total liabilities and equity | $ | 469,971 | $ | 495,188 |
Accuray Incorporated
Reconciliation of GAAP Net Loss to Adjusted Earnings Before Interest, Taxes, Depreciation,
Amortization and Stock-Based Compensation (Adjusted EBITDA)
| Three Months Ended June 30, | Years Ended June 30, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| GAAP net loss | $ | (5,600 | ) | $ | (9,809 | ) | $ | (40,209 | ) | $ | (35,448 | ) | |
| Amortization of intangibles (a) | 1,989 | 1,989 | 7,954 | 8,380 | |||||||||
| Depreciation (b) | 2,640 | 3,029 | 11,539 | 12,184 | |||||||||
| Stock-based compensation (c) | 3,426 | 3,070 | 13,930 | 11,313 | |||||||||
| Interest expense, net (d) | 4,096 | 3,746 | 16,158 | 13,759 | |||||||||
| Provision for income taxes | 108 | 473 | 2,419 | 3,088 | |||||||||
| Adjusted EBITDA | $ | 6,659 | $ | 2,498 | $ | 11,791 | $ | 13,276 |
| (a) | consists of amortization of intangibles - developed technology and distributor licenses |
| (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 Net Loss to Projected Adjusted Earnings Before Interest, Taxes, Depreciation,
Amortization and Stock-Based Compensation (Adjusted EBITDA)
| Twelve Months Ending June 30, 2016 | |||||||
| From | To | ||||||
| GAAP net loss | $ | (29,200 | ) | $ | (19,300 | ) | |
| Amortization of intangibles (a) | 7,950 | 7,950 | |||||
| Depreciation (b) | 10,850 | 10,850 | |||||
| Stock-based compensation (c) | 15,100 | 15,100 | |||||
| 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 |