Full Press Release Details
| Michael Polyviou | Beth Kaplan |
| Investor Relations, EVC Group | Public Relations Director, Accuray |
| +1 (732) 933-2754 | +1 (408) 789-4426 |
| mpolyviou@evcgroup.com | bkaplan@accuray.com |
Accuray Reports Fiscal 2020 First Quarter Financial Results
SUNNYVALE, Calif., October 29, 2019 - Accuray Incorporated (NASDAQ: ARAY) today reported its financial results for the first quarter of fiscal 2020 ended September 30, 2019.
Recent Company Highlights
"Our first quarter performance represented a solid start to our fiscal year with double digit gross order growth," said Joshua H. Levine, president and chief executive officer. "We are also very excited about Accuray systems named in 50 out of 58 Class A licenses recently awarded by the China National Health Commission which were announced on October 9, 2019. We need to remember that the process identified by the Ministry of Health requires a tender process following the license awards for all participating end user hospitals prior to being able to take receipt of a Type A device. This tender process has been put in place to define the transactional terms and conditions related to each hospital's equipment order and is not a competitive bidding situation that would result in changes in the specific device that the hospital has received the Type A license for. We expect that based on the timelines required for this tendering process, we would not begin to see revenue impact related to the China Type A awards until sometime in our fiscal 4th quarter, and we remain excited about the China market opportunity as a significant growth catalyst for our business."
Fiscal First Quarter Results
Gross orders totaled $78.5 million, an increase of 28 percent compared to $61.4 million for the prior year period. Backlog as of September 30, 2019 was $495.0 million, an increase of 7 percent compared to $461.9 million for the prior year period.
Total revenue was $89.6 million compared to $95.8 million for the prior year period. Product revenue totaled $37.6 million compared to $41.5 million, while service revenue totaled $52.0 million compared to $54.3 million.
Total gross profit for the fiscal 2020 first quarter was $32.9 million, or 36.8 percent of sales, comprised of product gross margin of 42.6 percent and service gross margin of 32.5 percent. This compares to total gross profit of $37.9 million, or 39.5 percent of sales, comprised of product gross margin of 40.9 percent and service gross margin of 38.5 percent for the prior fiscal year first quarter.
Operating expenses were $37.2 million, a decrease of 13 percent compared to $42.6 million in the prior fiscal year first quarter.
Net loss was $9.4 million, or $0.11 per share, compared to a net loss of $9.2 million, or $0.11 per share, for the prior fiscal year period.
Adjusted EBITDA for the first quarter of fiscal 2020 was a loss of $1.0 million, compared to $4.0 million in the prior fiscal period.
Cash, cash equivalents and short-term restricted cash were $86.7 million as of September 30, 2019 compared with $87.0 million as of June 30, 2019.
2020 Financial Guidance
The Company is reiterating its revenue and adjusted EBITDA guidance provided on August 15, 2019. Total revenue for fiscal year 2020 is expected to range between $410.0 and $420.0 million with revenue during the first half of the fiscal year expected to be approximately five to six percent below the first half of the prior fiscal year. The Company expects to generate revenue growth during the second half of fiscal year 2020 compared to the second half of the prior fiscal year. Adjusted EBITDA for fiscal year 2020 is expected to range between $19.0 to $24.0 million and include approximately $2.0 million of the Company's share of expected loss from the joint venture operations in China.
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 first fiscal quarter as well as recent corporate developments. Conference call dial-in information is as follows:
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: 4191278. An archived webcast will also be available at Accuray's website until Accuray announces its results for the second 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.
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 our competitive position related to Class A licenses; expectations related to revenue growth; expectations related to our market opportunity in China and its ability to grow our business; 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 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 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; risks and uncertainties related to future China Class A and B license announcement; and such other risks identified under the heading "Risk Factors" in the company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on August 23, 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
Accuray Incorporated
Consolidated Statements of Operations
(in thousands, except per share data)
| Three Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| Gross Orders | $ | 78,487 | $ | 61,414 | ||||
| Net Orders | 38,981 | 24,911 | ||||||
| Order Backlog | 495,029 | 461,876 | ||||||
| Net revenue: | ||||||||
| Products | $ | 37,605 | $ | 41,517 | ||||
| Services | 51,972 | 54,312 | ||||||
| Total net revenue | 89,577 | 95,829 | ||||||
| Cost of revenue: | ||||||||
| Cost of products | 21,570 | 24,524 | ||||||
| Cost of services | 35,064 | 33,426 | ||||||
| Total cost of revenue | 56,634 | 57,950 | ||||||
| Gross profit | 32,943 | 37,879 | ||||||
| Operating expenses: | ||||||||
| Research and development | 13,341 | 13,889 | ||||||
| Selling and marketing | 13,266 | 13,036 | ||||||
| General and administrative | 10,616 | 15,642 | ||||||
| Total operating expenses | 37,223 | 42,567 | ||||||
| Loss from operations | (4,280 | ) | (4,688 | ) | ||||
| Other expense, net | (4,439 | ) | (3,983 | ) | ||||
| Loss before provision for income taxes | (8,719 | ) | (8,671 | ) | ||||
| Provision for income taxes | 637 | 535 | ||||||
| Net loss | $ | (9,356 | ) | $ | (9,206 | ) | ||
| Net loss per share - basic and diluted | $ | (0.11 | ) | $ | (0.11 | ) | ||
| Weighted average common shares used in computing loss per share: | ||||||||
| Basic and diluted | 88,772 | 86,479 |
Accuray Incorporated
Consolidated Balance Sheets
| September 30, | June 30, | |||||||
| 2019 | 2019 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 80,911 | $ | 76,798 | ||||
| Restricted cash | 5,751 | 10,218 | ||||||
| Accounts receivable, net | 104,684 | 111,885 | ||||||
| Inventories | 129,233 | 120,823 | ||||||
| Prepaid expenses and other current assets | 20,500 | 24,205 | ||||||
| Deferred cost of revenue | 148 | 146 | ||||||
| Total current assets | 341,227 | 344,075 | ||||||
| Property and equipment, net | 16,682 | 17,122 | ||||||
| Goodwill | 57,657 | 57,770 | ||||||
| Intangible assets, net | 643 | 679 | ||||||
| Operating lease right-of-use assets | 28,864 | - | ||||||
| Other assets | 18,674 | 18,535 | ||||||
| Total assets | $ | 463,747 | $ | 438,181 | ||||
| Liabilities and equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 23,621 | $ | 29,562 | ||||
| Accrued compensation | 21,578 | 31,150 | ||||||
| Operating lease liabilities, current | 7,092 | - | ||||||
| Other accrued liabilities | 25,847 | 32,742 | ||||||
| Customer advances | 18,413 | 20,395 | ||||||
| Deferred revenue | 79,596 | 78,332 | ||||||
| Total current liabilities | 176,147 | 192,181 | ||||||
| Long-term liabilities: | ||||||||
| Long-term other liabilities | 6,344 | 9,646 | ||||||
| Deferred revenue | 26,273 | 26,639 | ||||||
| Operating lease liabilities, non-current | 25,549 | - | ||||||
| Long-term debt | 188,460 | 159,844 | ||||||
| Total liabilities | 422,773 | 388,310 | ||||||
| Equity: | ||||||||
| Common stock | 89 | 89 | ||||||
| Additional paid-in capital | 536,809 | 535,332 | ||||||
| Accumulated other comprehensive loss | (1,028 | ) | (10 | ) | ||||
| Accumulated deficit | (494,896 | ) | (485,540 | ) | ||||
| Total equity | 40,974 | 49,871 | ||||||
| Total liabilities and equity | $ | 463,747 | $ | 438,181 |
Accuray Incorporated
Reconciliation of GAAP Net Loss to Adjusted Earnings Before Interest, Taxes, Depreciation,
Amortization and Stock-Based Compensation (Adjusted EBITDA)
| Three Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| GAAP net loss | $ | (9,356 | ) | $ | (9,206 | ) | ||
| Depreciation and amortization (a) | 1,851 | 2,129 | ||||||
| Stock-based compensation | 1,700 | 3,212 | ||||||
| Interest expense, net (b) | 4,200 | 3,592 | ||||||
| Impairment charge (c) | - | 3,707 | ||||||
| Provision for income taxes | 637 | 535 | ||||||
| Adjusted EBITDA | $ | (968 | ) | $ | 3,969 |
(a) consists of depreciation, primarily on property and equipment as well as amortization of intangible assets.
(b) consists primarily of interest expense associated with our outstanding debt.
(c) consists of a one-time accounts receivable impairment charge related to one customer.
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, 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 intangible assets.
(b) consists of interest expense associated with outstanding debt.