Accuray Announces Results for First Quarter Fiscal 2013 Transformative Technology Launch at Leading Radiation Oncology Meeting Sets Stage for Future Growth

SUNNYVALE, Calif., Nov. 7, 2012 /PRNewswire/ -- Accuray Incorporated (Nasdaq: ARAY), the premier radiation oncology company, announced today financial results for the first quarter of fiscal 2013 that ended September 30, 2012. Non-GAAP results are provided to enhance understanding of Accuray's ongoing core results of operations.

Recent highlights include a 31 percent increase in net new product orders for the first quarter of fiscal 2013 over the same quarter of the prior year, followed by the introduction of new CyberKnife and TomoTherapy Systems at American Society for Radiation Oncology (ASTRO) in October.

"Following the launch of two exciting new technologies at the ASTRO Annual Meeting, customers and prospects shared their enthusiasm for the new systems' ability to expand the treatable patient population, increase accuracy of treatments, and improve throughput," said Joshua Levine, president and chief executive officer of Accuray. "Capitalizing on these new products to grow future orders and revenue will be a principal focus of Accuray. As I go through my strategic and operational review, I am gaining greater insights into the business.  After this review is complete, I look forward to providing guidance on our strategic agenda and associated metrics."

For the first quarter of fiscal 2013 Accuray reported total consolidated GAAP revenue of $82.7 million and total non-GAAP revenue of $83.0 million. By comparison, for the first quarter of fiscal 2012, total GAAP revenue was $100.5 million and total non-GAAP revenue was $95.7 million.  On a Non-GAAP basis product revenue was down by 28 percent from the same quarter of the prior year. "The year-on-year decline in product revenue reflects the fact that shipments of TomoTherapy Systems returned to normal levels from the unusually high levels in the first quarter after the acquisition was completed" said Derek A. Bertocci, chief financial officer of Accuray. "Service revenue continued to increase, up 10 percent from the prior year, driven primarily by continued increases in the installed base of systems."

The consolidated GAAP gross margin for the first quarter of fiscal 2013 was 40.9 percent for products and 16.8 percent for services compared to 31.7 percent for products and 13.9 percent for services, for the first quarter of the prior year. The consolidated non-GAAP gross margin for the first quarter of fiscal 2013 was 50.1 percent for products and 16.7 percent for service, compared to 52.4 percent and 12.1 percent, respectively, for the first quarter of the prior year.

Consolidated GAAP net loss attributable to stockholders for the first quarter of fiscal 2013 was $24.1 million, or $0.34 per share, compared to $26.5 million or $0.38 per share for the first quarter of the prior year. Non-GAAP net loss for the first quarter of fiscal 2013 was $16.9 million or $0.23 per share compared to $11.1 million or $0.16 per share for the first quarter of the prior year.

Net product orders to backlog totaled $51.6 million during the first quarter of fiscal 2013, a 31 percent increase from $39.5 million during the first quarter of the prior year. Product backlog increased 9 percent to $294.3 million from $270.8 million at the end of the first quarter of the prior year. This was driven by a 61 percent increase in net orders for the TomoTherapy product line, offset by a 12 percent decline in orders for the CyberKnife product line, compared to the same quarter in the previous year.

During the first quarter of fiscal 2013, 15 units were shipped and 25 were installed, increasing Accuray's worldwide installed base to 667 systems.

Accuray's cash, cash equivalents and restricted cash totaled $124.5 million as of September 30, 2012.

Additional Information
Additional information including slides of first quarter highlights, which will be discussed during the conference call, is available in the Investor Relations section of the company's website at www.accuray.com/investors.

Earnings Call Open to Investors   
Accuray will hold a conference call for financial analysts and investors on Wednesday, November 7, 2012 at 2:00 p.m. PST/5:00 p.m. EST. The conference call dial-in numbers are1-866-788-0539 (USA) or 1-857-350-1677 (International), Conference ID: 32216030.  A live webcast of the call will also be available from the Investor Relations section of the corporate website at www.accuray.com/investors.  In addition, a recording of the call will be available by calling 1-888-286-8010 (USA) or 1-617-801-6888 (International), Conference ID: 10163094, beginning at 5:00 p.m. PST/8:00 p.m. EST on November 7, 2012 and will be available through November 14, 2012. A webcast replay will also be available from the Investor Relations section of the Company's website at www.accuray.com/investors from approximately 5:00 p.m. PST/8:00 p.m. EST today through Accuray's release of its results for the second quarter of fiscal 2013, ending December 31, 2012.

About Accuray
Accuray Incorporated (Nasdaq: ARAY), based in Sunnyvale, Calif., is the premier radiation oncology company that develops, manufactures and sells personalized, 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 – the CyberKnife and TomoTherapy Systems – are designed to deliver radiosurgery, stereotactic body radiation therapy, intensity modulated radiation therapy, image guided radiation therapy, and adaptive radiation therapy. To date, 667 systems have been installed in leading hospitals around the world. For more information, please visit www.accuray.com.

Safe Harbor Statement
Statements made in this press r lease 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 growth; the effects of the introduction of new CyberKnife and TomoTherapy Systems, clinical applications, clinical efficacy, treatment populations, efficiency, order growth, revenue growth and future profitability. 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 its worldwide sales and marketing efforts; the success of the introduction of our CyberKnife and TomoTherapy Systems; the extent of market acceptance for the company's products and services; 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  filed on September 10, 2012 and the company's report on Form 10‑Q to be filed for the first quarter of fiscal 2013. 

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.

 

Accuray Incorporated

Consolidated Statements of Operations

(in thousands, except per share data)







Three months ended

September 30,




2012


2011




(unaudited)


Net revenue:






Products 


$         40,628


$         56,174


Services 


42,120


43,401


Other 


-


876


Total net revenue 


82,748


100,451


Cost of revenue:






Cost of products 


24,009


38,373


Cost of services 


35,063


37,349


Cost of other 


-


301


Total cost of revenue 


59,072


76,023


Gross profit 


23,676


24,428


Operating expenses:






Selling and marketing 


12,889


13,581


Research and development 


20,209


20,565


General and administrative 


13,269


14,969


Impairment of indefinite lived intangible assets


12,200


-


Total operating expenses 


58,567


49,115


Loss from operations


(34,891)


(24,687)


Other income (expense), net


(747)


(2,858)


Loss before provision for income taxes 


(35,638)


(27,545)


Provision for income taxes 


597


538


Net loss


(36,235)


(28,083)


Noncontrolling interest


(12,105)


(1,573)


Net loss attributable to stockholders


$        (24,130)


$        (26,510)








Net loss per share:






Basic and Diluted


$            (0.34)


$            (0.38)


Weighted average common shares  used in computing net loss per share






Basic and Diluted


71,995


70,263








Cost of revenue, selling and marketing, research and development, and general and administrative expenses include stock-based compensation charges as follows:  


Cost of revenue


$              247


$              558


Selling and marketing 


$              220


$              229


Research and development 


$              516


$              602


General and administrative 


$              772


$           1,220








 

Accuray Incorporated

Consolidated Balance Sheets

(in thousands, except share amounts)






 September 30, 


 June 30, 


2012


2012


(unaudited)

 Assets 




 Current assets: 




 Cash and cash equivalents 

$       121,861


$       143,504

 Restricted cash  

2,611


1,560

 Accounts receivable, net of allowance for doubtful accounts 

57,620


67,890

 Inventories  

81,739


81,693

 Prepaid expenses and other current assets 

17,619


16,715

 Deferred cost of revenue—current  

4,078


4,896

 Total current assets  

285,528


316,258





 Property and equipment, net 

39,536


37,458

 Goodwill  

59,344


59,215

 Intangible assets, net 

39,122


49,819

 Deferred cost of revenue—noncurrent  

3,575


2,433

 Other assets 

10,912


7,987

 Total assets  

$       438,017


$       473,170

 Liabilities and equity 




 Current liabilities: 




 Accounts payable  

$         28,025


$         18,209

 Accrued compensation 

16,226


23,071

 Other accrued liabilities 

27,025


31,646

 Customer advances 

21,173


18,177

 Deferred revenue—current  

77,797


83,071

 Total current liabilities  

170,246


174,174

 Long-term liabilities: 




 Long-term other liabilities 

5,592


5,988

 Deferred revenue—noncurrent  

12,582


9,675

 Long-term debt 

80,507


79,466

 Total liabilities  

268,927


269,303





 Equity: 




 Preferred stock, $0.001 par value; authorized: 5,000,000 shares; no shares



 issued and outstanding  

-


-

 Common stock, $0.001 par value; authorized: 100,000,000 shares; issued and  



outstanding: 72,143,926 and 71,864,268 shares at September 30 and June 30, 2012, respectively

72


72

 Additional paid-in capital  

411,136


409,143

 Accumulated other comprehensive income 

2,302


2,837

 Accumulated deficit  

(240,557)


(216,427)

 Total stockholders' equity 

172,953


195,625

 Noncontrolling interest 

(3,863)


8,242

 Total equity 

169,090


203,867

 Total liabilities and equity 

$       438,017


$       473,170

 

Non-GAAP Financial Measures           

This press release includes non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission, with respect to the three months ended September 30, 2012 and 2011. "GAAP" refers to generally accepted accounting principles in the United States.

Accuray closed the acquisition of TomoTherapy on June 10, 2011 and TomoTherapy's operations since that date are included in Accuray's consolidated results of operations. Accounting for the impact of this acquisition has resulted in changes to the value of assets and liabilities from the amounts reflected by TomoTherapy prior to the acquisition and the creation of incremental assets and liabilities including intangible assets for developed technology and backlog, and unfavorable lease obligations. These changes have impacted revenues and expenses recorded in Accuray's consolidated statements of operations since the close of the acquisition. In addition, Accuray has incurred significant expenses as a result of the acquisition, some of which are one-time charges while others were incurred over fiscal 2012 for the integration of TomoTherapy.

To reflect the ongoing core results of operations of the Company, including adjusting for the impact of the acquisition of TomoTherapy, the Company has presented its operating results on an adjusted non-GAAP basis as well as in accordance with GAAP for the three months ended September 30, 2012 and 2011. We use the following measures shown in the following tables, which are not calculated in accordance with GAAP. All significant adjustments to reconcile to GAAP primarily relate to the acquisition of TomoTherapy except the adjustment to Other income (expense). The Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses these non-GAAP financial measures in connection with its own budgeting and financial planning, as well as evaluating management performance for compensation purposes. These non-GAAP financial measures are in addition to, not a substitute for, nor superior to, measures of financial performance prepared in conformity with GAAP.

 


Revenue

Three months ended September 30,


Three Months Ended September 30,




2012


2012


2012



2011


2011


2011





















GAAP


Adjustments


Non-GAAP



GAAP


Adjustments


Non-GAAP




Products

$ 40,628


$ 265

(A)

$ 40,893



$ 56,174


$ 348

(A)

$ 56,522




Services

42,120


(59)

(B)

42,061



43,401


(5,068)

(B)

38,333




Other

-


-


-



876


-


876




Total

$ 82,748


$ 206


$ 82,954



$ 100,451


$ (4,720)


$ 95,731




















 

(A)

As of the close of the acquisition, TomoTherapy's deferred product revenue related to products shipped but not yet installed was written down to the fair value of goods and services remaining to be delivered. As a result, during the three months ended September 30, 2012 and 2011, product revenue recorded by Accuray for the sale of TomoTherapy products was $0.3 million lower than product revenue that would have been recorded by TomoTherapy if the acquisition had not occurred.

















(B)

As of the close of the acquisition, TomoTherapy's deferred service revenue was written up to fair value. As a result, deferred service revenue recognized by Accuray during the three months ended September 30, 2012 and 2011 was $0.1 million and $5.1 million higher than the amount that would have been recognized by TomoTherapy if the acquisition had not occurred.

 


































Cost of Revenue

Three months ended September 30,


Three Months Ended September 30,




2012


2012


2012



2011


2011


2011





















GAAP


Adjustments


Non-GAAP



GAAP


Adjustments


Non-GAAP




Products

$ 24,009


$ (3,617)

(C)

$ 20,392



$ 38,373


$ (11,491)

(C)

$ 26,882




Services

35,063


(11)

(D)

35,052



37,349


(3,644)

(D)

33,705




Other

-


-


-



301


-


301




Total

$ 59,072


$ (3,628)


$ 55,444



$ 76,023


$ (15,135)


$ 60,888



















 

















(C)

Products cost of revenue included the following charges arising from the acquisition of TomoTherapy during the three months ended September 30, 2012 and 2011, respectively: $-0- and $7.6 million due to the write up of finished goods and work-in-process inventory on hand at the time of the acquisition from cost basis to fair value and was subsequently sold in the period, $3.6 million and $3.8 million for amortization of intangible assets created by the acquisition.

















(D)

Services cost of revenue included the following charges and reductions to expenses arising from the acquisition of TomoTherapy during the three months ended September 30, 2012 and 2011: $0.2 million and $0.1 million charges for property, plant and equipment revaluation, $-0- and $1.2 million charges due to employee severance, integration and retention expenses. Additionally, service cost of revenue also included: $-0- and $3.6 million charge due to the write up of service related inventory on hand at the time of the acquisition from cost basis to fair value, $(0.3) million and $(1.3) million reductions in expenses due to the roll out of fair value increases in warranty and loss contracts reserves, both of which were related to service provided during the periods.

















 





















Three months ended September 30,


Three Months Ended September 30,



Gross Profit

2012


2012


2012



2011


2011


2011





















GAAP


Adjustments


Non-GAAP



GAAP


Adjustments


Non-GAAP




Products

$ 16,619


$ 3,882


$ 20,501



$ 17,801


$ 11,839


$ 29,640




Services

7,057


(48)


7,009



6,052


(1,424)


4,628




Other

-


-


-



575


-


575




Total

$ 23,676


$ 3,834


$ 27,510



$ 24,428


$ 10,415


$ 34,843




















 



















Three months ended September 30,


Three Months Ended September 30,



Gross Profit Margin

2012


2012


2012



2011


2011


2011





















GAAP


Adjustments


Non-GAAP



GAAP


Adjustments


Non-GAAP




Products

40.9%


9.2%


50.1%



31.7%


20.7%


52.4%




Services

16.8%


(0.1)%


16.7%



13.9%


(1.8)%


12.1%




Other

0.0%


0.0%


0.0%



65.6%


0.0%


65.6%




Total

28.6%


4.6%


33.2%



24.3%


12.1%


36.4%



















 



















Three months ended September 30,


Three Months Ended September 30,



Operating Expenses

2012


2012


2012



2011


2011


2011





















GAAP


Adjustments


Non-GAAP



GAAP


Adjustments


Non-GAAP




Selling and Marketing

$ 12,889


$ -


$ 12,889



$ 13,581


$ (1,724)

(E)

$ 11,857




Research and Development

20,209


(163)

(F)

20,046



20,565


(301)

(G)

20,264




General and Administrative

13,269


(976)

(H)

12,293



14,969


(2,381)

(I)

12,588




Impairment of indefinite lived intangible assets

12,200


(12,200)

(J)

-



-


-


-




Total

$ 58,567


$(13,339)


$ 45,228



$ 49,115


$ (4,406)


$ 44,709



















 

















(E)

Includes $0.8 million charge due to employee severance and retention expenses, and $0.9 million due to preparation for integration of work forces and operations from our acquisition of TomoTherapy.

















(F)

Includes $0.1 million due to retention expenses from the acquisition of Morphormics, and $0.1 million due to property, plant and equipment revaluation from acquisition of TomoTherapy.

















(G)

Includes $0.3 million charge primarily due to employee severance and retention expenses from the acquisition of TomoTherapy.

















(H)

Includes $0.3 million charge primarily due to employee severance from the acquisition of Morphormics, $0.2 million related to employee severance and retention due to consolidation of European offices, $0.1 million charge related to preparation for acquisition of Morphormics and $0.4 million due to property, plant and equipment revaluation due to the acquisition of TomoTherapy.

















(I)

Includes $0.9 million charge due to employee severance and retention expenses, $1.0 million of charges related to preparation for integration of work forces and operations, and $0.5 million charge for property, plant and equipment revaluation related to the acquisition of TomoTherapy.

















(J)

Represents the impairment charges related to the write-down of the in-process research and development (IPR&D) asset based on results of research and development work carried out by CPAC, a variable interest entity consolidated by the Company.

















 


















Net Loss Attributable to Stockholders









Three months ended September 30,


Three Months Ended September 30,




2012


2012


2012



2011


2011


2011





















GAAP


Adjustments


Non-GAAP



GAAP


Adjustments


Non-GAAP




Loss From Operations

$ (34,891)


$ 17,173

(K)

$ (17,718)



$ (24,687)


$ 14,821

(K)

$ (9,866)




Other Income (Expense)

(747)


379

(L)

(368)



(2,858)


639

(M)

(2,219)




Provision For Income Taxes

597


-


597



538


-


538




Noncontrolling Interest

(12,105)


10,323

(N)

(1,782)



(1,573)


-


(1,573)




Net Loss Attributable to Stockholders

$ (24,130)


$ 7,229


$ (16,901)



$ (26,510)


$ 15,460


$ (11,050)




































Net Loss Per Share - Basic and Diluted

$ (0.34)


$ 0.10


$ (0.23)



$ (0.38)


$ 0.22


$ (0.16)




















Weighted Average Common Shares outstanding - Basic and Diluted

71,995




71,995



70,263




70,263



















 

















(K)

Represents impact of all adjustments (A) through (J) on loss from operations.

















(L)

Includes $1.0 million non-cash interest expense arising from the accretion of interest expense on the long-term debt, offset by $0.6 million gain on previously held equity interest due to the acquisition of Morphormics.

















(M)

Represents non-cash interest expense arising from the accretion of interest expense on the long-term debt.




















(N)

Represents the noncontrolling portion of the $12.2 million impairment charge related to the write-down of the IPR&D asset based on results of research and development work carried out by CPAC, a variable interest entity consolidated by the Company.

















 

SOURCE Accuray Incorporated



RELATED LINKS
http://www.accuray.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.