Accuray Announces Results for Fourth Quarter and Fiscal Year 2012 Integration of TomoTherapy on Track; Company Preparing for Major Technology Releases

SUNNYVALE, Calif., Sept. 6, 2012 /PRNewswire/ -- Accuray Incorporated (Nasdaq: ARAY), the premier radiation oncology company, announced today financial results for the fourth quarter and fiscal year ended June 30, 2012. The fiscal 2012 financial data presented below reflects Accuray's consolidated results including the results for TomoTherapy Incorporated, which was acquired by Accuray in June 2011. Non-GAAP results are provided to enhance understanding of Accuray's ongoing core results of operations.

Highlights from the fourth quarter of fiscal 2012 include continued improvement in service margins, with a year-over-year decrease in sales and marketing, and general and administrative expenses and a 1.15 book-to-bill ratio.

"We have been investing heavily in research and development and plan to introduce two advanced technology platforms at the American Society for Radiation Oncology's (ASTRO) Annual Meeting in October 2012 which we expect to drive future orders and revenue growth," said Euan S. Thomson, Ph.D., president and chief executive officer of Accuray. "After the new product introductions we plan to reduce our research and development expenses to more normalized levels as seen historically.  We believe we are on track to return to profitability (non-GAAP) on schedule, by the end of our current fiscal year, ending June 30, 2013."

For the fourth quarter of fiscal 2012, Accuray reported total consolidated GAAP revenue of $100.5 million and non-GAAP total revenue of $101.1 million. By comparison, for the fourth quarter of fiscal 2011, the sum of the revenue reported or recorded by Accuray and TomoTherapy as separate companies totaled $109.8 million on a pro forma basis. For the fiscal year ended June 30, 2012, GAAP revenue was $409.2 million and non-GAAP revenue was $401.3 million, a decrease from the pro forma total revenue of $409.7 million in the same period of the prior year. Excluding non-recurring revenue items and changes in accounting for TomoTherapy, non-GAAP revenues were essentially unchanged year-on-year. CyberKnife System revenues in fiscal 2012 were $37.6 million lower than in fiscal 2011 due to shipment schedules in the European region and a decline in new orders in the Americas region, offset partially by increases in our APAC and Japan regions. TomoTherapy Systems revenues in fiscal 2012 were $5.8 million higher than in fiscal 2011 on a pro-forma basis.

The consolidated GAAP gross margin for the fourth quarter of fiscal 2012 was 46.2 percent for products and 21.6 percent for services. The consolidated non-GAAP gross margin for the fourth quarter of fiscal 2012 was 52.8 percent for products.  Non-GAAP service gross margins were 19.9 percent for the fourth quarter, up from (2.3 percent) in the fourth quarter of fiscal 2011 on a pro forma basis. Positive service gross margins were driven largely by a continued improvement in reliability and reduction of service costs for TomoTherapy Systems. We believe the company remains on track to achieve 20 to 22 percent service gross margins for the full fiscal year 2013 on a non-GAAP basis.

Consolidated GAAP net loss attributable to stockholders for the fourth quarter of fiscal 2012 was $20.3 million, or $0.28 per share. Non-GAAP net loss for the fourth quarter of fiscal 2012 was $14.2 million or $0.20 per share. By comparison, for the fourth quarter of fiscal 2011 the sum of the net losses reported or recorded by Accuray and TomoTherapy as separate companies totaled $8.5 million or $0.12 per share on a pro forma basis.  For the fiscal year ended June 30, 2012, GAAP net loss was $72.0 million or $1.02 per share, compared to a pro-forma net loss of $30.5 million or $0.44 per share in prior fiscal year.  For the fiscal year ended June 30, 2012, non-GAAP net loss was $41.6 million or $0.60 per share, compared to a pro-forma net loss of $30.5 million or $0.44 per share in the prior fiscal year. 

Accuray added $74.2 million of net new system orders to backlog during the fourth quarter of fiscal 2012, increasing system backlog to $283.6 million.  While performance was good internationally, the company continued to experience weakness in sales in the United States.  The company expects to generate improved results during fiscal year 2013 from the introduction of new technology platforms and from enhanced performance of its realigned United States sales organization. 

During the fourth quarter of fiscal 2012, 23 units were shipped and 15 were installed, increasing Accuray's worldwide installed base to 642 systems.

Accuray's cash, cash equivalents and restricted cash was $145 million as of June 30, 2012. Use of cash during the fourth quarter of fiscal 2012 was primarily due to changes in working capital.   

Outlook
The following statement, among others in this release, is forward-looking and actual results may differ materially.  We expect first quarter fiscal year 2013 revenue to be substantially below the first quarter of fiscal 2012, and revenues then to accelerate over the balance of the fiscal year.  We expect this to be driven by two key factors: (1) potential shipment delays as customers wait for our next technology releases and (2) that we will not benefit from the significant backlog of TomoTherapy System orders we had at this time last year.  For the full fiscal year 2013, Accuray expects that revenue will be in the range of $405 million to $425 million (non-GAAP), with the majority of revenue expected in the second half of fiscal year 2013.  More details will be provided on the conference call.

Additional Information
Additional information including slides of fourth 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 Thursday September 6, 2012 at 2:00 p.m. PDT/5:00 p.m. EDT. The conference call dial-in numbers are 1-800-295-4740 (USA) or 1-617-614-3925 (International), Conference ID: 89497327. 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:  79000863, beginning at 5:00 p.m. PDT/8:00 p.m. EDT on September 6, 2012 and will be available through September 13, 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. PDT/8:00 p.m. EDT today through Accuray's release of its results for the first quarter of fiscal 2013, ending September 30, 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, 642 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 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 profitability, including the timing of the company's expected return to profitability; the timing of the introduction of new platforms; the impact of research and development spending on future revenue growth; future research and development spending; continuing improvements in service gross margins, including specific targets for fiscal year 2013 service gross margins; expected impact of the US sales reorganization; and expected revenue for the first quarter of fiscal year 2013 and the entire fiscal year 2013. 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 timeliness and success of the integration of TomoTherapy; the company's ability to convert backlog to revenue; the success of its worldwide sales and marketing efforts; the timeliness of the introduction of our new platforms; the extent of market acceptance for the company's products and services; the company's ability to develop and bring to market new or enhanced products; 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 to be filed on or before September 13, 2012 and the company's reports on Form 10‑Q for the first, second and third quarters of fiscal 2012. 

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 June 30,


Years ended June 30,



2012


2011


2012


2011



(unaudited)


(unaudited)



Net revenue:









Products 


$  60,621


$  47,824


$    240,472


$138,595

Services 


39,463


25,657


166,681


80,490

Other 


449


1,742


2,070


3,199

Total net revenue 


100,533


75,223


409,223


222,284

Cost of revenue:









Cost of products 


32,606


20,572


136,180


55,524

Cost of services 


30,936


20,886


134,562


56,218

Cost of other 


501


1,539


1,209


3,300

Total cost of revenue 


64,043


42,997


271,951


115,042

Gross profit 


36,490


32,226


137,272


107,242

Operating expenses:









Selling and marketing 


14,500


13,307


54,547


37,181

Research and development 


22,892


15,036


87,114


41,687

General and administrative 


15,753


29,196


58,598


56,657

Total operating expenses 


53,145


57,539


200,259


135,525

Loss from operations


(16,655)


(25,313)


(62,987)


(28,283)

Other income (expense), net


(4,548)


(26)


(12,871)


2,288

Loss before provision for income taxes 


(21,203)


(25,339)


(75,858)


(25,995)

Provision for income taxes 


443


70


2,595


1,116

Net loss


(21,646)


(25,409)


(78,453)


(27,111)

Noncontrolling interest


(1,382)


(429)


(6,411)


(429)

Net loss attributable to stockholders


$(20,264)


$(24,980)


$     (72,042)


$ (26,682)










Net loss per share:









Basic 


$    (0.28)


$    (0.40)


(1.02)


$     (0.44)

Diluted


$    (0.28)


$    (0.40)


$         (1.02)


$     (0.44)

Weighted average common shares  used in computing net loss per share









Basic 


71,473


62,451


70,887


60,085

Diluted


71,473


62,451


70,887


60,085










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

Cost of revenue 


$       401


$       426


$        1,672


$    1,312

Selling and marketing 


$       184


$       182


$           729


$       695

Research and development 


$       667


$    1,130


$        2,340


$    2,922

General and administrative 


$       905


$    5,230


$        3,717


$    8,436

 

Accuray Incorporated

Consolidated Balance Sheets

(in thousands, except share amounts)










 June 30, 


 June 30, 


2012


2011


(unaudited)



 Assets 




 Current assets: 




 Cash and cash equivalents 

$  143,504


$  95,906

 Restricted cash  

1,560


3,172

 Accounts receivable, net of allowance for doubtful accounts of $1,700 and $324 at 




 June 30, 2012 and June 30, 2011, respectively 

67,890


61,853

 Inventories  

81,693


97,836

 Prepaid expenses and other current assets 

16,715


21,115

 Deferred cost of revenue—current  

4,896


5,840

 Total current assets  

316,258


285,722





 Property and equipment, net 

37,458


44,823

 Goodwill  

59,215


54,474

 Intangible assets, net 

49,819


66,039

 Deferred cost of revenue—noncurrent  

2,433


2,258

 Other assets 

7,987


2,468

 Total assets  

$  473,170


$455,784

 Liabilities and equity 




 Current liabilities: 




 Accounts payable  

$        18,209


$  38,645

 Accrued compensation 

23,071


27,406

 Other accrued liabilities 

31,646


43,012

 Customer advances 

18,177


25,829

 Deferred revenue—current  

83,071


68,152

 Total current liabilities  

174,174


203,044

 Long-term liabilities: 




 Long-term other liabilities 

5,988


6,321

 Deferred revenue—noncurrent  

9,675


6,092

 Long-term debt 

79,466


-

 Total liabilities  

269,303


215,457





 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: 71,864,268 and  



 72,199,837 shares at June 30, 2012 and June 30, 2011, respectively; outstanding: 




 71,864,268 and 70,059,819 shares at June 30, 2012 and June 30, 2011, respectively 

72


70

 Additional paid-in capital  

409,143


373,963

 Accumulated other comprehensive income 

2,837


127

 Accumulated deficit  

(216,427)


(144,385)

 Total stockholders' equity 

195,625


229,775

 Noncontrolling interest 

8,242


10,552

 Total equity 

203,867


240,327

 Total liabilities and equity 

$  473,170


$455,784





 

 

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 and twelve months ended June 30, 2012. "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 are 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 and twelve months ended June 30, 2012. We use the following measures shown in the following tables, which are not calculated in accordance with GAAP. All adjustments to reconcile to GAAP 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.

For comparison purposes, we have also presented our pro forma results for the three and twelve months ended June 30, 2011 based on the combined total of the financial results previously reported or recorded by Accuray and TomoTherapy as separate companies, excluding expenses related to the acquisition incurred during this period. Please refer to the pro forma financial results tables starting on page 9 for additional details.

 


Revenue

Three months ended June 30,


Years ended June 30,



2012


2012


2012


2011


2012


2012


2012


2011



GAAP


Adjustments


Non-GAAP


Pro forma Combined Results


GAAP


Adjustments