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

Aug 20, 2015, 16:01 ET from Accuray Incorporated

SUNNYVALE, Calif., Aug. 20, 2015 /PRNewswire/ -- 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.

About Accuray

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)

(Unaudited)

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

(in thousands)

(Unaudited)

 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)

(in thousands)

(Unaudited)

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)

(in thousands)

(Unaudited)

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 

 

SOURCE Accuray Incorporated



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