Accuray Reports Financial Results for Second Quarter of Fiscal Year 2015

Jan 27, 2015, 16:01 ET from Accuray Incorporated

SUNNYVALE, Calif., Jan. 27, 2015 /PRNewswire/ -- Accuray Incorporated (Nasdaq: ARAY) announced today financial results for the second fiscal quarter and six months ended December 31, 2014.

Second Quarter Highlights

  • Generates improved order volume with gross orders of $72.3 million
  • Increases total revenue by 5% to $98.2 million from year ago period
  • Expands service gross profit margins sequentially to 36% from 31%
  • Achieves adjusted EBITDA of $3.7 million                                                                      

"Our fiscal second quarter results illustrate the progress our team is making in executing our plan.  The company's gross system order volume increased as expected and supports our belief that we will see gross orders in the second half of the fiscal year grow at a rate faster than the overall market," said Joshua H. Levine, president and chief executive officer of Accuray.  "Additionally, the trends in the business enable us to reaffirm our full fiscal year financial guidance despite foreign currency headwinds that have materially reduced our overall year-to-date revenue results.  The Accuray team remains focused on generating profitable revenue growth, expanding gross profit margins and ultimately driving sustained cash flow and profitability for all of our stakeholders."

Financial Highlights
Gross product orders totaled $72.3 million for the second fiscal quarter, a decrease of $8.0 million or 10% from the second quarter of the prior fiscal year.  On a constant currency basis, gross product orders for the current year fiscal quarter would have totaled $74.4 million.  Ending product backlog was $358 million or approximately 1% lower than backlog at the end of the prior fiscal year second quarter.

Total revenue reached $98.2 million, representing an increase of 5%, or 9% on a constant currency basis, from the prior fiscal year second quarter.  The Americas region total revenues were $45.7 million, an increase of 31% from the prior fiscal year second quarter. Total revenues outside the Americas region were $52.5 million, a decrease of 11% from the prior fiscal year second quarter.  Product revenues totaled $47.7 million and represented an increase of 6% from the prior fiscal year second quarter while service revenues totaled $50.5 million, an increase of 4% over the prior fiscal year second quarter.

Total gross profit for the second quarter of fiscal 2015 was $38.5 million or 39% of sales comprised of product gross margin of 43% and service gross margin of 36%.  This compares to total gross margin of 41%, product gross margin of 45% and service gross margin of 37% for the prior fiscal year second quarter.  Total gross margin for the second quarter of fiscal 2015 would have been 41% on a constant currency basis as compared to the prior year period. 

Operating expenses were $42.1 million, reflecting an increase of 8% compared with $38.9 million in the prior fiscal year second quarter.  Included in other income and expense is a foreign exchange loss of approximately $1.5 million.  Selling and marketing expenses rose 11% against the prior fiscal year second quarter due to the growth and compensation of the sales force that occurred in the prior fiscal year.  General and administrative expenses also grew 10% primarily due to legal costs incurred in the second fiscal quarter of 2015. 

Net loss was $10.0 million, or $0.13 per share for the second quarter of fiscal 2015, compared to a net loss of $5.4 million, or $0.07 per share, for the prior fiscal year second quarter. 

Adjusted EBITDA for the second quarter of 2015 was $3.7 million, compared to $6.8 million in the prior fiscal year second quarter.

Cash, cash equivalents, and investments were $150.8 million as of December 31, 2014, a decrease of $1.9 million from September 30, 2014.

Six Month Highlights
For the six months ended December 31, 2014, total revenue reached $180.5 million, representing an increase of 6%, or 9% on a constant currency basis, from the comparable period of fiscal year 2014.  Product revenue for the six month period was $80.7 million, representing an increase of 8% while service revenue was $99.9 million, representing 5% growth over the comparable prior fiscal year period. 

Gross profit margin for the six months ended December 31, 2014 was 37%, comprised of product gross margin of 41% and service gross margin of 34%.  This compares to total gross margin of 38% for the comparable prior fiscal year period.  Total gross margin for the six months ended December 31, 2014 would have been 38% on a constant currency basis as compared to the comparable prior fiscal year period.

Operating expenses were $85.2 million for the six months ended December 31, 2014, compared with $77.7 million in the comparable prior fiscal year period.

Net loss for the six months ended December 31, 2014 was $31.6 million, or $0.41 per share, compared to a net loss of $21.0 million, or $0.28 per share, for the comparable prior fiscal year period.

Adjusted EBITDA for the six months ended December 31, 2014 was a loss of $4.8 million, compared to a profit of $3.0 million in the comparable prior fiscal year period.

2015 Financial Guidance
Accuray reaffirmed its financial guidance for fiscal year 2015 as follows:  total revenue of $390.0 million to $410.0 million and adjusted EBITDA of $18.0 million to $27.0 million.

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: (888) 539-3612    
  • International callers: (719) 325-2494
  • Conference ID Number (U.S. and international): 7150733

Individuals interested in listening to the live conference call via the Internet may do so by logging on to the company's website, www.accuray.com.  In addition, a dial-up replay of the conference call will be available beginning January 27, 2015 at 5:00 p.m. PT/8:00 p.m. ET and ending February 5, 2015.  The replay telephone number is 1-888-203-1112 (USA) or 1-719-457-0820 (International), Conference ID: 7150733.

Use of Non-GAAP Financial Measures
The company 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.

There are limitations in using this non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies.  This non-GAAP financial measure 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 and the reconciliations of the non-GAAP financial measure provided in the schedule below.

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 regarding growth in gross orders, gross profit margins, revenues and adjusted EBITDA, ability to meet financial targets, and Accuray's leadership position in radiation oncology innovation and technologies.  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 successful commercialization of the company's new technologies; 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 report on Form 10-Q which was filed on November 7, 2014, and 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 December 31,


Six Months Ended December 31,



2014


2013


2014


2013










Gross Orders


$      72,261


$      80,294


$    131,024


$    143,692

Net Orders


41,474


59,366


73,756


119,429

Order Backlog


357,831


362,044


357,831


362,044










Net revenue:









Products 


$      47,650


$      45,148


$      80,665


$      74,716

Services 


50,505


48,486


99,871


95,559

Total net revenue 


98,155


93,634


180,536


170,275

Cost of revenue:









Cost of products 


27,171


24,980


47,836


43,581

Cost of services 


32,495


30,483


66,410


62,045

Total cost of revenue 


59,666


55,463


114,246


105,626

Gross profit 


38,489


38,171


66,290


64,649

Operating expenses:









Research and development 


13,917


13,435


28,066


26,385

Selling and marketing 


15,802


14,262


33,776


28,716

General and administrative 


12,361


11,190


23,311


22,550

Total operating expenses 


42,080


38,887


85,153


77,651

Loss from operations


(3,591)


(716)


(18,863)


(13,002)

Other expense, net


(5,528)


(3,775)


(10,989)


(6,235)

Loss before provision for income taxes


(9,119)


(4,491)


(29,852)


(19,237)

Provision for income taxes


873


950


1,790


1,737

Net loss


$      (9,992)


$      (5,441)


$    (31,642)


$    (20,974)










Net loss per share - basic and diluted


$        (0.13)


$        (0.07)


$        (0.41)


$        (0.28)

Weighted average common shares used in computing loss per share:









Basic and diluted


77,924


75,280


77,607


74,990










 

 

 

Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited)






 December 31, 


 June 30, 


2014


2014

 Assets 




 Current assets: 




 Cash and cash equivalents 

$        97,273


$     92,346

 Investments 

53,517


79,553

 Restricted cash 

1,436


1,492

 Accounts receivable, net 

62,987


72,152

 Inventories 

104,490


87,752

 Prepaid expenses and other current assets 

15,076


17,873

 Deferred cost of revenue 

11,960


13,302

 Total current assets 

346,739


364,470

 Property and equipment, net 

30,830


34,391

 Goodwill 

58,015


58,091

 Intangible assets, net 

19,541


23,517

 Deferred cost of revenue 

2,220


2,899

 Other assets 

10,220


11,820

 Total assets 

$         467,565


$      495,188

 Liabilities and equity 




 Current liabilities: 




 Accounts payable 

$        15,980


$     15,639

 Accrued compensation 

19,482


32,569

 Other accrued liabilities 

24,478


24,464

 Customer advances 

19,673


19,804

 Deferred revenue 

92,495


92,093

 Total current liabilities 

172,108


184,569

 Long-term liabilities: 




 Long-term other liabilities 

10,483


6,593

 Deferred revenue 

9,875


9,866

 Long-term debt 

199,152


195,612

 Total liabilities 

391,618


396,640

 Commitment and contingencies 




 Equity: 




 Common stock 

78


77

 Additional paid-in capital 

461,995


451,750

 Accumulated other comprehensive income 

610


1,815

 Accumulated deficit 

(386,736)


(355,094)

 Total equity 

75,947


98,548

 Total liabilities and equity 

$         467,565


$      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 December 31,


   Six Months Ended December 31,



2014


2013


2014


2013

 GAAP net loss 


$        (9,992)


$        (5,441)


$     (31,642)


$       (20,974)

   Amortization of intangibles (a) 


1,988


2,201


3,976


4,403

   Depreciation (b) 


2,994


2,927


5,984


6,173

   Stock-based compensation (c) 


3,854


2,803


7,127


4,983

   Interest expense, net (d) 


4,023


3,341


8,011


6,647

   Provision for income taxes 


873


950


1,790


1,737

 Adjusted EBITDA 


$          3,740


$          6,781


$       (4,754)


$           2,969

 

(a)    

Consists of amortization of intangibles – developed technology, distributor licenses and backlog

(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



RELATED LINKS

http://www.accuray.com