ACCURAY INCORPORATED SUNNYVALE, Calif., Jan. 31, 2017 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) announced today financial results for the second fiscal quarter and six months ended December 31, 2016.
Fiscal Second Quarter Highlights
-- Ending backlog increased 16 percent year-over-year to $426.2 million;
gross orders were $78.5 million with net orders of $54.1 million
-- Strong mix of CyberKnife® System orders; greater than 70% equipped with
the InCise(TM) Multileaf Collimator ("MLC")
-- Three-unit multi-system Radixact(TM) System order for Hong Kong
Sanatorium and Hospital
-- Multiple sites in the US and Europe now equipped and treating patients
with the Radixact System
"Our 17% year-over-year gross order growth during the second quarter was led by increased demand for our CyberKnife system, especially from replacement orders to existing customers," said Joshua H. Levine, president and chief executive officer. "In addition, gross orders were favorably impacted by solid demand for our new Radixact System, which will be fully launched by the end of the third fiscal quarter. We performed above expectations in regards to gross order performance in the first half of the year and are seeing several indicators that lead us to believe our strong backlog growth will continue through the end of fiscal 2017 and into fiscal 2018."
Financial Highlights
Gross product orders totaled $78.5 million for the 2017 fiscal second quarter compared to $67.1 million for the prior fiscal year period. Ending product backlog was $426.2 million, approximately 16 percent higher than backlog at the end of the prior fiscal year second quarter.
Total revenue was $87.5 million compared to $108.9 million in the prior fiscal year second quarter. Service revenue totaled $52.1 million compared to $53.1 million, while product revenue totaled $35.4 million compared to $55.8 million in the prior fiscal year second quarter. The decrease in revenue was primarily due to lower sales unit volume as well as product and channel mix.
Total gross profit for the 2017 fiscal second quarter was $31.4 million or 36 percent of sales, comprised of product gross margin of 35 percent and service gross margin of 36 percent. This compares to total gross profit of $42.6 million or 39 percent of sales, comprised of product gross margin of 41 percent and service gross margin of 37 percent for the prior fiscal year second quarter.
Operating expenses were $36.2 million, a decrease of 15 percent compared with $42.7 million in the prior fiscal second quarter. The decrease was primarily because of lower legal fees, tradeshow expenses and research and development expenses.
Net loss was $9.4 million, or $0.11 per share, for the second quarter of fiscal 2017, compared to a net loss of $6.0 million, or $0.08 per share, for the second quarter of fiscal 2016.
Adjusted EBITDA for the second quarter of fiscal 2017 was $1.8 million, compared to $6.8 million in the prior fiscal year second quarter.
Cash, cash equivalents and investments were $108.4 million as of December 31, 2016, a decrease of $16.0 million from September 30, 2016, of which $5.0 million was due to secured debt principal pay down.
Six Month Highlights
For the six months ended December 31, 2016, gross product orders totaled $128.8 million compared to $132.0 million for the same prior year period.
Total revenue for the six months ended December 31, 2016, was $174.0 million compared to $198.5 million in the prior fiscal year period. Service revenue totaled $103.0 million which was flat from the prior fiscal year period, while product revenue totaled $71.0 million compared to $95.8 million in the prior year period. The decrease in revenue is the result of modestly extended revenue conversion times mainly resulting from a higher percentage of order growth in our distributor channels, which results in less direct control over the timing of revenue.
Total gross profit for the six months ended December 31, 2016, was $62.7 million or 36 percent of sales, comprised of product gross margin of 35 percent and service gross margin of 37 percent. This compares to total gross profit of $76.5 million or 39 percent of sales, comprised of product gross margin of 42 percent and service gross margin of 35 percent for the same prior fiscal year period. The decrease in gross margin stemmed from lower sales unit volume as well as product and channel mix.
Operating expenses were $74.1 million, a decrease of 12 percent compared with $83.8 million in the prior fiscal year period. The decrease was primarily because of lower legal fees and research and development expenses.
Net loss was $19.3 million, or $0.24 per share, for the six months ended December 31, 2016, compared to a net loss of $19.1 million, or $0.24 per share, for the prior year fiscal period.
Adjusted EBITDA for the six months ended December 31, 2016 was $2.9 million, compared to $5.7 million in the prior fiscal year period.
Cash, cash equivalents and investments were $108.4 million as of December 31, 2016, a decrease of $58.6 million from June 30, 2016 as the result of using $36.6 million to fully repay the Company's 3.75 percent convertible debt in August 2016 and $5.0 million of additional secured debt principal pay down in the current quarter.
2017 Financial Guidance
The Company is today reaffirming guidance originally provided on August 17, 2016 for fiscal year 2017 for all metrics except operating expenses, as follows:
-- Revenue: $410.0 million to $420.0 million representing growth of
approximately 3 percent to 5 percent year-over-year
-- Operating Expenses down approximately 3 to 4 percent over prior year
(August 17, 2016 guidance for this metric was "Approximately $164.0
million or flat with the prior year")
-- Adjusted EBITDA: $32.0 million to $38.0 million representing growth of
approximately 30 percent to 55 percent year-over-year
-- Gross Orders growth of approximately 5 percent
"During the second half of fiscal 2017, there are two major variables that could affect our revenue including China's timing of Class A radiotherapy licenses and the impact of a higher mix of distributor orders which could continue to result in timing uncertainty," continued Mr. Levine. "We are proactively communicating with our independent distributor partners to understand how to provide additional support around site planning and installation activities to improve the visibility into the timing of revenue conversion."
Conference Call Information
Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m. ET today to discuss its fiscal second quarter results and recent corporate developments. 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): 52778138
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 January 31, 2017 at 5:00 p.m. PT/8:00 p.m. ET and ending February 7, 2017. The replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International), Conference ID: 52778138.
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.
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 regarding orders, backlog, operating expenses, revenues and adjusted EBITDA, ability to meet financial targets, ability to influence revenue conversion, 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 timing of the China Class A license announcement, the success of the adoption of our CyberKnife, TomoTherapy and Radixact 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 24, 2016, the company's report on Form 10-Q, which was filed on November 1, 2016 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 Six Months Ended
December 31, December 31,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
Gross Orders $78,454 $67,078 $128,789 $132,006
Net Orders 54,069 42,679 91,256 87,478
Order Backlog 426,158 366,668 426,158 366,668
Net revenue:
Products $35,398 $55,759 $70,997 $95,754
Services 52,104 53,153 103,011 102,789
Total net revenue 87,502 108,912 174,008 198,543
Cost of revenue:
Cost of products 22,969 32,717 46,321 55,734
Cost of services 33,146 33,624 64,956 66,340
Total cost of
revenue 56,115 66,341 111,277 122,074
------ ------ ------- -------
Gross profit 31,387 42,571 62,731 76,469
Operating expenses:
Research and
development 11,944 14,931 24,173 29,227
Selling and
marketing 13,904 15,076 28,222 28,493
General and
administrative 10,362 12,688 21,706 26,104
Total operating
expenses 36,210 42,695 74,101 83,824
------ ------ ------ ------
Loss from operations (4,823) (124) (11,370) (7,355)
Other expense, net (4,120) (5,070) (8,125) (10,161)
Loss before
provision for
income taxes (8,943) (5,194) (19,495) (17,516)
(Benefit from)
provision for
income taxes 426 833 (200) 1,537
Net loss $(9,369) $(6,027) $(19,295) $(19,053)
======= ======= ======== ========
Net loss per share -
basic and diluted $(0.11) $(0.08) $(0.24) $(0.24)
====== ====== ====== ======
Weighted average common shares used in
computing loss per share:
Basic and diluted 82,328 80,346 81,952 80,053
====== ====== ====== ======
Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited)
December 31, June 30,
2016 2016
---- ----
Assets
Current assets:
Cash and cash
equivalents $69,472 $119,771
Investments 38,908 47,239
Restricted
cash 470 891
Accounts
receivable,
net 71,673 56,810
Inventories 116,902 115,987
Prepaid
expenses and
other
current
assets 14,516 16,098
Deferred cost
of revenue 4,782 4,884
Total current
assets 316,723 361,680
Property and
equipment,
net 24,967 27,878
Goodwill 57,712 57,848
Intangible
assets, net 3,634 7,611
Deferred cost
of revenue 610 1,996
Other assets 11,517 12,020
Total assets $415,163 $469,033
======== ========
Liabilities and equity
Current liabilities:
Accounts
payable $25,154 $15,229
Accrued
compensation 18,623 18,725
Other accrued
liabilities 16,788 22,184
Short-term
debt 3,500 39,900
Customer
advances 24,716 22,123
Deferred
revenue 91,032 92,051
Total current
liabilities 179,813 210,212
Long-term liabilities:
Long-term
other
liabilities 10,532 10,984
Deferred
revenue 11,497 17,665
Long-term
debt 166,668 170,512
Total
liabilities 368,510 409,373
Equity:
Common stock 83 81
Additional
paid-in
capital 488,908 481,346
Accumulated
other
comprehensive
loss (2,236) (960)
Accumulated
deficit (440,102) (420,807)
Total equity 46,653 59,660
------ ------
Total
liabilities
and equity $415,163 $469,033
======== ========
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 Six Months Ended
December 31, December 31,
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
GAAP net loss $(9,369) $(6,027) $(19,295) $(19,053)
Amortization of
intangibles (a) 1,989 1,988 3,977 3,976
Depreciation (b) 2,636 2,514 5,303 5,085
Stock-based
compensation (c) 2,914 3,365 6,387 5,879
Interest expense,
net (d) 3,172 4,138 6,764 8,294
(Benefit from)
provision for
income taxes 426 833 (200) 1,537
Adjusted EBITDA $1,768 $6,811 $2,936 $5,718
====== ====== ====== ======
(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 and term loan
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, 2017
--------
From To
---- ---
GAAP net loss $(14,575) $(8,575)
Amortization of
intangibles (a) 7,950 7,950
Depreciation (b) 10,325 10,325
Stock-based
compensation (c) 12,800 12,800
Interest expense,
net (d) 13,500 13,500
Provision for income
taxes 2,000 2,000
Adjusted EBITDA $32,000 $38,000
======= =======
(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 and tem loan
Doug Sherk Beth Kaplan
Investor Relations, EVC Group Public Relations Director, Accuray
+1 (415) 652-9100 +1 (408) 789-4426
dsherk@evcgroup.com bkaplan@accuray.com
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SOURCE Accuray Incorporated
