Accuray Generated $55.6 Million in First Quarter Gross Orders; Revenue Increased 5 Percent Year over Year
SUNNYVALE, Calif., Oct. 24, 2017 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the first fiscal quarter ended September 30, 2017.
First Quarter Highlights
-- Gross orders increased 11 percent to $55.6 million, net orders were
$51.0 million. Ending backlog increased 14 percent year-over-year to
$465.0 million
-- Gross orders featured a strong contribution from TomoTherapy® and
Radixact(TM) Systems that represented approximately 75 percent of unit
mix
-- Revenue increased 5 percent year-over-year to $91.0 million driven by
product revenue growth of 9 percent
-- Gross margin expanded approximately 600 basis points year-over-year to
42 percent driven by significant improvements in both product and
service gross margins
-- Enhanced capital structure by reducing short term debt and potential
share dilution by refinancing and extending convertible debt
-- Newly published 10-year study data demonstrated the clinical efficacy of
the CyberKnife® System with low-risk prostate cancer that showed 98.4
percent of study participants had local disease control 10-years post
treatment ((1))
"Our 11 percent year-over-year gross orders growth during the first quarter was highlighted by Radixact system wins primarily in new and competitor bunkers," said Joshua H. Levine, president and chief executive officer. "Customers cite the precision, case mix versatility and speed of our systems as reasons for their decision to select Accuray. Our first quarter results are on track to achieving our growth objectives for the year and therefore we are reaffirming today the fiscal 2018 guidance we provided in August."
Financial Highlights
Gross product orders totaled $55.6 million for the 2018 fiscal first quarter compared to $50.3 million for the prior fiscal year period. Ending product backlog was $465.0 million, approximately 14 percent higher than backlog at the end of the prior fiscal year first quarter.
Total revenue was $91.0 million compared to $86.5 million in the prior fiscal year first quarter. Service revenue totaled $52.0 million compared to $50.9 million, while product revenue totaled $38.9 million compared to $35.6 million in the prior fiscal year first quarter. The increase in product revenue was primarily due to backlog conversion of orders to revenue from the EIMEA and Japan regions. Service revenue increased due to the continued install base expansion.
Total gross profit for the fiscal 2018 first quarter was $38.1 million or 42 percent of sales, comprised of product gross margin of 43 percent and service gross margin of 41 percent. This compares to total gross profit of $31.3 million or 36 percent of sales, comprised of product gross margin of 34 percent and service gross margin of 38 percent for the prior fiscal year fiscal first quarter. The increase in gross margin was due to several factors including: volume, product mix, intangible amortization expiring in the fourth quarter of prior year and cost down initiatives on both product and service cost of goods sold.
Operating expenses were $40.2 million, an increase of 6 percent compared with $37.9 million in the prior fiscal first quarter. The increase is primarily due to investments in research and development as well as sales and marketing. Fiscal 2018 operating expense is now anticipated to be 3 to 5 percent higher than fiscal 2017, which is a run rate of approximately $39 to $40 million per quarter.
Net loss was $9.4 million, or $0.11 per share, for the first quarter of fiscal 2018, compared to a net loss of $9.9 million, or $0.12 per share, for the first quarter of fiscal 2017. Net loss for the first quarter of fiscal 2018 included a $3.2 million non-cash early extinguishment of debt expense.
Adjusted EBITDA for the first quarter of fiscal 2018 was $3.2 million, compared to $1.2 million in the prior fiscal year first quarter.
Cash, cash equivalents, investments and short-term restricted cash were $94.4 million as of September 30, 2017 compared to $108.8 million as of June 30, 2017.
As previously announced in August 2017, the company enhanced its capital structure through the issuance of approximately $85.0 million of 3.75% convertible senior notes due July 2022 and concurrently retiring approximately $75.0 million of previously outstanding 3.50% convertible senior notes due February 2018.
2018 Financial Guidance
The company is reaffirming the revenue, adjusted EBITDA, and gross orders guidance provided on August 22, 2017 as follows:
-- Revenue: $390.0 million to $400.0 million representing growth of
approximately 2 percent to 4 percent year-over-year with product revenue
growing approximately 5 to 10 percent year-over-year;
-- Adjusted EBITDA: $25.0 million to $30.0 million representing growth of
approximately 23 percent to 47 percent year-over-year; and
-- Gross Orders growth of approximately 5 percent.
Guidance for non-GAAP financial measures excludes amortization of intangibles, depreciation, stock-based compensation expense, interest expense, net and provision for income taxes. For more information regarding the non-GAAP financial measures discussed in this press release, please see "Use of Non-GAAP Financial Measures" below.
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 first 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): 98682556
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 taped replay of the conference call will be available beginning approximately two hours after the call's conclusion and available for seven days. The replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International), Conference ID: 98682556. An archived webcast will also be available at Accuray's website.
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 financial statement tables included in this press release, and investors are encouraged to review this reconciliation.
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 and excludes expenses that may have a material impact on the company's reported financial results. This 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, revenues, adjusted EBITDA, operating expenses and run rates, 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 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 Annual Report on Form 10-K, which was filed on August 25, 2017, 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.
(1) Katz A (September 09, 2017) Stereotactic Body
Radiotherapy for Low-Risk Prostate Cancer: A
Ten-Year Analysis. Cureus 9(9): e1668. DOI
10.7759/cureus.1668
Financial Tables to Follow
Accuray Incorporated
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,
-------------------
2017 2016
---- ----
Gross Orders $55,647 $50,335
Net Orders 51,038 37,187
Order Backlog 464,968 407,487
Net revenue:
Products $38,916 $35,599
Services 52,034 50,907
------ ------
Total net revenue 90,950 86,506
Cost of revenue:
Cost of products 22,102 23,352
Cost of services 30,742 31,810
------
Total cost of
revenue 52,844 55,162
------ ------
Gross profit 38,106 31,344
Operating expenses:
Research and
development 14,093 12,229
Selling and
marketing 14,757 14,318
General and
administrative 11,308 11,344
Total operating
expenses 40,158 37,891
------ ------
Loss from
operations (2,052) (6,547)
Other expense,
net (6,571) (4,005)
Loss before
provision for
income taxes (8,623) (10,552)
Provision for
(benefit from)
income taxes 759 (626)
--- ----
Net loss $(9,382) $(9,926)
======= =======
Net loss per
share -basic
and diluted $(0.11) $(0.12)
====== ======
Weighted average common shares used in
computing loss per share:
Basic and diluted 83,747 81,576
====== ======
Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited)
September 30, June 30,
2017 2017
---- ----
Assets
Current assets:
Cash and cash equivalents $67,916 $72,084
Investments 23,931 23,909
Restricted cash 2,547 12,829
Accounts receivable, net 69,650 72,789
Inventories 113,421 105,054
Prepaid expenses and other
current assets 16,909 18,988
Deferred cost of revenue 2,497 3,350
Total current assets 296,871 309,003
Property and equipment,
net 21,672 23,062
Goodwill 57,863 57,812
Intangible assets, net 929 964
Deferred cost of revenue 74 206
Other assets 16,543 15,417
Total assets $393,952 $406,464
======== ========
Liabilities and equity
Current liabilities:
Accounts payable $22,199 $17,486
Accrued compensation 20,813 25,402
Other accrued liabilities 18,113 23,870
Short-term debt 39,151 113,023
Customer advances 19,364 16,926
Deferred revenue 80,303 87,785
Total current liabilities 199,943 284,492
Long-term liabilities:
Long-term other
liabilities 10,414 10,068
Deferred revenue 16,080 13,823
Long-term debt 118,869 51,548
Total liabilities 345,306 359,931
Equity:
Common stock 84 84
Additional paid-in
capital 508,014 496,887
Accumulated other
comprehensive income
(loss) 316 (52)
Accumulated deficit (459,768) (450,386)
Total equity 48,646 46,533
------ ------
Total liabilities and
equity $393,952 $406,464
======== ========
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
September 30,
-------------------
2017 2016
---- ----
GAAP net loss $(9,382) $(9,926)
Amortization
of
intangibles
(a) 36 1,988
Depreciation
(b) 2,478 2,667
Stock-based
compensation
(c) 2,432 3,473
Interest
expense, net
(d) 6,820 3,592
Provision for
(benefit
from) income
taxes 759 (626)
Adjusted
EBITDA $3,143 $1,168
====== ======
(a) consists of amortization of
intangibles -developed technology
and acquired patents.
(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, interest expense
associated with our convertible
notes and revolving credit facility
and non-cash loss on extinguishment
of debt.
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, 2018
-------------
From To
---- ---
GAAP
net
loss $(20,600) $(15,600)
Depreciation
and
amortization
(a) 10,400 10,400
Stock-
based
compensation
(b) 13,000 13,000
Interest
expense,
net
(c) 19,000 19,000
Provision
for
income
taxes 3,200 3,200
Adjusted
EBITDA $25,000 $30,000
======= =======
(a) consists of depreciation,
primarily on property and equipment
as well as amortization of
intangibles -developed technology
and acquired patents.
(b) consists of stock-based
compensation in accordance with ASC
718.
(c) consists primarily of interest
income from available-for-sale
securities, interest expense
associated with our convertible
notes and revolving credit facility
and non-cash loss on extinguishment
of debt.
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
