Accuray Reports Fourth Quarter and Fiscal 2018 Financial Results
SUNNYVALE, Calif., Aug. 16, 2018 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and fiscal year ended June 30, 2018.
Q4 Fiscal 2018 and Recent Operating Highlights
-- Gross orders increased 12 percent to $96.4 million
-- Revenue increased to $113.8 million, the highest ever quarterly revenue
reported
-- Cash, cash equivalents, investments and short-term restricted cash
increased sequentially by $19.8 million to $92.9 million at June 30,
2018
-- Won a multi-system, multi-hospital order from Mercy for Radixact and
CyberKnife M6 systems
-- Installed base in Japan reaches 100 systems
Fiscal Year 2018 Highlights
-- Ending backlog increased 6 percent year-over-year to $478.5 million
-- Gross margin expanded 300 basis points year-over-year to 40 percent
-- Revenue increased 6 percent over the prior fiscal year to $404.9 million
-- Retired $40 million in convertible notes, reducing potential underlying
shareholder dilution
"With fourth quarter gross order growth of 12 percent over the last fiscal year, we had a solid finish to our fiscal year," said Joshua H. Levine, president and chief executive officer. "We also generated gross order growth for the full fiscal year from three of our four regions and record fourth quarter sales. At the same time, we increased our year-end cash position due to our improved operating results and paid down debt by approximately $33 million. These improved financial metrics occurred while we increased the investment in our product roadmap, which is expected to result in Accuray bringing to market new imaging software and true motion correction for Radixact as well as CyberKnife enhancements in the near future. Our product portfolio is the strongest it has ever been and the technology innovations associated with our key development programs will position the Company for growth going forward."
Q4 Fiscal 2018 Financial Highlights
Gross product orders totaled $96.4 million for the 2018 fiscal fourth quarter compared to $85.7 million for the prior fiscal year fourth quarter. Ending product backlog was $478.5 million, approximately 6 percent higher than backlog at the end of the fourth quarter of the prior fiscal year.
Total revenue was $113.8 million, an increase of 2 percent compared to $112.1 million in the prior fiscal year fourth quarter. Service revenue totaled $59.2 million compared to $51.5 million in the prior fiscal year fourth quarter, while product revenue totaled $54.6 million compared to $60.6 million in the prior fiscal year fourth quarter. The increase in service revenue was primarily from Accuray's recent software releases for both treatment planning and connectivity and install base growth. Product revenue decreased 10 percent compared to the prior fiscal year fourth quarter due to a decrease in unit volume, partially offset by higher average sales price per unit.
Total gross profit for the fiscal fourth quarter of 2018 was $48.0 million or approximately 42.2 percent of sales, comprised of product gross margin of 47.4 percent and service gross margin of 37.4 percent. This compares to total gross profit of $43.2 million or 38.5 percent of sales, comprised of product gross margin of 38.2 percent and service gross margin of 39.0 percent for the prior fiscal year fourth quarter. The increase in gross margin is the result of year-over-year pricing increases driven by the Company's latest generation platforms.
Net loss was $0.9 million, or $0.01 per share, for the fourth quarter of fiscal 2018, compared to a net loss of $5.3 million, or $0.06 per share, for the fourth quarter of fiscal 2017.
Adjusted EBITDA for the fourth quarter of fiscal 2018 was $7.8 million, compared to $10.3 million in the prior fiscal year fourth quarter.
Cash, cash equivalents, investments and short-term restricted cash were $92.9 million as of June 30, 2018, an increase of $19.8 million from March 31, 2018.
Fiscal Year 2018 Highlights
For the fiscal year ended June 30, 2018, gross product orders totaled $304.9 million, representing growth of 2 percent compared to the prior fiscal year period.
Total revenue was $404.9 million compared to $383.4 million in the prior fiscal year period. Service revenue totaled $221.0 million compared to $203.8 million from the prior fiscal year period, while product revenue totaled $183.9 million compared to $179.6 million in the prior year period. The increase in service revenue is primarily from higher upgrade revenue and increased install base.
Total gross profit for the year ended June 30, 2018 was $161.7 million or 39.9 percent of sales, comprised of product gross margin of 44.0 percent and service gross margin of 36.6 percent. This compares to total gross profit of $141.3 million or 36.9 percent of sales, comprised of product gross margin of 36.9 percent and service gross margin of 36.8 percent for the same prior fiscal year period. The increase in product gross margin is primarily attributable to higher pricing on Accuray's latest generation platforms and the intangible amortization charge from the TomoTherapy acquisition which was fully amortized in the fourth quarter of the prior year.
Operating expenses were $165.5 million, an increase of 9 percent compared to $151.2 million in the prior fiscal year period. The increase in overall operating expenses was driven by an increase of $7.3 million in research and development expenses due to investments accelerating the Company's product roadmap in fiscal 2018. Sales and marketing expenses increased by $2.6 million year over year, primarily resulting from additional personnel in the Company's US commercial organization. In addition, there was an increase of $4.4 million in general and administrative expenses primarily due to increased headcount and investment in Accuray's China strategy.
Net loss was $23.9 million, or $0.28 per share, for the fiscal year ended June 30, 2018, compared to a net loss of $29.6 million, or $0.36 per share, for the prior year fiscal period.
Adjusted EBITDA for the fiscal year ended June 30, 2018 was $17.1 million, compared to $20.4 million in the prior fiscal year period.
2019 Financial Guidance
The Company is introducing guidance for fiscal year 2019 as follows:
-- Revenue: Product revenue growth is expected to range between 4 and 8
percent and service revenue is expected to grow approximately 2 percent,
resulting in total revenue of between $415.0 million to $425.0 million;
-- Adjusted EBITDA: $21.0 million to $27.0 million representing growth of
approximately 23 percent to 58 percent year-over-year
CFO Transition
Accuray also announced today that Kevin Waters, CFO of Accuray since September 2015, will be leaving the Company effective October 1, 2018. Mr. Waters has accepted an offer to become the CFO of a privately held company in the urology market segment. He will remain as CFO of Accuray until October 1, 2018 and has agreed to be available to the Company to assist in any ongoing transition items through the end of the calendar year. Shig Hamamatsu, who joined the finance team last year and is currently Accuray's VP of Finance and Chief Accounting Officer, will assume the CFO responsibilities effective October 1st as Interim Chief Financial Officer while Accuray initiates a search.
"On behalf of our board and leadership team, I want to thank Kevin for his service and dedication to Accuray over the past three years and wish him the best in his new endeavor," said Joshua H. Levine, president and chief executive officer. "We believe the thoughtful planning and timeline we have built into this transition plan will ensure there is no impact on our goals and objectives."
Conference Call Information
Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m. ET today to discuss results for the fourth quarter and fiscal 2018 as well as 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): 8149058
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: 8149058. 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 schedule below.
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, revenue, and adjusted EBITDA; expectations regarding the company's product portfolio and future product enhancements and releases; the company's ability to build and achieve market momentum for its products and grow the company; and the company's leadership position in radiation oncology innovation and technologies. These forward-looking statements involve risks and uncertainties. If any of these risk or uncertainties materialize, or if any of the company's assumptions prove incorrect, actual results could differ materially from the results express or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the company's ability to achieve widespread market acceptance of its products, the company's ability to develop new products or enhance existing products to meet customers' needs and compete favorably in the market, the company's ability to effectively manage its growth, the company's ability to maintain or increase its gross margins on product sales and services, the company's ability to meet the covenants under its credit facilities, the company's ability to convert backlog to revenue, risks and uncertainties related to the China Class A license announcement, and such other risks identified under the heading "Risk Factors" in the company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on August 25, 2017, the company's Quarterly Reports on Form 10-Q, filed with the SEC on November 3, 2017, February 5, 2018, and May 2, 2018 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.
Todd Kehrli Beth Kaplan
Investor Relations, EVC Group Public Relations Director, Accuray
+1 (310) 625-4462 +1 (408) 789-4426
tkehrli@evcgroup.com bkaplan@accuray.com
Financial Tables to Follow
Accuray Incorporated
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Gross Orders $96,442 $85,736 $304,903 $298,348
Net Orders 64,967 63,473 209,534 226,559
Order Backlog 478,482 452,846 478,482 452,846
Net revenue:
Products $54,632 $60,582 $183,898 $179,611
Services 59,154 51,512 220,999 203,803
------ ------ ------- -------
Total net revenue 113,786 112,094 404,897 383,414
Cost of revenue:
Cost of products 28,747 37,462 103,038 113,357
Cost of services 37,054 31,447 140,164 128,716
------ ------ ------- -------
Total cost of revenue 65,801 68,909 243,202 242,073
------ ------ ------- -------
Gross profit 47,985 43,185 161,695 141,341
Operating expenses:
Research and development 14,588 13,264 57,251 49,921
Selling and marketing 16,864 16,230 60,105 57,477
General and administrative 13,440 10,876 48,136 43,766
------ ------ ------ ------
Total operating expenses 44,892 40,370 165,492 151,164
------ ------ ------- -------
Income (loss) from operations 3,093 2,815 (3,797) (9,823)
Other expense, net (4,450) (7,674) (19,224) (18,718)
------ ------ ------- -------
Loss before provision for income
taxes (1,357) (4,859) (23,021) (28,541)
Provision for (benefit from) income
taxes (411) 396 878 1,038
---- --- --- -----
Net loss $(946) $(5,255) $(23,899) $(29,579)
===== ======= ======== ========
Net loss per share -basic
and diluted $(0.01) $(0.06) $(0.28) $(0.36)
====== ====== ====== ======
Weighted average common shares used
in computing loss per share:
Basic and diluted 85,677 83,179 84,893 82,495
====== ====== ====== ======
Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 30, June 30,
2018 2017
---- ----
Assets
Current assets:
Cash and cash equivalents $83,083 $72,084
Investments - 23,909
Restricted cash 9,830 12,829
Accounts receivable, net 65,994 72,789
Inventories 108,540 105,054
Prepaid expenses and other current assets 15,569 18,988
Deferred cost of revenue 1,141 3,350
----- -----
Total current assets 284,157 309,003
Property and equipment, net 23,698 23,062
Goodwill 57,855 57,812
Intangible assets, net 821 964
Deferred cost of revenue - 206
Other assets 12,196 15,417
------ ------
Total assets $378,727 $406,464
======== ========
Liabilities and equity
Current liabilities:
Accounts payable $19,694 $17,486
Accrued compensation 28,992 25,402
Other accrued liabilities 22,448 23,870
Short-term debt - 113,023
Customer advances 22,896 16,926
Deferred revenue 75,404 87,785
------ ------
Total current liabilities 169,434 284,492
Long-term liabilities:
Long-term other liabilities 8,608 10,068
Deferred revenue 20,976 13,823
Long-term debt 131,077 51,548
------- ------
Total liabilities 330,095 359,931
Equity:
Common stock 86 84
Additional paid-in capital 521,738 496,887
Accumulated other comprehensive income (loss) 1,093 (52)
Accumulated deficit (474,285) (450,386)
-------- --------
Total equity 48,632 46,533
------ ------
Total liabilities and equity $378,727 $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 Twelve Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
GAAP net loss $(946) $(5,255) $(23,899) $(29,579)
Amortization of intangibles (a) 36 1,681 143 7,646
Depreciation (b) 2,309 2,512 9,589 10,395
Stock-based compensation 3,215 3,644 12,289 13,629
Interest expense, net (c) 3,627 7,358 18,087 17,260
Provision for income taxes (411) 396 878 1,038
---- --- --- -----
Adjusted EBITDA $7,830 $10,336 $17,087 $20,389
====== ======= ======= =======
_______________________________
(a) consists of amortization of intangibles -developed technology and
acquired patents.
(b) consists of depreciation, primarily on property and equipment.
(c) consists primarily of interest income from available-for-sale
securities, interest expense associated with our outstanding debt 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, 2019
-------------
From To
---- ---
GAAP net loss $(19,400) $(13,400)
Depreciation and amortization (a) 10,500 10,500
Stock-based compensation 13,100 13,100
Interest expense, net (b) 14,700 14,700
Provision for income taxes 2,100 2,100
----- -----
Adjusted EBITDA $21,000 $27,000
======= =======
_____________________________
(a) consists of depreciation, primarily on property and equipment as
well as amortization of intangibles -developed technology and acquired
patents.
(b) 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.
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SOURCE Accuray Incorporated
