Accuray Reports Fourth Quarter and Fiscal 2019 Financial Results
SUNNYVALE, Calif., Aug. 15, 2019 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and fiscal year ended June 30, 2019.
Q4 Fiscal 2019 and Recent Operating Highlights
-- Revenue increased 3 percent to $117.4 million, the highest ever
quarterly revenue reported; Gross orders increased to $97.2 million
-- $3.3 million of operating profit, which grew 5 percent
-- Signed first multi-system order bundling Accuray and RaySearch
Laboratories product and software offerings
-- Signed first upgrade order for Synchrony motion tracking and correction
technology for Radixact
Fiscal Year 2019 Highlights
-- Gross orders increased 12 percent year-over-year to $342.3 million
-- Revenue increased 3 percent over the prior fiscal year to $418.8 million
-- Recorded first full year of operating profit since 2011
"From all perspectives, fiscal 2019 was a very successful year," said Joshua H. Levine, president and chief executive officer. "We generated 12 percent gross order growth for the year while our efforts to increase efficiencies led to the Company's first operating profit since 2011. Additionally, we set a new quarterly revenue record during the fourth quarter. From a strategic growth perspective, we advanced our opportunities in China which is the world's fastest growing radiotherapy market. It should be noted that our progress during fiscal 2019 came without significant revenue contribution from the China market as the process for awarding and issuing Class A and B user licenses for radiotherapy systems is still in an early phase."
Q4 Fiscal 2019 Financial Highlights
Gross product orders totaled $97.2 million for the fourth quarter of fiscal 2019 compared to $96.4 million for the prior fiscal year fourth quarter. Ending order backlog was $495.6 million, approximately 4 percent higher than at the end of the prior fiscal year.
Total revenue was $117.4 million, an increase of 3 percent compared to $113.8 million in the prior fiscal year fourth quarter. Product revenue totaled $60.6 million compared to $54.6 million in the prior fiscal year fourth quarter, while service revenue totaled $56.8 million compared to $59.2 million in the prior fiscal year fourth quarter.
Total gross profit for the fourth quarter of fiscal 2019 was $45.9 million or approximately 39.1 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.4 percent. This compares to total gross profit of $48.0 million or 42.2 percent of sales, comprised of product gross margin of 47.4 percent and service gross margin of 37.4 percent for the prior fiscal year fourth quarter.
Net loss was $1.4 million, or $0.02 per share, for the fourth quarter of fiscal 2019, compared to a net loss of $0.9 million, or $0.01 per share, for the fourth quarter of fiscal 2018.
Adjusted EBITDA for the fourth quarter of fiscal 2019 was $8.9 million, compared to $7.8 million in the prior fiscal year fourth quarter.
Cash, cash equivalents, investments and short-term restricted cash were $87.0 million as of June 30, 2019, an increase of $22.4 million from March 31, 2019.
Fiscal Year 2019 Highlights
For the fiscal year ended June 30, 2019, gross product orders totaled $342.3 million, representing growth of 12 percent compared to the prior fiscal year period.
Total revenue was $418.8 million compared to $404.9 million in the prior fiscal year period. Product revenue totaled $196.7 million compared to $183.9 million in the prior fiscal year period, while service revenue totaled $222.1 million compared to $221.0 million from the prior fiscal year period.
Total gross profit for the year ended June 30, 2019 was $162.7 million or 38.8 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.2 percent. This compares to total gross profit of $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 for the same prior fiscal year period.
Operating expenses were $162.1 million, a decrease of 2 percent compared to $165.5 million in the prior fiscal year period.
Net loss was $16.4 million, or $0.19 per share, for the fiscal year ended June 30, 2019, compared to a net loss of $23.9 million, or $0.28 per share, for the prior fiscal year period.
Adjusted EBITDA for the fiscal year ended June 30, 2019 was $23.7 million, compared to $17.1 million in the prior fiscal year period.
2020 Financial Guidance
The Company is introducing guidance for fiscal year 2020 as follows:
-- Total revenue is expected to range between $410.0 million to $420.0
million due to the expected delay in timing of Class A system revenue
with total revenue during the first half of the year expected to be
slightly below fiscal 2019 levels. The total revenue range includes the
impact of 25% Chinese tariffs currently in place
-- Adjusted EBITDA is expected to range between $19.0 million to $24.0
million, including a loss of approximately $2 million from our China
joint venture equity interest
Guidance for non-GAAP financial measures excludes depreciation and amortization, 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 results for the fourth quarter and fiscal 2019 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): 3297842
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: 3297842. An archived webcast will also be available at Accuray's website until Accuray announces its results for the first quarter of fiscal 2020.
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) develops, manufactures and sells radiotherapy systems that are intended to make cancer treatments shorter, safer, personalized and more effective, ultimately enabling patients to live longer, better lives. Our radiation treatment delivery systems in combination with fully-integrated software solutions set the industry standard for precision and cover the full range of radiation therapy and radiosurgery procedures. 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 revenue and adjusted EBITDA; expectations regarding future sales in China and the impact of tariffs in China; expectations regarding our Chinese joint venture; expectations regarding the company's product portfolio; 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, including new product and software offerings; 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 integrate and execute the joint venture, the company's ability to realize the expected benefits of the joint venture; the ability of customers in China to obtain Class or B user licenses to purchase radiotherapy systems; risks inherent in international operations, 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; delays in regulatory approvals or the development or release of new offerings; the company's ability to meet the covenants under its credit facilities; the company's ability to convert backlog to revenue; and such other risks identified under the heading "Risk Factors" in the company's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on May 9, 2019 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.
Michael Polyviou
Beth Kaplan
Investor Relations, EVC Group
Public Relations Director, Accuray
+1 (732) 933-2755
+1 (408) 789-4426
mpolyviou@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,
2019 2018 2019 2018
Gross Orders $
97,166 $
96,442 $
342,321 $
304,903
Net Orders 64,364 64,967 218,263 209,534
Order Backlog 495,627 478,482 495,627 478,482
Net revenue:
Products $
60,646 $
54,632 $
196,665 $
183,898
Services 56,771 59,154 222,120 220,999
Total net revenue 117,417 113,786 418,785 404,897
Cost of revenue:
Cost of products 35,956 28,747 116,711 103,038
Cost of services 35,535 37,054 139,423 140,164
Total cost of revenue 71,491 65,801 256,134 243,202
Gross profit 45,926 47,985 162,651 161,695
Operating expenses:
Research and development 16,051 14,588 56,493 57,251
Selling and marketing 14,920 16,864 55,998 60,105
General and administrative 11,697 13,440 49,577 48,136
Total operating expenses 42,668 44,892 162,068 165,492
Income (loss) from operations 3,258 3,093 583 (3,797)
Other expense, net (3,794) (4,450) (14,927) (19,224)
Loss before provision for income
taxes (536) (1,357) (14,344) (23,021)
Provision for (benefit from) income
taxes 864 (411) 2,086 878
Net loss $
(1,400) $
(946) $
(16,430) $
(23,899)
Net loss per share -basic and
diluted $
(0.02) $
(0.01) $
(0.19) $
(0.28)
Weighted average common shares used
in
computing loss per
share:
Basic and diluted 88,202 85,677 87,465 84,893
Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 30, June 30,
2019 2018
Assets
Current assets:
Cash and cash equivalents $
76,798 $
83,083
Restricted cash 10,218 9,830
Accounts receivable, net 111,885 65,994
Inventories 120,823 108,540
Prepaid expenses and other current
assets 24,205 15,569
Deferred cost of revenue 146 1,141
Total current assets 344,075 284,157
Property and equipment, net 17,122 23,698
Goodwill 57,770 57,855
Intangible assets, net 679 821
Other assets 18,535 12,196
Total assets $
438,181 $
378,727
Liabilities and equity
Current liabilities:
Accounts payable $
29,562 $
19,694
Accrued compensation 31,150 28,992
Other accrued liabilities 32,742 22,448
Customer advances 20,395 22,896
Deferred revenue 78,332 75,404
Total current liabilities 192,181 169,434
Long-term liabilities:
Long-term other liabilities 9,646 8,608
Deferred revenue 26,639 20,976
Long-term debt 159,844 131,077
Total liabilities 388,310 330,095
Equity:
Common stock 89 86
Additional paid-in capital 535,332 521,738
Accumulated other comprehensive income
(loss) (10) 1,093
Accumulated deficit (485,540) (474,285)
Total equity 49,871 48,632
Total liabilities and equity $
438,181 $
378,727
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,
2019 2018 2019 2018
GAAP net loss $
(1,400) $
(946) $
(16,430) $
(23,899)
Amortization of intangibles 36 36 144 143
Depreciation (a) 2,142 2,309 8,122 9,589
Stock-based compensation 2,822 3,215 10,601 12,289
Interest expense, net (b) 3,973 3,627 15,015 18,087
Impairment charge (c) 3,707
Cost savings initiative (d) 511 1,509
Gain on lease termination (e) (1,007)
Provision for (benefit from) income
taxes 864 (411) 2,086 878
Adjusted EBITDA $
8,948 $
7,830 $
23,747 $
17,087
(a) consists of
depreciation,
primarily on
property and
equipment.
(b) consists
primarily of
interest
expense
associated
with our
outstanding
debt and non-
cash loss on
extinguishment
of debt.
(c) consists of a
one-time
accounts
receivable
impairment
charge related
to one
customer in
the first
quarter of
2019.
(d) consists of
costs
associated
with a staff
reduction.
(e) consists of a
non-cash
reversal of
deferred rent
related to a
facility lease
that was
terminated.
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, 2020
From To
GAAP net loss $
(17,500) $
(13,500)
Depreciation and amortization (a) 7,200 8,000
Stock-based compensation 12,100 12,100
Interest expense, net (b) 15,400 15,400
Provision for income taxes 1,800 2,000
Adjusted EBITDA $
19,000 $
24,000
(a) consists of
depreciation,
primarily on
property and
equipment as
well as
amortization
of
intangibles.
(b) consists
primarily of
interest
expense
associated
with
outstanding
debt.
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SOURCE Accuray Incorporated
