Accuray Reports Fourth Quarter and Fiscal 2021 Financial Results

SUNNYVALE, Calif., Aug. 11, 2021 /PRNewswire/ — Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and…

SUNNYVALE, Calif., Aug. 11, 2021 /PRNewswire/ — Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and fiscal year ended June 30, 2021.

Q4 Fiscal 2021 and Recent Operating Highlights

  • Gross orders of $112.7 million, an increase of 19 percent from the prior year
  • Net revenue of $110.9 million, an increase of 17 percent from the prior year
  • Net loss of $11.1 million including a one-time charge of $9.9 million associated with debt refinancing; Adjusted EBITDA of $6.7 million
  • Extended maturities of both convertible notes and bank debt to 2026 with improved terms on both
  • Received CE Mark certification ClearRT™ Helical kVCT Imaging for the Radixact® System

Fiscal Year 2021 Highlights

  • Gross orders of $325.9 million and the record ending backlog of $616.4 million
  • Net revenue of $396.3 million, an increase of 3.5% from fiscal 2021, including $54.2 million of China Type A system revenue
  • GAAP operating income grew to $22.2 million from $12.5 million in the prior year
  • Net loss $6.3 million, Adjusted EBITDA of $38.0 million
  • Robust demand for ClearRT™ Helical kVCT Imaging for the Radixact® System: 44 global orders received since its commercial release

«Despite the challenging environment caused by the COVID-19 pandemic, we finished fiscal year 2021 on a strong note with 17% year-over-year revenue growth and 19% year-over-year gross order growth in the fourth quarter, both of which were ahead of our expectations,» said Josh Levine, chief executive officer of Accuray. «I am proud of the team’s execution during the quarter and for the entire year, considering the challenging operating environment created by the pandemic. In addition to delivering year-over-year revenue growth in fiscal 2021, we aggressively managed expenses and working capital, refinanced our debt with more favorable terms and believe that we have positioned the business for further growth through the successful commercial launch of high impact technology upgrades like ClearRT Helical kVCT Imaging for the Radixact System.  Our product portfolio is the strongest it has ever been and we believe our continued investment in meaningful technology innovations will position the Company for growth going forward.»

Q4 Fiscal 2021 Financial Highlights

Gross product orders totaled $112.7 million for the fourth quarter of fiscal 2021 compared to $94.3 million for the prior fiscal year fourth quarter. Ending order backlog was $616.4 million, approximately 2 percent higher than at the end of the prior fiscal year.

Total revenue was $110.9 million for the fourth quarter of fiscal 2021 compared to $95.0 million for the prior fiscal year fourth quarter. Product revenue totaled $56.1 million compared to $40.4 million for the prior fiscal year fourth quarter, while service revenue totaled $54.8 million compared to $54.6 million for the prior fiscal year fourth quarter.

Total gross profit for the fourth quarter of fiscal 2021 was $43.7 million, or approximately 39.4 percent of sales, comprised of product gross margin of 41.5 percent and service gross margin of 37.3 percent. This compares to total gross profit of $39.7 million, or 41.8 percent of sales, comprised of product gross margin of 45.0 percent and service gross margin of 39.5 percent for the prior fiscal year fourth quarter.

Net loss was $11.1 million, or $0.12 per share, for the fourth quarter of fiscal 2021, compared to a net loss of $0.2 million, or $0 per share, for the prior fiscal year fourth quarter.  Net loss for the fourth quarter of fiscal 2021 included a one-time charge of $9.9 million related to the exchange of a significant portion of the Company’s existing 3.75% Convertible Senior Notes due July 2022 for newly issued 3.75% Convertible Senior Notes due May 2026 and the refinancing of the Company’s senior secured revolving credit facility and term loan with new lenders. This one-time charge was recorded as non-operating, other expense in the fourth quarter of fiscal 2021.

Adjusted EBITDA for the fourth quarter of fiscal 2021 was $6.7 million, compared to $10.0 million for the prior fiscal year fourth quarter.

Cash, cash equivalents, and short-term restricted cash were $116.9 million as of June 30, 2021, a decrease of $13.2 million from March 31, 2021.

Fiscal Year 2021 Highlights

For the fiscal year ended June 30, 2021, gross product orders totaled $325.9 million, representing decline of 13.6 percent compared to the prior fiscal year period.

Total revenue was $396.3 million for the fiscal year ended June 30, 2021 compared to $382.9 million for the prior fiscal year period. Product revenue totaled $176.6 million compared to $167.3 million for the prior fiscal year period, while service revenue totaled $219.6 million compared to $215.6 million for the prior fiscal year period.

Total gross profit for the year ended June 30, 2021 was $159.5 million, or 40.3 percent of sales, comprised of product gross margin of 42.2 percent and service gross margin of 38.7 percent. This compares to total gross profit of $149.7 million, or 39.1 percent of sales, comprised of product gross margin of 42.7 percent and service gross margin of 36.3 percent for the prior fiscal year period.

Operating expenses were $137.3 million, as compared to $137.2 million for the prior fiscal year period.

Net loss was $6.3 million, or $0.07 per share, for the fiscal year ended June 30, 2021, compared to a net income of $3.8 million, or $0.04 per share, basic, for the prior fiscal year period.

Net loss included an interest expense of $9.9 million related to the exchange of a significant portion of the Company’s existing 3.75% Convertible Senior Notes due July 2022 for newly issued 3.75% Convertible Senior Notes due May 2026 and the refinancing of the Company’s senior secured revolving credit facility and term loan with new lenders. The loss was recorded as non-operating, other expense in the fourth quarter of fiscal 2021. 

Prior fiscal year net income included a non-cash, special gain of $13.0 million related to the value of the Company’s capital contribution to its China joint venture in exchange for the Company’s 49 percent equity interest in the joint venture. This gain was recorded as non-operating, other income in the second quarter of fiscal 2020.

Adjusted EBITDA for the fiscal year ended June 30, 2021 was $38.0 million, compared to $27.4 million for the prior fiscal year period.

Fiscal Year 2022 Financial Guidance

The Company is introducing guidance for fiscal year 2022 as follows:

  • Total revenue is expected to range between $410.0 million to $420.0 million, representing a year-over year growth at the midpoint of the range of 5%.
  • Adjusted EBITDA is expected to range between $32.0 million to $35.0 million.

Guidance for non-GAAP financial measures excludes depreciation and amortization, stock-based compensation expense, interest expense 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.

CFO Departure

Shig Hamamatsu, Accuray’s Chief Financial Officer, announced his resignation from the Company to pursue an opportunity in another industry. Mr. Hamamatsu will continue as Chief Financial Officer through September 3, 2021 to help ensure a smooth transition. The Company has appointed Brandy Green, the Company’s Vice President, Corporate Controller, as Interim Chief Financial Officer effective September 4, 2021 and has initiated a national search to identify a permanent replacement. 

«I want to thank Shig for all his contributions to Accuray during his tenure,» said Josh Levine, chief executive officer of Accuray.  «He was integral in helping us navigate the COVID-19 pandemic, strengthening our balance sheet, and positioning us for long-term growth.»

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 of fiscal 2021 as well as recent corporate developments. Conference call dial-in information is as follows:

  • U.S. callers: (833) 316-0563
  • International callers: (412) 317-5747

Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Investor Relations section of Accuray’s website, www.accuray.com. There will be a slide presentation accompanying today’s event which can also be accessed on the Company’s Investor Relations page at www.accuray.com.

In addition, a taped replay of the conference call will be available beginning approximately one hour after the call’s conclusion and will be available for seven days. The replay number is (877) 344-7529 (USA), or (412) 317-0088 (International), Conference ID: 10158497. An archived webcast will also be available on Accuray’s website until Accuray announces its results for the first quarter of fiscal 2022.

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»).  The calculation of adjusted EBITDA also excludes certain non-recurring, irregular and one-time items, including the non-cash, special gain related to Accuray’s capital contribution to the China joint venture, one-time charge related to the refinancing of the Company’s debt and convertible notes exchange, and costs associated with reduction of staff. 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 income (loss) (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedules 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 committed to expanding the powerful potential of radiation therapy to improve as many lives as possible. We invent unique, market-changing solutions that are designed to deliver radiation treatments for even the most complex cases—while making commonly treatable cases even easier—to meet the full spectrum of patient needs. We are dedicated to continuous innovation in radiation therapy for oncology, neuro-radiosurgery, and beyond, as we partner with clinicians and administrators, empowering them to help patients get back to their lives, faster. Accuray is headquartered in Sunnyvale, California, with facilities worldwide.

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 expectations regarding total revenue and adjusted EBITDA; expectations regarding the effect of the COVID-19 pandemic on the Company and the market in general; expectations regarding the Company’s commercial strategy, including with respect to future sales in China and other underpenetrated markets; expectations regarding the Company’s China joint venture,; expectations regarding the Company’s product innovations and developments; expectations regarding the Company’s product portfolio and its ability to position the Company for growth; the impact of the Company’s products on its customers and its business, and market adoption of such products, including with respect to the Company’s Synchrony on Radixact, CyberKnife S7 System and Clear RT Helical kVCT Imaging upgrades as well as other strategic product innovations; expectations regarding the future of radiotherapy treatment; 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 effect of the COVID-19 pandemic on the operations of the Company and those of its customers and suppliers; 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 A 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 April 30, 2021 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

June 30,



Twelve Months Ended

June 30,




2021



2020



2021



2020


Gross Orders


$

112,672



$

94,293



$

325,929



$

377,295


Net Orders



63,038




74,607




191,881




280,537


Order Backlog



616,399




602,713




616,399




602,713


Net revenue:

















Products


$

56,145



$

40,410



$

176,647



$

167,302


Services



54,791




54,567




219,642




215,626


Total net revenue



110,936




94,977




396,289




382,928


Cost of revenue:

















Cost of products



32,863




22,221




102,100




95,882


Cost of services



34,342




33,011




134,682




137,325


Total cost of revenue



67,205




55,232




236,782




233,207


Gross profit



43,731




39,745




159,507




149,721


Operating expenses:

















Research and development



15,357




12,215




52,729




49,784


Selling and marketing



13,007




11,555




42,820




47,254


General and administrative



11,225




10,748




41,723




40,144


Total operating expenses



39,589




34,518




137,272




137,182


Income from operations



4,142




5,227




22,235




12,539


Income (loss) on equity investment, net



(149)




(371)




872




(149)


Other expense, net



(14,685)




(4,746)




(27,666)




(6,700)


Income (loss) before provision for income taxes



(10,692)




110




(4,559)




5,690


Provision for income taxes



400




262




1,752




1,863


Net income (loss)


$

(11,092)



$

(152)



$

(6,311)



$

3,827


Net income (loss) per share – basic


$

(0.12)



$

(0.00)



$

(0.07)



$

0.04


Net income (loss) per share – diluted


$

(0.12)



$

(0.00)



$

(0.07)



$

0.04


Weighted average common shares used in

   computing income (loss) per share:

















Basic



91,613




90,748




92,031




89,874


Diluted



91,613




90,748




92,031




90,623


 

Accuray Incorporated

Consolidated Balance Sheets

(in thousands)

(Unaudited)




June 30,



June 30,




2021



2020


Assets









Current assets:









Cash and cash equivalents


$

116,369



$

107,577


Restricted cash



560




997


Accounts receivable, net



85,360




90,599


Inventories



125,929




134,374


Prepaid expenses and other current assets



21,547




21,227


Deferred cost of revenue



3,008




2,712


Total current assets



352,773




357,486


Property and equipment, net



12,332




15,349


Investment in joint venture



15,935




13,929


Goodwill



57,960




57,717


Intangible assets, net



435




663


Operating lease right-of-use assets



22,522




28,647


Other assets



18,141




17,136


Total assets


$

480,098



$

490,927


Liabilities and equity









Current liabilities:









Accounts payable


$

19,467



$

23,126


Accrued compensation



26,865




17,963


Operating lease liabilities, current



8,169




8,224


Other accrued liabilities



27,471




27,180


Customer advances



24,937




22,571


Deferred revenue



81,660




83,207


Short-term debt



3,790





Total current liabilities



192,359




182,271


Long-term other liabilities



7,766




7,416


Deferred revenue



23,685




24,125


Operating lease liabilities, non-current



17,441




24,173


Long-term debt



170,007




189,307


Total liabilities



411,258




427,292


Equity:









Common stock



91




91


Additional paid-in capital



554,680




545,741


Accumulated other comprehensive income (loss)



2,093




(484)


Accumulated deficit



(488,024)




(481,713)


Total equity



68,840




63,635


Total liabilities and equity


$

480,098



$

490,927


 

Accuray Incorporated

Reconciliation of GAAP Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation,

Amortization and Stock-Based Compensation (Adjusted EBITDA)

(in thousands)

(Unaudited)




Three Months Ended

June 30,



Twelve Months Ended

June 30,




2021



2020



2021



2020


GAAP net income (loss)


$

(11,092)



$

(152)



$

(6,311)



$

3,827


Depreciation and amortization



1,498




1,960




6,389




7,526


Stock-based compensation



2,236




2,287




9,332




8,152


Interest expense, net



3,734




4,590




16,877




17,986


One-time charge related to debt refinance and convertible notes

exchange (a)



9,948







9,948





Gain on contribution to equity method investment in joint

venture (b)












(12,965)


Cost savings initiative (c)






1,058







1,058


Provision for income taxes



400




262




1,752




1,863


Adjusted EBITDA


$

6,724



$

10,005



$

37,987



$

27,447



(a) consists one-time charge related to the exchange of our 3.75% Convertible Notes due 2022 for our new 3.75% Convertible Notes due 2026 and the refinancing of revolving credit facility and term loan.

(b) consists of non-cash gain related to the value of the Company’s capital contribution to the China joint venture.

(c) consists of costs associated with reduction of staff.

 

Accuray Incorporated

Forward-Looking Guidance

Reconciliation of Projected Net Income (Loss) to Projected Adjusted Earnings Before Interest, Taxes, Depreciation,

Amortization and Stock-Based Compensation (Adjusted EBITDA)

(in thousands)

(Unaudited)




Twelve Months Ending

June 30, 2022




From



To


GAAP net income (loss)


$

(800)



$

2,200


Depreciation and amortization (a)



6,400




6,400


Stock-based compensation



10,200




10,200


Interest expense, net (b)



13,400




13,400


Provision for income taxes



2,800




2,800


Adjusted EBITDA


$

32,000



$

35,000



(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.

 

Joe Diaz

Beth Kaplan

Investor Relations, Lytham Partners

Public Relations Director, Accuray

+1 (602) 717-7804

+1 (408) 789-4426

jdiaz@accuray.com 

bkaplan@accuray.com

 

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SOURCE Accuray Incorporated