Chronicle Journal: Finance

Accuray Reports Second Quarter Fiscal 2021 Financial Results

SUNNYVALE, Calif., Jan. 27, 2021 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported its financial results for the second quarter of fiscal 2021 ended December 31, 2020.

Accuray Incorporated (PRNewsFoto/Accuray Incorporated) (PRNewsFoto/Accuray Incorporated)

Second Quarter Fiscal 2021 Summary

  • Net revenue of $97.5 million including $21.3 million of system revenue in China
  • Gross orders of $75.4 million, ending backlog of $596.2 million, an increase of 11 percent from December 31, 2019
  • GAAP operating income of $8.2 million and GAAP net income of $4.8 million compared to GAAP operating income of $3.6 million and GAAP net income of $10.7 million in the prior year second quarter
  • Adjusted EBITDA grew to $13.5 million from $7.1 million in the prior year second quarter
  • Received 510(k) FDA clearance for ClearRT™ Helical kVCT Imaging for the Radixact® System

"Our second quarter performance continues to reflect the positive momentum our business is making despite the headwinds created by the COVID-19 environment, said Josh Levine, President and CEO of Accuray. "Highlights from our second quarter performance include the beginning of system revenue conversion related to the Type A radiotherapy licenses in China as well as receiving 510(k) FDA clearance of our ClearRT Helical kVCT Imaging platform for the Radixact System. We are pleased with the continued resilience and commercial cadence that our business is exhibiting as well as the recent product innovation/upgrades coming through our development pipeline. We believe the additions of the Cyberknife S7 System, Synchrony on Radixact, and ClearRT Helical kVCT Imaging to our portfolio will have meaningful clinical impact for our customers and we look forward to the adoption of these important features and the functional improvement they represent in clinical practice."

Fiscal Second Quarter Results

Gross orders totaled $75.4 million compared to $98.6 million for the prior fiscal year period. Backlog as of December 31, 2020 was $596.2 million, an increase of 11 percent compared to $539.4 million for the prior fiscal year period.

Total net revenue was $97.5 million compared to $98.8 million in the same prior fiscal year period. Product revenue totaled $41.8 million compared to $43.8 million in the same prior fiscal year period, while service revenue totaled $55.7 million compared to $55.1 million in the same prior fiscal year period.

Total gross profit for the fiscal 2021 second quarter was $40.8 million, or 41.9 percent of net revenue, comprised of product gross margin of 44.7 percent of product revenue and service gross margin of 39.8 percent of service revenue. This compares to total gross profit of $37.9 million, or 38.4 percent of net revenue, comprised of product gross margin of 44.0 percent of product revenue and service gross margin of 33.9 percent of service revenue in the prior fiscal year second quarter.

Operating expenses were $32.6 million, a decrease of 5 percent compared to $34.3 million in the prior fiscal year second quarter.

Net income was $4.8 million, or $0.05 per share, compared to a net income of $10.7 million, or $0.12 per share, in the same prior fiscal year period. The prior year second quarter net income included a non-cash, special gain of $13.0 million related to the value of the Company's capital contribution to the Company's China joint venture. This gain was recorded as non-operating, other income in the prior fiscal year second quarter.

Adjusted EBITDA for the second fiscal quarter 2021 was $13.5 million compared to $7.1 million in the same prior fiscal year period, which excludes the non-cash, special gain related to the Company's capital contribution to the China joint venture recorded in the prior fiscal year second quarter.

Cash, cash equivalents and short-term restricted cash were $116.0 million as of December 31, 2020 compared with $95.5 million as of September 30, 2020.

Fiscal Six Months Results

For the six months ended December 31, 2020, gross product orders totaled $125.9 million compared to $177.0 million in the same prior fiscal year period. Ending product backlog was $596.2 million, approximately 11 percent higher than backlog at the end of the prior fiscal year second quarter.

Total net revenue for the six months ended December 31, 2020 was $182.8 million compared to $188.4 million in the same prior fiscal year period. Product revenue for the six months ended December 31, 2020 totaled $73.1 million compared to $81.4 million, while service revenue totaled $109.7 million compared to $107.0 million in the same prior fiscal year period.

Total gross profit for the six months ended December 31, 2020 was $76.2 million, or 41.7 percent of net revenue, comprised of product gross margin of 43.2 percent of product revenue and service gross margin of 40.7 percent of service revenue. This compares to total gross profit of $70.8 million, or 37.6 percent of net revenue, comprised of product gross margin of 43.4 percent of product revenue and service gross margin of 33.2 percent of service revenue in the same prior fiscal year period.

Operating expenses for the six months ended December 31, 2020 were $62.6 million, a decrease of 12 percent compared with $71.5 million in the same prior fiscal year period.

Net income was $5.2 million, or $0.06 per share, for the six months ended December 31, 2020, compared to net income of $1.4 million, or $0.02 per share, in the same prior fiscal year period.  The prior year six month period ended December 31, 2019 included a non-cash, special gain of $13.0 million related to the value of the Company's capital contribution to the Company's China joint venture. The gain was recorded as non-operating, other income in the prior fiscal year second quarter.

Adjusted EBITDA for the six months ended December 31, 2020 was $22.5 million, compared to $6.1 million in the prior fiscal year period, which excludes the non-cash, special gain related to the Company's capital contribution to the China joint venture recorded in the prior fiscal year second quarter.

Financial Guidance

The impact of the COVID-19 pandemic on Accuray's fiscal 2021 results remains uncertain. Given the continued evolution of the COVID-19 pandemic and the uncertainty surrounding its impact on the global economy and the healthcare industry, Accuray believes it is prudent to refrain from providing financial guidance for fiscal year 2021.

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

  • U.S. callers: (877) 270-2148
  • International callers: (412) 902-6510

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.

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 telephone number is (877) 344-7529 (USA), or (412) 317-0088 (International), Conference ID: 10151157. An archived webcast will also be available at Accuray's website until Accuray announces its results for the third quarter of fiscal 2021.

Use of Non-GAAP Financial Measures

Accuray has supplemented its GAAP net income (loss) with a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization, gain on contribution to equity method investment in joint venture 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 income (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedules below.

There are limitations in using 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 expectations regarding gross orders, order volume and age-outs; expectations regarding the effect of the COVID-19 pandemic on the Company; the Company's ability to adapt and make the necessary adjustments to compete and operate effectively; the Company's continued resilience and ability to continue to realize the benefits of working capital management and cash preservation activities; expectations regarding future sales in China; expectations regarding the Company's Chinese joint venture, including the timing of and ability to drive revenue conversion and introduce a Type B product to the market in China as well as the operating impact of the joint venture on the Company's income statement; expectations regarding the Company's product innovations and developments, including expectations related to future regulatory approvals; expectations regarding the Company's product portfolio, the clinical impact and value of those products on our customers, 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 commercial launch of Clear RT Helical kVCT Imaging; expectations regarding the new Centers for Medicare and Medicaid Services alternative payment model and reimbursement schedule; 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 November 4, 2020 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.

Accuray Incorporated

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)




Three Months Ended

December 31,



Six Months Ended

December 31,




2020



2019



2020



2019


Gross Orders


$

75,365



$

98,556



$

125,893



$

177,043


Net Orders



42,462




89,904




66,016




128,885


Order Backlog



596,214




539,357




596,214




539,357


Net revenue:

















Products


$

41,805



$

43,760



$

73,063



$

81,365


Services



55,654




55,066




109,728




107,038


Total net revenue



97,459




98,826




182,791




188,403


Cost of revenue:

















Cost of products



23,102




24,518




41,528




46,088


Cost of services



33,526




36,408




65,029




71,472


Total cost of revenue



56,628




60,926




106,557




117,560


Gross profit



40,831




37,900




76,234




70,843


Operating expenses:

















Research and development



11,956




13,064




24,104




26,405


Selling and marketing



10,348




11,327




19,246




24,593


General and administrative



10,328




9,886




19,217




20,502


Total operating expenses



32,632




34,277




62,567




71,500


Income (loss) from operations



8,199




3,623




13,667




(657)


Income on equity investment, net



1,117







1,089





Other income (expense), net



(4,260)




7,766




(8,954)




3,327


Income before provision for income taxes



5,056




11,389




5,802




2,670


Provision for income taxes



287




679




631




1,316


Net income


$

4,769



$

10,710



$

5,171



$

1,354


Net income per share - basic


$

0.05



$

0.12



$

0.06



$

0.02


Net income per share - diluted


$

0.05



$

0.12



$

0.06



$

0.02


Weighted average common shares used in

   computing income per share:

















Basic



92,025




89,517




91,609




89,145


Diluted



93,353




90,279




92,607




90,095


 

 

Accuray Incorporated

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)




December 31,



June 30,




2020



2020


Assets









Current assets:









Cash and cash equivalents


$

107,322



$

107,577


Restricted cash



8,692




997


Accounts receivable, net



65,367




90,599


Inventories



138,655




134,374


Prepaid expenses and other current assets



22,309




21,227


Deferred cost of revenue



2,577




2,712


Total current assets



344,922




357,486


Property and equipment, net



13,773




15,349


Investment in joint venture



17,019




13,929


Goodwill



57,963




57,717


Intangible assets, net



549




663


Operating lease right-of-use assets



26,110




28,647


Other assets



17,806




17,136


Total assets


$

478,142



$

490,927


Liabilities and equity









Current liabilities:









Accounts payable


$

10,876



$

23,126


Accrued compensation



21,942




17,963


Operating lease liabilities, current



8,587




8,224


Other accrued liabilities



24,396




27,180


Customer advances



19,516




22,571


Deferred revenue



80,884




83,207


Short-term debt



12,530





Total current liabilities



178,731




182,271


Long-term other liabilities



9,195




7,416


Deferred revenue



23,391




24,125


Operating lease liabilities, non-current



20,965




24,173


Long-term debt



168,082




189,307


Total liabilities



400,364




427,292


Equity:









Common stock



93




91


Additional paid-in capital



551,409




545,741


Accumulated other comprehensive income (loss)



2,818




(484)


Accumulated deficit



(476,542)




(481,713)


Total equity



77,778




63,635


Total liabilities and equity


$

478,142



$

490,927


 

 

Accuray Incorporated

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

Amortization and Stock-Based Compensation (Adjusted EBITDA)

(in thousands)

(Unaudited)




Three Months Ended

December 31,



Six Months Ended

December 31,




2020



2019



2020



2019


GAAP net income


$

4,769



$

10,710



$

5,171



$

1,354


Depreciation and amortization



1,663




1,846




3,313




3,697


Stock-based compensation



2,364




2,149




4,608




3,849


Interest expense, net



4,430




4,683




8,823




8,883


Gain on contribution to equity method investment in joint venture (a)






(12,965)







(12,965)


Provision for income taxes



287




679




631




1,316


Adjusted EBITDA


$

13,513



$

7,102



$

22,546



$

6,134







(a) Consists of non-cash gain related to the value of the Company's capital contribution to the China joint venture.

 

 

Joe Diaz

Beth Kaplan

Investor Relations, Lytham Partners

Public Relations Director, Accuray

+1 (602) 889-9700

+1 (408) 789-4426

diaz@lythampartners.com

bkaplan@accuray.com

 

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SOURCE Accuray Incorporated

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