Accuray Reports Fiscal 2024 Second Quarter Financial Results
- 19% increase in gross orders
- 8% service revenue expansion
- Reaffirmed guidance for fiscal year 2024
- Sequential growth in orders and revenue for the second quarter of fiscal 2024
- Net revenue decreased 7% from the same period in the prior fiscal year
- GAAP net loss increased to $9.6 million from $1.9 million in the prior fiscal year
- Adjusted EBITDA decreased to $2.0 million from $8.5 million in the same period in the prior fiscal year
Insights
The reported 19% year-over-year (YOY) growth in orders and 8% expansion in service revenue for Accuray Incorporated signify a positive market response, particularly to the Tomo® C product launch in China and the VitalHold™ breast cancer treatment package. These figures suggest an effective penetration of new market segments and a solid installed base, which is critical for recurring service revenue. However, the 7% decrease in net revenue compared to the prior fiscal year raises concerns about the company's ability to convert orders into recognized revenue efficiently.
Despite the increase in orders, the company's net loss widened significantly from the prior year, which could be indicative of operational challenges or increased costs that are not being offset by revenue growth. The reaffirmed FY24 guidance suggests management confidence in their strategic plan, but it will be essential for investors to monitor the company's ability to manage costs and improve profitability going forward.
The financial results indicate a mixed performance, with a notable discrepancy between the increase in gross orders and the decline in net revenue and adjusted EBITDA. The decline in net revenue on a constant currency basis and the widening GAAP net loss year-over-year highlight potential issues in cost management and profitability. Investors should consider the implications of the company's operating expenses, which have remained relatively flat, against the backdrop of declining gross profit margins.
The book to bill ratio, a key indicator of future revenue potential, improved from the prior year, which is a positive sign. However, the decrease in cash and cash equivalents raises liquidity concerns that may affect the company's operational flexibility. The provided guidance for FY24 indicates a moderate revenue growth expectation, which will require a careful balance between operational expenditure and revenue growth to achieve the projected adjusted EBITDA.
The launch of the Tomo® C product in China and the Shonin approval for the VitalHold™ treatment package in Japan reflect Accuray's strategic moves to expand its product offerings and geographic reach. The strong order growth in China and the EIMEA region demonstrates the company's capability to innovate and adapt to different market needs. However, the decrease in net revenue could suggest challenges in the broader adoption of these technologies or in the competitive landscape of medical devices.
While the company is advancing in its growth plan, the financial health indicated by the widening net loss and decreased cash reserves could impact future R&D investments and market expansion efforts. The long-term success of Accuray will depend on their ability to not only innovate but also to translate technological advancements into sustainable and profitable business growth.
Second Quarter Fiscal 2024 Summary
- Net revenue of
$107.2 million $106.0 million - GAAP net loss was
$9.6 million $1.9 million $2.0 million $8.5 million - Gross orders of
$93.9 million
Fiscal Six Months 2024 Summary
- Net revenue of
$211.1 million $208.8 million - GAAP net loss was
$12.6 million $7.3 million $8.5 million $10.4 million - Gross orders of
$157.6 million
Other Recent Operational Highlights
China orders in the second quarter increased 44 percent year-over-year driven by Tomo® C market launch.- Strong performance in EIMEA region with 30 percent order growth and 11 percent revenue growth year-over year.
- Service revenue expansion with an 8 percent increase year-over-year in the second quarter.
- APAC region achieved 250 installed base milestone.
- Gained Shonin approval for the VitalHold™* breast cancer treatment package and launched at JASTRO in
Japan .
"We close out the first half of FY24 advancing multiple growth catalysts for the business. I am pleased with our Q2 performance which reflects sequential growth in orders, revenue and the installed base. Customer adoption of the Tomo® C product in
Fiscal Second Quarter Results
Total net revenue in the second quarter of fiscal 2024 was
Total gross profit in the second quarter of fiscal 2024 was
Operating expenses in the second quarter of fiscal 2024 were
Net loss in the second quarter of fiscal 2024 was
Gross product orders in the second quarter of fiscal 2024 totaled
Cash, cash equivalents, and short-term restricted cash were
Fiscal Six Months Results
Total net revenue in the first six months of fiscal 2024 was
Total gross profit in the first six months of fiscal 2024 was
Operating expenses in the first six months of fiscal 2024 was
Net loss in the first six months of fiscal 2024 was
Gross product orders in the first six months of fiscal 2024 was
Fiscal Year 2024 Financial Guidance
Accuray's financial guidance is based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market and economic conditions, supply chain disruption, and the factors set forth under "Safe Harbor Statement" below.
The company is reaffirming guidance for fiscal year 2024 as follows:
- Total revenue is expected in the range of
$460 million $470 million - Adjusted EBITDA for fiscal year 2024 is expected in the range of
$27 million $30 million
In addition, the Company expects third quarter of fiscal 2024 revenue to be in the range of
Guidance for non-GAAP financial measures excludes depreciation and amortization, stock-based compensation, interest expense, provision for income taxes, and ERP and ERP related expenditures. 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 second quarter of fiscal 2024 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 (
Use of Non-GAAP Financial Measures
Accuray reports its financial results in accordance with generally accepted accounting principles in
Accuray has supplemented its GAAP net income (loss) with a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation, ERP and ERP related expenditures and restructuring charges ("adjusted EBITDA"). The calculation of adjusted EBITDA also excludes certain non-recurring, irregular and one-time items. 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.
Accuray has also reported certain operating results on a constant currency basis in order to facilitate period-to-period comparisons of its results without regard to the impact of foreign currency exchange rate fluctuations. Management believes disclosure of non-GAAP constant currency results is helpful to investors because it facilitates period-to-period comparisons of the company's results by increasing the transparency of the underlying performance by excluding the impact of foreign currency exchange rate fluctuations. The GAAP measure most directly comparable to net revenue on a constant currency basis is revenue. Accuray calculates the constant currency amounts by translating local currency amounts in the current period using the same foreign translation rate used in the prior period being compared against rather than the actual exchange rate in effect during the current period.
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
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; the company's three-year outlook and strategic pillars; the effect of the global economic environment and the COVID-19 pandemic on the company and the market in general, including with respect to the company's ability to navigate supply chain, logistics, macroeconomic, and foreign exchange challenges; delivering on the company's strategic growth plan, progressing against long-term strategic goals, and continuing adoption of its technologies; the company's ability to execute on margin and profitability expansion initiatives; expectations regarding commercial strategy and execution as well as growth opportunities; expectations regarding the market in
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.
* VitalHold™ availability is subject to regulatory clearance or approval in some markets
Aman Patel, CFA | Beth Kaplan |
Investor Relations, ICR-Westwicke | Public Relations Director, Accuray |
+1 (443) 450-4191 | +1 (408) 789-4426 |
aman.patel@westwicke.com | bkaplan@accuray.com |
Financial Tables to Follow
Accuray Incorporated Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net revenue: | |||||||||||||||
Products | $ | 51,538 | $ | 63,269 | $ | 104,888 | $ | 107,892 | |||||||
Services | 55,700 | 51,491 | 106,242 | 103,361 | |||||||||||
Total net revenue | 107,238 | 114,760 | 211,130 | 211,253 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of products | 34,333 | 39,248 | 70,032 | 68,098 | |||||||||||
Cost of services | 37,003 | 32,545 | 65,703 | 65,591 | |||||||||||
Total cost of revenue | 71,336 | 71,793 | 135,735 | 133,689 | |||||||||||
Gross profit | 35,902 | 42,967 | 75,395 | 77,564 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 15,281 | 14,641 | 29,294 | 28,733 | |||||||||||
Selling and marketing | 11,361 | 13,586 | 21,605 | 24,381 | |||||||||||
General and administrative | 13,224 | 12,035 | 26,247 | 23,927 | |||||||||||
Total operating expenses | 39,866 | 40,262 | 77,146 | 77,041 | |||||||||||
Income (loss) from operations | (3,964) | 2,705 | (1,751) | 523 | |||||||||||
Income (loss) from equity method investment, net | (427) | (699) | 4 | (1,067) | |||||||||||
Other expense, net | (4,352) | (2,831) | (8,033) | (5,389) | |||||||||||
Loss before provision for income taxes | (8,743) | (825) | (9,780) | (5,933) | |||||||||||
Provision for income taxes | 878 | 1,049 | 2,810 | 1,390 | |||||||||||
Net loss | $ | (9,621) | $ | (1,874) | $ | (12,590) | $ | (7,323) | |||||||
Net loss per share - basic and diluted | $ | (0.10) | $ | (0.02) | $ | (0.13) | $ | (0.08) | |||||||
Weighted average common shares used in computing loss per share: | |||||||||||||||
Basic and diluted | 97,776 | 94,567 | 97,165 | 94,048 | |||||||||||
Accuray Incorporated Condensed Consolidated Balance Sheets (in thousands) (Unaudited) | |||||||
December 31, | June 30, | ||||||
2023 | 2023 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 72,756 | $ | 89,402 | |||
Restricted cash | 485 | 524 | |||||
Accounts receivable, net | 77,397 | 74,777 | |||||
Inventories | 155,228 | 145,150 | |||||
Prepaid expenses and other current assets | 25,020 | 27,612 | |||||
Deferred cost of revenue | 284 | 568 | |||||
Total current assets | 331,170 | 338,033 | |||||
Property and equipment, net | 25,919 | 20,926 | |||||
Investment in joint venture | 14,536 | 15,128 | |||||
Operating lease right-of-use assets, net | 23,094 | 25,853 | |||||
Goodwill | 57,771 | 57,681 | |||||
Intangible assets, net | 116 | 210 | |||||
Long-term restricted cash | 1,251 | 1,276 | |||||
Other assets | 22,493 | 20,107 | |||||
Total assets | $ | 476,350 | $ | 479,214 | |||
Liabilities and equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 39,180 | $ | 33,739 | |||
Accrued compensation | 21,345 | 23,793 | |||||
Operating lease liabilities, current | 5,707 | 4,151 | |||||
Other accrued liabilities | 36,253 | 38,271 | |||||
Customer advances | 22,677 | 20,777 | |||||
Deferred revenue | 77,406 | 72,185 | |||||
Short-term debt | 6,738 | 5,721 | |||||
Total current liabilities | 209,306 | 198,637 | |||||
Operating lease liabilities, non-current | 21,758 | 23,602 | |||||
Long-term other liabilities | 4,804 | 4,675 | |||||
Deferred revenue, non-current | 24,809 | 27,079 | |||||
Long-term debt | 168,020 | 171,562 | |||||
Total liabilities | 428,697 | 425,555 | |||||
Equity: | |||||||
Common stock | 99 | 97 | |||||
Additional paid-in capital | 561,223 | 555,276 | |||||
Accumulated other comprehensive income | 1,057 | 422 | |||||
Accumulated deficit | (514,726) | (502,136) | |||||
Total equity | 47,653 | 53,659 | |||||
Total liabilities and equity | $ | 476,350 | $ | 479,214 | |||
Accuray Incorporated Summary of Orders and Backlog (in thousands, except book to bill ratio) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Gross orders | $ | 93,856 | $ | 79,035 | $ | 157,590 | $ | 148,883 | |||||||
Net orders | 54,606 | 40,869 | 86,346 | 60,439 | |||||||||||
Order backlog | 492,100 | 515,236 | 492,100 | 515,236 | |||||||||||
Book to bill ratio (a) | 1.8 | 1.2 | 1.5 | 1.4 | |||||||||||
(a) Book to bill ratio is defined as gross orders for the period divided by product revenue for the period. |
Accuray Incorporated Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
GAAP net loss | $ | (9,621) | $ | (1,874) | $ | (12,590) | $ | (7,323) | |||||||
Depreciation and amortization (a) | 1,546 | 1,151 | 2,797 | 2,327 | |||||||||||
Stock-based compensation | 2,314 | 3,126 | 4,706 | 6,042 | |||||||||||
Interest expense, net (b) | 2,713 | 2,642 | 5,341 | 4,898 | |||||||||||
Provision for income taxes | 878 | 1,049 | 2,810 | 1,390 | |||||||||||
Restructuring charges | 2,633 | 1,938 | 2,633 | 1,938 | |||||||||||
ERP and ERP related expenditures | 1,545 | 466 | 2,815 | 1,121 | |||||||||||
Adjusted EBITDA | $ | 2,008 | $ | 8,498 | $ | 8,512 | $ | 10,393 | |||||||
(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. |
Accuray Incorporated Forward-Looking Guidance Reconciliation of Projected GAAP Net Income (Loss) to Projected Adjusted EBITDA (in thousands) (Unaudited) | |||||||
Three Months Ending | |||||||
From | To | ||||||
GAAP net income (loss) | $ | (1,000) | $ | 2,000 | |||
Depreciation and amortization (a) | 1,300 | 1,300 | |||||
Stock-based compensation | 2,300 | 2,300 | |||||
Interest expense, net (b) | 2,600 | 2,600 | |||||
Provision for income taxes | 800 | 800 | |||||
Adjusted EBITDA | $ | 6,000 | $ | 9,000 | |||
Twelve Months Ending | |||||||
From | To | ||||||
GAAP net loss | $ | (6,400) | $ | (3,400) | |||
Depreciation and amortization (a) | 5,000 | 5,000 | |||||
Stock-based compensation | 9,200 | 9,200 | |||||
Interest expense, net (b) | 10,000 | 10,000 | |||||
Provision for income taxes | 3,800 | 3,800 | |||||
Restructuring charges | 2,600 | 2,600 | |||||
ERP and ERP related expenditures | 2,800 | 2,800 | |||||
Adjusted EBITDA | $ | 27,000 | $ | 30,000 | |||
(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
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