Accuray Reports Second Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Accuray Incorporated (NASDAQ: ARAY) reported its fiscal Q2 2021 results, with net revenue of $97.5 million, slightly down from $98.8 million year-over-year. The company achieved gross orders of $75.4 million, increasing backlog by 11% to $596.2 million. GAAP net income was $4.8 million or $0.05 per share, a decline from $10.7 million in the prior year due to a non-cash gain. Adjusted EBITDA rose to $13.5 million from $7.1 million. The company did not provide fiscal 2021 guidance due to COVID-19 uncertainties.

Positive

• Adjusted EBITDA increased to $13.5 million from $7.1 million year-over-year.
• Backlog increased 11% to $596.2 million compared to the prior year.
• GAAP operating income improved to $8.2 million from $3.6 million in the prior year.

Negative

• GAAP net income decreased to $4.8 million from $10.7 million in the prior year, influenced by a non-cash gain last year.
• Gross orders fell to $75.4 million compared to $98.6 million in the prior year period.
• Total net revenue decreased to $97.5 million from $98.8 million in the same prior fiscal year period.

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.

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

FAQ

What were Accuray's fiscal Q2 2021 results for ARAY?

Accuray reported net revenue of $97.5 million, GAAP net income of $4.8 million, and an adjusted EBITDA of $13.5 million.

How did Accuray's backlog change in Q2 2021?

Accuray's backlog increased by 11% to $596.2 million as of December 31, 2020.

What factors affected Accuray's net income in fiscal Q2 2021?

Net income decreased to $4.8 million due to a prior year non-cash gain of $13 million related to its China joint venture.

Why did Accuray refrain from providing fiscal 2021 guidance?

Accuray decided not to provide guidance due to uncertainties related to the ongoing COVID-19 pandemic.