Accuray Reports Third Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Accuray Incorporated (NASDAQ: ARAY) reported Q3 fiscal 2021 results, with net revenue of $102.6 million, up from $99.5 million year-over-year. System revenue in China amounted to $24.9 million, while gross orders were $87.4 million, a 16% increase from Q2. However, net loss stood at $0.4 million, a substantial decline from a net income of $2.6 million in the same quarter last year. The company also received regulatory approval for its ClearRT™ Helical kVCT Imaging in Japan. Cash reserves increased to $130.1 million.

Positive

• Net revenue increased to $102.6 million from $99.5 million year-over-year.
• Gross orders rose 16% from Q2 to $87.4 million.
• Cash reserves increased to $130.1 million, up from $116.0 million.

Negative

• Net loss of $0.4 million compared to net income of $2.6 million in Q3 last year.
• Gross orders of $87.4 million down from $106.0 million year-over-year.
• Adjusted EBITDA decreased to $8.7 million from $11.3 million in the same prior year period.

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

Third Quarter Fiscal 2021 Summary

• Net revenue of $102.6 million including $24.9 million of system revenue in China
• Gross orders of $87.4 million, an increase of 16 percent from the second quarter of fiscal 2021
• GAAP operating income of $4.4 million, GAAP net loss of $0.4 million, and Adjusted EBITDA of $8.7 million
• Received Shonin regulatory approval in Japan for ClearRT™ Helical kVCT Imaging for the Radixact® System

"Our third 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 third quarter performance include the continued ramp of China Type A system revenue, excellent progress in the phased introduction of ClearRT Helical kVCT Imaging platform for the Radixact System including regulatory approval in Japan and the continued adoption of our latest innovations like Synchrony real-time motion tracking and delivery adaptation on Radixact and our latest generation Cyberknife S7 system. Additionally, as announced yesterday, we are very excited to have Dr. Jean-Phillipe Pignol join us as Chief Medical and Technology Officer as we continue to build out our executive leadership team."

Fiscal Third Quarter Results

Gross orders totaled $87.4 million compared to $106.0 million for the same prior fiscal year period. Backlog as of March 31, 2021 was $610.8 million, an increase of 7 percent compared to $569.9 million for the same prior fiscal year period.

Total net revenue was $102.6 million compared to $99.5 million in the same prior fiscal year period. Product revenue totaled $47.4 million compared to $45.5 million in the same prior fiscal year period, while service revenue totaled $55.1 million compared to $54.0 million in the same prior fiscal year period.

Total gross profit for the fiscal 2021 third quarter was $39.5 million, or 38.5 percent of net revenue, comprised of product gross margin of 41.6 percent of product revenue and service gross margin of 35.9 percent of service revenue. This compares to total gross profit of $39.1 million, or 39.3 percent of net revenue, comprised of product gross margin of 39.4 percent of product revenue and service gross margin of 39.2 percent of service revenue in the same prior fiscal year third quarter.

Operating expenses were $35.1 million, an increase of 13 percent compared to $31.2 million in the same prior fiscal year third quarter.

Net loss was $0.4 million, or $0 per share, compared to a net income of $2.6 million, or $0.3 per share, in the same prior fiscal year period.

Adjusted EBITDA for the third fiscal quarter of 2021 was $8.7 million compared to $11.3 million in the same prior fiscal year period.

Cash, cash equivalents and short-term restricted cash were $130.1 million as of March 31, 2021 compared with $116.0 million as of December 31, 2020.

Fiscal Nine Months Results

For the nine months ended March 31, 2021, gross orders totaled $213.3 million compared to $283.0 million in the same prior fiscal year period. Ending product backlog was $610.8 million, approximately 7 percent higher than backlog at the end of the prior fiscal year third quarter.

Total net revenue for the nine months ended March 31, 2021 was $285.4 million compared to $288.0 million in the same prior fiscal year period. Product revenue for the nine months ended March 31, 2021 totaled $120.5 million compared to $126.9 million, while service revenue totaled $164.9 million compared to $161.1 million in the same prior fiscal year period.

Total gross profit for the nine months ended March 31, 2021 was $115.8 million, or 40.6 percent of net revenue, comprised of product gross margin of 42.6 percent of product revenue and service gross margin of 39.1 percent of service revenue. This compares to total gross profit of $110.0 million, or 38.2 percent of net revenue, comprised of product gross margin of 41.9 percent of product revenue and service gross margin of 35.2 percent of service revenue in the same prior fiscal year period.

Operating expenses for the nine months ended March 31, 2021 were $97.7 million, a decrease of 5 percent compared with $102.7 million in the same prior fiscal year period.

Net income was $4.8 million, or $0.05 per share, for the nine months ended March 31, 2021, compared to net income of $4.0 million, or $0.04 per share, in the same prior fiscal year period. The prior year nine month period ended March 31, 2020 included a non-cash, one-off 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 nine months ended March 31, 2021 was $31.3 million, compared to $17.4 million in the prior fiscal year period, which excludes the non-cash, one-off 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 third 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.

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: 10154473. An archived webcast will also be available at Accuray's website until Accuray announces its results for the fourth 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 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 operating expense, gross orders, order volume and age-outs; expectations regarding the effect of the COVID-19 pandemic on the Company; expectations regarding future sales in China; expectations regarding the Company's China 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 proposition 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 Company's catalysts for long-term growth; expectations regarding the executive leadership team and its ability to execute the Company's strategic growth; 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 February 1, 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 Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)
		Three Months Ended March 31,								Nine Months Ended March 31,
		2021				2020				2021				2020
Gross Orders		$	87,365			$	105,959			$	213,258			$	283,002
Net Orders			62,826				76,652				128,843				205,537
Order Backlog			610,795				569,901				610,795				569,901
Net revenue:
Products		$	47,439			$	45,527			$	120,502			$	126,892
Services			55,123				54,021				164,851				161,059
Total net revenue			102,562				99,548				285,353				287,951
Cost of revenue:
Cost of products			27,709				27,573				69,237				73,661
Cost of services			35,311				32,842				100,340				104,314
Total cost of revenue			63,020				60,415				169,577				177,975
Gross profit			39,542				39,133				115,776				109,976
Operating expenses:
Research and development			13,268				11,164				37,372				37,569
Selling and marketing			10,567				11,106				29,813				35,699
General and administrative			11,281				8,894				30,498				29,396
Total operating expenses			35,116				31,164				97,683				102,664
Income from operations			4,426				7,969				18,093				7,312
Income (loss) on equity investment, net			(68)				222				1,021				222
Other income (expense), net			(4,027)				(5,281)				(12,981)				(1,954)
Income before provision for income taxes			331				2,910				6,133				5,580
Provision for income taxes			721				285				1,352				1,601
Net income (loss)		$	(390)			$	2,625			$	4,781			$	3,979
Net income (loss) per share - basic		$	(0.00)			$	0.03			$	0.05			$	0.04
Net income (loss) per share - diluted		$	(0.00)			$	0.03			$	0.05			$	0.04
Weighted average common shares used in    computing income (loss) per share:
Basic			93,123				90,476				92,106				89,585
Diluted			93,123				90,855				93,422				90,429

 

Accuray Incorporated Condensed Consolidated Balance Sheets (in thousands) (Unaudited)
		March 31,				June 30,
		2021				2020
Assets
Current assets:
Cash and cash equivalents		$	126,335			$	107,577
Restricted cash			3,811				997
Accounts receivable, net			69,914				90,599
Inventories			136,854				134,374
Prepaid expenses and other current assets			21,030				21,227
Deferred cost of revenue			1,440				2,712
Total current assets			359,384				357,486
Property and equipment, net			12,327				15,349
Investment in joint venture			16,579				13,929
Goodwill			57,909				57,717
Intangible assets, net			492				663
Operating lease right-of-use assets			24,066				28,647
Other assets			16,069				17,136
Total assets		$	486,826			$	490,927
Liabilities and equity
Current liabilities:
Accounts payable		$	17,869			$	23,126
Accrued compensation			21,217				17,963
Operating lease liabilities, current			8,455				8,224
Other accrued liabilities			22,745				27,180
Customer advances			23,231				22,571
Deferred revenue			80,677				83,207
Short-term debt			18,942				—
Total current liabilities			193,136				182,271
Long-term other liabilities			8,950				7,416
Deferred revenue			23,212				24,125
Operating lease liabilities, non-current			18,888				24,173
Long-term debt			164,090				189,307
Total liabilities			408,276				427,292
Equity:
Common stock			93				91
Additional paid-in capital			554,673				545,741
Accumulated other comprehensive income (loss)			716				(484)
Accumulated deficit			(476,932)				(481,713)
Total equity			78,550				63,635
Total liabilities and equity		$	486,826			$	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 March 31,								Nine Months Ended March 31,
		2021				2020				2021				2020
GAAP net income (loss)		$	(390)			$	2,625			$	4,781			$	3,979
Depreciation and amortization			1,577				1,869				4,890				5,566
Stock-based compensation			2,489				2,016				7,097				5,865
Interest expense, net			4,320				4,513				13,143				13,396
Gain on contribution to equity method investment in joint venture (a)			—				—				—				(12,965)
Provision for income taxes			721				285				1,352				1,601
Adjusted EBITDA		$	8,717			$	11,308			$	31,263			$	17,442
(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) 717-7804				+1 (408) 789-4426
jdiaz@accuray.com				bkaplan@accuray.com

 

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SOURCE Accuray Incorporated

FAQ

What were Accuray's third quarter results for fiscal 2021?

Accuray reported net revenue of $102.6 million, net loss of $0.4 million, and gross orders totaling $87.4 million for Q3 fiscal 2021.

How did Accuray's gross orders perform in Q3 2021?

Gross orders in Q3 2021 were $87.4 million, a decline from $106.0 million in the same period last year.

What is Accuray's adjusted EBITDA for third quarter fiscal 2021?

Accuray's adjusted EBITDA for Q3 fiscal 2021 was $8.7 million, down from $11.3 million in the prior year period.

What is the status of Accuray's financial guidance for fiscal 2021?

Accuray refrained from providing financial guidance for fiscal 2021 due to uncertainties related to the COVID-19 pandemic.