ACCURAY INCORPORATED SUNNYVALE, Calif., April 26, 2016 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) announced today financial results for the third fiscal quarter and nine months ended March 31, 2016.
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Fiscal Third Quarter Highlights
-- Gross orders were $56.4 million; 9% year-over-year growth; Net orders
were $57.6 million; 60% year-over-year growth
-- Ending product backlog was $370.5 million; 7% year-over-year growth
-- Total revenue was $105.3 million, an increase of 8% year-over-year
-- Adjusted EBITDA expanded sequentially to $13.9 million from $6.8 million
-- Net operating income of $5.4 million; Net income of $0.8 million
-- Gross profit margin expanded to 42.7% from 39.6% in the prior year
"In the third quarter we exceeded our expectations for gross margins, operating profits, net income and adjusted EBITDA. While the third quarter gross orders were below expectations, we grew our overall backlog, which is what fuels our future revenue growth, and were up seven percent from a year ago," said Joshua H. Levine, president and chief executive officer of Accuray. "Additionally, we are excited to report that we submitted a 510(k) premarket notification with the Food and Drug Administration (FDA) for our innovative Radixact(TM) Treatment Delivery System*, the next generation TomoTherapy(®) platform. The Radixact System, with its unique architecture, is intended to strengthen our sales funnel by providing expanded clinical options for clinicians and innovative treatment opportunities for their patients."
*The Radixact Treatment Delivery System is pending FDA 510(k) clearance and not available for sale within the United States. This product may also be subject to international regulatory approval or licensing processes such that the availability of this product may vary according to geographical location.
Financial Highlights
Total revenue was $105.3 million, an increase of 8 percent year-over-year. The Americas region total revenue was $32.7 million and total revenue outside of the Americas region was $72.6 million. Product revenue increased 16 percent to $53.7 million while service revenue increased modestly to $51.5 million.
Total gross profit of $44.9 million, or 43 percent of sales, was comprised of product gross margin of 45 percent and service gross margin of 40 percent. This compares to total gross margin of 40 percent, product gross margin of 41 percent and service gross margin of 38 percent for the prior fiscal year third quarter.
Operating expenses were $39.5 million, an increase of 5 percent compared with $37.5 million in the third quarter of the prior year. The increase was primarily due to higher legal expenses relating to an arbitration award to our former distributor in China in the amount of $2.4 million.
Net income increased to $0.8 million, or $0.01 per basic and diluted share, for the third quarter of fiscal 2016, compared to a net loss of ($3.0) million, or ($0.04) per basic and diluted share, for the third quarter of fiscal 2015.
Adjusted EBITDA for the third quarter of fiscal 2016 was $13.9 million, compared to $9.9 million in the third quarter of the prior fiscal year.
Cash, cash equivalents and investments were $149.8 million as of March 31, 2016, a decrease of $6.0 million from December 31, 2015. The decrease was primarily related to the payment of $5.5 million to the Company's former distributor in China for an arbitration award that was finalized in January 2016.
Nine Month Highlights
For the nine months ended March 31, 2016, total revenues were $303.8 million, representing an increase of 9 percent, or 12 percent on a constant currency basis, from the comparable period of fiscal year 2015. Product revenue for the nine month period was $149.5 million, representing an increase of 18 percent while service revenue was $154.3 million, representing 2 percent growth over the comparable prior fiscal year period.
Gross profit margin for the nine months ended March 31, 2016 was 40 percent, comprised of product gross margin of 43 percent and service gross margin of 37 percent. This compares to total gross margin of 38 percent for the comparable prior fiscal year period.
Operating expenses were $123.3 million for the nine months ended March 31, 2016, compared with $122.6 million in the comparable prior fiscal year period.
Net loss for the nine months ended March 31, 2016 was $18.3 million, or $0.23 per share, compared to a net loss of $34.6 million, or $0.44 per share, for the comparable prior fiscal year period.
Adjusted EBITDA for the nine months ended March 31, 2016 was $19.6 million, compared to $5.1 million in the comparable prior fiscal year period.
Cash, cash equivalents, and investments increased $5.9 million from June 30, 2015.
2016 Financial Guidance
Accuray is revising financial guidance for fiscal year 2015 as follows: total revenue is now expected to be between $395 million to $405 million and adjusted EBITDA is now expected to be between $25 million to $30 million. This compares to previously issued guidance expectations in January 2016 of $395 million to $410 million in revenue and $25 million to $35 million in adjusted EBITDA. Accuray expects gross orders for the fiscal year will be $280 million to $290 million, compared to previously issued guidance of approximately $295 million.
Conference Call Information
Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m. ET today to discuss these results. Conference call dial-in information is as follows:
-- U.S. callers: (855) 867-4103
-- International callers: +1 (262) 912-4764
-- Conference ID Number (U.S. and international): 87031372
Individuals interested in listening to the live conference call via the Internet may do so by logging on to Accuray's website, www.accuray.com. In addition, a dial-up replay of the conference call will be available beginning April 26, 2016 at 5:00 p.m. PT/8:00 p.m. ET and ending when Accuray announces its results for the fourth quarter of fiscal, 2016 ending June 30, 2016. The replay telephone number is (855) 859-2056 (USA) or +1 (404) 537-3406 (International), Conference ID: 87031372.
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"). 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 more meaningful comparison of results for current periods with previous operating results. A reconciliation of GAAP net loss (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedule below.
Accuray presents certain measures, such as period-over-period revenue growth, on a constant currency basis, which excludes the effects of foreign currency translation. Due to the continuing strengthening of the U.S. dollar against foreign currencies and the overall variability of foreign exchange rates from period to period, management uses these measures on a constant currency basis to evaluate period-over-period operating performance. Measures presented on a constant currency basis are calculated by translating current period results at prior period monthly average exchange rates.
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 a radiation oncology company that develops, manufactures and sells precise, innovative treatment solutions that set the standard of care with the aim of helping patients live longer, better lives. The company's leading-edge technologies deliver the full range of radiation therapy and radiosurgery treatments. For more information, please visit www.accuray.com.
Safe Harbor Statement
This press release contains management's current intentions and expectations for the future, all of which are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as "estimate," "project," "intend," "expect," "believe," "target," and similar expressions are intended to identify forward-looking statements. 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 management's expectations regarding growth in orders, gross profit margins, revenues and adjusted EBITDA, ability to meet financial targets, anticipated regulatory approvals and launches of new products, market uptake of recently launched products, market growth and Accuray's leadership position in radiation oncology innovation and technologies. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including but not limited to: the company's ability to convert backlog to revenue; the success of the adoption of our CyberKnife and TomoTherapy Systems; the company's ability to manage its expenses; continuing uncertainty in the global economic environment; and other risks detailed from time to time under the heading "Risk Factors" in the company's report on Form 10-K, which was filed on August 28, 2015, the company's report on Form 10-Q, which were filed on November 5, 2015 and February 1, 2016, 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.
Doug Sherk Beth Kaplan
Investor Relations, EVC Group Public Relations Director, Accuray
+1 (415) 652-9100 +1 (408) 789-4426
dsherk@evcgroup.com bkaplan@accuray.com
Financial Tables to Follow
Accuray Incorporated
Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2016 2015 2016 2015
---- ---- ---- ----
Gross Orders $56,410 $51,891 $188,416 $182,915
Net Orders 57,559 35,937 145,037 109,693
Order Backlog 370,488 347,408 370,488 347,408
Net revenue:
Products $53,740 $46,361 $149,494 $127,026
Services 51,544 51,154 154,333 151,025
------
Total net revenue 105,284 97,515 303,827 278,051
Cost of revenue:
Cost of products 29,622 27,332 85,356 75,168
Cost of services 30,718 31,523 97,058 97,933
Total cost of
revenue 60,340 58,855 182,414 173,101
------ ------ ------- -------
Gross profit 44,944 38,660 121,413 104,950
Operating expenses:
Research and
development 13,270 12,836 42,497 40,902
Selling and
marketing 12,516 12,987 41,009 46,763
General and
administrative 13,716 11,665 39,820 34,976
Total operating
expenses 39,502 37,488 123,326 122,641
------ ------ ------- -------
Income (loss) from
operations 5,442 1,172 (1,913) (17,691)
Other expense, net (3,963) (3,618) (14,124) (14,607)
Income (loss) before
provision for
income taxes 1,479 (2,446) (16,037) (32,298)
Provision for income
taxes 723 521 2,260 2,311
--- ---
Net income (loss) $756 $(2,967) $(18,297) $(34,609)
==== ======= ======== ========
Net income (loss)
per share -basic $0.01 $(0.04) $(0.23) $(0.44)
===== ====== ====== ======
Net income (loss)
per share -diluted $0.01 $(0.04) $(0.23) $(0.44)
===== ====== ====== ======
Weighted average common shares used in computing
income (loss) per share:
Basic 80,860 78,746 80,320 77,981
====== ====== ====== ======
Diluted 82,071 78,746 80,320 77,981
====== ====== ====== ======
Accuray Incorporated
Consolidated Balance Sheets
(in thousands)
(Unaudited)
March 31, June 30,
2016 2015
---- ----
Assets
Current assets:
Cash and cash
equivalents $79,155 $79,551
Investments 70,650 64,306
Restricted cash 1,080 3,734
Accounts receivable,
net 89,319 77,727
Inventories 117,122 106,151
Prepaid expenses and
other current assets 14,688 15,991
Deferred cost of
revenue 8,632 6,869
Total current assets 380,646 354,329
Property and
equipment, net 29,061 31,829
Goodwill 57,936 58,054
Intangible assets, net 9,599 15,564
Deferred cost of
revenue 1,654 1,500
Other assets 11,124 5,497
Total assets $490,020 $466,773
======== ========
Liabilities and equity
Current liabilities:
Accounts payable $21,737 $13,096
Accrued compensation 20,534 21,934
Other accrued
liabilities 23,415 18,720
Short-term debt 39,278 -
Customer advances 19,732 19,385
Deferred revenue 104,935 96,780
Total current
liabilities 229,631 169,915
Long-term liabilities:
Long-term other
liabilities 10,925 10,934
Deferred revenue 16,722 10,489
Long-term debt 170,395 199,655
Total liabilities 427,673 390,993
Commitment and contingencies
Equity:
Common stock 81 79
Additional paid-in
capital 476,165 471,430
Accumulated other
comprehensive loss (299) (426)
Accumulated deficit (413,600) (395,303)
Total equity 62,347 75,780
------ ------
Total liabilities and
equity $490,020 $466,773
======== ========
Accuray Incorporated
Reconciliation of GAAP Net 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,
---------------------------- ---------------------------
2016 2015 2016 2015
---- ---- ---- ----
GAAP net income
(loss) $756 $(2,967) $(18,297) $(34,609)
Amortization of
intangibles (a) 1,988 1,989 5,964 5,965
Depreciation (b) 2,594 2,915 7,679 8,899
Stock-based
compensation (c) 3,566 3,377 9,445 10,504
Interest expense,
net (d) 4,291 4,051 12,585 12,062
Provision for
income taxes 723 521 2,260 2,311
Adjusted EBITDA $13,918 $9,886 $19,636 $5,132
======= ====== ======= ======
(a) consists of amortization of
intangibles -developed
technology.
(b) consists of depreciation,
primarily on property and
equipment.
(c) consists of stock-based
compensation in accordance with
ASC 718.
(d) consists primarily of interest
income from available-for-sale
securities and interest expense
associated with our convertible
notes and term loan.
Accuray Incorporated
Forward-Looking Guidance
Reconciliation of Projected Net Loss to Projected Adjusted Earnings Before Interest, Taxes,
Depreciation, Amortization and Stock-Based Compensation (Adjusted EBITDA)
(in thousands)
(Unaudited)
Twelve Months Ending June 30,
2016
------------------------------
From To
---- ---
GAAP net loss $(26,100) $(21,100)
Amortization of
intangibles (a) 7,950 7,950
Depreciation (b) 10,350 10,350
Stock-based
compensation (c) 12,900 12,900
Interest expense,
net (d) 16,900 16,900
Provision for income
taxes 3,000 3,000
Adjusted EBITDA $25,000 $30,000
======= =======
(a) consists of amortization of
intangibles -developed
technology
(b) consists of depreciation,
primarily on property and
equipment
(c) consists of stock-based
compensation in accordance with
ASC 718
(d) consists primarily of interest
income from available-for-sale
securities and interest expense
associated with our convertible
notes and tem loan
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SOURCE Accuray Incorporated
