Accuray grows second quarter gross orders 17%; backlog up 16% year over year

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CyberKnife CSIAccuray Incorporated has announced financial results for the second fiscal quarter and six months ended December 31, 2016.

Fiscal second quarter highlights include:

— Ending backlog increased 16 percent year-over-year to $426.2 million; gross orders were $78.5 million with net orders of $54.1 million.

— A strong mix of CyberKnife® System orders; greater than 70% equipped with the InCise™ Multileaf Collimator ("MLC").

— A three-unit multi-system Radixact™ System order for Hong Kong Sanatorium and Hospital.

— Multiple sites in the United States and Europe are now equipped and treating patients with the Radixact System.

“Our 17% year-over-year gross order growth during the second quarter was led by increased demand for our CyberKnife system, especially from replacement orders to existing customers," said Joshua H. Levine, president and chief executive officer. "In addition, gross orders were favorably impacted by solid demand for our new Radixact System, which will be fully launched by the end of the third fiscal quarter. We performed above expectations in regards to gross order performance in the first half of the year and are seeing several indicators that lead us to believe our strong backlog growth will continue through the end of fiscal 2017 and into fiscal 2018.”

Financial Highlights

Gross product orders totaled $78.5 million for the 2017 fiscal second quarter compared to $67.1 million for the prior fiscal year period. Ending product backlog was $426.2 million, approximately 16 percent higher than backlog at the end of the prior fiscal year second quarter.

Total revenue was $87.5 million compared to $108.9 million in the prior fiscal year second quarter. Service revenue totaled $52.1 million compared to $53.1 million, while product revenue totaled $35.4 million compared to $55.8 million in the prior fiscal year second quarter. The decrease in revenue was primarily due to lower sales unit volume as well as product and channel mix.

Total gross profit for the 2017 fiscal second quarter was $31.4 million or 36 percent of sales, comprised of product gross margin of 35 percent and service gross margin of 36 percent. This compares to total gross profit of $42.6 million or 39 percent of sales, comprised of product gross margin of 41 percent and service gross margin of 37 percent for the prior fiscal year second quarter.

Operating expenses were $36.2 million, a decrease of 15 percent compared with $42.7 million in the prior fiscal second quarter. The decrease was primarily because of lower legal fees, trade show expenses and research and development expenses.

Net loss was $9.4 million, or $0.11 per share, for the second quarter of fiscal 2017, compared to a net loss of $6.0 million, or $0.08 per share, for the second quarter of fiscal 2016.

Adjusted EBITDA for the second quarter of fiscal 2017 was $1.8 million, compared to $6.8 million in the prior fiscal year second quarter.

Cash, cash equivalents and investments were $108.4 million as of December 31, 2016, a decrease of $16.0 million from September 30, 2016, of which $5.0 million was due to secured debt principal pay down.

Six Month Highlights

For the six months ended December 31, 2016, gross product orders totaled $128.8 million compared to $132.0 million for the same prior year period.

Total revenue for the six months ended December 31, 2016, was $174.0 million compared to $198.5 million in the prior fiscal year period. Service revenue totaled $103.0 million which was flat from the prior fiscal year period, while product revenue totaled $71.0 million compared to $95.8 million in the prior year period. The decrease in revenue is the result of modestly extended revenue conversion times mainly resulting from a higher percentage of order growth in our distributor channels, which results in less direct control over the timing of revenue.

Total gross profit for the six months ended December 31, 2016, was $62.7 million or 36 percent of sales, comprised of product gross margin of 35 percent and service gross margin of 37 percent. This compares to total gross profit of $76.5 million or 39 percent of sales, comprised of product gross margin of 42 percent and service gross margin of 35 percent for the same prior fiscal year period. The decrease in gross margin stemmed from lower sales unit volume as well as product and channel mix.

Operating expenses were $74.1 million, a decrease of 12 percent compared with $83.8 million in the prior fiscal year period. The decrease was primarily because of lower legal fees and research and development expenses.

Net loss was $19.3 million, or $0.24 per share, for the six months ended December 31, 2016, compared to a net loss of $19.1 million, or $0.24 per share, for the prior year fiscal period.

Adjusted EBITDA for the six months ended December 31, 2016 was $2.9 million, compared to $5.7 million in the prior fiscal year period.

Cash, cash equivalents and investments were $108.4 million as of December 31, 2016, a decrease of $58.6 million from June 30, 2016 as the result of using $36.6 million to fully repay the Company’s 3.75 percent convertible debt in August 2016 and $5.0 million of additional secured debt principal pay down in the current quarter.

2017 Financial Guidance

The Company has reaffirmed guidance originally provided on August 17, 2016 for fiscal year 2017 for all metrics except operating expenses, as follows:

  • Revenue: $410.0 million to $420.0 million representing growth of approximately 3 percent to 5 percent year-over-year;
  • Operating Expenses down approximately 3 to 4 percent over prior year (August 17, 2016 guidance for this metric was “Approximately $164.0 million or flat with the prior year”)
  • Adjusted EBITDA: $32.0 million to $38.0 million representing growth of approximately 30 percent to 55 percent year-over-year
  • Gross Orders growth of approximately 5 percent

“During the second half of fiscal 2017, there are two major variables that could affect our revenue including China’s timing of Class A radiotherapy licenses and the impact of a higher mix of distributor orders which could continue to result in timing uncertainty,” said Levine. “We are proactively communicating with our independent distributor partners to understand how to provide additional support around site planning and installation activities to improve the visibility into the timing of revenue conversion.”

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Accuray grows second quarter gross orders 17%; backlog up 16% year over year.  Appl Rad Oncol. 

By News Release| February 01, 2017
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