Accuray reports financial results for first quarter, affirms full year fiscal 2017 guidance

Accuray Inc. has reported financial results for the 2017 fiscal first quarter ended Sept. 30, 2016.

“With our first quarter results we remain well-positioned to drive growth for both orders and revenue in the back half of fiscal 2017,” said Joshua H. Levine, president and chief executive officer. “Our full commercial release of Radixact along with new compelling CyberKnife clinical data will result in 2017 being a year of improved performance in orders, revenue, and EBITDA enabling us to affirm our full year fiscal 2017 guidance.”

First Quarter Fiscal 2017 Highlights

• Ending backlog increased 7 percent year-over-year to $407.5 million; gross orders were $50.3 million with net orders of $37.2 million.
• Total revenue was $86.5 million.
• Net loss of $9.9 million compared to a prior year net loss of $13.0 million.
• Adjusted EBITDA of $1.2 million as compared with an adjusted EBITDA loss of $1.1 million in the prior year period.
• Repaid $36.6 million in cash on maturity of the 3.75 percent Convertible Senior Notes on August 1, 2016.
• RadixactTM System commercially launched at ASTRO in September, after receiving FDA 501(k) clearance in June 2016 and CE Mark in August 2016.
• New study data presented at ASTRO demonstrated the clinical efficacy of the CyberKnife System with 97 percent of low-and intermediate-risk prostate cancer patients having excellent cancer control five years after receiving treatment.⁽¹⁾

Financial Highlights

Gross product orders totaled $50.3 million for the 2017 fiscal first quarter compared to $64.9 million for the year ago period. Ending product backlog was $407.5 million, approximately 7 percent higher than backlog at the end of the prior fiscal year first quarter. The decline in gross orders is mainly attributable to customer timing. Comparable prior fiscal first quarter orders included a greater number of MLC-equipped CyberKnife Systems as well as the first of its kind 5-unit multi-system order in the United States.

Total revenue was $86.5 million compared to $89.6 million in the prior fiscal year first quarter. Service revenue totaled $50.9 million which was an increase of 3 percent from the prior fiscal year first quarter, while product revenue totaled $35.6 million compared to $40.0 million in the prior year period.

Total gross profit for the 2017 fiscal first quarter was $31.3 million or 36 percent of sales, comprised of product gross margin of 34 percent and service gross margin of 38 percent. This compares to total gross margin of 38 percent, product gross margin of 43 percent and service gross margin of 34 percent for the prior fiscal year first quarter. The decrease in gross margin stemmed from lower sales unit volume as well as product and channel mix.

Operating expenses were $37.9 million, a decrease of 8 percent compared with $41.1 million in the prior fiscal first quarter. The decrease was primarily because of lower legal fees and research and development expenses partially offset by increased tradeshow and marketing expenses.

Net loss was $9.9 million, or $0.12 per share, for the first quarter of fiscal 2017, compared to a net loss of $13.0 million, or $0.16 per share, for the first quarter of fiscal 2016.

Adjusted EBITDA for the first quarter of fiscal 2017 was $1.2 million, compared to and Adjusted EBITDA loss of $1.1 million in the prior fiscal year first quarter.

Cash, cash equivalents and investments were $124.4 million as of Sept. 30, 2016, a decrease of $42.6 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.

2017 Financial Guidance

The company has affirmed previously provided guidance for fiscal year 2017 as follows:

• Revenue: $410.0 million to $420.0 million representing growth of approximately 3 percent to 5 percent year-over-year.
• Operating Expenses: 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.

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.

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.