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Classified in: Health, Business, Covid-19 virus
Subjects: ERN, ERP

Accuray Reports Fourth Quarter and Fiscal 2022 Financial Results


8.5% FY22 revenue growth; Company issues guidance for FY23

SUNNYVALE, Calif., Aug. 10, 2022 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and fiscal 2022 ended June 30, 2022.

Q4 Fiscal 2022 and Recent Operating Highlights

Fiscal Year 2022 Highlights

"The Accuray team delivered a solid fourth quarter beating consensus despite supply chain disruption and impacts from the COVID-19 lock downs in China.  For the year, we delivered historic revenue levels demonstrating strong customer adoption of our latest product innovation.  We continue to build a stronger business and invest in areas that are expected to deliver value to our customers to advance patient care," said Suzanne Winter, President and Chief Executive Officer.

Fiscal Fourth Quarter Results

Gross orders totaled $88.3 million for the fourth quarter of fiscal 2022 compared to $112.7 million for the prior fiscal year fourth quarter. Ending order backlog was $563.7 million, approximately 8.6 percent lower than at the end of the prior fiscal year as we experienced age-outs in the fourth quarter primarily driven by delayed installations in our China and EIMEA regions.

Total revenue was $110.0 million for the fourth quarter of fiscal 2022 compared to $110.9 million for the prior fiscal year fourth quarter. Product revenue totaled $58.0 million compared to $56.1 million for the prior fiscal year fourth quarter, while service revenue totaled $52.0 million compared to $54.8 million for the prior fiscal year fourth quarter.

Total gross profit for the fourth quarter of fiscal 2022 was $43.0 million, or approximately 39.1 percent of sales, comprised of product gross margin of 45.1 percent and service gross margin of 32.5 percent. This compares to total gross profit of $43.7 million, or 39.4 percent of sales, comprised of product gross margin of 41.5 percent and service gross margin of 37.3 percent for the prior fiscal year fourth quarter.

Operating expenses were $41.0 million, as compared to $39.6 million for the prior fiscal year fourth quarter.

Net loss was $3.5 million, or $0.04 per share, for the fourth quarter of fiscal 2022, compared to a net loss of $11.1 million, or $0.12 per share, for the prior fiscal year fourth quarter.  Net loss for the fourth quarter of fiscal 2021 included a one-time charge of $9.9 million related to the exchange of a significant portion of the Company's existing 3.75% Convertible Senior Notes due July 2022 for newly issued 3.75% Convertible Senior Notes due May 2026 and the refinancing of the Company's senior secured revolving credit facility and term loan with new lenders. This one-time charge was recorded as non-operating, other expense in the fourth quarter of fiscal 2021.

Adjusted EBITDA for the fourth quarter of fiscal 2022 was $5.2 million, compared to $6.7 million for the prior fiscal year fourth quarter.

Cash, cash equivalents, and short-term restricted cash were $88.9 million as of June 30, 2022, a decrease of $9.1 million from March 31, 2022.

Fiscal Year 2022 Highlights

For the fiscal year ended June 30, 2022, gross orders totaled $332.3 million, representing an increase of 1.9 percent compared to the prior fiscal year.

Total revenue was $429.9 million for the fiscal year ended June 30, 2022 compared to $396.3 million for the prior fiscal year period. Product revenue totaled $214.7 million compared to $176.7 million for the prior fiscal year period, while service revenue totaled $215.2 million compared to $219.6 million for the prior fiscal year.

Total gross profit for the year ended June 30, 2022 was $160.0 million, or 37.2 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 33.7 percent. This compares to total gross profit of $159.5 million, or 40.3 percent of sales, comprised of product gross margin of 42.2 percent and service gross margin of 38.7 percent for the prior fiscal year.

Operating expenses were $151.8 million, as compared to $137.3 million for the prior fiscal year period.

Net loss was $5.3 million, or $0.06 per share, for the fiscal year ended June 30, 2022, compared to a net loss of $6.3 million, or $0.07 per share, for the prior fiscal year period.

Prior fiscal year net loss included a one-time charge interest expense of $9.9 million related to the exchange of a significant portion of the Company's existing 3.75% Convertible Senior Notes due July 2022 for newly issued 3.75% Convertible Senior Notes due May 2026 and the refinancing of the Company's senior secured revolving credit facility and term loan with new lenders. The loss was recorded as non-operating, other expense in the fourth quarter of fiscal 2021.

Adjusted EBITDA for the fiscal year ended June 30, 2022 was $22.8 million, compared to $38.0 million for the prior fiscal year period.

Fiscal Year 2023 Financial Guidance

Accuray's financial guidance is based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market and economic conditions, the impact of the COVID-19 pandemic, supply chain disruption, and the factors set forth under "Safe Harbor Statement" below.

The Company is introducing guidance for fiscal year 2023 as follows:

"While supply chain constraints, foreign exchange headwinds, and COVID-19 related lock downs in China are expected to create near term pressure, we believe our new product introductions will serve as catalysts for growth in FY23.  We remain focused on margin expansion plans and investments in research and development to drive innovation and create shareholder value in the long term," said Ali Pervaiz, Chief Financial Officer.

Guidance for Adjusted EBITDA, a non-GAAP financial measures excludes depreciation and amortization, stock-based compensation expense, Enterprise Resource Planning (ERP) and ERP related expenditures, interest expense and provision for income taxes. For more information regarding the non-GAAP financial measures discussed in this press release, please see "Use of Non-GAAP Financial Measures" below.

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 fourth quarter of fiscal 2022 as well as recent corporate developments. Conference call dial-in information is as follows: 

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. There will be a slide presentation accompanying today's event which can also be accessed on the company's Investor Relations page at 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: 4554339. An archived webcast will also be available on Accuray's website until Accuray announces its results for the first quarter of fiscal 2023.

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, ERP and ERP related expenditures, depreciation, amortization and stock-based compensation ("adjusted EBITDA").  The calculation of adjusted EBITDA also excludes certain non-recurring, irregular and one-time items. 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 (loss) (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedules 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.

About Accuray

Accuray Incorporated (Nasdaq: ARAY) 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 total revenue and adjusted EBITDA; expectations regarding the effect of the COVID-19 pandemic, supply chain and logistics challenges on the company and the market in general; expectations regarding the company's commercial strategy and execution as well as long-term growth opportunities and catalysts; expectations regarding demand for the company's products, adoption of new products and the company's order growth; the company's innovation-driven growth strategy and its ability to continue to build a stronger business, deliver value to its customers and create shareholder value and return on investment in the long term; expectations regarding the company's China joint venture and other partnerships; expectations regarding the company's products and new product innovations and developments; expectations regarding the company's product portfolio and its ability to position the company for growth; the impact of the company's products on its customers and its business, and market adoption of such products, including with respect to the company's VOLO Ultra enhancement and Clear RT Helical kVCT Imaging upgrades as well as other strategic product innovations; expectations regarding the future of radiotherapy treatment and the company's addressable market; 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; disruptions to our supply chain, including increased logistics costs; 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 realize the expected benefits of the China joint venture and other partnerships; 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 April 29, 2022 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.

Aman Patel, CFA

Beth Kaplan

Investor Relations, ICR-Westwicke

Public Relations Director, Accuray

+1 (443) 450-4191

+1 (408) 789-4426

aman.patel@westwicke.com

bkaplan@accuray.com

###

Financial Tables to Follow

 

Accuray Incorporated

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)




Three Months Ended
June 30,



Twelve Months Ended
June 30,




2022



2021



2022



2021


Net revenue:













Products


$

58,037



$

56,145



$

214,715



$

176,647


Services



51,986




54,791




215,194




219,642


Total net revenue



110,023




110,936




429,909




396,289


Cost of revenue:













Cost of products



31,887




32,863




127,287




102,100


Cost of services



35,116




34,342




142,667




134,682


Total cost of revenue



67,003




67,205




269,954




236,782


Gross profit



43,020




43,731




159,955




159,507


Operating expenses:













Research and development



14,569




15,357




57,752




52,729


Selling and marketing



14,362




13,007




49,664




42,820


General and administrative



12,041




11,225




44,391




41,723


Total operating expenses



40,972




39,589




151,807




137,272


Income from operations



2,048




4,142




8,148




22,235


Income (loss) on equity investment, net



(533)




(149)




241




872


Other expense, net



(2,940)




(14,685)




(10,391)




(27,666)


Loss before provision for income taxes



(1,425)




(10,692)




(2,002)




(4,559)


Provision for income taxes



2,027




400




3,345




1,752


Net loss


$

(3,452)



$

(11,092)



$

(5,347)



$

(6,311)


Net loss per share - basic


$

(0.04)



$

(0.12)



$

(0.06)



$

(0.07)


Net loss per share - diluted


$

(0.04)



$

(0.12)



$

(0.06)



$

(0.07)


Weighted average common shares used in
   computing loss per share:













Basic



93,047




91,613




92,095




92,031


Diluted



93,047




91,613




92,095




92,031


 

Accuray Incorporated

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)




June 30,



June 30,




2022



2021


Assets







Current assets:







Cash and cash equivalents


$

88,737



$

116,369


Restricted cash



204




560


Accounts receivable, net



94,442




85,360


Inventories



142,254




125,929


Prepaid expenses and other current assets



23,794




21,547


Deferred cost of revenue



1,459




3,008


Total current assets



350,890




352,773


Property and equipment, net



12,685




12,332


Investment in joint venture



13,879




15,935


Operating lease right-of-use assets



16,798




22,522


Goodwill



57,840




57,960


Intangible assets, net



250




435


Restricted cash



1,213




1,272


Other assets



19,294




16,869


Total assets


$

472,849



$

480,098


Liabilities and equity







Current liabilities:







Accounts payable


$

31,337



$

19,467


Accrued compensation



29,441




26,865


Operating lease liabilities, current



8,567




8,169


Other accrued liabilities



30,285




27,471


Customer advances



25,290




24,937


Deferred revenue



75,375




81,660


Short-term debt



8,563




3,790


Total current liabilities



208,858




192,359


Long-term other liabilities



10,453




7,766


Deferred revenue



3,748




23,685


Operating lease liabilities, non-current



24,694




17,441


Long-term debt



171,907




170,007


Total liabilities



419,660




411,258


Equity:







Common stock



94




91


Additional paid-in capital



543,211




554,680


Accumulated other comprehensive income



2,406




2,093


Accumulated deficit



(492,522)




(488,024)


Total equity



53,189




68,840


Total liabilities and equity


$

472,849



$

480,098


 

Accuray Incorporated

Summary of Orders and Backlog

(in thousands)

(Unaudited)




Three Months Ended
June 30,



Twelve Months Ended
June 30,




2022



2021



2022



2021


Gross Orders


$

88,342



$

112,672



$

332,268



$

325,929


Net Orders



42,828




63,038




167,316




191,881


Order Backlog



563,684




616,399




563,684




616,399


 

Accuray Incorporated

Reconciliation of GAAP Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation,

Amortization, Stock-Based Compensation and Other (Adjusted EBITDA)

(in thousands)




Three Months Ended
June 30,



Twelve Months Ended
June 30,




2022



2021



2022



2021


GAAP net loss


$

(3,452)



$

(11,092)



$

(5,347)



$

(6,311)


Depreciation and amortization



1,275




1,498




5,522




6,389


Stock-based compensation



2,694




2,236




10,600




9,332


Interest expense, net



2,028




3,734




8,109




16,877


ERP and ERP related expenditures



594




?




594




?


One-time charge related to debt refinance and convertible
exchange (a)



?




9,948




?




9,948


Provision for income taxes



2,027




400




3,345




1,752


Adjusted EBITDA


$

5,166



$

6,724



$

22,823



$

37,987




(a)

consists of depreciation, primarily on property and equipment as well as amortization of intangibles.

(b)

consists primarily of interest expense associated with outstanding debt.

 

Accuray Incorporated

Forward-Looking Guidance

Reconciliation of Projected Net Loss to Projected Adjusted Earnings Before Interest, Taxes, Depreciation,
Amortization, Stock-Based Compensation and Other (Adjusted EBITDA)

(in thousands)




Twelve Months Ending
June 30, 2023




From



To


GAAP net income (loss)


$

(3,500)



$

500


Depreciation and amortization (a)



6,300




6,300


Stock-based compensation



11,600




11,600


Interest expense, net (b)



8,000




8,000


Provision for income taxes



2,000




2,000


ERP and ERP related expenditures



1,600




1,600


Adjusted EBITDA


$

26,000



$

30,000




(a)

consists of depreciation, primarily on property and equipment as well as amortization of intangibles.

(b)

consists primarily of interest expense associated with outstanding debt.

SOURCE Accuray Incorporated


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