On August 15, 2019 Accuray Incorporated (NASDAQ: ARAY) reported financial results for the fourth quarter and fiscal year ended June 30, 2019 (Press release, Accuray, AUG 15, 2019, View Source [SID1234538793]).
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Q4 Fiscal 2019 and Recent Operating Highlights
Revenue increased 3 percent to $117.4 million, the highest ever quarterly revenue reported; Gross orders increased to $97.2 million
$3.3 million of operating profit, which grew 5 percent
Signed first multi-system order bundling Accuray and RaySearch Laboratories product and software offerings
Signed first upgrade order for Synchrony motion tracking and correction technology for Radixact
Fiscal Year 2019 Highlights
Gross orders increased 12 percent year-over-year to $342.3 million
Revenue increased 3 percent over the prior fiscal year to $418.8 million
Recorded first full year of operating profit since 2011
"From all perspectives, fiscal 2019 was a very successful year," said Joshua H. Levine, president and chief executive officer. "We generated 12 percent gross order growth for the year while our efforts to increase efficiencies led to the Company’s first operating profit since 2011. Additionally, we set a new quarterly revenue record during the fourth quarter. From a strategic growth perspective, we advanced our opportunities in China which is the world’s fastest growing radiotherapy market. It should be noted that our progress during fiscal 2019 came without significant revenue contribution from the China market as the process for awarding and issuing Class A and B user licenses for radiotherapy systems is still in an early phase."
Q4 Fiscal 2019 Financial Highlights
Gross product orders totaled $97.2 million for the fourth quarter of fiscal 2019 compared to $96.4 million for the prior fiscal year fourth quarter. Ending order backlog was $495.6 million, approximately 4 percent higher than at the end of the prior fiscal year.
Total revenue was $117.4 million, an increase of 3 percent compared to $113.8 million in the prior fiscal year fourth quarter. Product revenue totaled $60.6 million compared to $54.6 million in the prior fiscal year fourth quarter, while service revenue totaled $56.8 million compared to $59.2 million in the prior fiscal year fourth quarter.
Total gross profit for the fourth quarter of fiscal 2019 was $45.9 million or approximately 39.1 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.4 percent. This compares to total gross profit of $48.0 million or 42.2 percent of sales, comprised of product gross margin of 47.4 percent and service gross margin of 37.4 percent for the prior fiscal year fourth quarter.
Net loss was $1.4 million, or $0.02 per share, for the fourth quarter of fiscal 2019, compared to a net loss of $0.9 million, or $0.01 per share, for the fourth quarter of fiscal 2018.
Adjusted EBITDA for the fourth quarter of fiscal 2019 was $8.9 million, compared to $7.8 million in the prior fiscal year fourth quarter.
Cash, cash equivalents, investments and short-term restricted cash were $87.0 million as of June 30, 2019, an increase of $22.4 million from March 31, 2019.
Fiscal Year 2019 Highlights
For the fiscal year ended June 30, 2019, gross product orders totaled $342.3 million, representing growth of 12 percent compared to the prior fiscal year period.
Total revenue was $418.8 million compared to $404.9 million in the prior fiscal year period. Product revenue totaled $196.7 million compared to $183.9 million in the prior fiscal year period, while service revenue totaled $222.1 million compared to $221.0 million from the prior fiscal year period.
Total gross profit for the year ended June 30, 2019 was $162.7 million or 38.8 percent of sales, comprised of product gross margin of 40.7 percent and service gross margin of 37.2 percent. This compares to total gross profit of $161.7 million or 39.9 percent of sales, comprised of product gross margin of 44.0 percent and service gross margin of 36.6 percent for the same prior fiscal year period.
Operating expenses were $162.1 million, a decrease of 2 percent compared to $165.5 million in the prior fiscal year period.
Net loss was $16.4 million, or $0.19 per share, for the fiscal year ended June 30, 2019, compared to a net loss of $23.9 million, or $0.28 per share, for the prior fiscal year period.
Adjusted EBITDA for the fiscal year ended June 30, 2019 was $23.7 million, compared to $17.1 million in the prior fiscal year period.
2020 Financial Guidance
The Company is introducing guidance for fiscal year 2020 as follows:
Total revenue is expected to range between $410.0 million to $420.0 million due to the expected delay in timing of Class A system revenue with total revenue during the first half of the year expected to be slightly below fiscal 2019 levels. The total revenue range includes the impact of 25% Chinese tariffs currently in place
Adjusted EBITDA is expected to range between $19.0 million to $24.0 million, including a loss of approximately $2 million from our China joint venture equity interest
Guidance for non-GAAP financial measures excludes depreciation and amortization, stock-based compensation expense, interest expense, net 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 and fiscal 2019 as well as recent corporate developments. Conference call dial-in information is as follows:
U.S. callers: (855) 867-4103
International callers: (262) 912-4764
Conference ID Number (U.S. and international): 3297842
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 taped replay of the conference call will be available beginning approximately two hours after the call’s conclusion and available for seven days. The replay telephone number is (855) 859-2056 (USA) or (404) 537-3406 (International), Conference ID: 3297842. An archived webcast will also be available at Accuray’s website until Accuray announces its results for the first quarter of fiscal 2020.
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 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.