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Accuray Generates $105.3 Million in Third Quarter Revenues

ARAY, -1.83% announced today financial results for the third fiscal quarter and nine months ended March 31, 2016.

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™ 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...


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