Core Insights - Accuray Incorporated announced new data on the CyberKnife System, highlighting its effectiveness in treating central nervous system (CNS) tumors, which are among the most fatal cancers in the U.S. [1][3] - The studies presented at the 2025 Radiosurgery Society meeting emphasize the long-term efficacy and expanding applications of the CyberKnife System in treating various conditions, including benign tumors and complex spinal issues [3][4]. Clinical Advances - The CyberKnife System utilizes stereotactic radiosurgery (SRS) and stereotactic body radiation therapy (SBRT) to deliver targeted radiation in one to five sessions, achieving high precision through advanced image guidance and adaptive delivery technology [2][3]. - A 25-year study on vestibular schwannoma treatment showed a local control rate of 89.3% and an overall survival rate of 97.1%, demonstrating the long-term efficacy of the CyberKnife System [4]. Treatment Innovations - A study on circumferential SBRT for spinal metastases indicated that this technique is safe and effective, achieving high local tumor control with minimal complications [5]. - Research on trigeminal neuralgia in elderly patients revealed that 90% experienced pain relief after treatment with the CyberKnife System, showcasing its potential for patients with limited surgical options [5][6]. - For occipital condyle metastasis, the CyberKnife System achieved a local tumor control rate of 93.8% over three years, providing significant pain relief and improving neurological symptoms [6]. Company Commitment - Accuray is dedicated to advancing radiation therapy technology to improve patient outcomes, focusing on innovative solutions for complex cases while enhancing treatment accessibility for a broader patient population [7].

Company Participation - Accuray Incorporated will participate in the 37th Annual Roth Conference from March 16-18, 2025, in Dana Point, California [1] - Management will engage in a fireside chat on March 18, 2025, at 9:30am PT / 12:30pm ET, and will be available for one-on-one meetings with investors [1] Webcast Information - A live webcast of the fireside chat will be accessible on the Accuray website, with a replay available approximately one hour after the live presentation for 90 days [2] Company Overview - Accuray is dedicated to advancing radiation therapy to improve patient lives, focusing on innovative solutions for complex cases and enhancing treatment for commonly treatable cases [3] - The company is committed to continuous innovation in radiation therapy for oncology and neuro-radiosurgery, partnering with clinicians to facilitate faster patient recovery [3] - Accuray is headquartered in Madison, Wisconsin, with facilities located worldwide [3]

Core Viewpoint - Accuray Incorporated (ARAY) is positioned for growth due to strong demand for its products, particularly in the Radiosurgery Market, despite facing reimbursement uncertainties and foreign exchange challenges [1][11]. Financial Performance - Accuray has experienced a 26.3% decline in stock value over the past year, compared to a 1.3% decline in the industry and a 16.2% growth in the S&P 500 [2]. - The company has a market capitalization of $197.4 million and predicts a 106.3% growth for fiscal 2025, with a price-to-sales (P/S) ratio of 0.4X, significantly lower than the industry's 2.7X [2]. Growth Drivers - The CyberKnife System has shown strong performance, with revenues growing over 50% year-over-year, driven by advanced capabilities and higher adoption rates, particularly in China and Japan [4][9]. - Product revenues increased by 19% year-over-year in the second quarter of fiscal 2025, supported by demand for CyberKnife, TomoTherapy, and the new Helix systems [6][8]. - China delivered over 50% year-over-year revenue growth, gaining 10 points of market share, aided by the rapid adoption of the Tomo C System and strategic partnerships [9][10]. Market Expansion - Recent regulatory approvals in China for the CyberKnife S7 system have expanded its market reach in the premium segment, where precision treatments are in high demand [5]. - The Helix platform secured 12 orders across emerging markets, indicating sustained order momentum and positioning Accuray for continued growth in China, Japan, and APAC [8]. Challenges - The weak Japanese yen has negatively impacted Accuray's service revenue, making contracts more expensive for local customers and potentially affecting contract retention [11][12]. - Reimbursement uncertainties from public and private payors for procedures using CyberKnife and TomoTherapy platforms could influence market acceptance and product commercialization [13][14]. Estimate Trends - The Zacks Consensus Estimate for earnings has remained stable at 1 cent per share for fiscal 2025, with third-quarter fiscal 2025 revenue estimates at $102.2 million, reflecting a 1% improvement from the previous year [15].

Accuray Incorporated (ARAY) reported second-quarter fiscal 2025 earnings per share of 2 cents against the year-ago period’s loss of 10 cents. The bottom line surpassed the Zacks Consensus Estimate by 300%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Revenues in DetailAccuray registered quarterly revenues of $116.2 million, up 8.3% year over year. The figure beat the Zacks Consensus Estimate by 4.7%.The overall top-line growth was driven by robust growth in product revenue and solid ...

Financial Data and Key Metrics Changes - Revenue for the quarter increased by 8% year-over-year, reaching $116 million, with product revenue growing by 19% to $61 million [10][24] - Adjusted EBITDA for the quarter was $9.6 million, significantly up from $2 million in the prior year, driven by higher shipments and operational efficiencies [31][10] - The overall gross margin improved to 36.1% from 33.5% in the prior year, attributed to pricing and operational efficiencies [27][10] Business Line Data and Key Metrics Changes - Product revenue growth was driven by strong demand for the CyberKnife system, which saw revenue growth of over 50% year-over-year [12][10] - Service revenue for the quarter was $55 million, down 1% year-over-year, but adjusted for one-time items, it would have been up 2% [24][10] - The service business is expected to grow as the installed base increases, contributing to long-term revenue growth [18][10] Market Data and Key Metrics Changes - In China, revenue grew over 50% year-over-year, with significant contributions from the Tomo C System and a strong performance from the joint venture partner [13][10] - Japan experienced over 40% revenue growth, maintaining a number two market share position [16][10] - EIMEA region saw 7% orders growth, with balanced contributions from both developed and emerging markets [11][10] Company Strategy and Development Direction - The company aims to innovate and expand its service solutions business while improving patient access to radiotherapy in developing markets [9][10] - A focus on operational efficiencies and pricing actions is expected to enhance margins and long-term profitability [9][10] - The introduction of new products like the Helix platform is part of the strategy to capture market share in emerging markets [11][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue guidance of $463 million to $475 million for fiscal 2025, raising expectations from previous guidance [21][34] - The company anticipates a gradual recovery in the U.S. market in the second half of the fiscal year, with key installations already in progress [50][10] - Management is closely monitoring macroeconomic factors, including inflation and tariffs, but believes the risks are minimal for the second half of the year [33][54] Other Important Information - The company welcomed a new Chief Operations Officer, Leonel Peralta, to enhance operational excellence and productivity [20][10] - The company is focused on addressing its capital structure and refinancing needs to ensure flexibility for future growth [33][10] Q&A Session Summary Question: Details on China revenue growth and sustainability - Management highlighted strong performance in China, attributing it to a strategic joint venture partner and a robust product portfolio, with expectations for continued demand [42][44] Question: Revenue number from China - Management indicated that specific revenue numbers could be shared in one-on-one calls [46] Question: Confidence in U.S. market recovery and macroeconomic factors - Management expects gradual recovery in the U.S. market, with visibility on orders already in the backlog, and is monitoring inflation and tariffs closely [50][54] Question: Performance in Japan and future opportunities in India - Management noted strong performance in Japan and anticipated growth in India, particularly with the upcoming regulatory approval for the Helix product [61][64]

Accuray (ARAY) reported $116.17 million in revenue for the quarter ended December 2024, representing a year-over-year increase of 8.3%. EPS of $0.02 for the same period compares to -$0.10 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $110.95 million, representing a surprise of +4.71%. The company delivered an EPS surprise of +300.00%, with the consensus EPS estimate being -$0.01.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wal ...

Accuray (ARAY) came out with quarterly earnings of $0.02 per share, beating the Zacks Consensus Estimate of a loss of $0.01 per share. This compares to loss of $0.10 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 300%. A quarter ago, it was expected that this radiation oncology company would post a loss of $0.04 per share when it actually produced a loss of $0.04, delivering no surprise.Over the last four quarters, the compan ...

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) Presents Accuray's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Presents Accuray's unaudited condensed consolidated financial statements and notes for the periods ended December 31, 2024 and 2023 [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of Accuray's financial position at December 31, 2024, and June 30, 2024 Unaudited Condensed Consolidated Balance Sheets (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :-------------------------------- | :----------- | :----------- | | **ASSETS** | | | | Total current assets | $325,891 | $323,236 | | Property and equipment, net | $26,881 | $24,774 | | Investment in joint venture | $12,837 | $9,826 | | Goodwill | $57,643 | $57,672 | | Total assets | $478,382 | $468,627 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $201,453 | $195,267 | | Total liabilities | $430,491 | $423,543 | | Total stockholders' equity | $47,891 | $45,084 | | Total liabilities and stockholders' equity | $478,382 | $468,627 | - Accounts receivable from the joint venture **increased from $25,339 thousand at June 30, 2024, to $26,082 thousand at December 31, 2024**[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details Accuray's financial performance and comprehensive loss for the periods ended December 31, 2024 and 2023 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share amounts) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net revenue | $116,174 | $107,238 | $217,719 | $211,130 | | Gross profit | $41,892 | $35,902 | $76,361 | $75,395 | | Income (loss) from operations | $4,707 | $(3,964) | $2,558 | $(1,751) | | Net income (loss) | $2,537 | $(9,621) | $(1,417) | $(12,590) | | Net income (loss) per share - basic | $0.03 | $(0.10) | $(0.01) | $(0.13) | | Net income (loss) per share - diluted | $0.02 | $(0.10) | $(0.01) | $(0.13) | | Comprehensive loss | $(382) | $(6,848) | $(2,596) | $(11,955) | - Product sales to the joint venture **increased significantly, from $17,890 thousand to $29,722 thousand for the three months ended December 31, 2024, and from $39,842 thousand to $58,366 thousand for the six months ended December 31, 2024**[13](index=13&type=chunk) [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in Accuray's stockholders' equity for the periods ended December 31, 2024 and June 30, 2024 Unaudited Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :------------------------------------ | :----------- | :----------- | | Common Stock (shares) | 102,809 | 100,195 | | Common Stock (amount) | $103 | $100 | | Additional Paid-in Capital | $572,287 | $566,887 | | Accumulated Other Comprehensive Loss | $(5,401) | $(4,222) | | Accumulated Deficit | $(519,098) | $(517,681) | | Total Stockholders' Equity | $47,891 | $45,084 | - Net income for the three months ended December 31, 2024, was **$2,537 thousand, a significant improvement from a net loss of $9,621 thousand in the prior year period**[19](index=19&type=chunk) - Foreign currency translation adjustment resulted in a **loss of $2,919 thousand for the three months ended December 31, 2024, compared to a gain of $2,773 thousand in the prior year period**[19](index=19&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes Accuray's cash inflows and outflows from operating, investing, and financing activities Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(5,493) | $(13,684) | | Net cash used in investing activities | $(2,690) | $(2,341) | | Net cash provided by (used in) financing activities | $3,593 | $(1,757) | | Effect of exchange rate changes on cash | $(414) | $1,072 | | Net decrease in cash, cash equivalents and restricted cash | $(5,004) | $(16,710) | | Cash, cash equivalents and restricted cash at end of period | $65,388 | $74,492 | - Net cash used in operating activities **decreased significantly from $(13,684) thousand in 2023 to $(5,493) thousand in 2024**, primarily due to a lower net loss and favorable changes in assets and liabilities[22](index=22&type=chunk)[138](index=138&type=chunk) - Net cash provided by financing activities **improved to $3,593 thousand in 2024 from a net use of $(1,757) thousand in 2023**, driven by net borrowings under the Revolving Credit Facility[22](index=22&type=chunk)[140](index=140&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [Note 1. The Company and its Significant Accounting Policies](index=8&type=section&id=Note%201.%20The%20Company%20and%20its%20Significant%20Accounting%20Policies) Describes Accuray's business, operational risks, and significant accounting policies, including recent ASU adoptions - Accuray Incorporated designs, develops, and sells advanced radiosurgery and radiation therapy systems for tumor treatment globally, with primary offices in the US, Switzerland, China, Hong Kong, and Japan[24](index=24&type=chunk) - The company faces significant macroeconomic and geopolitical risks, including inflation, high interest rates, foreign currency fluctuations, supply chain challenges, and geopolitical conflicts, which are expected to adversely impact gross margins, net income (loss), and cash from operations through fiscal year 2025[29](index=29&type=chunk)[30](index=30&type=chunk) - Accuray adopted ASU 2023-07 on July 1, 2024, to improve reportable segment disclosures, expecting no material impact on its consolidated financial statements[34](index=34&type=chunk) [Note 2. Revenue](index=12&type=section&id=Note%202.%20Revenue) Details Accuray's revenue recognition policies, contract balances, and remaining performance obligations Contract Balances (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | :--------- | | Unbilled accounts receivable – current | $20,584 | $19,131 | $1,453 | 8% | | Long-term accounts receivable | $3,254 | $2,859 | $395 | 14% | | Customer advances | $12,959 | $13,988 | $(1,029) | (7%) | | Deferred revenue – current | $72,088 | $71,649 | $439 | 1% | | Deferred revenue – non-current | $24,616 | $24,114 | $502 | 2% | - During the six months ended December 31, 2024, the company recognized **$44.2 million in revenue from deferred revenue balances at June 30, 2024**, compared to $51.2 million in the prior year[41](index=41&type=chunk) - Total remaining performance obligations as of December 31, 2024, amounted to **$886.7 million**, with an estimated **28% to 36% of $826.4 million** (open systems sales, upgrades, etc.) expected to be recognized in the next 12 months[43](index=43&type=chunk)[44](index=44&type=chunk) [Note 3. Supplemental Financial Information](index=14&type=section&id=Note%203.%20Supplemental%20Financial%20Information) Presents additional financial details on financing receivables, inventories, and other accrued liabilities Financing Receivables (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :-------------------- | :----------- | :----------- | | Total, net | $3,481 | $2,871 | | Current portion | $1,236 | $1,340 | | Non-current portion | $2,245 | $1,531 | Inventories, net (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :---------------- | :----------- | :----------- | | Raw materials | $61,007 | $57,699 | | Work-in-process | $13,949 | $13,629 | | Finished goods | $73,870 | $66,996 | | Total inventories, net | $148,826 | $138,324 | Other Accrued Liabilities (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :-------------------------- | :----------- | :----------- | | Value added tax liabilities | $8,016 | $5,048 | | Commissions due to third parties | $2,283 | $5,202 | | Refunds due to customers | $3,876 | $6,079 | | Total other accrued liabilities | $27,987 | $28,508 | [Note 4. Leases](index=18&type=section&id=Note%204.%20Leases) Outlines Accuray's operating lease costs, cash payments, and associated assets and liabilities Operating Lease Costs (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Operating lease costs | $2,189 | $2,456 | $4,420 | $5,010 | | Cash paid for lease liabilities | $2,062 | $2,536 | $4,092 | $5,025 | Operating Lease Assets and Liabilities (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :-------------------------------- | :----------- | :----------- | | Operating lease right-of-use assets | $31,716 | $33,773 | | Operating lease liabilities | $37,977 | $38,591 | | Current portion of operating lease liabilities | $7,518 | $6,218 | | Non-current portion of operating lease liabilities | $30,459 | $32,373 | [Note 5. Derivative Financial Instruments](index=19&type=section&id=Note%205.%20Derivative%20Financial%20Instruments) Explains Accuray's use of foreign currency forward contracts to manage exchange rate risk and related gains/losses - Accuray uses foreign currency forward contracts to manage exposure to exchange rate fluctuations, primarily for Japanese Yen, Swiss Franc, and Euro, with contract periods up to three months[63](index=63&type=chunk) Outstanding Forward Currency Exchange Contracts (Notional Amount in thousands) | Currency | Dec 31, 2024 | Jun 30, 2024 | | :--------------- | :----------- | :----------- | | Swiss Franc | $23,850 | $59,392 | | Japanese Yen | $10,353 | $7,762 | | Euro | $18,899 | $2,755 | | Indian Rupee | $12,209 | $8,916 | | Chinese Yuan | $10,303 | $5,156 | | Total | $79,615 | $87,956 | Foreign Currency Exchange Gain (Loss) on Forward Contracts (in thousands) | Period | 2024 | 2023 | | :------------------------------------------ | :--- | :--- | | Three Months Ended December 31, | $(618) | $959 | | Six Months Ended December 31, | $818 | $141 | [Note 6. Fair Value Measurements](index=20&type=section&id=Note%206.%20Fair%20Value%20Measurements) Details the fair value of Accuray's financial instruments, including debt and derivative contracts - The fair value of the company's open currency forward contracts was **$79.5 million as of December 31, 2024**, classified as a Level 2 fair value measurement[66](index=66&type=chunk) Carrying Value and Estimated Fair Value of Debt (in thousands) | Debt Instrument | Dec 31, 2024 (Carrying Value) | Dec 31, 2024 (Fair Value) | Jun 30, 2024 (Carrying Value) | Jun 30, 2024 (Fair Value) | | :-------------------------------- | :---------------------------- | :-------------------------- | :---------------------------- | :-------------------------- | | 3.75% Convertible Notes due 2026 | $99,091 | $91,573 | $98,782 | $85,762 | | Term Loan Facility | $59,422 | $59,422 | $63,374 | $63,374 | | Revolving Credit Facility | $17,000 | $17,000 | $10,000 | $10,000 | | Total | $175,513 | $167,995 | $172,156 | $159,136 | [Note 7. Commitments and Contingencies](index=21&type=section&id=Note%207.%20Commitments%20and%20Contingencies) Addresses Accuray's legal proceedings, indemnification obligations, and royalty expenses and payments - Accuray is involved in legal proceedings in the ordinary course of business but does not believe any current claims represent probable and reasonably estimable material losses as of December 31, 2024[70](index=70&type=chunk) - The company provides infringement indemnification in software license agreements and has not recorded any associated liability, as no probable losses are identified[71](index=71&type=chunk) Royalty Expense and Payments (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :-------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Royalty expense | $552 | $428 | $795 | $937 | | Royalty payments | $57 | $794 | $759 | $817 | [Note 8. Debt](index=23&type=section&id=Note%208.%20Debt) Provides information on Accuray's outstanding debt, credit facilities, and associated interest expenses Outstanding Debt (in thousands) | Debt Instrument | Dec 31, 2024 (Principal Amount) | Dec 31, 2024 (Net Carrying Amount) | Jun 30, 2024 (Principal Amount) | Jun 30, 2024 (Net Carrying Amount) | | :-------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | :------------------------------- | | 3.75% Convertible Senior Notes due 2026 | $100,000 | $99,091 | $100,000 | $98,782 | | Term Loan Facility | $60,000 | $59,422 | $64,000 | $63,374 | | Revolving Credit Facility | $17,000 | $17,000 | $10,000 | $10,000 | | Total debt | $177,000 | $175,513 | $174,000 | $172,156 | | Short-term debt | | $7,560 | | $7,756 | | Long-term debt | | $167,953 | | $164,400 | - The company's Revolving Credit Facility was **reduced to $20.0 million in available commitments** through the Fourth Amendment on September 12, 2024, which also changed financial maintenance covenants and added a minimum liquidity covenant[77](index=77&type=chunk) Interest Expense (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Contractual interest coupon | $2,495 | $2,653 | $5,120 | $5,322 | | Amortization of debt issuance costs | $275 | $237 | $529 | $475 | | Total | $2,770 | $2,890 | $5,649 | $5,797 | [Note 9. Stock Incentive Plan and Employee Stock Purchase Plan](index=25&type=section&id=Note%209.%20Stock%20Incentive%20Plan%20and%20Employee%20Stock%20Purchase%20Plan) Details share-based compensation expenses and changes in Accuray's stock incentive and employee stock purchase plans Share-Based Compensation Expenses (in thousands) | Functional Line Item | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Cost of revenue - products | $186 | $233 | $403 | $466 | | Cost of revenue - services | $186 | $157 | $340 | $160 | | Research and development | $343 | $280 | $725 | $681 | | Selling and marketing | $553 | $437 | $923 | $845 | | General and administrative | $1,016 | $1,207 | $2,246 | $2,554 | | Total share-based compensation | $2,284 | $2,314 | $4,637 | $4,706 | - Stockholders approved an **increase of 5.0 million shares for the 2016 Equity Incentive Plan and 2.5 million shares for the 2007 Employee Stock Purchase Plan** in November 2024[81](index=81&type=chunk) [Note 10. Net Income (Loss) Per Common Share](index=25&type=section&id=Note%2010.%20Net%20Income%20(Loss)%20Per%20Common%20Share) Presents Accuray's basic and diluted net income (loss) per common share calculations and related factors Net Income (Loss) Per Common Share (in thousands, except per share amounts) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income (loss) | $2,537 | $(9,621) | $(1,417) | $(12,590) | | Weighted average shares outstanding - basic | 101,405 | 97,776 | 100,796 | 97,165 | | Weighted average shares outstanding - diluted | 103,746 | 97,776 | 100,796 | 97,165 | | Basic net income (loss) per share | $0.03 | $(0.10) | $(0.01) | $(0.13) | | Diluted net income (loss) per share | $0.02 | $(0.10) | $(0.01) | $(0.13) | - Approximately **17.1 million shares issuable upon conversion of the 3.75% Convertible Notes due 2026** were excluded from diluted EPS calculation as their effect was anti-dilutive[82](index=82&type=chunk) [Note 11. Segment Information](index=25&type=section&id=Note%2011.%20Segment%20Information) Describes Accuray's single operating segment and provides net revenue and long-lived assets by geographic region - Accuray operates as one operating and reporting segment: oncology systems group, which develops, manufactures, and markets medical devices for radiation therapy[83](index=83&type=chunk) Net Revenue by Geographic Region (in thousands) | Region | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :----------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Americas | $17,135 | $23,742 | (28)% | $38,005 | $44,299 | (14)% | | EIMEA | $38,924 | $43,800 | (11)% | $64,818 | $83,333 | (22)% | | China | $35,974 | $23,375 | 54% | $69,950 | $49,590 | 41% | | Japan | $14,983 | $10,648 | 41% | $24,848 | $23,240 | 7% | | Asia Pacific | $9,158 | $5,673 | 61% | $20,098 | $10,668 | 88% | | Total | $116,174 | $107,238 | 8% | $217,719 | $211,130 | 3% | Long-Lived Assets by Geographic Region (in thousands) | Region | Dec 31, 2024 | Jun 30, 2024 | | :----------- | :----------- | :----------- | | Americas | $47,050 | $46,570 | | EIMEA | $8,340 | $9,327 | | China | $1,555 | $1,211 | | Japan | $1,089 | $1,304 | | Asia Pacific | $563 | $135 | | Total | $58,597 | $58,547 | [Note 12. Joint Venture](index=27&type=section&id=Note%2012.%20Joint%20Venture) Details Accuray's investment in its China joint venture, summarized financial information, and recognized gross profit - Accuray holds a **49% interest in CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (JV)** for manufacturing and selling radiation oncology systems in China, applying the equity method of accounting[89](index=89&type=chunk)[90](index=90&type=chunk) Summarized Financial Information of the JV (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2024 | Six Months Ended Sep 30, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Revenue | $33,582 | $22,457 | $55,416 | $54,312 | | Net income (loss) | $3,273 | $(872) | $3,125 | $7 | | Net income (loss) attributable to the Company | $1,604 | $(427) | $1,532 | $4 | | Metric | As of Sep 30, 2024 | As of Sep 30, 2023 | | :------------------------------------------ | :----------------- | :----------------- | | Total assets | $155,064 | $108,080 | | Stockholders' equity | $34,813 | $31,568 | Net Recognized Gross Profit on Sales to the JV (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Deferred intra-entity gross profit recognized | $11,745 | $4,728 | $14,459 | $6,313 | | Deferred intra-entity gross profit | $(7,232) | $(2,858) | $(13,565) | $(6,019) | | Net recognized gross profit | $4,513 | $1,870 | $894 | $294 | [Note 13. Income Tax](index=28&type=section&id=Note%2013.%20Income%20Tax) Outlines Accuray's provision for income taxes and factors influencing tax expense, including GILTI inclusion Provision for Income Taxes (in thousands) | Period | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :-------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Provision for income taxes | $695 | $878 | $1,320 | $2,810 | - The provision for income taxes **decreased by $0.2 million and $1.5 million for the three and six months ended December 31, 2024**, respectively, primarily due to lower deferred tax liability on unremitted foreign earnings in the prior year[95](index=95&type=chunk)[131](index=131&type=chunk) - The company's GILTI inclusion amount is expected to be fully absorbed by net operating loss carryforwards, not causing a U.S. taxable income position for fiscal year 2025[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on Accuray's financial condition and operational results for the reporting periods [Overview](index=30&type=section&id=Overview) Introduces Accuray's business, product offerings, and the macroeconomic and geopolitical risks impacting operations - Accuray develops, manufactures, sells, and supports advanced radiosurgery and radiation therapy systems (CyberKnife and TomoTherapy platforms) for tumor treatment, aiming for better accuracy, flexibility, and shorter treatment times[102](index=102&type=chunk)[103](index=103&type=chunk) - The company continues to face adverse impacts from inflation, supply chain challenges, and foreign currency fluctuations, which are expected to negatively affect gross margins, net income (loss), and cash from operations through fiscal year 2025[104](index=104&type=chunk)[105](index=105&type=chunk) - Reduced budgets and lower capital deployment priority for radiotherapy equipment in the U.S., along with longer customer installation timelines, have negatively impacted net revenue since fiscal year 2024 and are expected to continue through fiscal year 2026[105](index=105&type=chunk) [Sale of Our Products](index=31&type=section&id=Sale%20of%20Our%20Products) Describes Accuray's lengthy sales cycle for its platforms and its revenue reporting across five geographic regions - The sales cycle for Accuray's platforms is lengthy, typically spanning **6 to 30 months from first contact to signed contract**, with revenue recognition further delayed by customer facility preparation[107](index=107&type=chunk) - Accuray reports customer revenues across five geographic regions: Americas, EIMEA, China, Japan, and Asia Pacific, utilizing both direct sales and distributors[107](index=107&type=chunk)[108](index=108&type=chunk) [Joint Venture](index=31&type=section&id=Joint%20Venture) Details Accuray's China joint venture, its product offerings, and recent regulatory approvals for its systems - Accuray's joint venture in China, CNNC Accuray (Tianjin) Medical Technology Co. Ltd., manufactures and sells locally branded radiotherapy devices (Tomo C) and distributes other Accuray systems (Radixact, CyberKnife) in China[109](index=109&type=chunk)[111](index=111&type=chunk) - The JV's Tomo C system received NMPA approval for Class B devices, and the Accuray Precision Treatment Planning System for Class B devices was approved in June 2024[111](index=111&type=chunk) - Radixact SynC and CyberKnife S7 Systems distributed by the JV also received NMPA approval in January 2025[111](index=111&type=chunk) [Backlog](index=32&type=section&id=Backlog) Analyzes Accuray's gross orders, net orders, and order backlog, including factors affecting conversion to revenue Gross Orders, Net Orders, and Order Backlog (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Gross orders | $76,762 | $93,856 | $132,127 | $157,590 | | Age-ins | $11,840 | $4,846 | $15,842 | $13,572 | | Age-outs | $(27,023) | $(40,366) | $(53,368) | $(71,359) | | Cancellations | $(2,010) | $- | $(5,142) | $(8,841) | | Currency impacts and other | $(3,930) | $(3,730) | $(4,164) | $(4,616) | | Net orders | $55,639 | $54,606 | $85,295 | $86,346 | | Order backlog at the end of the period | $463,056 | $492,100 | $463,056 | $492,100 | - Backlog conversion to revenue is impacted by cancellations, age-outs (orders not recognized after 30 months), age-ins (previously aged-out orders recognized), and foreign currency fluctuations[112](index=112&type=chunk) [Gross Orders and Book to Bill Ratio](index=34&type=section&id=Gross%20Orders%20and%20Book%20to%20Bill%20Ratio) Examines trends in Accuray's gross orders and book-to-bill ratio, indicating demand and sales performance - Gross orders **decreased by $17.1 million (three months) and $25.5 million (six months)** compared to the prior year, primarily due to a decrease in CyberKnife System and system upgrades gross orders[115](index=115&type=chunk) - The book-to-bill ratio was **1.3 for the three months and 1.2 for the six months ended December 31, 2024**, indicating strong demand (ratio > 1.2)[116](index=116&type=chunk) [Net Orders](index=34&type=section&id=Net%20Orders) Discusses changes in Accuray's net orders, influenced by gross orders and cancellation rates for the periods - Net orders **increased by $1.0 million for the three months ended December 31, 2024**, but **decreased by $1.1 million for the six months**, primarily due to lower cancellations in fiscal year 2025, partially offset by decreased gross orders[117](index=117&type=chunk) [Results of Operations — Three and six months ended December 31, 2024 and 2023](index=34&type=section&id=Results%20of%20Operations%20—%20Three%20and%20six%20months%20ended%20December%2031,%202024%20and%202023) Analyzes Accuray's financial performance, including net revenue, gross profit, and operating expenses for the periods [Net revenue](index=34&type=section&id=Net%20revenue) Details Accuray's net revenue by product and service classifications, highlighting growth drivers and trends Net Revenue by Sales Classification (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :---------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Products | $61,189 | $51,538 | 19% | $109,558 | $104,888 | 4% | | Services | $54,985 | $55,700 | (1)% | $108,161 | $106,242 | 2% | | Total | $116,174 | $107,238 | 8% | $217,719 | $211,130 | 3% | - Products net revenue **increased by $9.7 million (19%) for the three months and $4.7 million (4%) for the six months**, driven by higher CyberKnife System and system upgrade shipments[120](index=120&type=chunk) - Services net revenue **decreased by $0.7 million (1%) for the three months** due to timing of installations but **increased by $1.9 million (2%) for the six months** due to a larger installed base[121](index=121&type=chunk) [Gross Profit](index=35&type=section&id=Gross%20Profit) Examines Accuray's gross profit and gross profit margin, identifying key factors influencing changes Gross Profit (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :------------------------------------------ | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Gross profit | $41,892 | $35,902 | 17% | $76,361 | $75,395 | 1% | | Gross profit as a percentage of net revenue | 36.1% | 33.5% | | 35.1% | 35.7% | | - Gross profit **increased by $6.0 million (17%) for the three months**, primarily due to a **$2.6 million increase in net deferred gross profit recognized from the JV** and a favorable product mix[123](index=123&type=chunk) [Operating Expenses](index=35&type=section&id=Operating%20Expenses) Analyzes Accuray's research and development, selling and marketing, and general and administrative expenses Operating Expenses (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Research and development | $13,644 | $15,281 | (11)% | $25,760 | $29,294 | (12)% | | Selling and marketing | $11,114 | $11,361 | (2)% | $22,796 | $21,605 | 6% | | General and administrative | $12,427 | $13,224 | (6)% | $25,247 | $26,247 | (4)% | | Total operating expenses | $37,185 | $39,866 | (7)% | $73,803 | $77,146 | (4)% | - R&D expenses **decreased by $1.6 million (three months) and $3.5 million (six months)** due to lower headcount and severance costs from a fiscal year 2024 restructuring, partially offset by higher project spending[124](index=124&type=chunk) - Selling and marketing expenses **decreased by $0.2 million (three months)** due to timing of trade show costs but **increased by $1.2 million (six months)** due to higher compensation and research grants[125](index=125&type=chunk)[126](index=126&type=chunk) [Income (loss) on equity method investment, net](index=37&type=section&id=Income%20(loss)%20on%20equity%20method%20investment,%20net) Discusses the income or loss recognized from Accuray's equity method investment in its joint venture Income (Loss) from Equity Method Investment, Net (in thousands) | Period | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :------------------------------------------ | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Income (loss) from equity method investment, net | $1,604 | $(427) | 476% | $1,532 | $4 | n/a | - Income from the JV **increased by $2.0 million (three months) and $1.5 million (six months)**, driven by higher system unit shipments and increased service revenue from the growing installed base in China[128](index=128&type=chunk) [Interest Expense](index=37&type=section&id=Interest%20Expense) Reviews Accuray's interest expense, noting the impact of interest rates and outstanding debt balances Interest Expense (in thousands) | Period | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :-------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Interest expense | $(2,883) | $(2,922) | (1)% | $(5,838) | $(5,844) | (0)% | - Interest expense remained flat for both the three and six months periods, as lower average interest rates were offset by higher average outstanding balances on Credit Facilities[129](index=129&type=chunk) [Other Income (Expense), net](index=37&type=section&id=Other%20Income%20(Expense),%20net) Analyzes Accuray's other income and expense, primarily driven by foreign currency exchange gains and losses Other Income (Expense), Net (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Interest income | $278 | $267 | 4% | $581 | $653 | (11)% | | Foreign currency exchange gain (loss) | $177 | $(1,278) | 114% | $2,351 | $(2,234) | 205% | | Costs for hedging activities | $(626) | $(403) | 55% | $(1,196) | $(688) | 74% | | Total other income (expense), net | $(196) | $(1,430) | (86)% | $1,651 | $(2,189) | (175)% | - Other expense **decreased by 86% for the three months**, and other income **increased by 175% for the six months**, primarily due to favorable changes in the fair value of foreign currency forward contracts[130](index=130&type=chunk) [Provision for Income Taxes](index=37&type=section&id=Provision%20for%20Income%20Taxes) Examines Accuray's provision for income taxes and the factors contributing to changes in tax expense Provision for Income Taxes (in thousands) | Period | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Change (%) | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------ | :--------- | :---------------------------- | :---------------------------- | :--------- | | Provision for income taxes | $695 | $878 | (21)% | $1,320 | $2,810 | (53)% | - The provision for income taxes **decreased by $0.2 million (three months) and $1.5 million (six months)**, mainly due to an additional expense in the prior year related to higher deferred tax liability on unremitted foreign earnings[131](index=131&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Accuray's cash position, liquidity, and ability to fund operations, considering macroeconomic impacts - As of December 31, 2024, Accuray had **$62.6 million in cash and cash equivalents** and believes it has sufficient cash resources and anticipated cash flows to fund operations for at least the next 12 months[132](index=132&type=chunk)[133](index=133&type=chunk) - The company's liquidity is impacted by macroeconomic factors, including inflation, supply chain disruptions, and foreign currency fluctuations, which could affect compliance with debt covenants[134](index=134&type=chunk) Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(5,493) | $(13,684) | | Net cash used in investing activities | $(2,690) | $(2,341) | | Net cash provided by (used in) financing activities | $3,593 | $(1,757) | | Net decrease in cash, cash equivalents and restricted cash | $(5,004) | $(16,710) | [Contractual Obligations and Commitments](index=42&type=section&id=Contractual%20Obligations%20and%20Commitments) Confirms no material changes to Accuray's contractual obligations and commitments during the reporting period - There have been no material changes to contractual obligations (debt, operating leases, purchase commitments) outside the ordinary course of business during the six months ended December 31, 2024[144](index=144&type=chunk) [Inflation](index=42&type=section&id=Inflation) Discusses the expected adverse impact of inflation on Accuray's gross margins, net income, and cash from operations - Accuray expects increased material, freight, and logistics costs due to inflation to continue adversely affecting gross margins, net income (loss), and cash from operations through fiscal year 2025[145](index=145&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) States that no material changes occurred in Accuray's critical accounting policies and estimates - No material changes occurred in the company's critical accounting policies and estimates during the six months ended December 31, 2024[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details Accuray's exposure to various market risks, including credit, foreign currency, and interest rate risks [Concentration of Credit and Other Risks](index=42&type=section&id=Concentration%20of%20Credit%20and%20Other%20Risks) Identifies Accuray's credit concentrations, reliance on single-source suppliers, and related risks - Accuray's cash and cash equivalents are held with major financial institutions, sometimes exceeding insured limits, but no significant losses have been experienced[149](index=149&type=chunk) - One customer accounted for **10% or more of total net revenue and accounts receivable** for the periods ended December 31, 2024[150](index=150&type=chunk) - The company relies on single-source suppliers for several critical components, posing a risk if a supplier is unable to deliver[152](index=152&type=chunk) [Foreign Currency Exchange Rate Risk](index=44&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) Explains Accuray's exposure to foreign currency fluctuations and its use of forward contracts for mitigation - A majority of Accuray's international sales are denominated in foreign currencies, primarily Euro and Japanese Yen, exposing the company to volatility from U.S. Dollar fluctuations[153](index=153&type=chunk) - The company uses foreign currency forward contracts with a notional value of approximately **$79.6 million as of December 31, 2024**, to mitigate foreign currency exchange rate risk[154](index=154&type=chunk) [Interest Rate Risk](index=44&type=section&id=Interest%20Rate%20Risk) Describes Accuray's interest rate exposure from variable-rate debt and the potential impact of rate changes - Accuray's debt includes fixed-rate convertible notes and variable-rate credit facilities (Term Loan Facility and Revolving Credit Facility) tied to SOFR[155](index=155&type=chunk) - A **50 basis point change in interest rates on the Credit Facilities** would increase or decrease annual interest expense by approximately **$0.4 million**[155](index=155&type=chunk) [Equity Price Risk](index=44&type=section&id=Equity%20Price%20Risk) Addresses the equity price risk associated with Accuray's convertible notes and potential stock dilution - The 3.75% Convertible Notes due 2026 have an initial conversion price of approximately **$5.86 per share**; if the common stock price exceeds this, the company may issue additional cash or shares[156](index=156&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Addresses the effectiveness of Accuray's disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=44&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Assesses the effectiveness of Accuray's disclosure controls and procedures, noting material weaknesses - As of December 31, 2024, Accuray's disclosure controls and procedures were **not effective** due to material weaknesses in internal control over financial reporting, as previously disclosed[157](index=157&type=chunk) [Management's Report on Internal Control over Financial Reporting](index=46&type=section&id=Management's%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Presents management's conclusion on the effectiveness of internal control over financial reporting and identified weaknesses - Management concluded that internal control over financial reporting was **not effective as of June 30, 2024**, due to two material weaknesses related to the SAP S/4HANA ERP system implementation[158](index=158&type=chunk)[159](index=159&type=chunk) - One material weakness, related to segregation of duties in manual journal entries, was **remediated during the three months ended December 31, 2024**[159](index=159&type=chunk) - The remaining material weakness pertains to ineffective controls over inventory existence at manufacturing warehouse locations due to cycle count program limitations[159](index=159&type=chunk) [Remediation of Previously Disclosed Material Weakness](index=46&type=section&id=Remediation%20of%20Previously%20Disclosed%20Material%20Weakness) Details the successful remediation of a material weakness related to segregation of duties in manual journal entries - The material weakness concerning segregation of duties in manual journal entries was **remediated by establishing new controls and procedures**, which have operated effectively as of December 31, 2024[159](index=159&type=chunk) [Remediation Efforts to Address the Material Weakness Existing in the Current Period](index=46&type=section&id=Remediation%20Efforts%20to%20Address%20the%20Material%20Weakness%20Existing%20in%20the%20Current%20Period) Outlines ongoing efforts to remediate the material weakness concerning inventory existence controls - Management is actively remediating the cycle count material weakness by enhancing ERP system reports for full inventory capture and reinforcing proper cycle count processes through policy and communication[160](index=160&type=chunk) [Changes in Internal Control over Financial Reporting](index=46&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports on significant changes in internal control over financial reporting during the quarter - Other than the remediation of one material weakness and ongoing efforts for another, there were no significant changes in internal control over financial reporting during the quarter ended December 31, 2024[163](index=163&type=chunk) [Inherent Limitations of Internal Control Over Financial Reporting](index=46&type=section&id=Inherent%20Limitations%20of%20Internal%20Control%20Over%20Financial%20Reporting) Explains the inherent limitations of internal control, providing reasonable but not absolute assurance - Internal control over financial reporting has inherent limitations, including human error, collusion, or management override, meaning it can only provide reasonable, not absolute, assurance of achieving financial reporting objectives[164](index=164&type=chunk)[165](index=165&type=chunk) [PART II. Other Information](index=48&type=section&id=PART%20II.%20Other%20Information) Presents additional disclosures, including legal proceedings, risk factors, and other required information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates information on Accuray's routine legal proceedings, with no anticipated material losses - The company is involved in legal proceedings in the ordinary course of business but does not believe any current claims represent probable and reasonably estimable material losses as of December 31, 2024[70](index=70&type=chunk)[166](index=166&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant risks and uncertainties that could adversely affect Accuray's business and financial results [Risk Factors Summary](index=48&type=section&id=Risk%20Factors%20Summary) Summarizes key risks related to Accuray's business, operations, product regulation, and common stock - Key risks include global economic environment impacts, market acceptance of products, gross margin maintenance, outstanding indebtedness, operating result fluctuations, intense competition, international operations, foreign currency exchange rates, manufacturing problems, and dependence on key employees[167](index=167&type=chunk)[168](index=168&type=chunk) - Regulatory risks involve compliance with privacy/cybersecurity laws, FDA clearances for product modifications, and adherence to federal, state, and foreign regulations[169](index=169&type=chunk) - Risks related to common stock include price volatility, potential dilution from future issuances, and conditional conversion features of notes[170](index=170&type=chunk) [Risks Related to Our Business and Results of Operations](index=52&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Results%20of%20Operations) Details risks impacting Accuray's business, including economic conditions, market acceptance, and indebtedness - Global economic conditions, including inflation, high interest rates, and geopolitical conflicts, continue to adversely affect Accuray's business by delaying customer financing, increasing costs, and impacting gross margins and net income (loss) through fiscal year 2025[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - The company's ability to achieve profitability depends on widespread market acceptance of its CyberKnife and TomoTherapy platforms, which requires significant marketing and education efforts to physicians, patients, and payors[180](index=180&type=chunk)[181](index=181&type=chunk) - Outstanding debt, including Convertible Senior Notes and Credit Facilities, exposes Accuray to financial risks, including the need to repay or refinance debt and compliance with restrictive covenants, which could affect future financial results[188](index=188&type=chunk)[191](index=191&type=chunk) [Risks Related to the Regulation of our Products and Business](index=98&type=section&id=Risks%20Related%20to%20the%20Regulation%20of%20our%20Products%20and%20Business) Outlines regulatory risks for Accuray's products and business, including FDA clearances and compliance laws - Modifications and new products for CyberKnife and TomoTherapy platforms require FDA 510(k) clearances or premarket approvals, and similar international licensing, which can be expensive, lengthy, and unpredictable[292](index=292&type=chunk) - Accuray is subject to various federal, state, and foreign laws, including anti-kickback, false claims, self-referral, anti-corruption, patient privacy (HIPAA, GDPR, PIPL), and transparency laws (Sunshine Act), with violations potentially leading to substantial penalties[299](index=299&type=chunk)[300](index=300&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) - Failure to obtain and maintain necessary regulatory approvals (e.g., CE mark in EU, Shonin in Japan) in specific countries would prevent Accuray from marketing and selling its products in those regions[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) [Risks Related to Our Common Stock](index=106&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Addresses risks concerning Accuray's common stock, including price volatility, dilution, and takeover provisions - The price of Accuray's common stock is volatile and can fluctuate significantly due to macroeconomic factors, operating results, competitive announcements, and changes in analyst estimates[317](index=317&type=chunk)[318](index=318&type=chunk) - Future issuances of equity securities, including common stock upon conversion of outstanding convertible notes, could dilute existing stockholders' ownership interests[318](index=318&type=chunk)[319](index=319&type=chunk) - Provisions in the company's corporate documents and debt agreements could discourage or prevent a takeover, even if beneficial to stockholders, and a change of control could trigger debt defaults[321](index=321&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk) [General Risks](index=108&type=section&id=General%20Risks) Covers broad risks such as financial market conditions, operational interruptions, and accounting policy changes - Accuray's liquidity could be adversely impacted by adverse conditions in financial markets, including reduced liquidity, defaults, or instability in the banking sector[325](index=325&type=chunk)[326](index=326&type=chunk) - Operations are vulnerable to interruption from climate change, natural disasters, pandemics, terrorist acts, and other events beyond control, which could disrupt manufacturing, delay shipments, and incur significant expenses[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk) - Changes in interpretation or application of U.S. GAAP, including new accounting standards, could significantly affect reported financial results and require adjustments to revenue recognition timing[332](index=332&type=chunk)[333](index=333&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=112&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) States that no unregistered sales of equity securities or use of proceeds occurred during the period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[335](index=335&type=chunk) [Item 3. Defaults Upon Senior Securities](index=112&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred during the reporting period[336](index=336&type=chunk) [Item 4. Mine Safety Disclosures](index=112&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Confirms that mine safety disclosures are not applicable to Accuray Incorporated - Mine safety disclosures are not applicable to Accuray Incorporated[337](index=337&type=chunk) [Item 5. Other Information](index=112&type=section&id=Item%205.%20Other%20Information) Notes that no directors or officers adopted or terminated Rule 10b5-1 trading arrangements - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the second quarter of fiscal year 2025[338](index=338&type=chunk) [Item 6. Exhibits](index=113&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including various employment agreements, certifications, and XBRL documents - Exhibits include separation and executive employment agreements, CEO and CFO certifications (Rule 13a-14(a) and 13a-14(b)), and Inline XBRL documents[340](index=340&type=chunk)

MADISON, Wis., Feb. 5, 2025 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the second quarter ended December 31, 2024.Key Fiscal Q2 Highlights: Strong second quarter and first half results; raising fiscal year 2025 guidance Total net revenue was $116.2 million, an increase of 8 percent year-over-year Net income was $2.5 million compared to a net loss of $9.6 million in the prior year period Adjusted EBITDA was $9.6 million compared to $2.0 million in the prior year ...

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) Accuray reported strong Q2 FY2025 financial performance, driven by strategic execution and growing demand [Key Fiscal Q2 Highlights](index=1&type=section&id=Key%20Fiscal%20Q2%20Highlights) Accuray reported strong Q2 FY2025 results, with revenue up 8% to $116.2 million, achieving net income and raising guidance - Strong Q2 performance reflects outstanding execution of strategies, growing demand for solutions, particularly in fast-growing emerging markets, and breakthrough wins for the new Helix system[1](index=1&type=chunk) - Company is raising fiscal year 2025 guidance due to strong second quarter and first half results[7](index=7&type=chunk) Key Fiscal Q2 Financial Highlights (YoY) | Metric (in millions) | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Total Net Revenue | 116.2 | 107.2 | +8% | | Net Income (Loss) | 2.5 | (9.6) | Improved | | Adjusted EBITDA | 9.6 | 2.0 | +380% | [About Accuray](index=3&type=section&id=About%20Accuray) Accuray is a global leader in radiation therapy, expanding its potential to improve cancer care with unique solutions - Accuray is committed to expanding the powerful potential of radiation therapy to improve as many lives as possible, inventing unique, market-changing solutions for complex and commonly treatable cases[20](index=20&type=chunk) - The company is dedicated to continuous innovation in radiation therapy for oncology, neuro-radiosurgery, and beyond, partnering with clinicians and administrators[20](index=20&type=chunk) [Financial Performance Review](index=1&type=section&id=Financial%20Performance%20Review) This section reviews Accuray's Q2 and H1 FY2025 financial performance, including revenue, profitability, and orders [Fiscal Second Quarter Results (Q2 FY2025)](index=1&type=section&id=Fiscal%20Second%20Quarter%20Results%20%28Q2%20FY2025%29) Accuray's Q2 FY2025 saw significant revenue growth, positive net income, and increased Adjusted EBITDA [Q2 Revenue Breakdown](index=1&type=section&id=Q2%20Revenue%20Breakdown) This section details Accuray's Q2 FY2025 revenue performance, showing growth in total net revenue driven by product sales Q2 FY2025 Revenue Breakdown (YoY) | Revenue Type (in millions) | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :------------------------- | :-------- | :-------- | :----------- | | Total Net Revenue | 116.2 | 107.2 | +8% | | Product Revenue | 61.2 | 51.5 | +19% | | Service Revenue | 55.0 | 55.7 | -1% | [Q2 Profitability Metrics](index=1&type=section&id=Q2%20Profitability%20Metrics) This section outlines Accuray's Q2 FY2025 profitability, highlighting improved net income and increased Adjusted EBITDA Q2 FY2025 Profitability Metrics (YoY) | Metric (in millions) | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Gross Profit | 41.9 | 35.9 | +16.7% | | Gross Profit Margin | 36.1% | 33.5% | +2.6 pp | | Operating Expenses | 37.2 | 39.9 | -7% | | Net Income (Loss) | 2.5 | (9.6) | Improved | | Net Income (Loss) per Share | 0.03 | (0.10) | Improved | | Adjusted EBITDA | 9.6 | 2.0 | +380% | [Q2 Orders, Backlog & Book-to-Bill](index=1&type=section&id=Q2%20Orders%2C%20Backlog%20%26%20Book-to-Bill) This section presents Accuray's Q2 FY2025 orders, backlog, and book-to-bill ratio, showing a year-over-year decrease Q2 FY2025 Orders and Backlog (YoY) | Metric (in millions) | Q2 FY2025 | Q2 FY2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Gross Product Orders | 76.8 | 93.9 | -18% | | Book to Bill Ratio | 1.3 | 1.8 | -0.5 | | Order Backlog (as of Dec 31) | 463.1 | 492.1 | -6% | [Q2 Cash and Equivalents](index=1&type=section&id=Q2%20Cash%20and%20Equivalents) This section provides Accuray's cash, cash equivalents, and short-term restricted cash balances across recent quarters Cash, Cash Equivalents, and Short-term Restricted Cash | Metric (in millions) | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | | :------------------- | :----------- | :----------- | :----------- | | Cash, Cash Equivalents, and Short-term Restricted Cash | 64.0 | 59.7 | 69.0 | [Fiscal Six Months Results (H1 FY2025)](index=2&type=section&id=Fiscal%20Six%20Months%20Results%20%28H1%20FY2025%29) H1 FY2025 saw total net revenue increase by 3%, with reduced net loss and improved Adjusted EBITDA, despite decreased orders [H1 Revenue Breakdown](index=2&type=section&id=H1%20Revenue%20Breakdown) This section details Accuray's H1 FY2025 revenue performance, showing modest growth in total net revenue, products, and services H1 FY2025 Revenue Breakdown (YoY) | Revenue Type (in millions) | H1 FY2025 | H1 FY2024 | Change (YoY) | | :------------------------- | :-------- | :-------- | :----------- | | Total Net Revenue | 217.7 | 211.1 | +3% | | Product Revenue | 109.6 | 104.9 | +4% | | Service Revenue | 108.2 | 106.2 | +2% | [H1 Profitability Metrics](index=2&type=section&id=H1%20Profitability%20Metrics) This section outlines Accuray's H1 FY2025 profitability, showing a reduced net loss and improved Adjusted EBITDA H1 FY2025 Profitability Metrics (YoY) | Metric (in millions) | H1 FY2025 | H1 FY2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Gross Profit | 76.4 | 75.4 | +1.3% | | Gross Profit Margin | 35.1% | 35.7% | -0.6 pp | | Operating Expenses | 73.8 | 77.1 | -4% | | Net Loss | (1.4) | (12.6) | Reduced | | Net Loss per Share | (0.01) | (0.13) | Reduced | | Adjusted EBITDA | 12.8 | 8.5 | +50% | [H1 Orders and Book-to-Bill](index=2&type=section&id=H1%20Orders%20and%20Book-to-Bill) This section presents Accuray's H1 FY2025 gross product orders and book-to-bill ratio, indicating a year-over-year decrease in orders H1 FY2025 Orders and Book-to-Bill (YoY) | Metric (in millions) | H1 FY2025 | H1 FY2024 | Change (YoY) | | :------------------- | :-------- | :-------- | :----------- | | Gross Product Orders | 132.1 | 157.6 | -16% | | Book to Bill Ratio | 1.2 | 1.5 | -0.3 | [Fiscal Year 2025 Financial Guidance](index=2&type=section&id=Fiscal%20Year%202025%20Financial%20Guidance) Accuray updated its FY2025 financial guidance, projecting increased total revenue and Adjusted EBITDA, with market recovery assumptions [Updated Guidance for FY2025](index=2&type=section&id=Updated%20Guidance%20for%20FY2025) Accuray is raising its FY2025 guidance, projecting total revenue between $463M-$475M and Adjusted EBITDA between $28.5M-$31.0M - The Company is raising guidance for fiscal year 2025[12](index=12&type=chunk) - Guidance assumes minimal tariff impact and that the U.S. market will begin its recovery in the second half of fiscal 2025[12](index=12&type=chunk) Fiscal Year 2025 Financial Guidance | Metric | FY2025 Guidance (Revised) | | :----- | :------------------------ | | Total Revenue | $463 million to $475 million | | Adjusted EBITDA | $28.5 million to $31.0 million | [Guidance Reconciliation (Non-GAAP)](index=7&type=section&id=Guidance%20Reconciliation%20%28Non-GAAP%29) This section reconciles projected GAAP net loss to Adjusted EBITDA for FY2025, detailing adjustments for non-GAAP items Projected GAAP Net Loss to Adjusted EBITDA Reconciliation (FY2025) | Metric (in thousands) | Twelve Months Ending June 30, 2025 (From) | Twelve Months Ending June 30, 2025 (To) | | :-------------------- | :---------------------------------------- | :-------------------------------------- | | GAAP net loss | $(4,000) | $(1,500) | | Depreciation and amortization | $6,500 | $6,500 | | Stock-based compensation | $10,000 | $10,000 | | Interest expense, net | $13,000 | $13,000 | | Provision for income taxes | $3,000 | $3,000 | | **Adjusted EBITDA** | **$28,500** | **$31,000** | [Non-GAAP Financial Measures Explanation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) This section clarifies Accuray's use of non-GAAP financial measures, particularly Adjusted EBITDA, explaining its purpose and limitations [Use of Non-GAAP Financial Measures](index=2&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) Accuray uses Adjusted EBITDA as a non-GAAP measure to supplement GAAP results, providing useful information by excluding non-cash items - Accuray supplements its GAAP financial statements with non-GAAP measures like **Adjusted EBITDA**, which excludes depreciation and amortization, stock-based compensation, interest expense, provision for income taxes, and ERP/ERP related expenditures[15](index=15&type=chunk)[18](index=18&type=chunk) - Management believes **Adjusted EBITDA** provides useful supplemental information for performance and comparison, but acknowledges limitations as it is not prepared in accordance with GAAP and should not be considered in isolation[18](index=18&type=chunk)[19](index=19&type=chunk) [Corporate Information](index=2&type=section&id=Corporate%20Information) This section provides details on Accuray's conference call, safe harbor statement, and contact information for investor and public relations [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Accuray hosted a conference call on February 5, 2025, to discuss Q2 FY2025 results, with webcast information for access and replays - Accuray hosted a conference call on February 5, 2025, at 1:30 p.m. PT/4:30 p.m. ET to discuss fiscal Q2 2025 results and recent corporate developments[13](index=13&type=chunk) - Live webcast and accompanying slide presentation were available on the Investor Relations section of Accuray's website, with a taped replay and archived webcast also provided[13](index=13&type=chunk)[14](index=14&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) This press release contains forward-looking statements subject to 'safe harbor' provisions, involving risks where actual results may differ - Statements in this press release that are not historical facts are forward-looking statements subject to the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995[21](index=21&type=chunk) - Forward-looking statements relate to future results, guidance, strategies, market conditions, product introductions, and financial performance, involving risks and uncertainties that could cause actual results to differ materially[21](index=21&type=chunk) - The company assumes no obligation to update forward-looking statements, and investors should not put undue reliance on any forward-looking statements[22](index=22&type=chunk) [Investor Relations Contact](index=4&type=section&id=Investor%20Relations%20Contact) Contact information for investor relations (Aman Patel, ICR-Westwicke) and public relations (Beth Kaplan, Accuray) is provided for inquiries - Investor Relations contact: Aman Patel, CFA, ICR-Westwicke, +1 (443) 450-4191, aman.patel@westwicke.com[23](index=23&type=chunk) - Public Relations contact: Beth Kaplan, Accuray, +1 (408) 789-4426, bkaplan@accuray.com[23](index=23&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Accuray's unaudited condensed consolidated financial statements, including operations, balance sheets, and reconciliations [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) This section presents unaudited condensed consolidated statements of operations for Q2 and H1 FY2025, detailing revenue, gross profit, and net income (loss) Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | 3 Months Ended Dec 31, 2024 | 3 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2024 | 6 Months Ended Dec 31, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net revenue: | | | | | | Products | 61,189 | 51,538 | 109,558 | 104,888 | | Services | 54,985 | 55,700 | 108,161 | 106,242 | | Total net revenue | 116,174 | 107,238 | 217,719 | 211,130 | | Gross profit | 41,892 | 35,902 | 76,361 | 75,395 | | Total operating expenses | 37,185 | 39,866 | 73,803 | 77,146 | | Net income (loss) | 2,537 | (9,621) | (1,417) | (12,590) | | Net income (loss) per share - basic | 0.03 | (0.10) | (0.01) | (0.13) | [Balance Sheets](index=6&type=section&id=Balance%20Sheets) This section provides unaudited condensed consolidated balance sheets as of December 31, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (in thousands) | Metric | Dec 31, 2024 | Jun 30, 2024 | | :-------------------- | :----------- | :----------- | | Total current assets | 325,891 | 323,236 | | Total assets | 478,382 | 468,627 | | Total current liabilities | 201,453 | 195,267 | | Total liabilities | 430,491 | 423,543 | | Total stockholders' equity | 47,891 | 45,084 | [Summary of Orders and Backlog](index=7&type=section&id=Summary%20of%20Orders%20and%20Backlog) This table presents gross orders, net orders, order backlog, and book-to-bill ratio for Q2 and H1 FY2025 Summary of Orders and Backlog (in thousands, except ratio) | Metric | 3 Months Ended Dec 31, 2024 | 3 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2024 | 6 Months Ended Dec 31, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Gross orders | 76,762 | 93,856 | 132,127 | 157,590 | | Net orders | 55,639 | 54,606 | 85,295 | 86,346 | | Order backlog | 463,056 | 492,100 | 463,056 | 492,100 | | Book to bill ratio (a) | 1.3 | 1.8 | 1.2 | 1.5 | [Reconciliation of GAAP Net Loss to Adjusted EBITDA](index=7&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20Adjusted%20EBITDA) This section reconciles GAAP net income (loss) to Adjusted EBITDA for Q2 and H1 FY2025, detailing non-GAAP adjustments Reconciliation of GAAP Net Loss to Adjusted EBITDA (in thousands) | Metric | 3 Months Ended Dec 31, 2024 | 3 Months Ended Dec 31, 2023 | 6 Months Ended Dec 31, 2024 | 6 Months Ended Dec 31, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | GAAP net income (loss) | 2,537 | (9,621) | (1,417) | (12,590) | | Depreciation and amortization | 1,513 | 1,546 | 2,977 | 2,797 | | Stock-based compensation | 2,284 | 2,314 | 4,638 | 4,706 | | Interest expense, net | 2,605 | 2,713 | 5,257 | 5,341 | | Provision for income taxes | 695 | 878 | 1,320 | 2,810 | | Restructuring charges | — | 2,633 | — | 2,633 | | ERP and ERP related expenditures | — | 1,545 | — | 2,815 | | **Adjusted EBITDA** | **9,634** | **2,008** | **12,775** | **8,512** | [Forward-Looking Guidance Reconciliation](index=7&type=section&id=Forward-Looking%20Guidance%20Reconciliation) This table reconciles projected GAAP net loss to Adjusted EBITDA for FY2025, as part of the company's financial guidance Projected GAAP Net Loss to Adjusted EBITDA Reconciliation (FY2025, in thousands) | Metric (in thousands) | Twelve Months Ending June 30, 2025 (From) | Twelve Months Ending June 30, 2025 (To) | | :-------------------- | :---------------------------------------- | :-------------------------------------- | | GAAP net loss | (4,000) | (1,500) | | Depreciation and amortization | 6,500 | 6,500 | | Stock-based compensation | 10,000 | 10,000 | | Interest expense, net | 13,000 | 13,000 | | Provision for income taxes | 3,000 | 3,000 | | **Adjusted EBITDA** | **28,500** | **31,000** |