Accuray(ARAY) - 2025 Q4 - Annual Report

PART I Item 1. Business Accuray specializes in radiation therapy, developing and supporting CyberKnife and TomoTherapy platforms for cancer treatment and market expansion - Accuray Incorporated develops, manufactures, sells, and supports market-changing radiation therapy solutions, including CyberKnife and TomoTherapy platforms, for precise and accurate treatments [15][16] - Key strategic elements include increasing physician adoption and patient awareness, expanding the radiosurgery market, fostering innovation, and growing international sales through various channels [20][21][22][23][24] - The company's solutions aim for better accuracy, flexibility, and control, fewer and shorter treatments, and technology expansion beyond cancer to improve patient care [15] Company Overview Accuray, reincorporated in 2007, specializes in radiation therapy, providing CyberKnife and TomoTherapy platforms for precise advanced treatments - Accuray Incorporated, founded in 1990 and reincorporated in Delaware in 2007, develops, manufactures, sells, and supports radiation therapy solutions [15][17] - Their core technologies, CyberKnife and TomoTherapy platforms (including Radixact System), deliver advanced treatments like SRS, SBRT, IMRT, IGRT, and ART, aiming for precision and minimal healthy tissue dose [16] - These systems serve radiation oncology and neurosurgery, treating cancerous/benign tumors and neurologic/endocrine disorders [16] Our Strategy Accuray's strategy focuses on expanding clinical options and the curative power of radiation therapy through innovation and global market growth - Accuray's goal is to develop equipment and technology for precise, accurate, customized, and leading-edge treatments for cancerous/benign tumors and neurologic/endocrine disorders [18] - Strategic elements include increasing physician adoption and patient awareness, expanding the radiosurgery market, continuous innovation through clinical development and collaboration, and expanding international sales [20][21][22][23] - The company pursues strategic partnerships and joint ventures, such as with CNNC High Energy Equipment (Tianjin) Co., Ltd. in China, to complement growth, increase sales, and broaden technology [24] Our Products Accuray offers robotic (CyberKnife) and helical (TomoTherapy, Radixact) radiation delivery systems, complemented by comprehensive software solutions - Accuray's product suite includes robotic (CyberKnife System) and helical (TomoTherapy platform, Radixact System, Accuray Helix, Tomo C System) radiation delivery devices, along with comprehensive software solutions [25][26][50][51][52][53][54] - The CyberKnife S7 System offers real-time AI-driven motion tracking and synchronized treatment delivery for SRS and SBRT, with sub-millimeter accuracy and frameless options for neuro-radiosurgery [26][28][30][35] - Helical systems feature ClearRT™ kVCT imaging for diagnostic-like quality, integrated treatment planning, and adaptive radiation therapy capabilities (Synchrony, VitalHold Solution) to enhance precision and efficiency [57][58][59][60][65][66] Our Software Solutions Accuray's software solutions provide integrated treatment planning and data management, enhancing workflow and patient care across its platforms - Accuray Precision TPS and iDMS Data Management Systems offer integrated treatment planning and data management for all compatible Accuray delivery platforms [69][73] - Key features include multi-modality image fusion, auto-segmentation, VOLO Optimizer for faster plan creation and delivery, PreciseART for adaptive radiotherapy, and PreciseRTX for efficient retreatment planning [70][71][72] - iDMS provides a centralized platform for patient treatment data, user/privilege management, secure data storage, customizable report generation, and connectivity with other radiation oncology department systems [73][75][76][77] Sales and Marketing Accuray utilizes a direct sales model in key markets and distributors elsewhere, with a strategic joint venture in China to expand its global reach - Accuray markets directly in the U.S. and key international regions (Western Europe, Japan, India, Canada), and through distributors in other regions, including Europe, Russia, the Middle East, Africa, Asia Pacific, and Latin America [78] - Sales and marketing efforts focus on educating radiation oncologists, neurosurgeons, and hospital administrators on the clinical and economic benefits of their robotic and helical platforms [80] - The CNNC Accuray joint venture in China manufactures and sells the locally branded Tomo® C system (Class B license) and distributes other Accuray systems (Radixact, CyberKnife S7), targeting China's underserved radiation oncology market [82][83] Manufacturing Accuray manufactures its platforms in Wisconsin and linear accelerators in China, relying on single-source suppliers for critical components - Accuray manufactures CyberKnife and TomoTherapy platforms in Madison, Wisconsin, and linear accelerators in Chengdu, China [87] - The company relies on single-source suppliers for critical components (e.g., robot, couch, magnetron) and mitigates supply risks through long-term contracts and forecasts [86] - Manufacturing processes comply with ISO 13485:2016 and FDA Quality System Regulations, with facilities expected to be adequate for growth over the next three years [87] Intellectual Property Accuray protects its proprietary technology through a robust portfolio of patents, trade secrets, trademarks, and confidentiality agreements - Accuray protects its proprietary products, components, processes, and know-how through patents, trade secrets, trademarks, copyrights, and confidentiality agreements [89] - As of June 30, 2025, the company held 530 U.S. and foreign patents and 84 U.S. and foreign patent applications, covering CyberKnife and TomoTherapy platforms and new technologies [90] Research and Development Accuray's R&D focuses on expanding clinical applications, product differentiation, and improving product performance through internal efforts and collaborations - Accuray's R&D activities focus on expanding clinical applications, driving product differentiation, and improving usability, interoperability, reliability, and performance of existing products [92] - Research aims to enable new product development by advancing core technologies such as next-generation linear accelerators, adaptive therapy, patient imaging, motion management, and treatment planning [92] - A key component of their R&D program involves collaborations with research programs at hospitals, cancer treatment centers, academic institutions, and industrial partners worldwide [94][95] Competition The medical device and non-invasive cancer treatment industries are highly competitive, with Accuray competing against major players and alternative treatments - The medical device and non-invasive cancer treatment industries are intensely competitive with rapidly evolving technologies [96] - Accuray competes with established leaders like Varian Medical Systems and Elekta AB, as well as other radiosurgical and radiation therapy companies, and alternative treatments such as traditional surgery, chemotherapy, and immunotherapy [97][98] - Competitive factors include product reliability, treatment quality, service capabilities, patient throughput, price, payment terms, and supplier viability, with Accuray aiming to compete on technology and value [101] U.S. Reimbursement U.S. healthcare providers rely on government and private payors for reimbursement of Accuray's treatments, with rates influencing purchasing decisions - U.S. healthcare providers rely on government (Medicare, Medicaid) and private third-party payors for reimbursement of treatments using Accuray's products [104] - Medicare coverage for CyberKnife, TomoTherapy, and Radixact treatments is based on Local Coverage Determinations or 'reasonable and necessary' criteria, covering various tumor indications [105] - Radiosurgery treatments are coded with CPT codes 77372 and 77373, while IMRT uses 77385 and 77386; payment rates are established by CMS and reviewed annually, influencing customer purchasing