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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File Number: 001-33301

 

 

ACCURAY INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

20-8370041

(State or Other Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification Number)

 

1310 Chesapeake Terrace

Sunnyvale, California 94089

(Address of Principal Executive Offices Including Zip Code)

 

(408) 716-4600

(Registrant’s Telephone Number, Including Area Code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

ARAY

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No

 

As of April 18, 2022, there were 92,802,213 shares of the Registrant’s Common Stock, par value $0.001 per share, outstanding.

 

+

 


 

Table of Contents

 

 

 

Page No.

 

 

 

PART I.

Financial Information

 

 

 

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

3

 

 

 

 

Unaudited Condensed Consolidated Balance Sheets as of March 31, 2022 and June 30, 2021

3

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended March 31, 2022 and 2021

4

 

 

 

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended March 31, 2022 and 2021

5

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2022 and 2021

7

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

 

 

 

Item 4.

Controls and Procedures

37

 

 

 

PART II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

39

 

 

 

Item 1A.

Risk Factors

39

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

74

 

 

 

Item 3.

Defaults Upon Senior Securities

74

 

 

 

Item 4.

Mine Safety Disclosures

74

 

 

 

Item 5.

Other Information

74

 

 

 

Item 6.

Exhibits

75

 

 

 

Signatures

 

76

 

We own or have rights to various trademarks and tradenames used in our business in the United States or other countries, including the following: Accuray®, Accuray Logo®, CyberKnife®, Hi‑Art®, RoboCouch®, Synchrony®, TomoTherapy®, Xsight®, Accuray Precision®, AutoSegmentation™, CTrue™, H™ Series, iDMS®, InCise™, Iris™, CyberKnife M6™ Series, Accuray OIS Connect™, PreciseART®, PreciseRTX®, Treatment Planning System™, TomoDirect™, TomoEdge™, TomoH®, TomoHD®, TomoHDA™, TomoHelical™, TomoTherapy Quality Assurance™, Radixact®, Onrad ™, S7™, and VoLO™.

2


 

PART I. FINANCIAL INFORMATION

 

Item 1. Unaudited Condensed Consolidated Financial Statements

 

Accuray Incorporated

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share amounts and par value)

 

 

 

March 31,
2022

 

 

June 30,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

97,839

 

 

$

116,369

 

Restricted cash

 

 

205

 

 

 

560

 

Accounts receivable, net of allowance for credit losses of $1,058
   and $
1,048 as of March 31, 2022 and June 30, 2021, respectively (a)

 

 

89,295

 

 

 

85,360

 

Inventories

 

 

137,519

 

 

 

125,929

 

Prepaid expenses and other current assets (b)

 

 

21,987

 

 

 

21,547

 

Deferred cost of revenue

 

 

351

 

 

 

3,008

 

Total current assets

 

 

347,196

 

 

 

352,773

 

Property and equipment, net

 

 

12,220

 

 

 

12,332

 

Investment in joint venture

 

 

14,251

 

 

 

15,935

 

Operating lease right-of-use assets, net

 

 

17,851

 

 

 

22,522

 

Goodwill

 

 

58,000

 

 

 

57,960

 

Intangible assets, net

 

 

286

 

 

 

435

 

Restricted cash

 

 

1,244

 

 

 

1,272

 

Other assets

 

 

18,388

 

 

 

16,869

 

Total assets

 

$

469,436

 

 

$

480,098

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

32,364

 

 

$

19,467

 

Accrued compensation

 

 

25,461

 

 

 

26,865

 

Operating lease liabilities, current

 

 

8,351

 

 

 

8,169

 

Other accrued liabilities

 

 

26,018

 

 

 

27,471

 

Customer advances

 

 

24,363

 

 

 

24,937

 

Deferred revenue

 

 

76,732

 

 

 

81,660

 

Short-term debt

 

 

8,051

 

 

 

3,790

 

Total current liabilities

 

 

201,340

 

 

 

192,359

 

Long-term liabilities:

 

 

 

 

 

 

Operating lease liabilities, non-current

 

 

11,929

 

 

 

17,441

 

Long-term other liabilities

 

 

6,812

 

 

 

7,766

 

Deferred revenue

 

 

24,550

 

 

 

23,685

 

Long-term debt

 

 

173,196

 

 

 

170,007

 

Total liabilities

 

 

417,827

 

 

 

411,258

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.001 par value; authorized: 200,000,000 shares as of March 31, 2022 and June 30, 2021, respectively; issued and outstanding: 92,802,213 and 90,821,661 shares at March 31, 2022 and June 30, 2021, respectively

 

 

93

 

 

 

91

 

Additional paid-in-capital

 

 

539,383

 

 

 

554,680

 

Accumulated other comprehensive income

 

 

1,203

 

 

 

2,093

 

Accumulated deficit

 

 

(489,070

)

 

 

(488,024

)

Total stockholders' equity

 

 

51,609

 

 

 

68,840

 

Total liabilities and stockholders' equity

 

$

469,436

 

 

$

480,098

 

 

(a)
Includes trade receivable from the China joint venture, an equity method investment of $24,146 and $8,822 at March 31, 2022 and June 30, 2021, respectively. See Note 14.
(b)
Includes other receivable from the China joint venture, an equity method investment of $616 and $187 at March 31, 2022 and June 30, 2021, respectively.
 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

Accuray Incorporated

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

(in thousands, except per share amounts)

 

 

 

Three Months Ended
March 31,

 

 

Nine Months Ended
March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Products (a)

 

$

43,198

 

 

$

47,439

 

 

$

156,678

 

 

$

120,502

 

Services (b)

 

 

52,971

 

 

 

55,123

 

 

 

163,208

 

 

 

164,851

 

Total net revenue

 

 

96,169

 

 

 

102,562

 

 

 

319,886

 

 

 

285,353

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products

 

 

28,371

 

 

 

27,709

 

 

 

95,400

 

 

 

69,237

 

Cost of services

 

 

33,014

 

 

 

35,311

 

 

 

107,551

 

 

 

100,340

 

Total cost of revenue (c)

 

 

61,385

 

 

 

63,020

 

 

 

202,951

 

 

 

169,577

 

Gross profit

 

 

34,784

 

 

 

39,542

 

 

 

116,935

 

 

 

115,776

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (d)

 

 

14,104

 

 

 

13,268

 

 

 

43,183

 

 

 

37,372

 

Selling and marketing

 

 

10,798

 

 

 

10,567

 

 

 

35,302

 

 

 

29,813

 

General and administrative

 

 

10,174

 

 

 

11,281

 

 

 

32,350

 

 

 

30,498

 

Total operating expenses

 

 

35,076

 

 

 

35,116

 

 

 

110,835

 

 

 

97,683

 

Income (loss) from operations

 

 

(292

)

 

 

4,426

 

 

 

6,100

 

 

 

18,093

 

Income (loss) on equity method investment, net

 

 

1,946

 

 

 

(68

)

 

 

774

 

 

 

1,021

 

Other expense, net

 

 

(2,293

)

 

 

(4,027

)

 

 

(7,451

)

 

 

(12,981

)

Income (loss) before provision for income taxes

 

 

(639

)

 

 

331

 

 

 

(577

)

 

 

6,133

 

Provision for income taxes

 

 

407

 

 

 

721

 

 

 

1,318

 

 

 

1,352

 

Net income (loss)

 

$

(1,046

)

 

$

(390

)

 

$

(1,895

)

 

$

4,781

 

Net income (loss) per share - basic

 

$

(0.01

)

 

$

(0.00

)

 

$

(0.02

)

 

$

0.05

 

Net income (loss) per share - diluted

 

$

(0.01

)

 

$

(0.00

)

 

$

(0.02

)

 

$

0.05

 

Weighted average common shares used in computing net
   income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

92,761

 

 

 

93,123

 

 

 

91,780

 

 

 

92,106

 

Diluted

 

 

92,761

 

 

 

93,123

 

 

 

91,780

 

 

 

93,422

 

Net income (loss)

 

$

(1,046

)

 

$

(390

)

 

$

(1,895

)

 

$

4,781

 

Foreign currency translation adjustment

 

 

(1,013

)

 

 

(2,102

)

 

 

(890

)

 

 

1,199

 

Comprehensive income (loss)

 

$

(2,059

)

 

$

(2,492

)

 

$

(2,785

)

 

$

5,980

 

 

(a)
Includes sales to the China joint venture, an equity method investment of $17,442 and $32,177 for the three and nine months ended March 31, 2022 and $1,633 and $5,954 for the three and nine months ended March 31, 2021, respectively. See Note 14.
(b)
Includes sales to the China joint venture, an equity method investment of $2,326 and $7,820 for the three and nine months ended March 31, 2022 and $4,934 and $10,197 for the three and nine months ended March 31, 2021, respectively. See Note 14.
 
(c)
Includes cost of revenue from sales to the China joint venture, an equity method investment of $14,838 and $29,086 for the three and nine months ended March 31, 2022 and $2,387 and $7,088 for the three and nine months ended March 31, 2021, respectively.
(d)
Includes chargeback to the China joint venture, an equity method investment related to research and development project of $549 and $1,543 for the three and nine months ended March 31, 2022 $0 and $430 for the three and nine months ended March 31, 2021.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

Accuray Incorporated

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive
Income /

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balance at June 30, 2021

 

 

90,821,661

 

 

$

91

 

 

$

554,680

 

 

$

2,093

 

 

$

(488,024

)

 

$

68,840

 

Cumulative adjustment due to adoption of ASU No. 2020-06

 

 

 

 

 

 

 

 

(25,633

)

 

 

 

 

 

849

 

 

 

(24,784

)

Issuance of restricted stock

 

 

97,315

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

2,506

 

 

 

 

 

 

 

 

 

2,506

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,028

)

 

 

(1,028

)

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

231

 

 

 

 

 

 

231

 

Balance at September 30, 2021

 

 

90,918,976

 

 

$

91

 

 

$

531,553

 

 

$

2,324

 

 

$

(488,203

)

 

$

45,765

 

Exercise of stock options, net

 

 

331,401

 

 

 

1

 

 

 

1,223

 

 

 

 

 

 

 

 

$

1,224

 

Issuance of restricted stock

 

 

1,061,356

 

 

 

 

 

 

(258

)

 

 

 

 

 

 

 

 

(258

)

Issuance of common stock under employee stock
   purchase plan

 

 

421,798

 

 

 

1

 

 

 

1,523

 

 

 

 

 

 

 

 

 

1,524

 

Share-based compensation

 

 

 

 

 

 

 

 

2,668

 

 

 

 

 

 

 

 

 

2,668

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

179

 

 

 

179

 

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

(108

)

Balance at December 31, 2021

 

 

92,733,531

 

 

$

93

 

 

$

536,709

 

 

$

2,216

 

 

$

(488,024

)

 

$

50,994

 

Issuance of restricted stock

 

 

68,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

2,674

 

 

 

 

 

 

 

 

 

2,674

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,046

)

 

 

(1,046

)

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(1,013

)

 

 

 

 

 

(1,013

)

Balance at March 31, 2022

 

 

92,802,213

 

 

$

93

 

 

$

539,383

 

 

$

1,203

 

 

$

(489,070

)

 

$

51,609

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
Other
Comprehensive
Income /

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balance at June 30, 2020

 

 

91,178,108

 

 

$

91

 

 

$

545,741

 

 

$

(484

)

 

$

(481,713

)

 

$

63,635

 

Issuance of restricted stock

 

 

95,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

1,910

 

 

 

 

 

 

 

 

 

1,910

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

402

 

 

 

402

 

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

1,493

 

 

 

 

 

 

1,493

 

Balance at September 30, 2020

 

 

91,273,683

 

 

$

91

 

 

$

547,651

 

 

$

1,009

 

 

$

(481,311

)

 

$

67,440

 

Exercise of stock options, net

 

 

17,175

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

66

 

Issuance of restricted stock

 

 

1,117,816

 

 

 

 

 

 

(343

)

 

 

 

 

 

 

 

 

(343

)

Issuance of common stock under employee stock
   purchase plan