Accuray (ARAY +29.65%) got off to a great start in 2019, jumping more than 50% earlier in the year after posting a lower-than-expected net loss and strong growth in orders. However, the picture hasn't been as bright since the first quarter, with Accuray's shares giving up all of the gains.
The CyberKnife maker announced its fourth-quarter results after the market closed on Thursday. Investors weren't pleased, with shares falling more than 8% in after-hours trading. Here's what you need to know about Accuray's Q4 update.
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By the numbers
Accuray announced Q4 revenue of $117.4 million, a 3% increase from the $113.8 million reported in the same quarter of the previous year. The result was also slightly higher than the average analysts' revenue estimate of $116.4 million.
The company reported a net loss in the fourth quarter of $1.4 million, or $0.02 per share, based on generally accepted accounting principles (GAAP). Accuray's bottom line reflected deterioration from the prior-year-period GAAP net loss of $900,000, or $0.01 per share. It was also worse than the Wall Street estimate for a net loss in Q4 of $0.01.
Accuray ended the fourth quarter with cash, cash equivalents, and short-term investments of $87 million. This was an increase of $22.4 million from the company's cash position as of March 31, 2019.
Behind the numbers
The numbers themselves don't reveal that this was Accuray's highest quarterly revenue in the company's history. Although service revenue slipped to $56.8 million from $59.2 million in the prior-year period, Accuray's product sales more than offset that decline. The company stated that product revenue in the fourth quarter totaled $60.6 million, up from $54.6 million in the fourth quarter of fiscal 2018.
Despite this revenue performance, though, Accuray's bottom line worsened for a couple of key reasons. First, the company's gross margin fell from 42.2% in the prior-year period to 39.1% in the fourth quarter of fiscal 2019. Second, Accuray experienced a bigger hit from income taxes in the quarter and had an income tax benefit in the year-ago period.
The company reported that its gross product orders increased slightly year over year to $97.2 million. Its order backlog at the end of the fourth quarter stood at $495.6 million, up 4% year over year.
In addition to its financial results, Accuray highlighted a couple of major milestones achieved in the fourth quarter. The company signed its first multisystem order bundling with RaySearch Laboratories for products and software offerings. It also signed the first upgrade order for its Radixact correction technology's Synchrony motion tracking.
Looking ahead
Accuray projects full-year fiscal 2020 sales will be between $410 million and $420 million. This range includes the impact of Chinese tariffs that are currently in place. Revenue in the first half of the year will be a little lower than fiscal 2019 levels due to the anticipated delay in the timing of Class A system revenue.
The company also expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will be between $19 million and $24 million. This includes a loss of around $2 million from Accuray's China joint venture.
