) fourth-quarter fiscal 2013 adjusted loss remained flat year
over year at 20 cents per share. However, it was narrower than
the Zacks Consensus Estimate of a loss of 21 cents. Adjusted loss
excludes one-time items such as acquisition, restructuring and
integration-related expenses associated with TomoTherapy and
Reported net loss in the quarter was $18.7 million or 25 cents a
share versus a loss of $20.3 million or 28 cents in the
For fiscal 2013, adjusted loss of $1.12 a share was wider than
the Zacks Consensus Estimate of a loss of $1.10 per share and the
year-ago adjusted loss per share of 59 cents. Reported net loss
attributable to shareholders in fiscal 2013 was $103.2 million or
$1.41 a share versus a loss of $72 million or $1.02 in the
Adjusted revenues for the quarter went down 45.6% to $84.9
million, which was in-line with the Zacks Consensus Estimate of
$85 million. Adjustments exclude deferred sales related to the
TomoTherapy products and services. For fiscal 2013, adjusted
revenues fell 21.2% to $316.2 million, missing the Zacks
Consensus Estimate of $317 million.
Adjusted revenues from products decreased 36.6% to $38.6 million
in the quarter, mainly due to manufacturing and supply-related
issues, which led to shipment delays of new products. However,
adjusted revenues from services grew 16.6% to $46.3 million,
reflecting positive trends from the TomoTherapy business.
Accuray shipped 14 and installed 15 new CyberKnife and
TomoTherapy systems during the quarter, taking the aggregate
global installed base to 700 units. The company added net new
system orders worth $71.6 million, leading to a total system
backlog of $317.4 million, up 12% year over year.
Adjusted gross margin for the quarter declined to 34.6% from
39.6% in the year-ago quarter due to a change in sales mix.
Adjusted gross margins from product and services were 41.7% and
28.7%, respectively, in the fourth quarter versus 52.8% and 19.9%
in the year-ago quarter. Improving gross margin in the service
business following the acquisition of TomoTherapy is encouraging.
The company expects service gross margin to improve but it is
likely to demonstrate quarterly fluctuations, going forward.
On an adjusted basis, selling and marketing along with general
and administrative expenses decreased 12.9% to $25.0 million. On
an adjusted basis, research and development (R&D) expenses
significantly dropped 31.9% to $14.6 million.
On an adjusted basis, operating expenses decreased 21.4% to $39.4
million from $50.1 million a year ago, mainly due to the
company's restructuring activities. Operating expense was close
to the company's plan of spending $38 million on operational
Accuray exited the quarter with cash, cash equivalents and
restricted cash of $177.1 million, higher than $145.1 million as
of Jun 30, 2012. Long-term debt increased to $198.8 million as of
Jun 30, 2013 from $79.5 million as of Jun 30, 2012.
The Calif.-based company divulged its revenue outlook for fiscal
2014. Revenues are expected in the range of $325 million-$345
million on both reported and adjusted basis. The fiscal 2014
Zacks Consensus Estimate for revenues and loss per share is
pegged at $361 million and 46 cents, respectively.
Despite a bottom line beat, we remain concerned over Accuray's
declining top line. Management needs to improve its higher-margin
product revenues and aggressively remediate its structural issues
for new offerings to fully contribute to total sales. Moreover,
ARAY remains susceptible to the weak global markets,
reimbursement uncertainties and faces stiff challenges from
competitive product offerings. A lot needs to be done to bring
the company back on track.
However, we are impressed with Accuray's achievement of improving
product order momentum in the fourth quarter, reflecting healthy
product adoption of new products. Additionally, the company's
restructuring efforts and healthy service revenues and gross
margin are also helping it stabilize.
Currently, ARAY carries a Zacks Rank #4 (Sell). Other medical
instrument companies such as
) with a Zacks Rank #2 (Buy) are worth considering.
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