Accuray Fiscal Q4 Loss Wider than Expected but Narrower Y/Y - Analyst Blog

Accuray Incorporated ( ARAY ) posted a loss of $9.8 million or 13 cents per share in the fourth quarter of fiscal 2014 (ended Jun 30, 2014), significantly narrower than the year-ago loss of $18.7 million or 25 cents per share. However, loss per share was wider than the Zacks Consensus Estimate of a loss of 7 cents.

Accuray Incorporated - Earnings Surprise | FindTheBest

Revenue Details

Total revenue for the quarter came in at $102.0 million, up 20.1% year over year and also above the Zacks Consensus Estimate of $90 million.

Product revenues during the quarter escalated 34.4% to $51.8 million, mainly driven by enhanced commercial effort and improvement in the company's order to revenue conversion process.

Service revenues stood at $50.2 million, up 8.3% from the year-ago quarter. The upside was driven by an increase in the company's installed base and shift of customers toward higher value service contracts.

Domestic revenues improved 13% to $50.0 million while international revenues increased 28% to $52.0 million in the fourth quarter.


Gross orders went up 4% to $74.5 million during the quarter. Gross product orders, less cancellations and age-outs, totaled $63.0 million, reflecting an increase of 8% from the fourth quarter of fiscal 2013.

Both gross and net order volumes improved year over year owing to strong new orders from international regions, particularly in EMEA.


Gross profit for the quarter escalated nearly 40.9% to $38.4 million. Gross margin expanded 560 basis points (bps) to 37.7% from 32.1% in the year-ago quarter. Product and services gross margins were 44.5% and 30.6%, respectively, in the fourth quarter versus 36.4% and 28.6% in the year-ago quarter.

Product gross margin improved on higher volumes and stronger average product revenues. The higher service gross margin represents continued improvement in TomoTherapy Systems reliability, which continues to drive demand for higher-margin service contracts.

Total operating expenses rose 7.8% to $43.1 million from $40.0 million a year ago. However, operating loss declined significantly by 63.3% to $4.7 million while operating (loss) margin contracted considerably by 1,040 bps to 4.6% from 15.0% in the prior-year quarter.

ARAY reported adjusted EBITDA (loss) of $0.6 million compared with a loss of $8.0 million in the fourth quarter of fiscal 2013, representing an impressive improvement of 92.8%. The improvement came on the back of revenue growth, margin expansion and operating expense control.

Fiscal 2014 Results

For fiscal 2014, ARAY posted a loss of $35.4 million or 47 cents per share, significantly narrower than the loss of $97.4 million or $1.33 per share in fiscal 2013. However, loss per share was wider than the Zacks Consensus Estimate of a loss of 40 cents.

Total revenue for the fiscal year stood at $369.4 million, up 16.9% from $316.0 million in fiscal 2013. Product revenues spiked 26.3% to $173.6 million while services revenues increased 9.7% to $195.8 million.

Financial Condition

ARAY exited the fiscal year with cash, cash equivalents and restricted cash of roughly $93.8 million, up 23.4% from $76.0 million as of Jun 30, 2013. Long-term debt decreased marginally by 1.6% to $195.6 million from $198.8 million as of Jun 30, 2013.

Total cash outflow in fiscal 2014 improved to $2.5 million as compared with $80 million in the previous year when excluding the infusion from the convertible debt offering last year.

Fiscal 2015 Guidance

ARAY introduced its financial guidance for fiscal 2015. The company expects total revenues in the range of $390 to $410 million, representing a growth of 6 to 11% over fiscal 2014 revenues. The current Zacks Consensus Estimate of $395 million lies within the guided range.

ARAY also projected adjusted EBITDA in the range of $3-$12 million for fiscal 2015, compared with $2.0 million in fiscal 2014.

Zacks Rank

Currently, ARAY carries a Zacks Rank #3 (Hold). Better-ranked medical instrument stocks include Alphatec Holdings, Inc. ( ATEC ), ERBA Diagnostics, Inc. ( ERB ) and RTI Surgical Inc. ( RTIX ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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