Accuray Incorporated — FY2022 Form 10-K
Reporting period: Fiscal year ended June 30, 2022; filed August 17, 2022. Although the request metadata says “2021 Q4,” this filing reports FY2022 annual results, not a standalone quarterly period. Accuray develops, manufactures, sells and services radiation therapy systems, principally CyberKnife and TomoTherapy/Radixact, and related software and support.
Key financial results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $429.9 million | $396.3 million |
| Product revenue | $214.7 million | $176.6 million |
| Service revenue | $215.2 million | $219.6 million |
| Gross profit / margin | $160.0 million / 37% | $159.5 million / 40% |
| Operating income | $8.1 million | $22.2 million |
| Net loss | $5.3 million | $6.3 million |
| Operating cash flow | $(2.4) million | $38.5 million |
- Revenue rose 8%, mainly on higher system shipments and average product revenue; service revenue fell 2%. Product gross margin was 41% versus 42%; service gross margin fell to 34% from 39%, reflecting higher service costs and lower revenue. Overall gross margin declined to 37% from 40%.
- Operating income declined despite higher revenue as operating expenses increased 11% to $151.8 million. Other expense improved to $10.4 million from $27.7 million, primarily because FY2021 included debt-extinguishment losses.
- FY2022 operating cash use reflected working-capital investment, including inventory growth of $22.9 million and accounts receivable growth of $12.5 million. Capital spending was $4.7 million.
- Cash and cash equivalents were $88.7 million at year-end, down from $116.4 million. Total debt carrying value was $180.5 million; total liabilities were $419.7 million. Debt included $100 million principal of 3.75% convertible notes due 2026, $76 million term-loan principal and $5 million revolving borrowings. The $2.9 million remaining 2022 notes were repaid after year-end.
- Backlog declined to $563.7 million from $616.4 million. Gross orders increased 2% to $332.3 million, but net orders fell 13% to $167.3 million, primarily due to higher age-outs and unfavorable currency effects. The reported book-to-bill ratio was 1.5, down from 1.8.
Material changes and business developments
- Product revenue increased 22%, supported by stronger Americas performance and higher system average revenue. China represented 20% of total revenue, unchanged as a share from FY2021; Japan’s share declined from 15% to 13%.
- Sales to the China joint venture (JV) were $55.9 million, versus $24.4 million in FY2021. Accuray owns 49% of the JV and uses equity-method accounting. Year-end accounts receivable from the JV were $24.8 million, up from $8.8 million.
- Accuray reported delivery of China Class A systems and approximately $65.1 million of related system revenue during FY2022. It anticipated revenue from remaining awarded licenses over the following 12–18 months, subject to customer and tender timing.
Outlook, risks and unusual items
- No specific revenue or earnings guidance is provided. Management said available cash, debt facilities, its business plan and revenue prospects should fund operations for at least 12 months, while emphasizing substantial uncertainty and continued liquidity monitoring.
- Management expected supply-chain constraints, scarce electronic components, inflation and elevated freight and logistics costs to pressure margins and net income through at least the remainder of calendar 2022, potentially longer. COVID-19-related customer delays, installation timing and backlog conversion were expected to persist to some degree.
- Key risks include order cancellations and aging backlog, long sales and installation cycles, dependence on single-source suppliers, international and currency exposure, competition, reimbursement and regulatory changes, and debt covenants. The company was in compliance with its credit-facility covenants at June 30, 2022; a future breach could accelerate debt repayment.
- FY2022 included a $3.5 million inventory write-down and a $3.3 million cash-flow adjustment for JV transaction profit elimination. No restructuring charges were recorded in FY2022. The auditor issued an unqualified opinion on the financial statements and internal controls; management also concluded controls were effective.
Most important facts for investors to verify
- Whether backlog converts to shipments and revenue: validate age-outs, cancellations, installation schedules and the assumptions behind the stated backlog.
- Whether gross margins and operating cash flow recover as supply, freight and service-cost pressures ease; monitor inventory and receivables growth.
- China/JV exposure: assess the collectability of the $24.8 million JV receivable, JV performance, Class A deliveries and progress toward the locally manufactured Class B device.
- Liquidity and refinancing risk: review debt maturities, interest costs, covenant headroom and cash available after working-capital needs.
- Reconcile reported FY2022 China Class A system revenue of approximately $65.1 million with the filing’s geographic revenue and product-revenue disclosures before relying on that figure.