Accuray — Fiscal 2027 First Quarter Earnings Summary

Financial Performance:

• Total net revenue was $86.5 million, a decrease of 8% year-over-year compared to $93.9 million in the prior year first quarter.
• Product revenue was $27.3 million, a decrease of 26% year-over-year compared to $37.2 million.
• Service revenue was $59.2 million, an increase of 4% year-over-year compared to $56.8 million, up 5% on a constant currency basis.
• Total gross profit was $26.1 million, or 30.1% of total net revenue, compared to $27.0 million (28.8% margin) in the prior year.
• Service gross margin rose 120 basis points year-over-year to 35.1%, driven by pricing actions and a lower service labor cost structure.
• Operating expenses were $62.6 million, including a $35.4 million non-cash goodwill impairment charge; excluding this charge, expenses fell 29% to $27.2 million from $38.3 million.
• Transformation initiatives generated approximately $13 million of cost and margin improvement year-over-year.
• Net income was $10.1 million ($0.07 diluted per share), including a $59.6 million non-cash gain on extinguishment of debt and the $35.4 million goodwill impairment charge.
• Excluding the debt gain and goodwill impairment, net loss was $14.0 million ($0.10 diluted per share), compared to a net loss of $21.7 million ($0.18 diluted per share) in the prior year.
• Adjusted EBITDA was $2.5 million, compared to a negative $4.1 million in the prior year.
• Gross product orders were $19.8 million compared to $39.6 million in the prior year; the book-to-bill ratio was 0.7 versus 1.1.
• Order backlog was $272.0 million as of September 30, 2026, approximately 31% lower than the prior fiscal year first quarter.
• Total cash, cash equivalents, and restricted cash were $50.4 million, an increase of $1.6 million from June 30, 2026.
• Long-term debt, net, decreased to $94.972 million from $146.370 million as of June 30, 2026.
• Goodwill decreased to $22.524 million from $57.911 million due to the impairment charge.

Guidance and Future Outlook:

• The Company continues not to provide formal revenue or Adjusted EBITDA guidance for fiscal 2027.
• Fiscal 2027 priorities focus on execution, building on service margin improvements, cost structure efficiency, and financial flexibility.
• Management aims to turn commercial engagement into stronger product revenue and order performance.
• The Company believes it is well-positioned to execute on strategic priorities with a more efficient business model in place.

Business Segments and Product Lines:

• Service revenue growth was driven by service contract pricing actions and nearly 3% growth in the global installed base.
• The Company signed a definitive agreement with RaySearch to accelerate its online adaptive radiation therapy strategy.
• Collaboration with Samsung NeuroLogica advanced regarding volumetric imaging for the CyberKnife System.
• Long-term PACE-A data presented at ASTRO showed excellent eight-year biochemical control for SBRT, with about 75% of patients treated with the CyberKnife System.
• SBRT demonstrated quality-of-life advantages over surgery in the presented data.

Market and Competitive Landscape:

• Customer engagement at ASTRO and growing clinical evidence supporting precision radiation therapy are viewed as reinforcing confidence in the company's direction.
• Management identifies a clear opportunity to improve product and order performance by converting engagement into orders.

Risks and Challenges:

• Gross product orders and order backlog declined significantly year-over-year.
• The company faces risks related to global macroeconomic conditions, international tariffs, supply chain disruptions, and geopolitical uncertainty.
• Substantial outstanding indebtedness and the ability to maintain compliance with financial covenants remain a risk.
• Risks include the ability to achieve widespread market acceptance, delays in regulatory approvals, and the ability to convert backlog to revenue.

Management Commentary and Tone:

• CEO Steve La Neve stated fiscal 2026 was a year of transformation and fiscal 2027 is about execution.
• Management highlighted progress in service margins, controlled operating expenses, strengthened financial position, and advanced innovation roadmaps.
• La Neve noted the focus is on turning customer engagement into orders and pairing operating discipline with stronger commercial performance.
• Management expressed confidence in the direction taken, citing the combination of precision treatment delivery, real-time motion management, and enhanced imaging capabilities.

Other Key Points:

• The Company recognized a $59.6 million gain on extinguishment of debt related to a July 2026 financing transaction with TCW.
• Stockholders approved proposals to complete the TCW financing, including a $40 million exchange of term loan debt for convertible preferred equity.
• These financial actions are intended to reduce leverage, enhance liquidity, and provide greater flexibility to execute strategy.
• The financing transaction added a substantive contingent conversion feature to the outstanding Term Loan B and Delayed Draw Term Loan.
• Operating expenses included $0.4 million in restructuring charges, down from $2.8 million in the prior year.
• The gain on debt extinguishment was recognized before the completion of the debt-for-equity exchange, which remained subject to closing conditions including stockholder approval and a reverse stock split.