UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33301

ACCURAY INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-8370041
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

1310 Chesapeake Terrace

Sunnyvale, California 94089

(Address of Principal Executive Offices Including Zip Code)

(408) 716-4600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	ARAY	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of January 27, 2023, there were 95,494,729 shares of the Registrant’s Common Stock, par value $0.001 per share, outstanding.

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Table of Contents

		Page No.
PART I.	Financial Information
Item 1.	Unaudited Condensed Consolidated Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets as of December 31, 2022 and June 30, 2022	3
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended December 31, 2022 and 2021	4
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended December 31, 2022 and 2021	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2022 and 2021	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.	Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	67
Signatures		68

We own or have rights to various trademarks and tradenames used in our business in the United States or other countries, including the following: Accuray®, Accuray Logo®, CyberKnife®, Hi‑Art®, RoboCouch®, Synchrony®, TomoTherapy®, Xsight®, Accuray Precision®, AutoSegmentation™, CTrue™, H™ Series, iDMS®, InCise™, Iris™, CyberKnife M6™ Series, Accuray OIS Connect™, PreciseART®, PreciseRTX®, Treatment Planning System™, TomoDirect™, TomoEDGE™, TomoH®, TomoHD®, TomoHDA™, TomoHelical™, TomoTherapy Quality Assurance™, Radixact®, Onrad ™, S7™, and VoLO™.

2

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Accuray Incorporated

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share amounts and par value)

	December 31,  2022			June 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	67,729		$	88,737
Restricted cash		189			204
Accounts receivable, net of allowance for credit losses of $910 and $1,000 as of December 31, 2022, and June 30, 2022, respectively (a)		89,187			94,442
Inventories		155,665			142,254
Prepaid expenses and other current assets (b)		23,536			23,794
Deferred cost of revenue		642			1,459
Total current assets		336,948			350,890
Property and equipment, net		11,155			12,685
Investment in joint venture		12,276			13,879
Operating lease right-of-use assets, net		25,334			16,798
Goodwill		57,776			57,840
Intangible assets, net		268			250
Long-term restricted cash		1,293			1,213
Other assets		23,719			19,294
Total assets	$	468,769		$	472,849
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	33,861		$	31,337
Accrued compensation		20,099			29,441
Operating lease liabilities, current		4,913			8,567
Other accrued liabilities		30,301			30,285
Customer advances		17,169			25,290
Deferred revenue		72,675			75,375
Short-term debt		5,702			8,563
Total current liabilities		184,720			208,858
Long-term liabilities:
Operating lease liabilities, non-current		22,664			10,453
Long-term other liabilities		5,181			3,748
Deferred revenue, non-current		30,357			24,694
Long-term debt		174,102			171,907
Total liabilities		417,024			419,660
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock, $0.001 par value; authorized: 200,000,000 shares as of December 31, 2022, and June 30, 2022, respectively; issued and outstanding: 95,494,729 and 93,499,500 shares at December 31, 2022, and June 30, 2022, respectively		95			94
Additional paid-in-capital		550,288			543,211
Accumulated other comprehensive income		1,541			2,406
Accumulated deficit		(500,179	)		(492,522	)
Total stockholders' equity		51,745			53,189
Total liabilities and stockholders' equity	$	468,769		$	472,849

(a)Includes trade receivable from the China joint venture, an equity method investment, of $21,867 and $24,828 at December 31, 2022, and June 30, 2022, respectively. See Note 14.

(b)Includes other receivable from the China joint venture, an equity method investment, of $487 and $861 at December 31, 2022, and June 30, 2022, respectively.
 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Accuray Incorporated

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

	Three Months Ended December 31,						Six Months Ended December 31,
	2022			2021			2022			2021
Net revenue:
Products (a)	$	63,269		$	60,721		$	107,892		$	113,480
Services (b)		51,491			55,554			103,361			110,237
Total net revenue		114,760			116,275			211,253			223,717
Cost of revenue:
Cost of products		39,248			35,520			68,098			67,029
Cost of services		32,545			38,128			65,591			74,537
Total cost of revenue (c)		71,793			73,648			133,689			141,566
Gross profit		42,967			42,627			77,564			82,151
Operating expenses:
Research and development (d)		14,641			14,697			28,733			29,079
Selling and marketing		13,586			13,233			24,381			24,504
General and administrative		12,035			10,716			23,927			22,176
Total operating expenses		40,262			38,646			77,041			75,759
Income from operations		2,705			3,981			523			6,392
Loss on equity method investment, net		(699	)		(832	)		(1,067	)		(1,172	)
Other expense, net		(2,831	)		(2,490	)		(5,389	)		(5,158	)
Income (loss) before provision for income taxes		(825	)		659			(5,933	)		62
Provision for income taxes		1,049			480			1,390			911
Net income (loss)	$	(1,874	)	$	179		$	(7,323	)	$	(849	)
Net income (loss) per share - basic	$	(0.02	)	$	0.00		$	(0.08	)	$	(0.01	)
Net income (loss) per share - diluted	$	(0.02	)	$	0.00		$	(0.08	)	$	(0.01	)
Weighted average common shares used in computing net loss per share:
Basic		94,567			91,761			94,048			91,299
Diluted		94,567			93,932			94,048			91,299
Net income (loss)	$	(1,874	)	$	179		$	(7,323	)	$	(849	)
Foreign currency translation adjustment		2,790			(108	)		(865	)		123
Comprehensive income (loss)	$	916		$	71		$	(8,188	)	$	(726	)

(a)Includes sales to the China joint venture, an equity method investment, of $16,715 and $25,584 during the three and six months ended December 31, 2022, and $8,816 and $14,735 during the three and six months ended December 31, 2021, respectively. See Note 14.

(b)Includes sales to the China joint venture, an equity method investment, of $2,494 and $5,451 during the three and six months ended December 31, 2022, respectively, and $2,679 and $5,494 during the three and six months ended December 31, 2021, respectively. See Note 14.

(c)Includes cost of revenue from sales to the China joint venture, an equity method investment, of $9,916 and $15,823 during the three and six months ended December 31, 2022, respectively, and $6,203 and $14,248 during the three and six months ended December 31, 2021, respectively.

(d)Includes charge back to the China joint venture, an equity method investment, related to a research and development project of $487 and $1,266 during the three and six months ended December 31, 2022, respectively, and $415 and $994 during the three and six months ended December 31, 2021, respectively.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Accuray Incorporated

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders
	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance at June 30, 2022		93,500	$	94	$	543,211		$	2,406		$	(492,522	)	$	53,189
Issuance of restricted stock		279		—		—			—			—			—
Share-based compensation		—		—		2,906			—			—			2,906
Net loss		—		—		—			—			(5,449	)		(5,449	)
Foreign currency translation adjustment		—		—		—			(3,655	)		—			(3,655	)
Balance at September 30, 2022		93,779	$	94	$	546,117		$	(1,249	)	$	(497,971	)	$	46,991
Issuance of restricted stock		1,062		—		(116	)		—			—			(116	)
Issuance of common stock under employee stock purchase plan		653		1		1,138			—			—			1,139
Share-based compensation		—		—		3,136			—			—			3,136
Net loss		—		—		—			—			(1,874	)		(1,874	)
Foreign currency translation adjustment		—		—		—			2,790			—			2,790
Other						13						(334	)		(321	)
Balance at December 31, 2022		95,494	$	95	$	550,288		$	1,541		$	(500,179	)	$	51,745

	Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders
	Shares		Amount		Capital			Income			Deficit			Equity
Balance at June 30, 2021		90,822	$	91	$	554,680		$	2,093		$	(488,024	)	$	68,840
Cumulative adjustment due to adoption of ASU No. 2020-06		—		—		(25,633	)		—			849			(24,784	)
Issuance of restricted stock		97		—		—			—			—			—
Share-based compensation		—		—		2,506			—			—			2,506
Net loss		—		—		—			—			(1,028	)		(1,028	)
Foreign currency translation adjustment		—		—		—			231			—			231
Balance at September 30, 2021		90,919	$	91	$	531,553		$	2,324		$	(488,203	)	$	45,765
Exercise of stock options, net		331		1		1,223								$	1,224
Issuance of restricted stock		1,061		—		(258	)		—			—			(258	)
Issuance of common stock under employee stock purchase plan		422		1		1,523			—			—			1,524
Share-based compensation		—		—		2,668			—			—			2,668
Net income		—		—		—			—			179			179
Foreign currency translation adjustment		—		—		—			(108	)		—			(108	)
Balance at December 31, 2021		92,733	$	93	$	536,709		$	2,216		$	(488,024	)	$	50,994

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Accuray Incorporated

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)