Joint Venture

9 Months Ended

Mar. 31, 2025

Equity Method Investments and Joint Ventures [Abstract]

Note 12. Joint Venture

In January 2019, the Company’s wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (the “JV”), to manufacture and sell radiation oncology systems in China. As of March 31, 2025, the Company owned a 49% interest in the JV, which is reported as an investment in joint venture on the Company’s unaudited condensed consolidated balance sheets.

The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The Company recognizes the 49% proportionate share of the JV income (loss) on a one-quarter lag due to the timing of the availability of the JV’s financial records. The Company recognizes revenue on sales to the JV in the current period and defers a portion of gross profit to the extent goods sold have not been sold through by the JV to an end customer at the end of such reporting period. With the receipt of the necessary permits and licenses to operate, the JV has begun to manufacture and sell a locally branded “Made in China” radiotherapy device, the Tomo C radiation therapy system, in the Class B license category.

The following table shows the reconciliation between the carrying value of the Company's investment in the JV and its proportional share of the underlying equity in net assets of the JV (in thousands):


	March 31, 2025			June 30, 2024
Carrying value of investment in joint venture	$	9,284		$	9,826
Deferred intra-entity gross profit (1)		13,956			9,835
Equity method goodwill		(4,720	)		(4,720	)
Proportional share of equity investment in joint venture	$	18,520		$	14,941

(1)

As of March 31, 2025, $5.3 million of the deferred intra-entity gross profit balance was related to the Tomo C radiation therapy system as compared to $4.2 million as of June 30, 2024.

As of March 31, 2025, the Company’s carrying value of the investment in the JV was decreased for the Company's proportional share of the JV's currency translation adjustment by $0.9 million. As of June 30, 2024, the Company’s carrying value of the investment in the JV was decreased for the Company's proportional share of the JV's currency translation adjustment by $0.6 million. In June 2024, the JV declared a $2.5 million dividend to the Company which was paid in July 2024.

Summarized financial information of the JV is as follows (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
Statement of Operations Data:	2024		2023		2024		2023
Revenue	$	90,882	$	45,173	$	146,298	$	99,485
Gross profit		13,309		7,401		24,750		16,014
Net income		4,687		2,091		7,812		2,098
Net income attributable to the Company		2,297		1,024		3,829		1,028


Summarized Balance Sheet Data:	As of December 31, 2024		As of December 31, 2023
Assets
Current assets	$	143,010	$	107,893
Non-current assets		16,003		13,417
Total assets	$	159,013	$	121,310
Liabilities and Stockholders' Equity
Current liabilities	$	119,698	$	86,554
Non-current liabilities		1,409		134
Stockholders' equity		37,906		34,622
Total liabilities and stockholders' equity	$	159,013	$	121,310

The following table shows the activity of the Company’s net revenue recognized from intra-entity gross profit from sales (in thousands):


	Three Months Ended March 31,						Nine Months Ended March 31,
	2025			2024			2025			2024
Deferred intra-entity gross profit recognized on sales to the JV	$	501		$	662		$	14,960		$	6,975
Deferred intra-entity gross profit on sales to the JV		(5,515	)		(3,112	)		(19,080	)		(9,131	)
Net deferred gross profit on sales to the JV (1)	$	(5,014	)	$	(2,450	)	$	(4,120	)	$	(2,156	)

(1)

Profit earned by the Company from the JV is eliminated through cost of goods sold until it is realized; such profits would generally be considered realized when the inventory has been sold through to third parties. During the three and nine months ended March 31, 2025, the Company deferred $2.4 million and $1.1 million, respectively, of gross profit on sales to the JV that were related to the Tomo C radiation therapy system as compared to $0.3 million recognized gross profit during the three months ended March 31, 2024 and $2.0 million deferred gross profit during the nine months ended March 31, 2024 on sales to the JV that were related to the Tomo C radiation therapy system.