BACKGROUND AND ORGANIZATION

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND AND ORGANIZATION

BACKGROUND AND ORGANIZATION

ViewRay, Inc. (“ViewRay” or the “Company”), and its wholly-owned subsidiary ViewRay Technologies, Inc., designs, manufactures and markets MRIdian, an MR Image-Guided radiation therapy system to simultaneously image and treat cancer patients.

Since inception, ViewRay Technologies, Inc. has devoted substantially all of its efforts towards research and development, selling and marketing activities, raising capital and the manufacturing, shipment and installation of MRIdian systems. In May 2012, ViewRay Technologies, Inc. was granted clearance from the U.S. Food and Drug Administration (“FDA”), to sell MRIdian with Cobalt-60. In November 2013, ViewRay Technologies, Inc. received its first clinical acceptance of a MRIdian with Cobalt-60 at a customer site, and the first patient was treated with that system in January 2014. ViewRay Technologies, Inc. has had the right to affix the CE mark to MRIdian with Cobalt-60 in the European Economic Area ("EEA") since November 2014. In September 2016, the Company received the rights to affix the CE mark to MRIdian Linac, and in February 2017, the Company received 510(k) clearance from the FDA to market MRIdian Linac. In February 2019, the Company received 510(k) clearance from the FDA for advancements in MRI, 8 frames per second cine, and Functional imaging (T1/T2/DWI) and High-Speed MLC. In December 2019, we received the CE mark for these advancements in the EEA. In December 2021, the Company received 510(k) clearance from the FDA on its recent submission for new MRIdian features ("MRIdian A3i") focused on enhancing on-table adaptive workflow efficiency and expanding clinical utility. In September 2022, the Company received approval to market the MRIdian system in China from the National Medical Products Administration ("NMPA").

Liquidity and Ability to Continue as a Going Concern

Under Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements - Going Concern, the Company is required to evaluate whether there is substantial doubt regarding its ability to continue as a going concern each reporting period, including interim periods.

In this evaluation, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of the financial statements included in this Quarterly Report on Form 10-Q (the “financial statements”), and considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations during such twelve month period. The Company’s principal sources of liquidity are cash flows from public and private offerings and available borrowings under its term loan agreement, as well as cash receipts from its sales of MRIdian systems. These have historically been sufficient to meet working capital needs, capital expenditures, operating expenses, and debt service obligations.

The Company has a history of significant net losses, including $29.6 million for the three months ended March 31, 2023, and net cash used in operations of $53.6 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had cash and cash equivalents of $81.3 million and restricted cash of $4.2 million. The Company has borrowings under the Credit Agreement with $77.8 million outstanding as of March 31, 2023, which was reclassified to current during the period (see Note 5). As of March 31, 2023, the Company was in compliance with all applicable covenants in agreements governing its debt. However, based on the Company’s projected financial performance for the twelve-month period subsequent to the date of the filing of this Quarterly Report on Form 10-Q, the Company projects that it will not be in compliance with a financial covenant under the Company’s Credit Agreement, as defined in Note 5, Debt, which could result in an event of default. Such a default would allow the Lender under the Credit Agreement to accelerate the maturity of the debt, which carries a balance of $77.8 million as of March 31, 2023, making it due and payable at that time, which the Company does not have availability liquidity to repay. The Company projects it will not have sufficient cash on hand or available liquidity to fund its operations or repay the outstanding debt in the event of default through the twelve months following the date of the issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, on April 13, 2023, the Company announced it has retained Goldman Sachs and Co. LLC as a financial advisor to undertake an evaluation of strategic alternatives, including a corporate sale, merger, or business combination. Additionally, the Company is undertaking a number of actions in order to improve its financial position and stabilize its working capital, including, but not limited to, cost reduction efforts and cash conversion initiatives. The Company’s operating plans are significantly contingent around estimates on the number of systems to be recognized in a

fiscal year along with the anticipated cash collections for those systems. As discussed in the Company’s announcement on April 13, 2023, the continued high inflation environment has resulted in delays on projects and elongated cash collection timing. These factors have significantly impacted the expected cash usage of the Company.

Although the Company has been reviewing a number of potential alternatives to improve its working capital, it cannot conclude it is probable that any such alternative will be achievable under favorable terms, or at all, and therefore the Company may be unable to meet its obligations as they become due within twelve months after the date that the financial statements are issued, or at all, and these conditions and events in the aggregate raise substantial doubt regarding the Company’s ability to continue as a going concern within twelve months after the date that the financial statements are issued. The Company’s financial statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming the Company will continue as a going concern.