Exchange: NASDAQ | Sector: Healthcare | Industry: Medical Devices
Q4 2024
Published: Sep 19, 2024
Earnings Highlights
Revenue of $134.29M up 13.5% year-over-year
EPS of $0.03 increased by 227.8% from previous year
Gross margin of 28.6%
Net income of 3.39M
"“record number of system shipments within the quarter, representing 20% more than our previous highest shipment milestone”" - Suzanne Winter
Accuray Incorporated (ARAY) QQ4 2024 Results: Record Q4 Shipments, Accelerating International Growth, and Strategic Path to Margin Expansion
Executive Summary
In Q4 FY2024, Accuray reported a fifth consecutive quarter of revenue growth, delivering $134.3 million in net revenue, up 14% year over year and representing the highest quarterly revenue in the company’s history. The quarter featured a record 36 system shipments, 28% year-over-year product revenue growth, and a book-to-bill ratio of 1.2, underscoring durable demand across international markets and the momentum of next-generation platforms. Management highlighted meaningful progress in China with the Tomo C program advancing to Type B shipments following final approvals, and a broader push into emerging markets such as APAC and Latin America. Despite near-term margin headwinds from China margin deferral timing, FX effects (notably in Japan) and a supplier quality issue in Q4, Accuray exited the quarter with a positive operating trajectory and a clearly defined path to margin recovery.
Key Performance Indicators
Revenue
134.29M
QoQ: 32.79% | YoY:13.52%
Gross Profit
38.45M
28.63% margin
QoQ: 32.26% | YoY:2.05%
Operating Income
6.82M
QoQ: 249.43% | YoY:1 591.68%
Net Income
3.39M
QoQ: 153.41% | YoY:232.51%
EPS
0.03
QoQ: 153.21% | YoY:227.82%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $134.289M, up 32.79% QoQ and 13.52% YoY; Net revenue for the full year FY2024 was $447.0M, roughly flat YoY; Constant-currency Q4 revenue ≈ $137M (+16% YoY).
Gross profit: $38.452M, gross margin 28.63% in Q4, down from 31.9% YoY; FY2024 gross margin 32.0% vs 34.4% prior year.
Operating income: $6.82M in Q4; FY2024 operating income $0.50M (vs $2.4M prior year).
Net income / EPS: Q4 net income $3.39M; Q4 basic/diluted EPS $0.034 / $0.030; FY2024 net income and EPS reflect ongoing margin pressures and one-off deferrals.
Financial Highlights
Key quarterly metrics (Q4 FY2024 vs Q3 FY2024 and vs FY2023):
- Revenue: $134.289M, up 32.79% QoQ and 13.52% YoY; Net revenue for the full year FY2024 was $447.0M, roughly flat YoY; Constant-currency Q4 revenue ≈ $137M (+16% YoY).
- Gross profit: $38.452M, gross margin 28.63% in Q4, down from 31.9% YoY; FY2024 gross margin 32.0% vs 34.4% prior year.
- Operating income: $6.82M in Q4; FY2024 operating income $0.50M (vs $2.4M prior year).
- EBITDA: Q4 adjusted EBITDA $10.10M; FY2024 adjusted EBITDA $19.7M (vs $23.9M prior year).
- Net income / EPS: Q4 net income $3.39M; Q4 basic/diluted EPS $0.034 / $0.030; FY2024 net income and EPS reflect ongoing margin pressures and one-off deferrals.
- Backlog and orders: Backlog at $487M (≈>2 years of product revenue); Q4 gross orders ~$95M; full-year orders $342M; book-to-bill 1.2 for Q4, 1.5 for FY2024.
- Cash flow and liquidity: Net cash provided by operating activities $9.88M in Q4; free cash flow $9.42M; cash balance at period end $70.4M; total debt $210.7M; net debt $141.7M; working capital improvements included a $21M inventory reduction in FY2024 and a $9.4M free cash flow in Q4.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
134.29M
13.52%
32.79%
Gross Profit
38.45M
2.05%
32.26%
Operating Income
6.82M
1 591.68%
249.43%
Net Income
3.39M
232.51%
153.41%
EPS
0.03
227.82%
153.21%
Key Financial Ratios
currentRatio
1.65
grossProfitMargin
28.6%
operatingProfitMargin
5.08%
netProfitMargin
2.52%
returnOnAssets
0.72%
returnOnEquity
7.51%
debtEquityRatio
4.67
operatingCashFlowPerShare
$0.1
freeCashFlowPerShare
$0.09
priceToBookRatio
3.89
priceEarningsRatio
12.94
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management themes from the Q4 results call:
- Strategy and growth: Suzanne Winter emphasized international momentum, emergence of new markets, and a path to leadership in both developed and emerging markets, noting that international revenue represented more than 80% of FY2024 sales and that Tomo C in China unlocks a $3B Type B opportunity over five years.
- Operational execution: Ali Pervaiz highlighted the strongest revenue quarter in company history, 36 system shipments (record), and a 28% YoY rise in product revenue, with a global book-to-bill ratio of 1.2 for Q4 and 1.5 for the year. He also noted ERP/SAP implementation completing without material disruption and inventory reductions.
- Margin dynamics and near-term headwinds: Both executives identified China margin deferral and higher parts consumption (supplier quality issue) as the primary drivers of gross-margin decline in Q4, with expectations that deferred margins will be realized starting in Q2 FY2025 as Tomo C shipments accelerate.
- China and US regulatory/tailwinds: The team discussed final Tomo C approvals in China enabling full-margin recognition at delivery and discussed ongoing but evolving anti-corruption dynamics; they also referenced potential government stimulus in China aimed at replacement cycles which could support demand later in FY25.
- Guidance and the US recovery: The company guided FY2025 revenue of $460-470M and adjusted EBITDA of $27.5-29.5M, acknowledging that US market recovery timing is a key variable in the range, with China margin deferral anticipated to begin releasing in Q2 FY2025.
“record number of system shipments within the quarter, representing 20% more than our previous highest shipment milestone”
— Suzanne Winter
“entering emerging markets where patient access to radiation therapy is under-penetrated and where we can become the number one or number two player over time”
— Suzanne Winter
Forward Guidance
Analyst guidance highlights for FY2025 include: revenue of $460–$470 million and adjusted EBITDA of $27.5–$29.5 million. The range factors in a delayed US market recovery (expected in the second half of FY2025) and a China margin deferral release beginning in Q2 FY2025 as Tomo C shipments scale post-NMPA/approval. Management also flagged potential tailwinds from China stimulus programs aimed at replacing older radiotherapy systems, though they have not baked these into the forecast until clearer signals emerge. Key risk factors include ongoing FX volatility (notably in Japan), US capital budget cycles and potential delays in US installations, and the timing of China market normalization amid anti-corruption headwinds. Investors should monitor: (1) progression of US system conversions and install cadence; (2) Tomo C shipments from Tianjin JV and related margin realization; (3) China stimulus impact on replacement cycle demand; (4) continued service-margin expansion via pricing actions and portfolio enhancements (CyberComm, TrueNorth, Airbus partnership).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ARAY Focus
28.63%
5.08%
7.51%
12.94%
SRDX
73.90%
-1.84%
-2.90%
-39.88%
AXGN
78.70%
-7.44%
-4.07%
-18.88%
BVS
62.20%
3.14%
-3.51%
-13.64%
CUTR
9.04%
-89.50%
26.30%
-38.90%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Accuray has positioned itself for a meaningful re-acceleration in international markets, led by Tomo C in China and Helix in India, with a scalable product and services ecosystem intended to convert backlog into revenue across a multi-year horizon. The Q4 2024 results show resilience amid FX headwinds and a supplier disruption, with a book-to-bill >1 and a backog of $487M providing visibility into future growth. The FY2025 guidance implies a cautious recovery in the US market with a heavier contribution from international geographies, and a ramp in Tomo C shipments in China is expected to bolster margins as the China deferral normalizes from Q2 FY2025 onward. However, the equity story hinges on US demand recovery timing and the successful execution of margin expansion initiatives (pricing, service mix expansion, supplier partnerships) to offset China deferrals and foreign exchange pressures. With a diversified international footprint, a robust pipeline of regulatory approvals (Tomo C China Type B, Helix India) and ongoing service margin enhancements, Accuray presents an asymmetric risk-reward profile: material upside if US demand stabilizes in H2 FY2025 and China/AAPAC stimuli drive replacement cycles, but downside risk if US install velocity remains weak or if regulatory/regional headwinds intensify.
Key Investment Factors
Growth Potential
Significant growth potential from international and emerging markets (APAC, EIMEA, India) with expanding product and service offerings. Tomo C and Helix pave the way for growth in China and India, respectively, while the Radixact platform maintains share momentum with features like ClearRT, Synchrony, VitalHold, and upcoming Cenos-enabled adaptive workflows. Backlog of $487M provides visibility into future revenue, and management cited a multi-year, large TAM in Type B China (~$3B) and a broader expansion into value-based markets, supported by new service offerings (CyberComm, TrueNorth, Airbus collaboration) and regional education centers to sustain growth.
Profitability Risk
Key risks include: (a) US market recovery timing and potential delay to installation cycles; (b) FX headwinds, notably Japan; (c) China anti-corruption dynamics affecting pace of orders and installations; (d) China margin deferral timing and reliance on NMPA approvals; (e) regulatory and localization hurdles in India for HLX Helix and potential delays in FDA/Cenos acceptance; (f) supplier quality issues and potential supply chain disruptions; (g) competitive dynamics in the radiotherapy market and capital equipment funding cycles.
Financial Position
Solid short-term liquidity with approximately $70M in cash and equivalents; total debt of $210.7M and net debt of $141.7M; working capital improvements included a $21M inventory reduction in FY2024 and $9.4M of free cash flow in Q4. The company carries a sizable backlog ($487M) and generated 9.88M in operating cash flow in Q4. However, gross margin compressions (Q4 28.6% vs 31.9% prior year; FY2024 32% vs 34.4% prior year) reflect China margin deferrals and higher parts consumption; management expects margin normalization as China tailwinds unfold and supplier issues are resolved.
SWOT Analysis
Strengths
Leading radiotherapy platforms (CyberKnife, Radixact/TomoTherapy family) with differentiated features (ClearRT, Synchrony, VitalHold, Cenos) and a growing service ecosystem.
Record quarterly shipments and a high book-to-bill (Q4: 1.2) signaling durable demand; backlog of $487M provides revenue visibility over ~30 months.
Significant international exposure (80%+ of FY2024 revenue outside the US) and meaningful momentum in APAC, EIMEA, and Latin America.
Strategic partnerships and ecosystem initiatives (Airbus, TrueNorth, GE/RaySearch, C-RAD, Limbus AI, Radformation) to enhance margins and win rates.
Weaknesses
Near-term margin pressure driven by China margin deferral and a supplier quality incident causing higher parts consumption (Q4).
US market remains cyclical and lagging; near-term dependency on US market recovery timing for revenue and margins.
Debt profile with relatively high leverage (debt to capitalization ≈ 0.824; debt to equity ≈ 4.67) could constrain flexibility if macro headwinds persist.
Opportunities
China Type B Tomo C commercialization post-approval, with first shipments completed in June 2024 and wider installations anticipated in FY2025.
India Helix launch with CE marking and potential sizable pent-up demand; plan to begin shipments and build the funnel in coming months.
Cenos FDA pathway advancement with planned ASTRO introduction, enabling broader Radixact adoption and new service revenue streams.
Expansion of service contracts, CyberComm and other value-added services to convert more of the installed base into recurring revenue.
Threats
Macro volatility, particularly FX (Japan) and inflation; US capital equipment budget cycles could delay deployments and affect revenue mix.
Regulatory and geopolitical risks in China and India affecting ramp speed and timing of shipments.
Competition from legacy players and potential pricing pressure in emerging markets as Accuray expands into value-based segments.