ARAY

On August 19, Accuray Incorporated (NASDAQ:ARAY) held its fiscal fourth-quarter and full-year 2026 earnings call, laying out a business caught between a genuine financial rescue and a China market that is still bleeding revenue. Total net revenue fell 21% in the quarter to $100.9 million, and the company won't even offer a forecast for the year ahead. The headline news is the TCW Asset Management transaction. TCW converted $40 million of existing term debt into preferred equity, added a $15 million cash investment through convertible preferred shares, and opened up a $5 million delayed draw facility. The deal also waives certain covenants through December 31, 2027. Cash and restricted cash rose to $48.8 million from $44.4 million the prior quarter, and net inventory dropped $9.6 million as finished goods built earlier in the year finally shipped. That liquidity relief lands alongside real cost discipline. CEO Stephen LaNeve said the company's transformation plan delivered more than $20 million in cost and margin improvement during fiscal 2026, beating its original $12 million target, and management expects another $15 million in incremental annualized savings in fiscal 2027. Service revenue, the steadier half of the business, grew 6% in the quarter to $60.1 million on pricing actions and a larger installed base, and the contract capture rate across active systems sits near 90%. Accuray also struck nonbinding letters of intent with Samsung Medison and expanded its work with Tata Consultancy Services, plus a 10-year research collaboration with the University of Wisconsin School of Medicine and Public Health. LaNeve pointed to ESTRO 26, where the European debut of the Stellar platform and continued interest in CyberKnife drove a year-over-year increase in qualified commercial leads. The bear case starts with product revenue, which fell 42% in the quarter to $40.8 million. Management attributed a $58 million full-year decline specifically to China, citing what LaNeve called "geopolitical developments, trade policy uncertainty, tariff impacts, conditions in China and the Middle East." Full fiscal-year revenue came in at $401.9 million, down 12%, and order backlog fell 27% year over year to $312.5 million. The book-to-bill ratio was just 0.9 in the quarter, well below the 1.2x level management has called healthy for a growing backlog. The margin picture is murkier than the headline numbers suggest. Product gross margin was reported at 31.7% for the quarter, but $5.8 million of that came from a one-time favorability tied to the invalidation of IEEPA tariff expenses. Strip that out and adjusted product gross margin was just 17.5%. The company swung to a full-year operating loss of $26.4 million from operating income of $7.8 million a year earlier, and adjusted EBITDA for the year dropped to $10.6 million from $28.3 million. Management chose not to issue formal revenue or EBITDA guidance for fiscal 2027, citing ongoing order-timing risk from trade policy. Hedge fund ownership climbed from 11 funds to 13 in the most recent quarter, a modest but positive shift in institutional interest. Short interest sits at 4.48% of float, a level that suggests some organized skepticism without signaling a crowded bearish trade. From these figures, it's hard to say how much of the turnaround story is already reflected in the stock. Accuray heads into fiscal 2027 with a materially stronger balance sheet than it had a year ago, but the two halves of its business are pulling in different directions. Service revenue and cost savings are compounding in the company's favor, while product sales in China remain hostage to tariff policy the company has no control over. For the bull case to hold, the new partnerships and transformation savings need to translate into actual order growth once the book-to-bill ratio climbs back toward management's 1.2x target. While we acknowledge the potential of ARAY as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

Image source: The Motley Fool. Wednesday, Aug. 19, 2026 at 4:30 p.m. ET Vice President of Financial Planning and Analysis - Stephen Monroe President and Chief Executive Officer - Stephen R. LaNeve Chief Financial Officer - Ali Pervaiz Operator: Good day, and welcome to the Accuray Fourth Quarter Fiscal 26 Financial Results Conference Call. All participants will be in a listen-only mode. [Inaudible] by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch-tone phone. And to withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Stephen Monroe, Vice President of Financial Planning and Analysis. Please go ahead, sir. Stephen Monroe: Thank you, operator, and good afternoon, everyone. Welcome to Accuray's conference call to review financial results for the fourth quarter of fiscal year 26, which ended 06/30/2026. During our call this afternoon, management will review recent corporate developments. Joining us on today's call are Stephen R. LaNeve, Accuray's President and Chief Executive Officer and Ali Pervaiz, Accuray's Chief Financial Officer. Before we begin, I would like to remind everyone that our discussion today includes forward-looking statements. Actual results may differ materially from those contemplated or implied by these forward-looking statements. Factors that could cause actual results to differ materially are outlined in today's earnings release and in our filings with the Securities and Exchange Commission. We undertake no obligation to update any forward looking statements except as required by law. In addition, we will discuss certain non GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are provided in today's earnings release. There is also a supplemental slide presentation available on the Investor Relations of our website. With that, let me turn the call over to Stephen R. LaNeve. Stephen R. LaNeve: Thank you, Steve. Good afternoon and thank you for joining us. Fiscal 26 was an important year for Accuray. Last October, we began a comprehensive effort to evaluate every aspect of our business. Engage with customers around the world, improve accountability and operating discipline, and position Accuray for sustainable long-term success. Over the last several quarters, we have streamlined our organization. Strengthened commercial leadership, sharpened our strategic focus and our execution, reduced our cost structure, worked towards expanding partnerships, and taken significant steps to improve our financial position. These actions were all designed with a common objective in mind. Building a stronger, more competitive, and more profitable Accuray. While the operating environment remained challenging throughout much of fiscal 26, due to geopolitical uncertainty, tariff pressures, and regional market volatility we remain focused on the factors within our control and have executed well against the transformation plan we introduced in December of last year. As a result of these actions, is fundamentally stronger than it was a year ago. We have strengthened our financial foundation, upgraded our people and processes, focused on core competencies by expanding our ecosystem of strategic partners, advanced key technology platforms, and service solutions improved organizational discipline, increased our installed base and are now entering the next phase of our transformation. Which consists of decisive steps to strengthen our competitive position enhance customer value, and drive long-term growth in revenues and margins. 1 of the most encouraging developments has been the positive response we are seeing from customers partners, and the broader radiation oncology community. The exceptional engagement we experienced at ESRO 26 is illustrative of this response. Our booth remained highly active throughout the event Our clinical symposium was standing room only and the quality of customer discussions was robust. Together, these interactions reinforced our belief that the market increasingly recognizes the value of Accuray's innovation in precision treatment delivery. Adaptive therapy, real-time motion management, and intelligent software solutions. Importantly, clinical data presented at ESTRO by global clinical leaders reinforce the growing role of precision short-course radiotherapy across multiple disease sites. In prostate cancer, presentations from San Raffaele Scientific Institute in Italy and the European Institute of Oncology supported the feasibility and early safety of highly precise motion managed ultra hypofractionated treatment approaches using the CyberKnife platform. This data builds on broader published evidence base that includes randomized Phase 3 prostate SBRT data and mature long-term robotic SBRT outcomes showing favorable relapse free survival with very low severe toxicity. In breast cancer, investigators shared encouraging clinical experience with the treatment delivery on both robotic and helical platforms. The National Institute of Oncology, Hungary reported institutional experience with partial breast irradiation while researchers from the European Institute of Oncology, Italy provided an update further supporting the feasibility and safety of this approach. Preliminary outcomes from patients treated on the Radixact platform incorporating the recent introduced VitalHold system were presented by CHR Metz-Thionville in Vantoux, France. Highlighting the potential of integrated surface guided radiotherapy and automated breath hold delivery to support precision treatment delivery. Additional data across kidney, lung, functional radiosurgery other precision radiotherapy use cases further reinforced the breadth of Accuray's clinical relevance across multiple disease sites. These ESTRO presentations build upon a broader and expanding body of published clinical evidence supporting Accuray technologies. This includes randomized Phase 3 prostate SBRT data and mature long-term robotic SBRT outcomes demonstrating favorable disease control and low rates of severe toxicity. Further strengthening the evidence base that supports our differentiated approach to radiation therapy. Lastly, ESTRO 26 was not simply about visibility, it was about momentum. The event translated strong interest into measurable commercial activity which led to a meaningful increase in qualified leads year over year. We also saw encouraging traction from the European debut of Stellar, as well as continued interest in the unique capabilities of the CyberKnife system. This engagement reinforces our confidence that the investments we have made in innovation, partnerships and commercial execution are gaining traction in the market and creating opportunities for future growth. This afternoon, I will discuss our progress across 5 areas. Number 1, financial foundation. Number 2, strategic partnerships in our ecosystem. Number 3, differentiated technology Number 4, transformation Phase 2 and number 5, the FY 27 outlook. Our financial foundation, let me begin with what I believe is 1 of the most important developments in the company's recent history. Last month, we announced a comprehensive transaction with TCW Asset Management Company LLC that fundamentally strengthens our financial position and enhances our ability to execute our strategy. The transaction includes a conversion of $40 million of existing debt into preferred equity that is convertible into common shares of more than 100% premium to where the common stock was trading immediately prior to the announcement. A $15 million cash investment and additional convertible preferred equity additional liquidity available through a delayed draw facility a covenant holiday through December 2027, and several governance and capital structure enhancements. I will add that certain elements of the transaction such as the issuance of convertible preferred equity remain subject to shareholder approval and other customary closing conditions as further described in our related Form 8-K filing. Collectively, these actions would improve liquidity, reduce leverage, enhance financial flexibility provide a greater runway to execute our strategic priorities. We appreciate the continued support and confidence demonstrated by our partners at TCW. Importantly, these steps allow us to spend less time managing capital constraints and more time investing in our customers, innovation, commercial execution and profitable growth. This transaction was not simply a financing exercise. It was designed to create a stronger foundation for the next phase of Accurates evolution and beyond. Strategic partnerships and our ecosystem. The second area I would like to discuss is partnerships and our expanding clinical ecosystem. 1 of the key conclusions that emerged from our transformation work that Accuration devoted resources to the areas where we create the greatest value by focusing on core competencies and competitive differentiators while partnering with world-class organizations to further accelerate innovation and execution. We have taken important steps to build exactly that type of ecosystem Recently, we entered into nonbinding letters of intent with Samsung Medison and Research Laboratories while continuing to expand our relationship with Tata Consultancy Services. These relationships are intended to strengthen our capabilities across volumetric imaging, software development, adaptive therapy, engineering, and customer support. While simultaneously producing operational efficiencies that we could not capture on our own. Additionally, we announced in May a landmark 10-year strategic collaboration with the University of Wisconsin School of Medicine and Public Health. This relationship is especially meaningful because it builds upon decades of shared innovation. Many of the technologies that helped establish Accuray's helical platform originated from groundbreaking work conducted at the University of Wisconsin. Today, we are extending that legacy by creating framework designed to advance adaptive radiation therapy research education, training, and the next generation of personalized cancer treatment using our stellar adaptive radiation therapy platform. Together, these relationships are allowing us to build an ecosystem that extends our capabilities while enabling Accuray to remain sharply focused on our core competencies. Radiation therapy innovation, clinical excellence, treatment delivery, patient outcomes, and customer solutions. By partnering with world-class organizations across imaging, software, engineering, AI, and services we can accelerate innovation improve execution, increase efficiency without having to build every capability internally ourselves. We believe this approach can accelerate innovation while also improving efficiency and scalability across the business over time. Importantly, this is not a 1-time effort. We have used strategic partnerships as a key pillar of our operating model going forward We expect to continue expanding our ecosystem with additional partnerships that further enhance our capabilities and create value for customers and shareholders. Differentiated technology, Innovation remains central to our strategy. As we look ahead, our product roadmap including the CyberKnife and Radixact systems is increasingly centered around 3 areas of differentiated technology. First is motion management. Synchrony remains 1 of the most differentiated capabilities in radiation therapy. And enables clinicians to track and adapt to patient and tumor motion in real-time during treatment. Leveraging Accuray's proprietary software and AI-enabled algorithms, Synchrony helps predict, track, and compensate for motion throughout treatment. Positioning Accuray at the forefront of intelligent motion management. As precision medicine continues to evolve, we believe the importance of motion management will only increase. Second, is imaging. ClearRT continues to provide high quality volumetric imaging that supports treatment planning patient positioning, adaptive workflows, and clinical decision making on our Radixact platform. As the field increasingly emphasizes precision and adaptation, Accuray's innovation roadmap will continue to prioritize enhanced imaging on the Radixact and CyberKnife systems. Third is software. In response to our voice of customer findings, we continue to invest in precision. VOLO, workflow enhancements, and software enabled treatment optimization capabilities. We believe software will play an increasingly important role in driving both clinical and operational value. Volo's advanced optimization engine enables faster, high quality treatment planning, while ongoing investments in workflow automation and adaptive treatment capabilities help improve efficiency, support clinician productivity, and further differentiate the Accuray treatment platform. What gives us confidence is not only the technology itself, but also the growing body of supporting clinical evidence. At ESRO 26, data presented by Key Opinion Leaders highlighted compelling outcomes across multiple indications including impressive kidney treatment results and long-term prostate cancer outcomes demonstrating excellent disease control with low toxicity profiles. These clinical findings reinforce our belief that Accuray's differentiated technology platform remains well positioned as radiation oncology increasingly shifts towards adaptive precise, and personalized treatment approaches. Our transformation Phase 2, The first phase of our transformation program focused primarily on creating a more efficient and competitive operating model and a more agile, responsive, and accountable enterprise. We streamlined our organization, simplified decision making, improved accountability, reduced costs, strengthened commercial focus, and improved operational discipline. With the incredible efforts of our team, were able to exceed the financial benefits of our transformation actions. As we had previously communicated, we were expecting approximately $12 million of cost and margin improvement in fiscal 26. Which represented roughly $25 million of annualized benefit. Through disciplined execution, we ultimately realized more than $20 million of cost and margin improvement during fiscal 26 versus a target of $12 million These realized improvements are expected to support a profit approximately $15 million of incremental annualized cost and margin improvement in fiscal 27. With the degree of contribution depending on product demand levels the cost environment and broader business and macro conditions. Now we are entering transformation Phase 2, This next stage of Accuray's transformation focuses on the following priorities: differentiated innovation, investing in technologies and capabilities where Accuray possesses unique competitive advantages. Continuing to lower our cost structure driving further efficiency leveraging technology and partnerships, removing complexity throughout the organization. Expanded market reach improving commercial execution, strengthening distributor performance, growing customer and channel partner engagement, and expanding market penetration globally. Service revenue and margin expansion, driving growth in service revenues, and margins through price optimization more efficient parts and personnel utilization, using remote diagnostics and introduction of value added solutions our customers have been asking for. We believe these initiatives help position us to improve both revenue growth and profitability over time. As we enter fiscal 27, we are doing so from a position of greater strength than a year ago. Our priorities remain clear. Executing on our transformation initiatives, improving profitability expanding recurring revenue, and creating long-term shareholder value. At the same time, geopolitical developments, trade policy uncertainty tariff impacts, conditions in China and the Middle East, and broader macroeconomic factors continue to create significant uncertainty around product demand and margins. Given the long sales cycle inherent in our business, these factors can also affect the timing of orders, installations, and revenue recognition. As a result, we are not providing formal revenue or adjusted EBITDA guidance for fiscal 27. Instead, we expect continued growth in service revenue improved service margins driven primarily by pricing optimization and operational efficiencies. Ongoing operating expense discipline, and continued benefits from our transformation initiatives. We also expect strategic partnerships to play an increasingly important role in expanding our capabilities while allowing us to remain focused on our core competencies. While product revenue and margin performance remain difficult to predict, we believe the actions taken over the past year strengthened the business, and improved our ability to execute in fiscal 27. With that, I will turn the call over to Ali. Ali Pervaiz: Thank you, Steve, and good afternoon, everyone. I would like to begin by thanking our global teams for their focus commitment and execution throughout this transformational year. Turning to the financial results for fiscal year 26 fourth quarter and full fiscal year. Net revenue for Q4 was $100.9 million which was down 21% versus the prior year on a both reported and constant currency basis. For the full fiscal year total revenue was $402 million, down 12% from last year and down 14% on a constant currency basis. The decreases for both periods were driven by lower product revenues partially offset by higher service revenue. Service revenue for the fourth quarter was $60.1 million, up $3.2 million or 6% from the prior year and up 5% on a constant currency basis. Approximately $1.4 million of that increase was attributable to service contract pricing actions, while the remaining $1.8 million increase was driven by an increase in our global installed base and higher out of contract time and material billings. Full year service revenue was $229 million, up $8.3 million or 4% from last year and up 2% on a constant currency basis. The increase was driven by approximately $5.4 million related to service contract pricing actions, while the remaining $2.9 million increase was driven by an increase in our global installed base and higher out of contract time and material billings. The company's contract capture rate, defined as the percentage of active systems covered by a service agreement, continues to be at nearly 90% across our active installed base. Product revenue for the fourth quarter was $40.8 million, down $29.9 million or 42% versus the prior year on both the reported and constant currency basis. For the full year product revenue was $173 million, down $65 million or 27% as compared to the prior year and down 28% on a constant currency basis. Approximately $58 million of that decline was attributable to lower revenue in China versus prior year resulting from a sustained geopolitical tension and ongoing tariff uncertainty. Product gross orders for the fourth quarter were approximately $38 million and represented a book to bill ratio of 0.9x. For the full year, gross orders totaled $192 million, representing a trailing 12 month book to bill ratio of 1.1x. Ended the fourth quarter with a reported order backlog of approximately $313 million, defined to include only orders younger than 30 months. As we previously stated, we consider our book to bill ratio of 1.2x to be a healthy level for our growing backlog. While we fell short of that target in fiscal 20 as we implemented significant commercial transformation initiatives including sales region realignment and leadership changes those foundational actions are now largely complete. We have strengthened our commercial organization, are developing a healthier pipeline, have introduced product improvements and are improving engagement with our distribution partners. We believe these actions position us to improve order intake as we move through fiscal 27. Overall, profit for the quarter was $35.1 million, representing gross margins of 34.8% compared to gross margins of 30.6% in the prior year. In the fourth quarter, the company recorded favorability of $5.8 million or 5.7 points related to IEPA tariff expenses incurred prior to those tariffs being invalidated by the Supreme Court earlier this year. Additionally, a non recurring write down of an obsolete component unfavorably impacted fiscal 26 fourth quarter gross margins by $1.5 million or 1.5 points. Adjusting for these 1-time items, fourth quarter pro form a gross margins were $30.8 million or 30.5%. For the full year, overall gross profit was $111 million, representing gross margins of 27.7% compared to gross margins of 32.1% in the prior fiscal year. Note that $5.5 million or 95% of the AIIFA tariff favorability was related to tariff expense that was recognized in fiscal year 26. Service gross profit for the quarter was $22.1 million, representing gross margins of 36.8% compared to gross margins of 34.4% in the prior year. Service contract pricing actions drove margins higher by $1.4 million or 2.3 points and lower overall service labor cost structure improved margins by $3.2 million or 5.3 points as compared to the prior year. Offsetting these items was primarily the impact of tariffs, as well as inflationary pressures on materials and freight which had an unfavorable impact of $2.4 million or 4 points. On a sequential basis, service gross margins were 10.7 points higher than the third quarter of fiscal 26, driven by favorable pricing, lower parts consumption, and lower freight costs. The fourth quarter improvement reflects the benefits of pricing actions and operational initiatives implemented throughout fiscal 26, which gained momentum during the second half of the year. For the full year, service gross profit was $71 million, representing gross margins of 31% compared to gross margins of 32.6% in the prior year. Service contract pricing actions drove margins higher by $5.4 million or 2.4 points and lower overall service labor cost structure improved margins by $8.3 million or 3.6 points as compared to prior year. This favorability was primarily offset by higher net parts consumption of approximately $11.2 million or 4.9 points. Product gross profit in the quarter was $12.9 million, representing 31.7% gross margins compared to 27.5% in the prior year. As noted above, the IEFA tariff favorability of $5.8 million or 14.2 points were recorded in the fourth quarter drove product margins higher. Excluding this favorability pro form a product gross profit was approximately $7.1 million, representing adjusted product gross margins of 17.5%. The lower product gross margins were also impacted by the unfavorable obsolete inventory impact higher non IEPA tariff expense, and unfavorable product and region mix of product shipments. For the full year, gross profit was $40.4 million, representing 23.4% of gross margins compared to 31.6% in the prior year. Excluding the $0.3 million IEFA tariff favorability related to prior periods, to fiscal year 26 adjusted product gross profit was approximately $40.1 million, representing adjusted product gross margins of 23.2%. The year-over-year decrease was driven by non-IEFA tariff expense and unfavorable product and region mix, in particular, significantly fewer CyberKnife system shipments to China. Operating expenses in the fourth quarter were $29.6 million, compared to $34.7 million in the prior fiscal year. The current year fourth quarter includes $0.7 million of non recurring restructuring expenses which includes severance costs and other costs directly related to our restructuring and transformation plans. Excluding these restructuring expenses, fourth quarter 26 operating expenses decreased $5.9 million or 17% versus the prior year. For the full year, operating expenses were $137.9 million, compared to $139.1 million in the prior year. Excluding restructuring expenses of $16.2 million, operating expenses decreased to $121.7 million, a decrease of 13% year over year. As Steve mentioned earlier, our transformation initiatives continue to deliver measurable results in fiscal 26 generating more than $20 million in bottom line improvements realized during the fiscal year compared to our previously communicated target of $12 million. These benefits are translating into a higher long-term savings opportunity and are expected to support approximately $15 million of incremental annualized cost and margin improvement in fiscal 27, with a degree of contribution depending on product demand levels, the cost environment, and broader business and macro conditions. As noted earlier, we recognized $16.2 million of nonrecurring restructuring expenses in fiscal year 26. As our transformation plan has progressed over the second half of fiscal 26, we expect restructuring costs related to our transformation plan to be substantially complete. Operating income for the quarter was $5.5 million, compared to $4.2 million in the prior year. Operating income for the full year was a loss of $26.4 million, compared to income of $7.8 million in the prior year. Adjusted EBITDA for the quarter was $12.9 million, compared to $9.4 million in the prior year, Adjusted EBITDA for the full year was $10.6 million, compared to $28.3 million in the prior year. We described the reconciliation between GAAP net income and adjusted EBITDA in our earnings release issued today. Turning to the balance sheet. Total cash, cash equivalents and restricted cash as of quarter end amounted to $48.8 million, compared to $44.4 million at the end of last quarter. The restricted cash is related to required postings for cash flow hedging, and tariffs amounting to $8.1 million in the current quarter compared to $6.4 million at the end of last quarter. Net accounts receivable were $67.4 million, up $2.8 million from the prior quarter Our net inventory balance was $147.1 million, down $9.6 million from the prior quarter as finished goods inventory built early in the second half of fiscal 26 was monetized in the fourth quarter. At the end of the fourth quarter, we had $5 million outstanding on our revolving credit facility In May, the company drew the full $18 million under its prior preexisting delayed draw term loan facility and use the proceeds to pay off $18 million of outstanding convertible notes that matured on June 1. We also recently announced a comprehensive transaction with TCW that would significantly strengthen our balance sheet and liquidity position. Under the agreement, TCW will exchange $40 million of existing term debt for convertible preferred equity with an equivalent liquidation preference. The preferred shares will accrue dividends at 8% annually and are convertible into common stock conversion price of $0.50 per share, representing an approximately 105% premium to our share price at announcement. In addition, TCW has made a $15 million convertible preferred equity investment and has agreed to make available a delayed draw term loan of up to $5 million providing additional liquidity and financial flexibility. The transaction also includes the covenant holiday with certain financial covenants waived through 12/31/2027 and the first covenant testing date set for 03/31/2028, giving us additional runway to execute our strategic priorities and planned investments. As Steve mentioned earlier, portions of the TCW transaction remain subject to shareholder approval and other customary closing conditions. We look forward to engaging with shareholders as we move through that process. We are excited to continue our partnership with TCW and appreciate their in our transformation plan and long-term opportunity. In addition, we plan to implement a reverse stock split at a ratio still to be determined and subject to stockholder approval which we believe will better position the company moving forward. Collectively, these actions would strengthen our capital structure, improve financial flexibility, support our focus on driving sustainable profitability and long-term shareholder value. Stephen R. LaNeve: Thank you, Ali. Fiscal 26 was a year of transformation. Fiscal 27 is a year of execution. We are strengthening our financial foundation We are expanding our partnership ecosystem. We sharpened our focus on differentiated technology We improved the way we operate and we established the framework for transformation Phase 2. Most importantly, we remain focused on helping customers deliver exceptional patient care while positioning Accuray to generate sustainable long-term value for shareholders. I will now turn it back over to the operator for Q and A. Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we will pause momentarily to assemble our roster. As there are no questions, this will conclude our question and answer session. I would like to turn the conference back over to Mr. Stephen R. LaNeve, President and CEO, for any closing remarks. Please go ahead. Stephen R. LaNeve: Thank you all for joining our call today. We look forward to speaking with you again later this fall when we report our fiscal 27 first quarter results. This concludes our earnings call. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Accuray, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Accuray wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $443,461!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,307,633!* Now, it’s worth noting Stock Advisor’s total average return is 973% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 26, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Accuray (ARAY) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized fiscal 2026 as a foundational year focused on streamlining the organization, reducing cost structures, and improving accountability through a formal transformation plan. Performance was significantly impacted by geopolitical tensions and tariff uncertainty in China, which accounted for approximately $58 million of the total product revenue decline. The company is pivoting to a 'partner-centric' model, utilizing nonbinding letters of intent with Samsung Medison and Research Laboratories to accelerate innovation in imaging and AI without internal capital intensity. Service revenue growth of 6% in Q4 was driven by strategic contract pricing actions and an expanding global installed base, serving as a stabilizing factor against volatile product sales. Management highlighted that clinical data presented at ESTRO 26 for CyberKnife and Radixact platforms is driving a shift toward ultra-hypofractionated and adaptive radiotherapy, which they believe validates their technology roadmap. Operational discipline led to $20 million in realized cost and margin improvements during the year, exceeding the initial target of $12 million. Management is not providing formal revenue or adjusted EBITDA guidance for fiscal 2027 due to persistent geopolitical uncertainty, trade policy volatility, and long sales cycles. The company expects approximately $15 million of incremental annualized cost and margin improvements in fiscal 2027, though the final contribution depends on product demand levels. Strategic focus for 'Transformation Phase 2' centers on expanding market reach through improved distributor performance and driving service margin expansion via remote diagnostics and price optimization. The financial framework for the coming year assumes a 'covenant holiday' through December 2027, providing a runway to invest in commercial execution without immediate debt-related constraints. Management plans to implement a reverse stock split, subject to shareholder approval, to improve the company's capital structure and market positioning. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. A comprehensive transaction with TCW Asset Management includes converting $40 million of debt into preferred equity at a 105% premium to the pre-announcement share price. Q4 gross margins were impacted by a $5.8 million one-time benefit from the invalidation of IEPA tariffs, partially offset by a $1.5 million non-recurring write-down of obsolete inventory. The company recognized $16.2 million in non-recurring restructuring expenses for the full year, covering severance and transformation costs, which are now expected to be substantially complete. Liquidity was bolstered by a $15 million cash investment from TCW and the full draw of an $18 million delayed draw facility used to retire maturing convertible notes.

This article first appeared on GuruFocus. Revenue: Fourth quarter net revenue was $100.9 million, down 21% year-over-year; full-year revenue was $402 million, down 12% (down 14% on a constant currency basis). Service Revenue: Fourth quarter service revenue was $60.1 million, up 6% year-over-year; full-year service revenue was $229 million, up 4%. Product Revenue: Fourth quarter product revenue was $40.8 million, down 42% year-over-year; full-year product revenue was $173 million, down 27%. Gross Margin: Fourth quarter gross margin was 34.8%, up from 30.6% in the prior year; full-year gross margin was 27.7%, down from 32.1%. Service Gross Margin: Fourth quarter service gross margin was 36.8%, up from 34.4% in the prior year; full-year service gross margin was 31%, down from 32.6%. Product Gross Margin: Fourth quarter product gross margin was 31.7%, up from 27.5% in the prior year; full-year product gross margin was 23.4%, down from 31.6%. Operating Income: Fourth quarter operating income was $5.5 million, up from $4.2 million in the prior year; full-year operating loss was $26.4 million, compared to income of $7.8 million in the prior year. Adjusted EBITDA: Fourth quarter adjusted EBITDA was $12.9 million, up from $9.4 million in the prior year; full-year adjusted EBITDA was $10.6 million, down from $28.3 million. Gross Orders: Fourth quarter gross orders were approximately $38 million, representing a book-to-bill ratio of 0.9 times; full-year gross orders totaled $192 million, representing a book-to-bill ratio of 1.1. Order Backlog: Reported order backlog was approximately $313 million at the end of the fourth quarter. Cash Position: Total cash, cash equivalents and restricted cash amounted to $48.8 million at quarter end, up from $44.4 million at the end of the prior quarter. Operating Expenses: Fourth quarter operating expenses were $29.6 million, down from $34.7 million in the prior year; full-year operating expenses were $137.9 million, down from $139.1 million. Warning! GuruFocus has detected 6 Warning Signs with ARAY. Is ARAY fairly valued? Test your thesis with our free DCF calculator. Release Date: August 19, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Accuray Inc (NASDAQ:ARAY) exceeded its transformation cost-saving target, realizing over $20 million in cost and margin improvements in fiscal 2026 versus a $12 million target. The company strengthened its financial position through a comprehensive transaction with TCW, including debt conversion, a $15 million cash investment, and a covenant holiday through December 2027. Service revenue grew 4% year-over-year to $229 million, driven by pricing actions and an expanding installed base, with service gross margins improving sequentially. The company is building a strategic partnership ecosystem, including a landmark 10-year collaboration with the University of Wisconsin to advance adaptive radiation therapy. Clinical data presented at ESTRO 2026 reinforced the differentiated capabilities of Accuray's CyberKnife and Radixact platforms, leading to a meaningful increase in qualified leads. Total revenue declined 12% year-over-year to $402 million, with product revenue down 27% due to a $58 million drop in China sales from geopolitical tensions and tariff uncertainty. Full-year gross margin fell to 27.7% from 32.1% in the prior year, impacted by higher non-EPA tariff expenses and unfavorable product mix. The company reported an operating loss of $26.4 million for fiscal 2026, compared to operating income of $7.8 million in the prior year. Adjusted EBITDA declined significantly to $10.6 million from $28.3 million in the prior year, reflecting lower product revenue and margin pressures. Management did not provide formal revenue or adjusted EBITDA guidance for fiscal 2027 due to ongoing geopolitical, tariff, and macroeconomic uncertainties, limiting visibility for investors. Q: What were the key financial results for the fourth quarter and full fiscal year 2026?A: Ali Pervaiz, CFO, reported that Q4 net revenue was $100.9 million, down 21% year-over-year, while full-year revenue was $402 million, down 12%. Service revenue grew 6% in Q4 to $60.1 million and 4% for the full year to $229 million, driven by pricing actions and a larger installed base. Product revenue declined significantly, down 42% in Q4 and 27% for the full year, largely due to a $58 million drop in China revenue from geopolitical tensions and tariff uncertainty. Q: Can you provide details on the comprehensive transaction with TCW Asset Management Company?A: Steve LaNeve, CEO, explained that the transaction includes the conversion of $40 million of existing debt into convertible preferred equity at a conversion price of $0.50 per share, representing a 105% premium to the stock price at announcement. TCW is also making a $15 million cash investment in additional convertible preferred equity, providing a delayed draw facility of up to $5 million, and granting a covenant holiday through December 2027. This strengthens liquidity, reduces leverage, and provides greater financial flexibility. Q: What were the results of the transformation initiatives in fiscal 2026, and what is expected for fiscal 2027?A: Steve LaNeve, CEO, stated that the company exceeded its transformation targets, realizing more than $20 million in cost and margin improvements in fiscal 2026 versus a target of $12 million. These improvements are expected to support approximately $15 million of incremental annualized cost and margin improvement in fiscal 2027. The company is now entering "Transformation Phase 2," focusing on differentiated innovation, lowering cost structure, expanding market reach, and service revenue and margin expansion. Q: What is the company's outlook for fiscal 2027, and why is formal guidance not being provided?A: Steve LaNeve, CEO, stated that due to geopolitical uncertainty, tariff impacts, and conditions in China and the Middle East, the company is not providing formal revenue or adjusted EBITDA guidance for fiscal 2027. However, they expect continued growth in service revenue, improved service margins, ongoing operating expense discipline, and continued benefits from transformation initiatives. The company believes the actions taken over the past year have strengthened the business and improved its ability to execute. Q: What were the key drivers of the service gross margin improvement in the fourth quarter?A: Ali Pervaiz, CFO, reported that service gross margins improved to 36.8% in Q4, up from 34.4% in the prior year. This improvement was driven by service contract pricing actions, which added 2.3 points, and lower overall service labor costs, which improved margins by 5.3 points. These gains were partially offset by the impact of tariffs and inflationary pressures on materials and freight, which had an unfavorable impact of 4 points. Q: How did the company's order backlog and book-to-bill ratio perform in fiscal 2026?A: Ali Pervaiz, CFO, noted that product gross orders for Q4 were approximately $38 million, representing a book-to-bill ratio of 0.9 times. For the full year, gross orders totaled $192 million, representing a trailing 12-month book-to-bill ratio of 1.1. The company ended Q4 with a reported order backlog of approximately $313 million. While the company fell short of its healthy 1.2 book-to-bill target, the commercial transformation initiatives are now largely complete, positioning the company to improve order intake in fiscal 2027. Q: What strategic partnerships has Accuray established to expand its ecosystem?A: Steve LaNeve, CEO, highlighted several key partnerships, including nonbinding letters of intent with Sansoft-HMEAmerica and research laboratories, and an expanded relationship with Tata Consultancy Services. These partnerships are intended to strengthen capabilities across volumetric imaging, software development, adaptive therapy, engineering, and customer support. Additionally, the company announced a landmark 10-year strategic collaboration with the University of Wisconsin School of Medicine and Public Health to advance adaptive radiation therapy research and education. Q: What were the main factors impacting product gross margins in fiscal 2026?A: Ali Pervaiz, CFO, explained that full-year product gross margins were 23.4%, down from 31.6% in the prior year. The decrease was driven by non-EPA tariff expenses and unfavorable product and region mix, particularly significantly fewer CyberKnife system shipments to China. In Q4, product gross margins were 31.7%, benefiting from $5.8 million of EPA tariff favorability related to tariffs invalidated by the Supreme Court, but were also impacted by a nonrecurring write-down of an obsolete component. Q: What is the company's plan regarding a reverse stock split?A: Ali Pervaiz, CFO, stated that the company plans to implement a reverse stock split at a ratio still to be determined, subject to stockholder approval. This action, along with the TCW transaction, is intended to strengthen the capital structure, improve financial flexibility, and support the company's focus on driving sustainable profitability and long-term shareholder value. Q: What were the highlights from the ESTRO 2026 conference?A: Steve LaNeve, CEO, reported that the company experienced exceptional engagement at ESTRO 2026, with a highly active booth and a standing-room-only clinical symposium. Clinical data presented by global leaders reinforced the growing role of precision, short-course radiotherapy across multiple disease sites, including prostate, breast, kidney, and lung cancer. The event translated into a meaningful increase in qualified leads year-over-year and encouraging traction from the European debut of the Stellar system. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

MADISON, Wis., Aug. 19, 2026 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the fourth quarter and fiscal 2026, ended June 30, 2026. Key Highlights The Company's transformation plan delivered more than $20 million of cost and margin improvement during fiscal 2026, significantly exceeding the Company's original target of $12 million. The Company announced a comprehensive financing transaction with TCW Asset Management that strengthens liquidity, reduces leverage, provides relief for certain covenants through December 2027, and enhances financial flexibility to support long-term strategic objectives. Service revenue increased 6% year-over-year in the fourth quarter and 4% for the full fiscal year, reflecting continued momentum and a stable foundation for profitable growth in the Company's recurring revenue business. The Company has been expanding its strategic partnership ecosystem through collaborations with leading organizations across imaging, software, engineering, adaptive therapy, research, and customer support; accelerating innovation while enabling Accuray to remain focused on its core competencies. Strong customer engagement at ESTRO 2026 reinforced growing market interest in Accuray's differentiated technologies and supported a meaningful increase in qualified commercial opportunities. "Fiscal 2026 was a transformational year for Accuray. Throughout the year, we strengthened our operational foundation, improved accountability and execution, expanded our ecosystem of strategic partnerships, advanced differentiated technology capabilities, and took important steps to enhance our financial position," said Steve LaNeve, President and Chief Executive Officer. "Despite ongoing geopolitical uncertainty, tariff pressures, and market volatility, we remained focused on the factors within our control and successfully executed against the transformation initiatives we introduced earlier in the fiscal year. As a result, Accuray enters fiscal 2027 as a stronger company with greater financial flexibility, and a clear focus on driving sustainable revenue growth, margin expansion, and long-term shareholder value." Fiscal Fourth Quarter ResultsTotal net revenue was $100.9 million for the fourth quarter of fiscal 2026, or a decrease of 21 percent, as compared to $127.5 million in the prior fiscal year fourth quarter. Product revenue totaled $40.8 million, or a decrease of 42 percent, as compared to $70.7 million in the prior fiscal year fourth quarter, while service revenue totaled $60.1 million, or an increase of 6 percent, as compared to $56.8 million in the prior fiscal year fourth quarter.Total gross profit in the fourth quarter of fiscal 2026 was $35.1 million, or 34.8 percent of net revenue, as compared to total gross profit of $39.0 million, or 30.6 percent of net revenue in the prior fiscal year fourth quarter.Operating expenses were $29.6 million in the fourth quarter of fiscal 2026, or a decrease of 15 percent, as compared to $34.7 million in the prior fiscal year fourth quarter. Operating expenses in the fourth quarter of fiscal 2026 include $0.7 million of restructuring charges. Excluding restructuring charges, operating expenses would have decreased by $5.9 million or 17 percent, as compared to the prior fiscal year fourth quarter. Net loss was $1.9 million, or $0.02 per share, in the fourth quarter of fiscal 2026, as compared to a net income of $1.1 million, or $0.01 per share, in the prior fiscal year fourth quarter. Adjusted EBITDA was $12.9 million in the fourth quarter of fiscal 2026 compared to $9.4 million in the prior fiscal year fourth quarter. Gross product orders were $37.7 million in the fourth quarter of fiscal 2026 as compared to $84.7 million in the prior fiscal year fourth quarter. The book to bill ratio was 0.9 in the fourth quarter of fiscal 2026, as compared to 1.2 in the prior fiscal year fourth quarter. Order backlog as of June 30, 2026, was $312.5 million, approximately 27 percent lower than the end of the prior fiscal year fourth quarter. Total cash, cash equivalents, and short-term restricted cash were $41.2 million as of June 30, 2026, an increase of $2.7 million from March 31, 2026. Fiscal Year 2026 HighlightsTotal net revenue was $401.9 million for fiscal 2026, or a decrease of 12 percent, as compared to $458.5 million in the prior fiscal year period. Product revenue totaled $172.7 million, or a decrease of 27 percent, as compared to $237.6 million in the prior fiscal year period. Service revenue totaled $229.2 million, or an increase of 4 percent, as compared to $220.9 million in the prior fiscal year period.Total gross profit was $111.5 million for fiscal 2026, or 27.7 percent of net revenue, as compared to total gross profit of $147.0 million, or 32.1 percent of net revenue in the prior fiscal year period. Operating expenses were $137.9 million for fiscal 2026, or a decrease of 1 percent, as compared to $139.1 million for the prior fiscal year period. Operating expenses in fiscal 2026 include $16.2 million of restructuring charges. Excluding restructuring charges, operating expenses would have decreased by $17.4 million or 13 percent, as compared to the prior fiscal year. GAAP net loss was $49.2 million, or $0.40 per share, for the fiscal 2026, as compared to a net loss of $1.6 million, or $0.02 per share, in the prior fiscal year period. Adjusted EBITDA was $10.6 million for fiscal 2026, as compared to $28.3 million in the prior fiscal year period. Gross product orders were $191.9 million for fiscal 2026 as compared to $288.0 million for the prior fiscal year period. The book to bill ratio was 1.1 in fiscal 2026, as compared to 1.2 in the prior fiscal year. "Fiscal 2026 was a year of meaningful operational and structural change," said Ali Pervaiz, Chief Financial Officer. "While product demand in certain regions remained impacted by geopolitical developments and tariff uncertainty, we continued to expand service revenue, improve operating efficiency, and execute our transformation initiatives ahead of expectations. We also announced a comprehensive transaction that enhances liquidity and reduces leverage as we enter the next phase of Accuray's transformation." Fiscal Year 2027 Financial Guidance As the Company enters fiscal 2027, management believes Accuray is operating from a position of greater strength than a year ago. The Company expects continued growth in service revenue, improved service margins driven by pricing optimization and operational efficiencies, ongoing operating expense discipline, and continued benefits from transformation initiatives. Strategic partnerships are also expected to play an increasingly important role in expanding capabilities while enabling the Company to remain focused on its core competencies. Given ongoing uncertainty related to geopolitical developments, international trade policy, tariff impacts, conditions in China and the Middle East, and broader macroeconomic factors, the Company is not providing formal revenue or Adjusted EBITDA guidance for fiscal 2027 at this time. Management believes the actions taken during fiscal 2026 have strengthened the business and improved the Company's ability to execute and create long-term value for shareholders. Conference Call InformationAccuray will host a conference call beginning at 3:30 p.m. CT/4:30 p.m. ET today to discuss results for the fourth quarter of fiscal 2026 as well as recent corporate developments. Conference call dial-in information is as follows: U.S. callers: (888) 999-5318 International callers: (848) 280-6460 Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Investor Relations section of Accuray's website, www.accuray.com. There will be a slide presentation accompanying today's event which can also be accessed on the company's Investor Relations page at www.accuray.com. In addition, a taped replay of the conference call will be available beginning approximately one hour after the call's conclusion and will be available for seven days. The replay number is (877) 344-7529 (USA), or (412) 317-0088 (International), Conference ID: 3326908. An archived webcast will also be available on Accuray's website until Accuray announces its results for the first quarter of fiscal 2027. Use of Non-GAAP Financial Measures Accuray reports its financial results in accordance with generally accepted accounting principles in the United States ("GAAP") and the rules of the SEC. To supplement its financial statements prepared and presented in accordance with GAAP, Accuray uses certain non-GAAP financial measures, such as Adjusted EBITDA. Accuray has supplemented its GAAP net income (loss) with a non-GAAP measure of Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation, changes to the fair value of warrant liability, and restructuring charges ("Adjusted EBITDA"). The calculation of Adjusted EBITDA also excludes certain non-recurring, irregular and one-time items. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of the company and facilitates a meaningful comparison of results for current periods with previous operating results. A reconciliation of GAAP net income (loss) (the most directly comparable GAAP measure) to non-GAAP Adjusted EBITDA is provided in the schedules below. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. About Accuray Accuray Incorporated (Nasdaq: ARAY) is committed to expanding the powerful potential of radiation therapy to improve as many lives as possible. We invent unique, market-changing solutions that are designed to deliver radiation treatments for even the most complex cases—while making commonly treatable cases even easier—to meet the full spectrum of patient needs. We are dedicated to continuous innovation in radiation therapy for oncology, neuro-radiosurgery, and beyond, as we partner with clinicians and administrators, empowering them to help patients get back to their lives, faster. Accuray is headquartered in Madison, Wisconsin, with facilities worldwide. Safe Harbor Statement Statements made in this press release that are not statements of historical fact are forward-looking statements that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release relate, but are not limited, to the company's future results of operations and financial position, including expectations regarding: the company's recently announced financing transaction; the company's strategic partnerships and collaborations and ability to realize the expected benefits of those relationships; the ability to drive sustainable revenue growth, margin expansion, and long-term shareholder value; the effects of the global macroeconomic conditions on the company's financial results and business as well as the business of the company's customers and suppliers; the sufficiency of the company's cash, cash equivalents and investments to meet the company's anticipated cash needs for working capital and capital expenditures and the company's business strategy, plans and objectives; the expected benefits from the transformation plan, including expected improvement in annualized operating profit and cost and margin improvements; the ability to achieve the objectives of the transformation plan; service revenue and service margin improvements; the company's ability to deliver sustained performance and execute on its strategies and objectives, including related to its transformation efforts and restructuring plans; the company's ability to improve sales and drive margin expansion; opportunities to accelerate top-line growth and expand profitability; the company's ability to navigate supply chain, logistics, macroeconomic, and foreign exchange challenges; expectations related to the markets and regions in which the company operates; new product introductions and innovations; installed base growth; clinical outcomes; and the company's ability to improve execution, drive sustainable, profitable growth, while creating long-term value for patients, providers and shareholders. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "may," "will be," "will continue," "will likely result," and similar expressions. These forward-looking statements involve risks and uncertainties. If any of these risks or uncertainties materialize, or if any of the company's assumptions prove incorrect, actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the effect of the global macroeconomic environment on the operations of the company and those of its customers and suppliers; effects related to international tariffs; disruptions to our supply chain, including increased logistics costs; the company's ability to achieve widespread market acceptance of its products; substantial outstanding indebtedness and its ability to maintain compliance with financial covenants related to its debt; the company's ability to realize the expected benefits of the China joint venture and other strategic partnerships; risks inherent in international operations; geopolitical uncertainty, including armed conflict or political instability in the Middle East or other regions in which the company or its customers operate, and the effect of such conditions on the timing of system installations, customer site readiness, service revenue recognition, and the ability to complete transactions in affected markets; the company's ability to maintain or increase its gross margins on product sales and services; delays in regulatory approvals or the development or release of new offerings; the company's ability to meet the covenants under its credit facilities; the company's ability to convert backlog to revenue; and such other risks identified under the heading "Risk Factors" in the company's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on May 6, 2026, and as updated periodically with the company's other filings with the SEC. Forward-looking statements speak only as of the date the statements are made and are based on information available to the company at the time those statements are made and/or management's good faith belief as of that time with respect to future events. The company assumes no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements. Financial Tables to Follow View original content to download multimedia:https://www.prnewswire.com/news-releases/accuray-reports-fourth-quarter-and-fiscal-2026-financial-results-302855389.html

MADISON, Wis., May 6, 2026 /PRNewswire/ -- Accuray Incorporated (NASDAQ: ARAY) today reported financial results for the third quarter ended March 31, 2026. Key Highlights Transformation plan delivering ahead of expectations, with approximately $10 million of cost and margin improvements achieved through the fiscal third quarter, positioning the company to exceed the $12 million FY26 target. Commercial leadership strengthened with the appointment of Paul Miele as Chief Commercial Officer, bringing deep global experience in scaling capital medical device businesses and accelerating profitable growth. Strategic partnerships gaining momentum, expanding Accuray's ecosystem across imaging, software, workflow, clinical research, and operational execution in collaboration with many leading organizations to further amplify the company's strengths. Company withdraws fiscal 2026 financial guidance due to geopolitical uncertainty in the Middle East, which continues to materially impact product shipments and service revenue, with installations in several of the markets within the region delayed. At the upcoming European Society for Radiotherapy and Oncology ("ESTRO") Congress in Stockholm, Sweden on May 15 – 19, 2026, the Company will showcase a series of practical, customer‑driven product enhancements that reinforce their commitment to clinical excellence, workflow efficiency, and continuous innovation. "During the quarter, we made meaningful progress executing against the transformation plan we launched in December," said Steve LaNeve, President and Chief Executive Officer of Accuray. "We are already seeing tangible benefits from these initiatives, including approximately $10 million in realized margin improvements through the fiscal third quarter, positioning us ahead of our original expectations. We have also strengthened our leadership team with experienced talent in key strategic areas and continue to enhance our technology platform through highly strategic partnerships focused on advancing real-time adaptation to patient and tumor motion during treatment, a core differentiator of Accuray's technology. Taken together, we believe these actions will improve execution, strengthen profitability, and create meaningful long-term value for our shareholders." Mr. LaNeve continued, "Overall, we are encouraged by the progress we are making and remain confident in our strategy and our ability to execute on the areas within our control. However, the current geopolitical environment has created significant unpredictability around the timing of installations in several key Middle Eastern markets. Given these uncertainties, we believe it is prudent to withdraw financial guidance at this time, specifically as it relates to total net revenue and Adjusted EBITDA, and revisit our outlook when we report fiscal fourth quarter results." Fiscal Third Quarter Results Total net revenue was $104.8 million in the third quarter of fiscal 2026, or a decrease of 7 percent, as compared to $113.2 million in the prior fiscal year third quarter. Product revenue was $49.7 million in the third quarter of fiscal 2026, or a decrease of 13 percent, as compared to $57.3 million in the prior fiscal year third quarter. Service revenue was $55.1 million in the third quarter of fiscal 2026, or a decrease of 1 percent, as compared to $55.9 million in the prior fiscal year third quarter. Total gross profit was $25.3 million in the third quarter of fiscal 2026, or 24.1 percent of total net revenue, as compared to a total gross profit of $31.6 million, or 27.9 percent of total net revenue, in the prior fiscal year third quarter. The decrease in gross margin rate was primarily due to higher net parts consumption of $3.2 million, as well as higher than average logistics and duties costs. Operating expenses were $34.4 million in the third quarter of fiscal 2026, or an increase of 12 percent, as compared to $30.6 million in the prior fiscal year third quarter. Operating expenses in the third quarter of fiscal 2026 include $6.5 million in restructuring charges. Excluding restructuring charges, operating expenses would have decreased by $2.8 million, or 9 percent, as compared to the prior fiscal year third quarter. Additionally, the prior year third quarter benefited from a $3.2 million reversal of accrued compensation from the first half of fiscal year 2025. Adjusting for these two discrete items, third quarter 2026 operating expenses decreased $6.0 million, or 18%, versus prior year. Net loss was $11.8 million in the third quarter of fiscal 2026, or a diluted net loss of $0.09 per share, as compared to a net loss of $1.3 million, or a diluted net loss of $0.01 per share, in the prior fiscal year third quarter. Adjusted EBITDA was $3.8 million in the third quarter of fiscal 2026, as compared to an adjusted EBITDA of $6.0 million in the prior fiscal year third quarter. Gross product orders were $48.5 million in the third quarter of fiscal 2026 as compared to $71.2 million in the prior fiscal year third quarter. The book to bill ratio was 1.0 in the third quarter of fiscal 2026, as compared to 1.2 the prior fiscal year third quarter. Order backlog as of March 31, 2026 was $356.2 million, which is approximately 21% percent lower than at the end of the prior fiscal year third quarter. Total cash, cash equivalents and restricted cash as of quarter end amounted to $44.4 million compared to $47.9 million at the end of last fiscal quarter and compared to $62.1 million at June 30, 2025. First Nine Months Results Total net revenue was $301.0 million in the first nine months of fiscal 2026, or a decrease of 9 percent, as compared to $331.0 million in the prior fiscal year period. Product revenue was $131.9 million in the first nine months of fiscal 2026, or a decrease of 21 percent, as compared to $166.9 million in the prior fiscal year period. Service revenue was $169.1 million in the first nine months of fiscal 2026, or an increase of 3 percent, as compared to $164.1 million in the prior fiscal year period. Total gross profit was $76.4 million in the first nine months of fiscal 2026, or 25.4 percent of total net revenue, as compared to a total gross profit of $108.0 million, or 32.6 percent of total net revenue, in the prior fiscal year period. Operating expenses were $108.3 million in the first nine months of fiscal 2026, or an increase of 4 percent, as compared to $104.4 million in the prior fiscal year period. Operating expenses in the first nine months of fiscal 2026 include $15.4 million in restructuring charges. Excluding restructuring charges, operating expenses would have decreased by $11.5 million, or 11% percent as compared to the prior fiscal year period. Net loss was $47.3 million in the first nine months of fiscal 2026, or a diluted net loss of $0.39 per share, as compared to a net loss of $2.7 million, or a diluted net loss of $0.03 per share, in the prior fiscal year period. Adjusted EBITDA was a negative $2.3 million in the first nine months of fiscal 2026, as compared to a positive adjusted EBITDA of $18.8 million in the prior fiscal year period. Gross product orders was $154.2 million in the first nine months of fiscal 2026 as compared to $203.3 million in the prior fiscal year period. The book to bill ratio was 1.2 in the first six months of fiscal 2026, as compared to 1.2 in the prior fiscal year period. Conference Call Information Accuray will host a conference call beginning at 1:30 p.m. PT/4:30 p.m. ET today to discuss results for the third quarter of fiscal 2026 as well as recent corporate developments. Conference call dial-in information is as follows: U.S. callers: (833) 316-0563 International callers: (412) 317-5747 Individuals interested in listening to the live conference call via the Internet may do so by logging on to the Investor Relations section of Accuray's website, www.accuray.com. There will be a slide presentation accompanying today's event which can also be accessed on the company's Investor Relations page at www.accuray.com. In addition, a taped replay of the conference call will be available beginning approximately one hour after the call's conclusion and will be available for seven days. The replay number is (855) 669-9658 (USA), or (412) 317-0088 (International), Conference ID: 4178502. An archived webcast will also be available on Accuray's website until Accuray announces its results for the fourth quarter of fiscal 2026. Use of Non-GAAP Financial Measures Accuray reports its financial results in accordance with generally accepted accounting principles in the United States ("GAAP") and the rules of the SEC. To supplement its financial statements prepared and presented in accordance with GAAP, Accuray uses certain non-GAAP financial measures, such as adjusted EBITDA. Accuray has supplemented its GAAP net income (loss) with a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation, and (gain) loss from change in fair value of warrant liability ("adjusted EBITDA"). The calculation of adjusted EBITDA also excludes certain non-recurring, irregular and one-time items. Management believes that this non-GAAP financial measure provides useful supplemental information to management and investors regarding the performance of the company and facilitates a meaningful comparison of results for current periods with previous operating results. A reconciliation of GAAP net loss (the most directly comparable GAAP measure) to non-GAAP adjusted EBITDA is provided in the schedules below. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. About Accuray Accuray Incorporated (Nasdaq: ARAY) is committed to expanding the powerful potential of radiation therapy to improve as many lives as possible. We invent unique, market-changing solutions that are designed to deliver radiation treatments for even the most complex cases—while making commonly treatable cases even easier—to meet the full spectrum of patient needs. We are dedicated to continuous innovation in radiation therapy for oncology, neuro-radiosurgery, and beyond, as we partner with clinicians and administrators, empowering them to help patients get back to their lives, faster. Accuray is headquartered in Madison, Wisconsin, with facilities worldwide. Forward-Looking Statements Statements made in this press release that are not statements of historical fact are forward-looking statements that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release relate, but are not limited, to the company's future results of operations and financial position, including expectations regarding: the company's backlog, age-ins and age-outs, cancellations of contracts and foreign currency impacts; the anticipated drivers of the company's future capital requirements; expectations of the company's strategy in China and the company's China joint venture as well as its expected impact on the company's business; expectations regarding the market in China for radiation oncology systems; expectations regarding the effects of the global macroeconomic conditions on the company's financial results and business as well as the business of the company's customers and suppliers; expectations regarding the impact of changes in government administration policy positions; expectations regarding delays in deliveries and installations and its impact on the company's business; expectations regarding inflation, supply chain challenges and heightened logistics costs and its impact on the company's business, including gross margins and net income (loss); expectations regarding the timing of deliveries and revenue conversion; the company's expectations regarding the adequacy of its manufacturing facilities; the anticipated risks associated with the company's foreign operations and fluctuations in the U.S. Dollar and foreign currencies as well as its ability to mitigate such risks; potential changes in tariffs, export controls, trade sanctions and other trade policies; expectations related to the company's convertible notes and credit facilities; expectations related to the company's leases; the sufficiency of the company's cash, cash equivalents and investments to meet the company's anticipated cash needs for working capital and capital expenditures and the company's business strategy, plans and objectives; the expected benefits from the transformation plan, including expected improvement in annualized operating profit and cost and margin improvements; the ability to achieve the objectives of the transformation plan; expected restructuring charges for fiscal year 2026; the company's ability to deliver sustained performance and execute on its strategies and objectives, including related to its transformation efforts and restructuring plans; the company's ability to improve sales and drive margin expansion; opportunities to accelerate top-line growth and expand profitability; expectations related to management, including the new chief commercial officer; expectations regarding the impact of tariffs as well as mitigation efforts by the company; the company's ability to navigate supply chain, logistics, macroeconomic, and foreign exchange challenges; expectations related to the amount and timing of realizing deferred margin from the company's China joint venture; expectations with respect to strategic partnerships and collaborations; expectations related to the markets and regions in which the company operates; expectations regarding new product introductions and innovations; expectations regarding installed base growth; and the company's ability to improve execution, drive sustainable, profitable growth, while creating long-term value for patients, providers and shareholders. Forward-looking statements generally can be identified by words such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "may," "will be," "will continue," "will likely result," and similar expressions. These forward-looking statements involve risks and uncertainties. If any of these risks or uncertainties materialize, or if any of the company's assumptions prove incorrect, actual results could differ materially from the results expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, risks related to the effect of the global macroeconomic environment on the operations of the company and those of its customers and suppliers; effects related to international tariffs; disruptions to our supply chain, including increased logistics costs; the company's ability to achieve widespread market acceptance of its products; substantial outstanding indebtedness and its ability to maintain compliance with financial covenants related to its debt; the effect of enhanced international tariffs on the company; the company's ability to realize the expected benefits of the China joint venture and other partnerships; risks inherent in international operations; geopolitical uncertainty, including armed conflict or political instability in the Middle East or other regions in which the company or its customers operate, and the effect of such conditions on the timing of system installations, customer site readiness, service revenue recognition, and the ability to complete transactions in affected markets; the company's ability to maintain or increase its gross margins on product sales and services; delays in regulatory approvals or the development or release of new offerings; the company's ability to meet the covenants under its credit facilities; the company's ability to convert backlog to revenue; and such other risks identified under the heading "Risk Factors" in the company's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on February 17, 2026, and as updated periodically with the company's other filings with the SEC. Forward-looking statements speak only as of the date the statements are made and are based on information available to the company at the time those statements are made and/or management's good faith belief as of that time with respect to future events. The company assumes no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. Accordingly, investors should not place undue reliance on any forward-looking statements. Financial Tables to Follow View original content to download multimedia:https://www.prnewswire.com/news-releases/accuray-reports-fiscal-2026-third-quarter-financial-results-302764579.html

Image source: The Motley Fool. Wednesday, May 6, 2026 at 4:30 p.m. ET President and Chief Executive Officer — Stephen LaNeve Chief Financial Officer — Ali Pervaiz Vice President, Investor Relations — Stephen Monroe Stephen Monroe: Thank you, and good afternoon, everyone. Welcome to Accuray Incorporated's conference call to review financial results for the third quarter of fiscal 2026, which ended 03/31/2026. During our call this afternoon, management will review recent corporate developments. Joining us on today's call are Stephen LaNeve, Accuray Incorporated's President and Chief Executive Officer, and Ali Pervaiz, Accuray Incorporated's Chief Financial Officer. Before we begin, I would like to remind you that our call today includes forward-looking statements. Actual results may differ materially from those contemplated or implied by these forward-looking statements. Factors that could cause these results to differ materially are outlined in the press release we issued just after the market closed this afternoon, as well as in our filings with the Securities and Exchange Commission. We base the forward-looking statements on this call on the information available to us as of today's date. We assume no obligation to update any forward-looking statements as a result of new information or future events except to the extent required by applicable securities laws. Accordingly, you should not put undue reliance on any forward-looking statements. A few housekeeping items for today's call. All references to a specific quarter in the prepared remarks are to our fiscal year quarters. For example, statements regarding our third quarter refer to our fiscal third quarter ended March 31. Additionally, there will be a supplemental slide deck to accompany this call which you can access by going directly to Accuray Incorporated's Investor Relations page at investors.accuray.com. As you review our prepared remarks and guidance today, please note that our outlook represents our current estimates and reflects the operating environment as we understand it today, including, among other things, current tariff impacts and geopolitical conditions. As always, the situation remains dynamic and we will continue to update investors as visibility improves. With that, let me turn the call over to Accuray Incorporated's Chief Executive Officer, Stephen LaNeve. Stephen LaNeve: Thank you, Stephen. Good afternoon and thank you for joining us. Since joining Accuray Incorporated last October, I have spent time with teams across the company and in our key markets. What stands out is the strength of our technology, the commitment of our people, the conviction health care providers and patients have in our solutions, and the scale of the opportunity ahead of us. Turning to the quarter, total revenue was approximately $105 million, up 3% sequentially but down 7% year-over-year. In the third quarter, we had product shipments planned to certain customers in the Middle East, North Africa, and Pakistan that have been delayed indefinitely due to increased geopolitical disruption in the Middle East, which is also impacting our service revenue in those regions. We do not know how long this regional dynamic might continue. Additionally, our business in China continues to face headwinds that we discussed during our last earnings call which pertain to geopolitical tensions and ongoing tariff uncertainty. These are markets that remain strategically important to Accuray Incorporated over the long term, but the current environment has added volatility and uncertainty that is largely outside of our control and difficult to predict. That said, restating our strategy, we are prioritizing investment in innovation, product reliability, service solutions, workflow efficiency, and partnerships that expand our reach and strengthen our platform. Additionally, we are relentlessly focused on executing on our transformation program initiatives that did not take effect until the middle or end of the third quarter, which, coupled with the geopolitical factors I have mentioned, have masked their impact to date. While we remain confident in our ability to execute against our transformation plan, the current geopolitical environment, including the conflict involving Iran and its ripple effects across the Middle East, as well as my earlier comments about our business in China, has created significant unpredictability for both the product and the service sides of our business. Given such uncertainty, we believe the responsible approach is to withdraw our financial guidance at this time. We will provide an update on the business when we report fiscal fourth quarter results. Now turning to our transformation plan and the progress we have made. We launched a comprehensive strategic, operational, organizational transformation plan. This plan was designed to sharpen accountability, tighten cost control, and accelerate execution, while positioning Accuray Incorporated for sustainable, profitable growth over the long term. The foundation of this plan was to establish clear product and service strategies supported by a set of critical enablers we believe are necessary to execute at a higher level. The first of those enablers was rightsizing our cost structure while improving efficiency through better processes and the use of our ERP system and business intelligence tools. This was paired with an organizational realignment that centralized key functions, outsourced non-core activities, and reinforced accountability, speed, and commercial focus across the business by reducing approximately 15% of our workforce. At the same time, we reallocated engineering resources toward higher ROI programs, particularly those that integrate third-party solutions and more directly reflect the voice of the customer. Taken together, these actions were designed to structurally improve operating profitability by approximately $25 million on an annualized basis, with roughly $12 million expected to benefit fiscal 2026. As of the end of the third quarter, we have already achieved approximately $10 million of those improvements, and we are well on track to exceed the $12 million we originally targeted for fiscal year 2026. We continue to believe that at least $25 billion of these improvements should be realized in fiscal year 2027. We remain encouraged by the pace, the quality of execution, and the sustainability of these actions to date, and we will provide an updated view on these annualized improvements on our fourth quarter earnings call. To put some color around what this looks like in practice, let me briefly highlight a few initiatives that are already underway. First, we are expanding and diversifying our service portfolio to better monetize our installed base and enhance customer value. During the quarter, we launched new training and educational solutions, which can be included in service agreements or sold standalone. Additionally, we will launch packages to add software solutions to our service agreements, which we believe strengthens recurring revenue opportunities and improves customer engagement over time. Our strategy is to better leverage our substantial and growing installed base and to drive significant value creation through our service business. Second, we are making meaningful progress toward a more disciplined distributor partnership model. In markets where distributors are essential to our reach, we are implementing clear performance standards, improved transparency, stronger alignment, and better support models to drive consistent, high-quality execution. During the quarter, we advanced this effort with several concrete actions, including the appointment of a Vice President of Distributor Partnerships, a new and strategically important role for Accuray Incorporated focused on elevating distributor performance and accountability globally. Third, we are implementing systems, processes, and controls to help ensure we are fully and appropriately compensated for the work our service teams deliver every day. During the quarter, we have made enhancements to our service systems, which are designed to improve cash conversion and margin quality. Fourth, we continue to optimize pricing across our product and service portfolio to better reflect the clinical and economic value our technology and our service solutions deliver. This work is designed to support competitive wins at appropriate margins and is expected to translate into stronger sales quality and margin expansion over time. Finally, an essential element of the transformation is strong commercial leadership. I am very excited that Paul Maielli has joined Accuray Incorporated as Chief Commercial Officer. Paul brings more than two decades of experience leading and scaling global capital medical device businesses across the Americas, EMEA, and APAC regions. His track record strongly aligns with Accuray Incorporated's priorities in terms of building effective commercial operating models, reactivating the installed base, expanding service and solutions monetization, and accelerating capital equipment sales, specifically in the areas of imaging, navigation, and robotics. In prior roles, his leadership helped drive the reversal of revenue decline trends and helped deliver double-digit annual growth. Paul and his team will play a critical role in strengthening our top line, improving profitability, and supporting sustainable, long-term value creation. With our internal transformation well underway, I would like to now turn to strategic partnerships, which is an area that is playing an increasingly important role in shaping Accuray Incorporated's future. A core principle of our transformation is focus. We are being very deliberate about where we invest our internal resources and where partnering allows us to move faster, scale more efficiently, and deliver greater value to our customers. Over the past several months, we have made meaningful progress aligning with partners that strengthen our execution today and fortify our long-term position as an innovative leader in radiation medicine. One of the most exciting areas of progress is how we are leveraging partnerships with the goal to convert one of Accuray Incorporated's most distinctive capabilities—real-time adaptation to patient and tumor motion during treatment—into a durable clinical evidence engine. Radiation medicine is entering an era where precision is increasingly defined not just by the treatment plan created in advance, but by what happens during treatment itself. Recent high-impact prostate SBRT data have reinforced that delivery-side factors, intrafractional motion management, can meaningfully impact outcomes. Accuray Incorporated's installed base gives us access to one of the largest repositories of real-world motion-tracked treatment data in the industry, spanning hundreds of thousands of treatment fractions across multiple disease sites. By pairing these insights with a multicenter registry sponsored by the Radiosurgery Society, we are working to define the clinical value of real-time correction, inform future product development, and help shape emerging standards of care. Importantly, this effort strengthens our differentiation, supports our product roadmap, and reinforces our focus on clinically meaningful innovation. Our new partnership strategy is built around creating an ecosystem of aligned partners that amplifies our strengths. We are building a constellation of strategic collaborations with many leading organizations, including the University of Wisconsin–Madison, Tata Consulting Services, as well as many others. Each brings distinct capabilities across imaging, software, workflow innovation, clinical research, treatment continuity, and operational execution. Together these partnerships allow us to deliver more comprehensive solutions to radiation medicine teams while improving speed to market and capital efficiency. This partnership-driven model is an important pillar of our transformation and a key component of how we intend to create enduring value for customers and shareholders alike. In addition to the momentum we are seeing across our transformation and partnerships, we are very excited about the upcoming European Society for Radiotherapy and Oncology conference in Stockholm later this month. ESTRO is an important global forum for radiation medicine and a key opportunity to engage directly with our customers. At ESTRO, we plan on highlighting a series of practical, customer-driven product enhancements and new partnerships that reinforce our commitment to clinical excellence, workflow efficiency, and continuous innovation. As I have said before, these are areas where we believe Accuray Incorporated can make the biggest difference for patients and where we can meaningfully differentiate ourselves in the market. In summary, while the external environment remains challenging, the transformative progress we are making across execution, innovation, and partnerships gives us confidence that we are building a stronger, more resilient Accuray Incorporated for the future. With that, I will hand it over to Ali to take you through our financial results and key financial metrics. Ali Pervaiz: Thanks, Stephen, and good afternoon, everyone. I would like to begin by thanking our global cross-functional teams for their continued dedication and hard work as we execute on our transformation plan. Turning to the third quarter results, net revenue for the quarter was $104.8 million, which was down 7% versus the prior year and down 10% on a constant currency basis. On a sequential basis, revenue increased 3%. Product revenue for the third quarter was $49.7 million, down 13% versus the prior year and down 15% on a constant currency basis, representing the majority of the year-over-year decline. Similar to earlier in fiscal 2026, most of this came as a result of ongoing macroeconomic headwinds in China and, more recently, geopolitical tensions in the Middle East. Service revenue for the third quarter was $55.1 million, down 1% from the prior year and down 5% on a constant currency basis. As a result of our global installed base and service network being negatively impacted by Middle East tensions, we had a $1.2 million negative impact to service revenue. The company's contract capture rate, defined as a percentage of active systems covered by a service agreement, continues to be at nearly 90% across our active installed base. As Stephen discussed, optimizing pricing to reflect our true clinical and economic value has been a key piece of our transformation plan. This includes a significant focus on pricing on service contract renewals. While the pricing secured in renewals spans over the next two to three years, we did experience $0.6 million of price favorability within service revenues in the third quarter. Product gross orders for the third quarter were approximately $49 million and represented a book-to-bill ratio of 1.0 in the quarter, with a trailing twelve-month ratio of 1.2. We ended the third quarter with a reported order backlog of approximately $356 million, defined to include only orders younger than thirty months. Our overall gross margin for the quarter was 24.1% compared to 27.9% in the prior year. This decline was primarily due to service margins, which were 26.1% compared to 33.3% in the prior year. Driving this decrease was higher net parts consumption of $3.2 million, which negatively impacted service gross margins by approximately 600 basis points. As we have mentioned in prior quarters, the timing of parts consumption can fluctuate quarterly depending on the volume and extent of service requirements. In the third quarter, our higher-than-anticipated service parts consumption also required higher-than-average logistics and duties costs. Additionally, tariffs adversely impacted service margins by $0.8 million, or 150 basis points. Product gross margins in the third quarter were 21.9% compared to 22.7% in the prior year. The year-over-year incremental cost from higher tariffs was $2.6 million, which adversely impacted product gross margins by approximately 530 basis points. Tariffs have been quite fluid recently, and although IEPA tariffs have been invalidated, we continue to monitor how the tariff landscape evolves over the near term and how that impacts our profitability and cash flow. Operating expenses in the third quarter were $34.4 million compared to $30.6 million in the third quarter of the prior fiscal year. The current-year third quarter includes $6.5 million of nonrecurring expenses, which includes severance costs and other costs directly related to our restructuring and transformation plans. Additionally, the prior-year third quarter benefited from a $3.2 million reversal of unrealized accrued compensation from fiscal 2025. Adjusting for these discrete items, third quarter fiscal 2026 operating expenses decreased $6 million, or 18%, versus prior year, which illustrates that the cost actions taken as part of our transformation have taken hold. As stated above, during the third quarter, we recognized $6.5 million of nonrecurring restructuring expenses. As our transformation plan progresses, we expect restructuring costs to sequentially decrease from these third quarter levels in future quarters, with a significant portion of the restructuring costs recognized by the end of the fiscal year. Operating loss for the quarter was $9.1 million compared to income of $1 million in the prior year. Adjusted EBITDA for the quarter was $3.8 million compared to $6 million in the prior year. We describe the reconciliation between GAAP net income and adjusted EBITDA in our earnings release issued today. Turning to the balance sheet, total cash, cash equivalents, and restricted cash as of quarter end amounted to $44.4 million compared to $47.9 million at the end of last quarter. The restricted cash related to required postings for cash flow hedging and tariffs amounted to $0.4 million in the current quarter as compared to $6.6 million at the end of last quarter. Net accounts receivable were $64.6 million, up $3.6 million from the prior quarter, largely due to higher sequential quarter revenue. Our net inventory balance was $156.6 million, up $5.7 million from the prior quarter. At the end of the third quarter, we had $5 million outstanding on our revolving credit facility. As Stephen noted earlier, we continue to execute our transformation strategy and remain ahead of plan to achieve the $12 million improvements we had originally forecasted. By the end of the third quarter, we had already realized approximately $10 million of these transformation-related improvements, which were largely achieved through workforce and discretionary spend reductions, as well as pricing realization. And with that, I would like to hand the call back to Stephen. Stephen LaNeve: Thank you, Ali. I remain excited about the opportunities ahead for Accuray Incorporated and continue to have strong conviction in the differentiation of our technology and the value it brings to customers and patients. We believe the impact of our strategic focus and the transformation plan we initiated will become increasingly evident over the coming quarters, with 2027 and 2028 financial performance expected to reflect the benefits of the actions we are taking today. As we look ahead, we believe our progress should be measured against a clear set of priorities. Number one, driving top-line growth with our product and service business lines through a focused commercial strategy. Number two, relentlessly executing on our transformation plan to improve gross margins and strengthen EBITDA through tighter cost management. And number three, prioritizing innovation grounded in voice of customer as part of our product and service development programs. We will now open the call for questions. I will turn the call back over to the operator for Q&A. Operator: We will now open the call for questions. The first question comes from Marie Thibault with BTIG. Please go ahead. Marie Thibault: Just wanted to ask about the decision to remove guidance. I know that the Iran war started after your last quarterly earnings call, but your prior commentary had pointed to a close understanding of timelines in these various regions. Why not just revise the guidance to remove some of those specific customers or those revenue installs in those regions? Why remove entirely? Stephen LaNeve: Thank you, Marie. This is Stephen. I appreciate the question, and obviously, we have spent a lot of time thinking through this very carefully. As we noted in our remarks earlier, the shipments to customers in the Middle East, North Africa, and Pakistan particularly have been delayed indefinitely due to these tensions, and that directly impacts both product revenue and all the associated service revenue. Just given the dynamic nature of these disruptions and the difficulty in predicting when these installations will resume, we collectively thought it was more appropriate to withdraw guidance. EMEA is the largest region for Accuray Incorporated, and within EMEA, the Middle East and North Africa are the fastest-growing subregions. Given the interdependencies that exist between other regions around the world, we felt this was the most prudent course of action. Marie Thibault: Okay. And then I know you are ahead of schedule on some of your cost-cutting efforts, but it looks like adjusted EBITDA came in well below what we were expecting and certainly does not really keep you on track for your prior outlook. I understand that has been removed. What is going on there? I think that excluded things like the restructuring charge. So what is going on there? And is there a way to see improving profitability despite some of this macro uncertainty? Ali Pervaiz: Hey, Marie, it is Ali. Thanks for the question. We are really excited about the fact that the transformation is moving along well, and we are ahead, just like you said. In terms of the savings, we have made a lot of progress to date. You heard about the workforce reductions and the reorganization that we have done. We have made a lot of progress in terms of overall cost and spend rationalization, and we will continue to execute on the transformation. The main pillars associated with the transformation relate to continuing to focus on our service business, making meaningful progress in our distributor partnership model, and focusing on optimizing pricing. All of those are going to take some time to come into play, and the timing of those is really hard to anticipate. We think we are still going to see a solid annualized benefit in fiscal year 2027. Marie Thibault: Thank you, Ali. You took my question out of my mouth. I was going to ask about the timing of some of those potential benefits. I will hop back in queue. Thank you. Stephen LaNeve: Thank you. Operator: This concludes our question and answer session. I would like to turn the conference back over to Accuray Incorporated's President and Chief Executive Officer, Stephen LaNeve, for any closing remarks. Stephen LaNeve: Thank you all for joining our call today, and we look forward to speaking with you again in the summer when we report our fiscal 2026 fourth quarter earnings results. This concludes our earnings call. Thank you again. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Accuray, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Accuray wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $473,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,204,650!* Now, it’s worth noting Stock Advisor’s total average return is 950% — a market-crushing outperformance compared to 203% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 6, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Accuray (ARAY) Q3 2026 Earnings Transcript was originally published by The Motley Fool

Q3 revenue $104.8M, down 7% year-over-year (down 10% constant-currency) and up 3% sequentially; management withdrew guidance due to indefinite shipment delays in the Middle East/North Africa/Pakistan and ongoing China/geopolitical headwinds. Margins and profitability were pressured — gross margin fell to 24.1% (service margin 26.1%) driven by $3.2M higher parts consumption, increased logistics/duties and tariffs, leading to an operating loss of $9.1M and adjusted EBITDA of $3.8M. Accuray is executing a Transformation Plan (including ~15% workforce reduction) that incurred $6.5M of restructuring charges this quarter but aims for about $25M of annualized operating improvements, with roughly $10M already realized and ~$12M targeted for fiscal 2026. Interested in Accuray Incorporated? Here are five stocks we like better. Accuray (NASDAQ:ARAY) reported fiscal third-quarter 2026 results marked by modest sequential revenue growth but pressure from geopolitical disruptions and ongoing headwinds in China, prompting the company to withdraw its financial guidance. Net revenue for the quarter ended March 31, 2026, was $104.8 million, down 7% year-over-year and up 3% sequentially, according to Chief Financial Officer Ali Pervaiz. On a constant-currency basis, revenue declined 10% from the prior year. → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries President and CEO Steve La Neve said the quarter was impacted by delayed product shipments “planned to certain customers in the Middle East, North Africa, and Pakistan” that were “delayed indefinitely due to increased geopolitical disruption in the Middle East,” which also weighed on service revenue in those regions. La Neve added that Accuray’s business in China continues to face headwinds tied to “geopolitical tensions and ongoing tariff uncertainty.” Pervaiz said product revenue was $49.7 million, down 13% year-over-year (down 15% on a constant-currency basis), representing “the majority of the year-over-year decline.” Service revenue was $55.1 million, down 1% year-over-year (down 5% on a constant-currency basis). → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Pervaiz attributed a $1.2 million negative impact to service revenue to Middle East tensions affecting the company’s “global install base and service network.” He also noted that Accuray’s contract capture rate—defined as the percentage of active systems covered by a service agreement—“continues to be at nearly 90% across our active install base.” As part of Accuray’s focus on pricing, Pervaiz said the company saw $0.6 million of “price favorability within service revenues” during the quarter, tied to service contract renewals, while noting renewal pricing impacts typically span two to three years. → Tyson Foods' Total Returns: Tasty Treats for Income Investors? Gross margin for the quarter was 24.1%, down from 27.9% in the prior-year quarter. Pervaiz said the decline was primarily driven by service margins, which fell to 26.1% from 33.3% a year earlier. He cited higher net parts consumption of $3.2 million, which reduced service gross margin by roughly 600 basis points. The higher service parts consumption also drove “higher than average logistics and duties costs,” Pervaiz said. In addition, tariffs adversely impacted service margins by $0.8 million, or 150 basis points. Product gross margin was 21.9% compared with 22.7% in the prior year. Pervaiz said higher tariffs increased year-over-year costs by $2.6 million, which reduced product gross margin by approximately 530 basis points. He added that while “IEPA tariffs have been invalidated,” the company continues to monitor how tariff conditions evolve and how they affect profitability and cash flow. La Neve reiterated that Accuray launched a strategic and operational Transformation Plan in mid-December intended to improve accountability, cost control, and execution. Actions taken included centralizing functions, outsourcing non-core activities, and reducing the workforce by approximately 15%, along with reallocating engineering resources toward higher-return programs. La Neve said these actions were designed to improve operating profitability by about $25 million on an annualized basis, with roughly $12 million expected to benefit fiscal 2026. “As of the end of the third quarter, we have already achieved approximately $10 million of those improvements,” he said, adding the company is “well on track to exceed the $12 million” target for fiscal 2026 and continues to believe “at least $25 million” should be realized in fiscal 2027. Pervaiz said operating expenses were $34.4 million, compared with $30.6 million in the prior-year quarter. The current quarter included $6.5 million of non-recurring restructuring expenses tied to the restructuring and transformation plans. He also noted the prior-year quarter included a $3.2 million reversal of unrealized accrued compensation from the first half of fiscal 2025. Adjusting for these discrete items, Pervaiz said operating expenses declined $6 million, or 18%, year-over-year, which he said “illustrates that the cost actions taken as part of our transformation have taken hold.” Operating loss was $9.1 million, compared with operating income of $1.1 million a year earlier. Adjusted EBITDA was $3.8 million, down from $6.0 million in the prior-year quarter. La Neve said the company withdrew guidance due to the difficulty of forecasting the impacts of the current geopolitical environment on both product and service revenue, citing “the conflict involving Iran and its ripple effects across the Middle East” as well as uncertainty in China. “Given such uncertainty, we believe the responsible approach is to withdraw our financial guidance at this time,” he said, adding the company plans to update investors when it reports fiscal fourth-quarter results. In the Q&A, BTIG’s Marie Thibault asked why the company chose to withdraw guidance rather than revise it to remove specific delayed customer installs. La Neve responded that the shipments to Middle East, North Africa, and Pakistan customers had been “delayed indefinitely,” affecting both product revenue and associated service revenue, and that “the dynamic nature of these disruptions” made it difficult to predict when installations will resume. He also noted that EMEA is Accuray’s largest region and that the Middle East and North Africa are its fastest-growing sub-regions within EMEA, adding that the company viewed withdrawing guidance as the “most prudent course of action.” On the balance sheet, Pervaiz said cash, cash equivalents, and restricted cash totaled $44.4 million at quarter end, down from $47.9 million at the end of the prior quarter. Net accounts receivable were $64.6 million, up $3.6 million sequentially, and net inventory was $156.6 million, up $5.7 million. The company ended the quarter with $5 million outstanding on its revolving credit facility. Looking ahead, La Neve said Accuray will focus on three priorities: driving top-line growth across product and service, executing the transformation plan to improve gross margins and EBITDA, and prioritizing innovation grounded in the voice of the customer. He said the company expects 2027 and 2028 performance to reflect benefits from actions being taken now. Accuray Incorporated (NASDAQ: ARAY) is a global medical device company that develops, manufactures and markets innovative radiation therapy solutions for the treatment of cancer. The company's flagship products include the CyberKnife® System, a robotic radiosurgery platform offering sub-millimeter precision, and the TomoTherapy® System, which combines helical computed tomography (CT) imaging with intensity-modulated radiation therapy (IMRT). More recently, Accuray introduced the Radixact® System, an advanced iteration of its TomoTherapy technology designed to enhance treatment speed and clinical workflow. Accuray's suite of products enables clinicians to deliver highly targeted radiation doses while minimizing exposure to surrounding healthy tissue. The article "Accuray Q3 Earnings Call Highlights" was originally published by MarketBeat.