Accuray Incorporated 2026 Q4 Earnings Call

Please go ahead, sir. Thank you, operator, and good afternoon, everyone.

Welcome to Accuray's conference call to review financial results for the fourth quarter of fiscal year 2026, which ended June 30, 2026. During our call this afternoon, management will review recent corporate developments. Joining us on today's call are Steve La Neve, 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 section of our website. With that, let me turn the call over to Steve La Neve.

Thank you, Steve. Good afternoon, and thank you for joining us. Fiscal 2026 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 2026 due to geopolitical uncertainty, tariff pressures, and regional market volatility, we remained 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, Accuray 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.

One 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 ESTRO 2026 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 reinforced the growing role of precision short-course radiotherapy across multiple disease sites. In prostate cancer, presentations from San Raffaele Scientific Institute, 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 is built on broader published evidence base that includes randomized phase III 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 recently introduced VitalHold system, were presented by CHR Metz-Thionville, 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, and 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 III 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 2026 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 five areas.

Number one, financial foundation. Number two, strategic partnerships and our ecosystem. Number three, differentiated technology. Number four, transformation phase 2. And number five, the FY 2027 outlook. Our financial foundation. Let me begin with what I believe is one 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 at more than 100% premium to where the common stock was trading immediately prior to the announcement, a $15 million cash investment in 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, and 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 Accuray's evolution and beyond. Strategic partnerships and our ecosystem. The second area I would like to discuss is partnerships and our expanding clinical ecosystem.

One of the key conclusions that emerged from our transformation work is that Accuray should devote its 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. Recently, we entered into non-binding letters of intent with Samsung HME America and RaySearch 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 a 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, and 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 one-time effort.

We view 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 three areas of differentiated technology. First is motion management. Synchrony remains one 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.