Poor Q2 results prompt Accuray restructuring

Radiation oncology firm Accuray is projecting a decline in product revenue of between 45% and 50% in the second quarter of fiscal 2013 (end-December 31, 2012), prompting the company to lay off some employees.

The company's preliminary financial report estimated that consolidated revenues under generally accepted accounting principles (GAAP) will be in the range of $72 million to $75 million, compared with total GAAP revenue of $106.4 million in the second quarter of fiscal 2012.

Service revenue, however, posted an increase of approximately 14% in the second fiscal quarter, compared with the same quarter of fiscal 2012.

Accuray anticipated a net loss on a non-GAAP basis of $25 million to $30 million in the second fiscal quarter of 2013.

Because of the results, the company plans to restructure operations to enhance revenue and profitability by developing a cost structure to reallocate resources to commercial sales and marketing and enhance business processes to support revenue growth.

The restructuring is expected to reduce staff by approximately 13%, with most layoffs occurring in the U.S.

Accuray expects to take a nonrecurring charge of $3 million to $4 million in the third quarter of fiscal 2013 for the restructuring. The move could save the company approximately $40 million per year in annual operating expenses compared to fiscal 2012, with initial benefits on the book for the fourth quarter of fiscal 2013.

Accuray projects fiscal 2013 revenues on a non-GAAP basis of $320 million to $330 million, with a net loss in the range of $63 million to $69 million for fiscal 2013.

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