www.accuray.com
2 0 2 5 A N N U A L R E P O R T
Certainty
Matters.
SENIOR MANAGEMENT
Suzanne Winter
President, Chief Executive Officer and Director
Ali Pervaiz
Senior Vice President, Chief Financial Officer
Sandeep Chalke
Senior Vice President, Chief Commercial Officer
Leonel Peralta
Senior Vice President, Chief Operations Officer
Jim Dennison
Senior Vice President, Chief Quality and
Development Officer
Seth Blacksburg, M.D., MBA
Senior Vice President, Chief Medical Officer
Todd. M. Brown
Senior Vice President, Global Commercial
Operations and Service
John M. Dunn
Senior Vice President, Chief Information
and Security Officer
Melanie Rivers
Senior Vice President, Chief Human Resources Officer
Mu Young Lee
Senior Vice President, Research
and Product Development
BOARD OF DIRECTORS*
Joseph E. Whitters
Chairperson of the Board
Audit Committee and Nominating and
Corporate Governance Committee Member
James M. Hindman
Chairperson of the Audit Committee
Nominating and Corporate Governance
Committee Member
Beverly A. Huss
Chairperson of the Compensation
Committee
Science and Technology
Committee Member
Robert C. Kill
Compensation Committee Member
Anne B. Le Grand
Chairperson of the Science and
Technology Committee
Steven F. Mayer
Compensation Committee Member
Mika Nishimura
Chairperson of the Nominating and
Corporate Governance Committee
Audit Committee Member
Byron C. Scott, M.D.
Compensation Committee and Science
and Technology Committee Member
Suzanne Winter
Corporate Headquarters • Madison, WI
* Full director biographies are contained under the headings “Director Nominees” and “Continuing Directors” in the Company’s fiscal 2025 proxy statement, which is incorporated
into this Annual Report.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2025
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-33301
ACCURAY INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE
20-8370041
(State or Other Jurisdiction of
Incorporation or organization)
(I.R.S. Employer
Identification No.)
1240 Deming Way
Madison, Wisconsin 53717
(Address of Principal Executive Offices) (Zip Code)
Registrants’ telephone number, including area code: (608) 824-2800
Securities registered pursuant to section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share
ARAY
The Nasdaq Stock Market LLC
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based on the last sale price for such stock on December 31, 2024,
the last business day of the registrant’s most recently completed second fiscal quarter was: $146,769,044. Shares of the registrant’s common stock held by each executive
officer, director and 5% stockholder have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
As of August 22, 2025, the number of outstanding shares of the registrant’s common stock, $0.001 par value, was 112,677,147.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Registrant’s 2025 Annual Meeting of stockholders to be filed within 120 days of our fiscal year end (the “2025 Proxy
Statement”) are incorporated by reference in Part III of this Form 10-K.
ACCURAY INCORPORATED
YEAR ENDED JUNE 30, 2025
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
Page No.
PART I
Item 1.
Business.....................................................................................................................................................
4
Item 1A.
Risk Factors...............................................................................................................................................
27
Item 1B.
Unresolved Staff Comments .....................................................................................................................
66
Item 1C.
Cybersecurity ............................................................................................................................................
66
Item 2.
Properties...................................................................................................................................................
68
Item 3.
Legal Proceedings .....................................................................................................................................
68
Item 4.
Mine Safety Disclosures ...........................................................................................................................
68
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities...................................................................................................................................................
69
Item 6.
[RESERVED] ...........................................................................................................................................
69
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations...................
69
Item 7A.
Quantitative and Qualitative Disclosure About Market Risk ...................................................................
80
Item 8.
Financial Statements and Supplementary Data.........................................................................................
82
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................
125
Item 9A.
Controls and Procedures ...........................................................................................................................
125
Item 9B.
Other Information......................................................................................................................................
126
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections......................................................
126
PART III
Item 10.
Directors, Executive Officers and Corporate Governance........................................................................
128
Item 11.
Executive Compensation...........................................................................................................................
128
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
128
Item 13.
Certain Relationships and Related Transactions, and Director Independence..........................................
128
Item 14.
Principal Accountant Fees and Services ...................................................................................................
128
PART IV
Item 15.
Exhibits and Financial Statement Schedules.............................................................................................
129
Item 16.
Form 10-K Summary ................................................................................................................................
132
Signatures..................................................................................................................................................
133
We own or have rights to various trademarks and tradenames used in our business in the United States or other countries,
including the following: Accuray®, Accuray Logo®, CyberKnife®, Hi-Art®, RoboCouch®, Synchrony®, TomoTherapy®,
Xsight®, Accuray Precision®, AutoSegmentation™, CTrue™, H™ Series, iDMS®, InCise™, Iris™, CyberKnife M6™ Series,
Accuray OIS Connect™, PreciseART®, PreciseRTX®, Treatment Planning System™, TomoDirect™, TomoEDGE™,
TomoH®, TomoHD®, TomoHDA™, TomoHelical™, TomoTherapy Quality Assurance™, Radixact®, Onrad ™, S7™,
Accuray Helix™, CyberComm™, AEX®, ClearRT® , XChange®, and VoLO™.
[This page intentionally left blank]
3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not
limited to, statements regarding expectations and beliefs regarding the effect of macroeconomic conditions, inflation and
changes in government administration policy positions as a result of the current presidential administration on our
operations and financial results as well as the markets and industry in general; future revenues and expenses, including our
expectations regarding timing of recognition of revenue from performance obligations and our expectations regarding the
impact of supply chain issues; our sales, distribution and marketing efforts; reimbursement rates and its effects on our
business; regulatory requirements, including our compliance with applicable regulations; future orders and expectations
regarding our book-to-bill ratio; the radiation therapy market; expectations regarding the economic impact of cancer; our
strategy; our products and offerings, including their capabilities and benefits and anticipated benefits to patients and
physicians; the factors that contribute to the long-term success of our products; our suppliers and manufacturing facilities;
our intellectual property rights; the expected impact of changes in laws and regulations, including regulatory and tax laws;
our expectations regarding litigation matters; our expectations regarding future capital requirements; our expectations
regarding our liquidity and capital resources; our earnings or other financial results; our expectations regarding new
products and features; our expectations regarding our joint venture with CNNC High Energy Equipment (Tianjin) Co., Ltd;
our expectations regarding our debt, including our outstanding convertible notes, credit facility and warrants to purchase
shares of our common stock; our expectations regarding the effects of foreign currency fluctuations; and other statements
using words such as “anticipates,” “believes,” “can,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,”
“plans,” “projects,” “seek,” “should,” “will” and “would,” and words of similar import and the negatives thereof. Accuray
Incorporated (“we,” “our,” or the “Company”) has based these forward-looking statements largely on our current
expectations and projections about future events and financial trends affecting the financial condition of our business. Such
forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and
the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be
accurate indications of the times at, or by, which such performance or results will be achieved. Factors that could contribute
to such differences include, but are not limited to, those discussed under “Risk Factors” in Part I, Item 1A of this report.
These forward-looking statements speak only as of the date of this Annual Report on Form 10-K and are subject to business
and economic risks. We undertake no obligation to update or revise any forward-looking statements to reflect any event or
circumstance that arises after the date of this report except as required by applicable law.
4
PART I
Item 1. BUSINESS
The Company
Accuray Incorporated is a radiation therapy company that develops, manufactures, sells and supports market-changing
solutions that are designed to deliver radiation treatments for even the most complex cases, while making commonly treatable
cases even more straightforward, to meet the full spectrum of patient needs. We believe in comparison to conventional linear
accelerators, our treatment delivery, planning, and data management solutions provide better accuracy, flexibility, and
control; fewer treatments with shorter treatment times; and the technology to expand beyond cancer, making it easier for
clinical teams around the world to provide treatments that help patients get back to living their lives, faster.
Our solutions are designed to advance patient care: during each individual treatment, throughout the treatment process,
and at each stage of the cancer treatment journey, from curative to palliative treatments. Our solutions include:
•
Novel artificial intelligence (“AI”) driven radiation therapy systems that automatically adapt treatment delivery for
targets that move, synchronizing the radiation beam with the target’s motion in real-time throughout treatment delivery.
•
Powerful treatment planning software that reduces the time to create high quality treatment plans and the time it takes to
deliver patient treatments as compared to the prior planning software, so clinicians can treat more patients each day.
•
One-of-a-kind imaging solution designed to produce exceptional diagnostic-like quality CT images, quickly and cost-
effectively.
•
Automated tools that help to identify the interfraction changes for which re-planning is clinically beneficial and facilitate
adaptation of the radiation dose to precisely conform to the patient’s tumor.
•
Distinctive software that accelerates and automates the re-planning process to make re-treatment of a previously
irradiated area more efficient for practices and more effective for patients.
•
Advanced architecture that accommodates third party surface guidance interfaces to support effective positioning of the
patient and monitoring of the accuracy of that positioning throughout treatment, and enable deep inspiration breath hold
(“DIBH”) for highly accurate and precise breast cancer treatments.
Our innovative technologies, the CyberKnife and TomoTherapy platforms, including the Radixact System, our next
generation TomoTherapy platform, are designed to deliver advanced treatments, including stereotactic radiosurgery (“SRS”),
stereotactic body radiation therapy (“SBRT”), intensity modulated radiation therapy (“IMRT”), image-guided radiation
therapy (“IGRT”), and adaptive radiation therapy (“ART”). The CyberKnife and TomoTherapy platforms have
complementary clinical applications with the same goal: to empower our customers to deliver the most precise and accurate
treatments while still minimizing dose to healthy tissue, helping to reduce the risk of side effects that may impact patients’
quality of life. Each of these systems serve patient populations treated by the same medical specialty, radiation oncology,
with advanced capabilities. The CyberKnife platform is also used by neurosurgeons specializing in radiosurgery to treat
patients with tumors in the brain and spine, and neurologic and/or endocrine disorders. In addition to these products, we also
provide services, which include post-contract customer support (warranty period services and post-warranty services),
installation services, training, and other professional services.
We were incorporated in California in 1990 and commenced operations in 1992. We reincorporated in Delaware in 2007.
Our principal offices in the United States are located in Madison, Wisconsin and Santa Clara, California.
Our Strategy
Our goal is to develop equipment and technology that enable physicians to deliver precise and accurate, customized,
leading-edge treatments that help patients with cancerous or benign tumors, or neurologic or endocrine disorders, get back to
living their lives, faster. We endeavor to achieve this goal by expanding the clinical options for healthcare providers, helping
5
them offer the best radiation treatment for each patient tailored to their specific needs. Our vision is to expand the curative
power of radiation therapy to improve as many lives as possible. We believe our current technologies and our future
innovations can help to achieve this. Some of the key elements of our strategy include the following:
Increase physician adoption and patient awareness to drive utilization. We are continually working to increase adoption
and awareness of our systems and demonstrate their advantages over other treatment methods, including more conventional
approaches. We hold and sponsor symposia and educational meetings and support clinical studies to demonstrate the clinical
benefits of our systems. We regularly meet with clinicians to educate them on the expanded versatility that our systems offer
in comparison to more traditional radiation therapy products or surgery. We are continuously expanding our digital and social
presence to reach and educate a broader audience of physicians and patients. To support awareness of all our product
offerings, we assist our customers with increasing patient awareness in their communities by providing them with tools to
develop marketing and educational campaigns.
Continue to expand the radiosurgery market. The CyberKnife System is a robotic radiosurgery system capable of
treating tumors throughout the body. There is an extensive body of published literature supporting the use of the CyberKnife
System in the treatment of various targets, including cancers, benign tumors, or functional diseases. Radiosurgery is a
commonly used procedure among neurosurgeons, specializing in radiosurgery, who require the high level of precision found
with surgery, yet want to offer their brain tumor patients a non-invasive option. With more than 30 years of clinical evidence,
the CyberKnife System offers distinct advantages in the treatment of diseases in the head, base of the skull, and spine. These
areas of the body require extremely accurate treatment because of the proximity of the tumors to critical radiosensitive
structures that may impact a person’s ability to perform basic functions and to think, see, hear, walk and breathe.
Continue to innovate through clinical development and collaboration. The clinical success of our products is largely the
result of the collaborative partnerships we have developed over the last decade with clinicians, researchers and patients. We
proactively seek out and rely on constructive feedback from system users to learn what is needed to enhance the technology.
As a result of this collaborative process, we continually refine and upgrade our systems, thereby improving our competitive
position in the radiation therapy and radiosurgery markets. Upgrades to our systems are designed to address customer needs
in the areas of improving the ease of use and accuracy of treatment, decreasing treatment times, and improving utilization for
specific types of tumors.
Expand sales in international markets. We intend to continue to increase our sales and distribution capabilities outside of
the United States to take advantage of the large international opportunity for our products. Outside of the United States, we
currently have regional offices in Morges, Switzerland, Hong Kong, China, Shanghai, China and Tokyo, Japan and direct
sales staff in most countries in Western Europe, Japan, India and Canada, combined with distributors in Europe, Russia, the
Middle East, Africa, the Asia Pacific region, and Latin America. Many of the countries in these regions are not highly
developed at this time and therefore sales opportunities may be limited. We intend to increase our international revenue by
focused additions of direct sales personnel in targeted areas to further penetrate our most promising international markets,
and additional distributors, strategic partnerships, or joint ventures where opportune. In addition, we recently introduced
Accuray Helix, a CT-guided helical radiotherapy system, to help address gaps in patient access to radiation medicine. The
Helix system combines affordability with automation and tools for enhancing the speed of planning and delivery of radiation.
Strategic partnerships and joint ventures. We intend to pursue strategic partnerships and joint ventures we believe will
allow us to complement our growth strategy, increase sales in our current markets and expand into adjacent markets, broaden
our technology and intellectual property, and strengthen our relationships with our customers.
•
In fiscal 2016, we signed an agreement with RaySearch Laboratories AB, which led to the integration of
treatment planning support for the TomoTherapy, Radixact and CyberKnife Systems in the RayStation Treatment
Planning System (“TPS”) as well as interface to the RayCare Oncology Information System (“OIS”). In fiscal
2017, we signed an agreement with Photo Diagnostic Systems, Incorporated to enhance image quality of our
TomoTherapy System through an enhanced image reconstruction software.
•
In fiscal 2019, our wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement
with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of
China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (TianJin) Medical Technology
Co. Ltd. (the “JV”), to manufacture and sell radiation oncology systems in China.
6
•
In fiscal 2021, we announced a collaboration with Brainlab to enhance and expand the CyberKnife platform’s
capabilities for the neuro-radiosurgery market.
•
In fiscal 2022, we entered into an agreement with C-RAD to provide customers with a solution to enable surface
guided radiation therapy (“SGRT”) and DIBH using the C-RAD Catalyst+ HD and Radixact System.
Additionally, we entered into an agreement with Limbus AI (now Radformation) to augment our adaptive
radiotherapy capabilities by leveraging Limbus’ AI-driven autocontouring algorithms.
•
In fiscal 2023, we announced a global, commercial partnership with GE Healthcare, intended to enable both
companies to advance personalized cancer care and offer solutions throughout the care pathway from precision
diagnostics, precision treatment planning and delivery to precision monitoring post-treatment.
•
In fiscal 2024, we announced a collaboration agreement with Oncopole Claudius Regaud (IUCT-Oncopole) in
France, and Airbus SAS, a leader in the aerospace industry, to develop an AI-driven solution for predicting
radiotherapy system performance. We also announced an agreement with TrueNorth Medical Physics LLC to
provide radiation oncology departments with third-party support services that are complementary and
supplementary to those already supplied by us.
Our Products
From oncology to radiosurgery and beyond, our solutions enable clinicians to deliver shorter, more personalized, and
more effective treatments. Our suite of radiation delivery devices includes the CyberKnife System and our next generation
TomoTherapy platform-based solutions, including the Radixact System. In addition, our portfolio includes comprehensive
software solutions to enable and enhance the precise and efficient radiotherapy treatments with our advanced delivery
systems.
Robotic Radiation Delivery Solutions
The CyberKnife platform is the only robotic, full-body SRS and SBRT delivery device on the market. The latest
generation is the CyberKnife S7 System, which combines speed, advanced precision, and real-time AI-driven motion
tracking and synchronized treatment delivery for all SRS and SBRT treatments, in as little as 15 minutes. The platform is
designed to treat cancerous and benign tumors throughout the body, as well as neurologic and endocrine disorders. The use of
SRS and SBRT with the CyberKnife platform to treat tumors throughout the body has grown significantly in recent years.
SRS and SBRT are performed on an outpatient basis in a limited number of treatment sessions - typically 1-5 fractions. They
enable the treatment of patients who might not otherwise be treated with radiation, who may not be good candidates for
surgery, or who desire a non-surgical treatment option.
The CyberKnife S7 System is available for sale in most major markets globally. The system includes disease-specific
tracking and treatment delivery solutions for brain, spine, lung and prostate tumors, improvements in treatment speed as
compared to earlier systems, more options to configure the treatment room, and expanded number of nodes leading to more
coverage and minimizing the dose to healthy tissue. The CyberKnife S7 System comes in a variety of radiation oncology
suited configurations, with the option of fixed collimators plus the Iris Variable Aperture Collimator and/or InCise multi-leaf
collimators (“MLC”). With the addition of the InCise MLC, the CyberKnife S7 System is designed to enable the treatment of
larger tumors that were previously thought untreatable with radiosurgery and SBRT. The InCise MLC and IMRT planning
tools are designed to enable expansion of indications that can be treated with a CyberKnife platform to include many IMRT
indications.
In addition, we also offer a specific configuration for the neuro-radiosurgery space. The CyberKnife S7 F System is
designed to deliver radiosurgery treatments to central nervous system tumors and lesions with sub-millimeter accuracy. It
offers precise, frameless, and non-invasive radiosurgery, with features for real-time correction of positional and anatomical
changes, and fixed collimators to shape and direct the radiation beam when treating small targets. The system can deliver
plans using the Brainlab Elements software to enhance the target definition for radiosurgery treatments for functional
neurological indications such as essential tremor, Parkinson’s, and epilepsy. Brainlab Elements software augments the
capabilities of the Accuray Precision® Treatment Planning System for contouring, fusion and correction.
Using our Synchrony real-time target tracking with dynamic delivery technology and computer controlled robotic
mobility, the CyberKnife platform is designed to deliver radiation from a wide array of beam angles and autonomously track,
7
detect and correct for even the slightest tumor and patient movement in real-time throughout the entire treatment. This design
is intended to enable the CyberKnife platform to deliver high-dose radiation with sub-millimeter precision and accuracy,
which minimizes damage to surrounding healthy tissue and eliminates the need for invasive head or body immobilization
frames.
The Accuray Precision TPS with the VOLO Optimizer software on the CyberKnife S7 System enables customers to
significantly improve operational efficiency by reducing both the time to create high quality treatment plans and the time it
takes to deliver patient treatments. The next-generation TPS with the VOLO Optimizer facilitates the development of
clinically optimal treatment plans up to an estimated 90 percent faster than before and the delivery of the treatment up to an
estimated 50 percent faster than before the availability of this software.
We believe that our robotic delivery systems offer clinicians and patients the following benefits:
The only truly robotic system in the market. The CyberKnife platform features a compact linear accelerator mounted on a
highly maneuverable robotic arm that moves around the resting patient while delivering isocentric or non-isocentric, non-
coplanar treatment radiation beams from potentially thousands of unique angles, tailoring radiation delivery to minimize the
dose to healthy tissue, while maintaining sub-millimeter accuracy and precision even for targets that move during treatment.
We believe the CyberKnife platform is the clinical solution to choose when accuracy, flexibility, speed, and patient comfort
are essential.
Treatment of inoperable or surgically complex tumors. The CyberKnife platform may be used to target tumors that
cannot be easily treated with traditional surgical techniques because of their location, number, size, shape or proximity to
vital tissues or organs, or because of the age or health of the patient. The CyberKnife platform’s intelligent robotics enable
the precise targeting of a tumor, while at the same time minimizing damage to surrounding healthy tissue.
Treatment of tumors throughout the body. The CyberKnife platform has been cleared by the Food and Drug
Administration (“FDA”) to provide treatment planning and image-guided radiation therapy treatment for tumors anywhere in
the body where radiation treatment is indicated. By comparison, traditional frame-based radiosurgery systems are generally
limited to treating brain tumors with some using cobalt 60 radioactive material, which decays over time and is difficult and
expensive to replace. The CyberKnife platform is being used for the treatment of primary and metastatic tumors outside the
brain, including tumors on or near the spine and in the breast, kidney, liver, lung, pancreas and prostate, in addition to tumors
in the brain, with the same sub-millimeter accuracy in every disease site.
Real-time tracking of tumor movement. The CyberKnife platform is designed to accommodate all forms of patient and
tumor motion, even while the treatment is being delivered. With the Accuray-exclusive Synchrony AI-driven tumor tracking
with dynamic delivery technology, the CyberKnife platform enables smaller treatment margins around the tumor, minimizing
the amount of healthy tissue exposed to high-dose radiation.
Significant patient benefits. The CyberKnife platform is designed to maximize patient comfort. Patients may be treated
with the CyberKnife platform on an outpatient basis without anesthesia and without the risks and complications inherent in
traditional surgery. Patients do not require substantial pretreatment preparation, and typically there is little to no recovery
time or hospital stay associated with CyberKnife platform’s treatments. In addition, the CyberKnife platform eliminates the
need for an invasive rigid frame to be screwed into the patient’s skull or affixed to other parts of the body, or gating
instruments.
Additional revenue generation through increased patient volumes. We believe clinical use of the CyberKnife platform
allows our customers to effectively treat patients where extreme precision and ability to account for motion are important,
and patients who otherwise would not have been treated with radiation or who may not have been good candidates for
surgery.
Upgradeable modular design. The CyberKnife platform has a modular design that facilitates the implementation of
upgrades that often do not require our customers to purchase an entirely new system to gain the benefits of new features. We
continue to work to develop and offer new clinical capabilities enhancing ease of use, reducing treatment times, improving
accuracy and improving patient access. The main components and options of the CyberKnife platform include compact
8
X-band linear accelerator; robotic manipulator arm, real-time image-guidance system with continuous target tracking and
correction.
Key features of the main components include:
Compact X-band linear accelerator. The CyberKnife S7 System utilizes a compact X-band linear accelerator (linac)
mounted on a robotic manipulator arm. The side-coupled-cavity radiofrequency standing wave linac is fitted with a triode
electron gun, demountable target, and demountable radiofrequency window.
Robotic manipulator arm. The robotic manipulator arm, with six-degrees-of-freedom range of movement, is designed to
move around the patient to position the linac and direct the radiation with an extremely high level of precision and
repeatability. The manipulator arm provides what we believe to be a unique method of positioning the linac to deliver doses
of radiation from nearly any direction and position, without the limitations inherent in gantry-based systems, creating a
non-isocentric composite dose pattern with a high level of conformance to the shape of each treated tumor. This flexibility
enhances the ability to diversify beam trajectories and beam entrance and exit points, helping to minimize risks of radiation
damage to healthy cells near the tumor. Furthermore, the rapid response time of the manipulator arm allows tracking of
tumors that are prone to movement.
Realtime image guidance system with continuous target tracking and correction. Without the need for clinician
intervention or treatment interruption, Synchrony is designed to enable continuous monitoring and correction for patient and
tumor movements throughout each treatment as it is being delivered. Our patented image guidance technology correlates low
dose, real time treatment X-rays with images previously taken with a CT scan of the tumor and surrounding tissue to direct
each beam of radiation with increased precision versus treatments without this real time feedback. This, in turn, enables
delivery of a highly conformal, non-isocentric dose of radiation to the tumor, minimizing radiation delivered to surrounding
healthy tissue. Synchrony is the only technology that uses AI, through image guidance, to automatically adapt and
synchronize the treatment delivery beam position to the target location precisely and accurately during the delivery of a
treatment fraction. The beams of radiation are delivered continuously throughout the treatment session as the patient behaves
naturally. The Synchrony technology provides what we believe is unsurpassed clinical accuracy for lung tumors that move
with respiration without the need for implanted fiducials. It makes it possible and practical for clinicians to deliver radiation
dose with sub-millimeter precision and accuracy, even for tumors that are prone to movement.
Imaging sources. The low energy X-ray sources generate the images that help determine the location of bony or other
anatomic landmarks, or implanted fiducials, which are used for tracking throughout the entire treatment.
Imaging detectors. The image detectors capture high resolution anatomical images throughout the treatment. These live
images are continually compared to the patient’s CT scan to determine real time patient positioning. Based on this
information, the robotic manipulator automatically corrects for detected movements.
In addition to the main components listed above, we also offer the following components and options: Lung Optimized
Treatment; Synchrony Fiducial Tracking with the InTempo Imaging System; RoboCouch Patient Positioning System;
Xchange Robotic Collimator Changer; Iris Variable Aperture Collimator; and the InCise MLC. Key features of some of these
components are as follows:
Synchrony Skull, Spine and Lung Tracking Systems. The Synchrony Skull, Spine and Lung Tracking Systems allow for
tracking of tumors without the need for implanted markers in the skull, spine and the lung.
Lung Optimized Treatment. An integrated suite of tools that provides a complete fiducial free clinical solution for lung
cancer patients and optimizes noninvasive lung SBRT treatments.
InTempo Imaging System. The InTempo Imaging System with the Synchrony Fiducial Tracking System is designed to
optimize imaging frequency during prostate treatments, for example, using time-based image guidance to assist with tracking
and correcting non-predictable intrafraction target motion.
Iris Variable Aperture Collimator. The Iris Variable Aperture Collimator enables delivery of beams in 12 unique sizes
with a single collimator, which significantly reduces treatment times and the total radiation dose delivered to the patient.
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Fixed Collimators. The Fixed Collimators enables delivery of beams in 12 unique sizes with 12 different collimators,
usually used for radiosurgery.
InCise Multileaf Collimator. The InCise MLC is designed to deliver the same precise SRS and SBRT treatments
clinicians expect from the CyberKnife platform, while significantly reducing treatment times. With the InCise MLC, the
CyberKnife S7 Series can be used to treat larger and irregular tumors more efficiently.
The long-term success of the CyberKnife platform is dependent on a number of factors including the following:
•
Continued adoption of our CyberKnife platform, including the CyberKnife M6 System and CyberKnife S7
System, in markets where they are available;
•
Greater awareness among doctors and patients of the benefits of radiosurgery delivered with the CyberKnife
platform, including its robotic architecture and Synchrony technology and VOLO optimizer;
•
Continued evolution in clinical studies demonstrating the safety, efficacy and other benefits of using the
CyberKnife platform to treat tumors in various parts of the body;
•
Change in medical practice leading to utilization of stereotactic body radiation therapy more regularly as an
alternative to surgery or other treatments;
•
Continued advances in our technology that improve the quality of treatments and ease of use of the CyberKnife
platform;
•
Receipt of regulatory approvals in various countries which are expected to improve access to radiosurgery with
the CyberKnife S7 System in such countries;
•
Medical insurance reimbursement policies that cover CyberKnife platform treatments; and
•
Our ability to expand sales of CyberKnife M6 and S7 Systems in countries throughout the world where we do
not currently sell or have not historically sold a significant number of any CyberKnife platform configurations.
Helical Radiation Delivery Solutions
Through the TomoTherapy platform, we were the first to introduce helical radiation therapy, revolutionizing the way
radiation is delivered. Helical radiation therapy is a type of treatment that integrates the linear accelerator and CT imaging
technology to deliver radiation from multiple 360-degree rotations around the patient while the patient table moves through
center of the system. Helical radiation therapy helps to provide greater control of the radiation dose so it conforms precisely
to the tumor and helps minimize dose to healthy tissue.
Since the introduction of the TomoTherapy platform, Accuray has built on its legacy with the introduction of innovative
solutions including the Radixact, Accuray Helix and Tomo C Systems, each tailored to meet the evolving needs of global
markets.
The Radixact System is the next generation TomoTherapy platform. The system allows for fully integrated radiation
treatment planning, delivery and data management, enabling clinicians to deliver ultra-precise treatments to more than 50
patients per day. Additionally, the system offers two treatment delivery modes - TomoHelical™ and TomoDirect™ -
providing flexibility in the types of indications that can be treated with radiation - from the simplest to the most complex
cases, multiple tumors and recurrent tumors.
Accuray Helix™ combines affordability with automation and tools for enhancing the speed of planning and delivery of
radiation. The system is designed to provide a broad range of capabilities to increase flexibility and versatility for facilities
that may have resources and staffing for only one system, enabling them to offer state-of-the-art cancer care in their
communities.
The new, made in China Tomo® C System, is the first CNNC-Accuray joint venture product. A fast and effective radiation
delivery device, the system will enable more medical care teams within China to provide personalized and highly precise
treatments to more people each day.
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We believe that our helical delivery systems offer clinicians and patients the following benefits:
Versatile treatment capabilities. The ring gantry architecture enables precise and efficient treatments with a high degree
of dose conformity. The high-speed binary MLC is integrated with the linac and consists of 64 individual low leakage
tungsten leaves that move across the beam to either block or allow the passage of radiation, effectively modulating and
shaping the beam as it is emitted. The combination of the ring gantry and the high-speed MLC enable treatment to be
delivered continuously in a 360-degree helical pattern around the patient’s body (which we refer to as TomoHelical).
Additionally, the TomoDirect feature provides the TomoTherapy platform with added versatility, enabling the delivery of
high quality, fixed angle beams for those cases suited to simple fixed angle radiation delivery. All TomoTherapy platform
systems enable an operator to provide non-isocentric 3D conformal radiotherapy (“3D CRT”), IG-IMRT, or stereotactic
treatments within a typical cylindrical volume of 40 centimeters in diameter and up to 135 centimeters in length. This
expansive treatment field allows single or multiple tumors, located anywhere in body, to be treated in a single session. The
TomoTherapy platform’s versatility, efficiency and precision offer clinicians an extensive range of effective treatment
possibilities.
Diagnostic-like quality kVCT images enable better visualization of tumors, dose verification and re-planning. We
launched ClearRT™ helical kVCT imaging technology for the Radixact System, and have also made this advanced imaging
available on the Accuray Helix and Tomo C systems. ClearRT helical kVCT enables high-fidelity imaging, providing
clinicians with an option to produce exceptional diagnostic-like quality CT images, quickly and cost-effectively, to improve
patient care. ClearRT imaging brings low dose diagnostic-like kVCT imaging quality, the largest imaging field of view
available on a radiation delivery system at 50 cm (diameter) by 135 cm (long), and speed, as evidenced by its ability to
capture a 1-meter image in only 1 minute. ClearRT delivers enhanced imaging capabilities compared to conventional linear
accelerator systems that rely on cone-beam CT (“CBCT”) imaging, and as an alternative to MR-based radiation therapy
systems that can be complex and cost prohibitive to use. ClearRT offers excellent uniformity and low noise across the entire
image, improved soft tissue visualization while maintaining exceptional spatial resolution, which is intended to enhance the
versatility and efficiency of the Radixact System in the radiation therapy department. ClearRT helical kVCT images are also
available within the Accuray PreciseART® automated dose trending tool for clinicians to evaluate if plan adaptation would be
beneficial, enabling the most personalized patient care.
Integrated treatment system for precise radiation delivery. We believe the integration of our proprietary imaging
technology, treatment planning and helical radiation delivery mode enables highly accurate and precise radiation therapy. Our
planning software allows clinicians to establish the contours of a tumor and any normal radio-sensitive structures in close
proximity to the treatment beam. The TomoTherapy platform uses an intelligent dose optimization algorithm to ensure the
radiation beam conforms to the patient’s tumor and minimizes exposure to surrounding healthy tissue structures, providing a
highly targeted and effective dose distribution. These features significantly benefit patients by increasing the radiation
delivered to cancerous tissues, while minimizing damage to nearby healthy tissues, thus also minimizing side effects.
Enhancing efficiency and quality of treatment planning and delivery. We are committed to providing clinical teams with
technologies that improve both the efficiency and quality of radiation therapy planning. Our goal is to streamline workflows
while maintaining the precision and consistency essential to modern oncology. VOLO™ Ultra, our next-generation
optimization engine, supports this by dramatically accelerating treatment planning without compromising accuracy—
enabling faster plan generation, improved throughput, and greater support for adaptive and personalized radiotherapy.
Efficient clinical workflow for Image-Guided Radiation Therapy and adaptive radiation therapy. The TomoTherapy
platform integrates into a single system all of the key elements for radiation therapy, including treatment planning, CT image-
guided patient positioning, treatment delivery, quality assurance and adaptive planning. The imaging and treatment planning
capabilities of many traditional systems are more modular or require cumbersome add-ons or separate treatment planning
systems that result in clinicians taking more steps between scanning, planning and treatment of patients. Conversely, the
integrated imaging and treatment features allow clinicians to scan, plan and treat cancer patients efficiently. Treatment plans
as well as daily images can be easily accessed remotely, enabling clinical teams to collaboratively work together, regardless
of location, ensuring higher quality plan development and delivery.
Low barriers to installation and implementation. All external beam radiation systems must be housed in rooms that have
special radiation shielding to capture any radiation not absorbed by the patient. The TomoTherapy platform’s size and
self-contained design allow customers to retrofit them into existing treatment rooms previously used for legacy radiation
therapy systems and avoid, or reduce, the significant construction costs that can be associated with building new, larger
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treatment rooms, which are often required of other radiation therapy systems. With both imaging and radiation delivery
capabilities integrated on a ring gantry, the systems require less space than other linac systems, which use large moving arms
to position the linac or incorporate adjacent imaging equipment used for treatment planning. In addition, because the
Radixact System has an integrated radiation beam stop, which shields radiation that passes through the patient, they require
less radiation shielding in treatment room walls as compared to traditional systems. We also preassemble, test and
commission each system at our manufacturing facility, and ship the system almost fully assembled. This process typically
allows radiation “beam on” within four days after delivery and first patient treatments to begin within 14 to 28 days after
delivery.
Enhance precision and reduce treatment time. TomoEDGE Delivery. TomoEDGE dynamically varies the width of the
collimator jaws during treatment delivery, dose to normal healthy tissues immediately adjacent to the tumor is reduced,
helping to minimize the risk of radiation side effects. Additionally, overall treatment time is shortened because the jaws
opening can be effectively tailored to the size of the tumor, enabling more efficient dose coverage. The resulting gains in
treatment quality and speed expand the Radixact Systems’ clinical and market reach within the conventional and stereotactic
radiotherapy spaces.
Platform for further technological advancements in adaptive radiation therapy. We believe the helical delivery systems
are uniquely positioned to enable truly adaptive radiation therapy because of their ability to provide daily, quantitative
images, high speed delivery of radiation from fixed beam angles or helically from 360 degrees around the body and real time
verification of the dose received by the patient. We believe the combination of these design features and our integrated
treatment planning and optimization software will allow us to continue to enhance our systems adaptive capabilities to enable
clinicians to routinely and easily adjust a patient’s treatment as needed, thereby remaining true to the intent of the original
treatment plan.
In addition to the functionality listed above, the Radixact System may be enhanced with the following product options:
Real-time tracking of tumor movement. The Accuray proprietary Synchrony® AI-driven real-time target tracking with
dynamic delivery technology is a collection of unique hardware and software technologies that enables personalized real-time
adaptive delivery of radiation treatment to targets while they are in motion by synchronizing the treatment delivery beam
position to the target location precisely and accurately during the delivery of a treatment fraction. Synchrony is the only
technology that uses AI, through image guidance, to automatically adapt and synchronize the radiation beam to the position
of the tumor if and when it moves during treatment. The beams of radiation are delivered continuously throughout the
treatment session as the patient behaves naturally. Synchrony can be used on the Radixact System to adapt treatment delivery
for tumors that move as a result of bodily processes, including respiration and digestion, as well as patient movement.
Synchrony treatments are truly personalized, as delivery is adapted to the individual’s unique movements throughout
treatment delivery. If movement changes during treatment, delivery is adapted for that unique change. The Synchrony
technology makes it possible and practical for clinicians to deliver radiation dose with accuracy and precision, even for
tumors that move. Synchrony helps to maximize treatment effectiveness and minimize dose to surrounding healthy tissue
because it accounts for the current and changing conditions of the patient during treatment delivery.
The VitalHold Solution enables medical care teams to treat patients with SGRT using the Radixact System. SGRT helps
to effectively position the patient and monitor the accuracy of that positioning throughout their treatment, enhancing
precision in radiation delivery. VitalHold also enables DIBH treatments on the Radixact System. During DIBH treatments, a
patient takes a deep breath which moves the heart away from the chest wall and the targeted tumor to help minimize radiation
dose to organs at risk (“OARs”) and reduce associated complications later in life.
We believe the TomoTherapy platform offers clinicians and patients significant benefits over other vendors’ radiation
therapy systems in the market. The long-term success of the TomoTherapy platform is dependent on a number of factors,
including the following:
•
Continued adoption of our TomoTherapy platform, including the Radixact System, Accuray Helix, and Tomo C
System, in markets where they are available;
•
Greater awareness among doctors and patients of the unique benefits of radiation therapy using the
TomoTherapy platform, including its ring gantry architecture that enables treatment delivery from multiple 360
degree rotations around the patient, and ClearRT helical kVCT imaging for the Radixact System, which are
designed to produce exceptional diagnostic-like quality CT images, quickly and cost-effectively;
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•
Advances in our technology that improve the quality of treatments and ease of use of the TomoTherapy platform;
•
Greater awareness among doctors of the reliability of the TomoTherapy platform; and
•
Our ability to expand sales of the TomoTherapy platform in countries throughout the world where we do not
currently sell or have not historically sold a significant number of any TomoTherapy platform configurations.
Our Software Solutions
Our Accuray Precision TPS with iDMS Data Management Systems provide fully integrated treatment planning and data
management for use with all compatible Accuray delivery platforms.
Accuray Precision Treatment Planning. With a streamlined and intuitive interface, Accuray Precision TPS enables
clinicians to efficiently generate high quality radiation therapy treatment plans for all case types. It is a complete planning
solution, including multi-modality image fusion with proprietary deformable image registration algorithm, comprehensive
suite of contouring tools, AutoSegmentation and auto contouring options for head and neck, brain, and prostate, side-by-side
treatment plan comparison, plan summation and evaluation. It supports treatment plan creation for all case types with
TomoHelical, TomoDirect IMRT and 3D CRT planning mode on both Radixact and TomoTherapy Systems enabled with
iDMS Data Management Systems. It also supports planning for all case types on CyberKnife platforms, including Frameless
Intracranial Radiosurgery, Fiducial Free Lung Tracking with Dynamic Motion Synchronization, SBRT, for the skull, spine,
abdomen and pelvis, as well as IMRT. It provides fast and accurate dose computation engines for both Accuray platforms,
including Monte Carlo dose calculation for the CyberKnife InCise Multileaf Collimator and VOLO™ Technology for the
CyberKnife, Radixact and TomoTherapy Systems. The VOLO and VOLO Ultra solutions feature high-speed processing for
both dose calculation and optimization that empowers clinicians to create highly customized treatment plans in less time,
with greater flexibility to work interactively and in real time to efficiently develop the best IMRT treatment plans for even the
most complex cases.
The Accuray Precision TPS can be further enhanced with optional advanced capabilities described below:
PreciseART Adaptive Radiation Therapy Option. The PreciseART Radiation Therapy Option extends adaptive
radiotherapy possibilities, delivering an entirely new level of system integration and workflow automation for Radixact and
other TomoTherapy Systems compatible with iDMS. The PreciseART Option enables clinicians to monitor patient treatment
and efficiently adapt plans, helping clinics of all sizes deliver more precise treatments to more patients. It offers automated
processing of daily imaging to enable clinicians to monitor all patients and set protocol specific action levels to flag cases for
review and possible plan adaptation. The PreciseART software's streamlined re-planning capabilities leverage full integration
of treatment delivery, planning and database systems to allow clinicians to efficiently generate new treatment plans based on
previous plan data. It is also designed to maintain the integrity of original treatment plans to ensure tumor coverage, preserve
OAR doses and reduce toxicity.
PreciseRTX Retreatment Option. The PreciseRTX Retreatment Option makes retreatment planning more efficient and
effective. The option helps to accelerate and enhance the process of creating new treatment plans for patients who have
received previous irradiation. The workflow includes importation of patient dose data, from either Accuray or non-Accuray
planning systems, automatic deformation of original plan contours onto a new treatment planning CT, automatic deformation
of previously delivered dose onto a new planning CT, generation of the re-treatment plan based on the information from the
existing plan and summation of the original and new treatment plans to review the total dose.
Accuray iDMS Data Management System. Accuray iDMS creates a centralized platform for storing and managing all
patient treatment plan data. Designed to integrate with a wide range of technologies and systems, iDMS enables users and
applications to securely and seamlessly access the data they need to drive efficient, informed, effective treatment. Information
for patients to be treated or previously treated on any iDMS compatible Accuray platforms will be maintained as a single
treatment record, providing the flexibility to treat patients on any available Accuray platform compatible with iDMS. It can
manage users and privileges to control patient data access. It supports the Storage Vault option, which can safely maintain
years of encrypted patient data. It also offers customizable report generation of patient, plan and treatment system with
Report Administration Application. In addition, the Accuray iDMS enables connectivity between Accuray platforms with
other systems in radiation oncology departments, encompassing the entire radiotherapy workflow. iDMS offers several key
capabilities:
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OIS Connect Option. The OIS Connect software option is a Digital Imaging and Communications in Medicine
(“DICOM”) standard-based solution that provides the ability to interface all iDMS enabled Accuray platforms to compatible
OISs. This integration with electronic medical record generates a comprehensive export of the radiotherapy treatment history
delivered using Accuray platforms.
Total Quality Assurance (TQA™) package. The TQA application offers trending and reporting of many systems and
dosimetric parameters that allow physicians to monitor the performance of their TomoTherapy platforms.
Delivery Analysis™. Delivery Analysis is an option for the TomoTherapy platform that enables easy pretreatment quality
assurance. The software also offers an innovative capability to monitor doses throughout the patient treatment using detector
signals to ensure that the patient is receiving the expected dose from treatment to treatment. Delivery Analysis provides both
high level analytics for summary display as well as detailed analysis capability.
Sales and Marketing
In the United States, we primarily market directly to customers, including hospitals and stand-alone treatment facilities,
through our sales organization, and we also market to customers through sales agents and group purchasing organizations.
Outside the United States, we market to customers directly and through the use of distributors and sales agents. We currently
have international offices in Morges, Switzerland; Hong Kong, China; Shanghai, China and Tokyo, Japan and direct sales
staff in most countries in Western Europe, Japan, India and Canada. In addition, we have distributors in Europe, Russia, the
Middle East, Africa, the Asia Pacific region, and Latin America.
In direct sales markets, we employ a combination of territory sales managers, product specialists, training specialists and
marketing managers. Territory sales managers and product specialists are responsible for selling the systems to hospitals and
stand-alone treatment facilities. Our marketing managers help market our current products and work with our engineering
group to identify and develop upgrades and enhancements for our suite of products. Our training specialists train radiation
oncologists, surgeons, physicists, dosimetrists and radiation therapists.
We market our products to radiation oncologists, neurosurgeons, general surgeons, oncology specialists and other
referring physicians in hospitals and stand-alone treatment facilities. We intend to continue to increase our focus on
marketing and education efforts to surgical specialists and oncologists responsible for treating tumors throughout the body
and are also working closely with hospital administrators to demonstrate the economic benefits of our offering. Our
marketing activities also include efforts to inform and educate patients with cancerous or benign tumors, or neurologic and/or
endocrine disorders, about the benefits of the CyberKnife and TomoTherapy robotic and helical platforms.
Under our standard distribution agreement, we generally appoint a distributor for a specific country. We typically also
retain the right to distribute our full portfolio of solutions in such territories. In most territories, our distributors generally
provide the full range of service and sales capabilities, although we may provide installation and service support for certain
distributors.
The JV aims to be uniquely positioned to serve China, which we believe is the world’s largest growth market for radiation
oncology systems. China represents a significantly underserved market for linacs based on the country’s population and
cancer incidence rates on both an absolute and relative country basis. Accuray Asia has a 49% ownership interest in the JV
and the CIRC Subsidiary has a 51% ownership interest in the JV.
With the receipt of the necessary permits and licenses to operate, the JV has begun selling products in China, much like a
distributor. The JV has recently begun to manufacture and sell a locally branded “Made in China” radiotherapy device, or the
Tomo® C radiation therapy system, in the Class B license category. We believe this strategy will allow us to best maximize
both near and longer-term opportunities in China. In September 2023, we received approval for our Class B device from the
National Medical Products Administration (“NMPA”) and our Accuray Precision Treatment Planning System for the Class B
device was approved by the NMPA in June 2024. The JV also distributes other Accuray treatment delivery systems like the
Radixact and CyberKnife treatment delivery systems, including the Radixact SynC and CyberKnife S7 Systems, which
received NMPA approval in January 2025.
For more information on the JV, see Note 11, “Joint Venture,” of the Notes to the consolidated financial statements.
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Manufacturing
We purchase major components for each of our products from outside suppliers, including the robotic manipulator,
treatment couches, gantry, magnetrons and computers. We closely monitor supplier quality, delivery performance and
conformance to product specifications, and we also expect suppliers to contribute to our efforts to improve our manufacturing
cost and quality.
Some of the components are obtained from single-source suppliers. These components include the couch, magnetron and
solid state modulator for the TomoTherapy platform and the robot, couch, and magnetron for the CyberKnife platform. In
most cases, if a supplier was unable to deliver these components, we believe we would be able to find other sources for these
components subject to any regulatory qualifications, if required. In the event of a disruption in any of these suppliers’ ability
to deliver a component, we would need to secure a replacement supplier. Additionally, any disruption or interruption of the
supply of key subsystems could result in increased costs and delays in deliveries of our treatment systems, which could
adversely affect our reputation and results of operations. To help mitigate these risks, we negotiate long-term supply
contracts or submit long-term orders and forecasts to our single-source suppliers with the goal that our demand can be
satisfied and any capacity problem can be mitigated.
Currently, we manufacture our CyberKnife and TomoTherapy platforms in Madison, Wisconsin. We manufacture the
linear accelerator for our CyberKnife and TomoTherapy platforms at our Chengdu, China facility. Our facilities employ
state-of-the-art manufacturing techniques and equipment. Our Madison headquarters manages and oversees the complete
design, manufacturing, installation, service and distribution for our medical devices under one global quality management
systems compliant to the internationally recognized quality system standard for medical devices ISO, 13485:2016, and the
Quality System regulations enforced by the FDA. We believe our manufacturing facilities will be adequate for our expected
growth and foreseeable future demands for at least the next three years.
The manufacturing processes at our facilities include fabrication, subassembly, assembly, system integration and final
testing. Our manufacturing personnel consist of fabricators, assemblers and technicians supported by production engineers as
well as planning and supply chain managers. Our quality assurance program includes various quality control measures from
inspection of raw material, purchased parts and assemblies through on-line inspection. We have also incorporated lean
manufacturing techniques to improve manufacturing flow and efficiency. Lean manufacturing techniques include reducing
wasteful and extraneous activities, balancing assembly and test flow, as well as better utilizing production assets and
resources.
Intellectual Property
The proprietary nature of, and protection for, our products, product components, processes and know-how are important to
our business. We seek patent protection in the United States and internationally for our systems and other technology where
available and when appropriate. We may also in-license the technology, inventions and improvements that we consider
important to the development of our business. In addition, we also rely upon trade secrets, know-how, trademarks, copyright
protection, as well as confidentiality agreements with employees, consultants and other third parties, to protect our
proprietary rights and to develop and maintain our competitive position.
As of June 30, 2025, we held an exclusive field of use licenses or ownership of 530 U.S. and foreign patents, and 84 U.S.
and foreign patent applications. These patents and applications cover various components and techniques incorporated into
the CyberKnife and TomoTherapy platforms, or which may be incorporated into new technologies under current
development, all of which we believe will allow us to maintain a competitive advantage in the field of radiation therapy
systems. We cannot be certain that any patents will be issued from any of our pending patent applications, nor can we be
certain that any of our existing patents or any patents that may be granted to us in the future will provide us with protection.
We periodically monitor the activities of our competitors and other third parties with respect to their use of intellectual
property.
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Research and Development
Continued innovation is critical to our future success. Our current product development activities include projects
expanding clinical applications, driving product differentiation, and continually improving the usability, interoperability,
reliability, and performance of our products. We continue to seek to develop innovative technologies so that we can improve
our products and increase our sales. Some of our product improvements have been discussed above under the heading “Our
Products.”
Our research activities strive to enable new product development opportunities by developing new technologies and
advancing areas of existing core technology such as next generation linear accelerators, adaptive therapy, patient imaging,
motion management, or treatment planning capabilities.
The modular design of our systems support rapid development for new clinical capabilities and performance
enhancements by generally allowing each subsystem to evolve within the overall platform design. Access to regular product
upgrades protects customer investment in the system, facilitates the rapid adoption of new features and capabilities among
existing installed base customers, and drives increasing value in our multiyear service plans. These upgrades will generally
consist of software and hardware enhancements designed to increase the ease of use of our systems, improve the speed and
accuracy of patient treatment and meet other customer needs.
A key component of our research and development program is our collaboration with research programs at selected
hospitals, cancer treatment centers, academic institutions and research institutions worldwide. Our agreements with these
third-party collaborators generally require us to make milestone-based payments during the course of a particular project and
often also require that we make up-front payments to fund initial activities. Generally, we obtain non-exclusive worldwide
rights to commercialize results from the collaboration with an option to negotiate an exclusive license. For inventions
resulting from the collaboration that we own or exclusively license, we generally grant a royalty-free license for the purpose
of continuing the institution’s research and development, and from time to time, we also grant broader licenses. Our research
collaboration programs include work on clinical protocols and hardware and software developments. We also work with
suppliers to develop new components in order to increase the reliability and performance of our products and seek
opportunities to acquire or invest in the research of other parties where we believe it is likely to benefit our existing or future
products.
We have entered into collaboration agreements with a variety of industrial partners within the fields of radiation oncology
and medical imaging to provide us with opportunities to accelerate our innovation capability and bring complimentary
products and technologies to market. We continue to seek out new partnerships to complement our internal developments and
implement our product strategies.
Competition
The medical device industry in general and the non-invasive cancer treatment field in particular, are subject to intense and
increasing competition and rapidly evolving technologies. Because our products often have long development and regulatory
approval cycles, we must anticipate changes in the marketplace and the direction of technological innovation and customer
demands. To compete successfully, we will need to continue to demonstrate the advantages of our products and technologies
over well established alternative procedures, products and technologies, and convince physicians and other healthcare
decision makers of the advantages of our products and technologies. Traditional surgery and other forms of minimally
invasive procedures, brachytherapy, chemotherapy, immunotherapy, and other drugs remain alternatives or are
complementary to treatments delivered with the CyberKnife and TomoTherapy platforms.
New product sales in this competitive market are primarily dominated by two companies: Varian Medical Systems, Inc, a
Siemens Healthineers company (“Varian”) and Elekta AB (“Elekta”). Some manufacturers of standard linac systems,
including Varian and Elekta, have products that can be used in combination with body and/or head frame systems and image
guidance-systems to perform both radiosurgical and radiotherapy procedures. Our other competitors include RefleXion
Medical Inc., ZAP® Surgical Systems, Inc., and other companies in the radiosurgical and radiation therapy markets.
Furthermore, many government, academic and business entities are investing substantial resources in research and
development of cancer treatments, including surgical approaches, radiation treatment, MRI-guided radiotherapy systems,
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proton therapy systems, drug treatment, immunotherapy, gene therapy, and other approaches. Successful developments that
result in new approaches for the treatment of cancer could reduce the attractiveness of our products or render them obsolete.
Our future success will depend in large part on our ability to establish and maintain a competitive position in current and
future technologies. Rapid technological development may render the CyberKnife and TomoTherapy platforms and their
technologies obsolete. Some of our competitors have or may have greater corporate, financial, operational, sales and
marketing resources, and more experience in research and development than we have. We cannot assume that our
competitors will not succeed in developing or marketing technologies or products that are more effective or commercially
attractive than our products or that would render our technologies and products obsolete or less useful. We may not have the
financial resources, technical expertise, marketing, distribution or support capabilities to compete successfully in the future.
Our competitive position also depends, among other things, on:
•
Widespread awareness, acceptance and adoption of our products by the radiation oncology, cancer therapy and
neurosurgery markets;
•
Innovations that improve the effectiveness and productivity of our systems’ treatment processes and enable them to
address emerging customer needs;
•
Availability of reimbursement coverage from third-party payors (including insurance companies, governments, and/or
others) for procedures performed using our platforms;
•
Inclusion of radiotherapy in countries’ cancer treatment policies as an effective treatment modality;
•
Published, peer-reviewed data supporting the efficiency, efficacy and safety of our platforms;
•
Limiting the time required from proof of feasibility to routine production;
•
Limiting the time period and cost of regulatory approvals or clearances;
•
The manufacture and delivery of our products in sufficient volumes on time, and accurately predicting and controlling
costs associated with manufacturing, installation, warranty and maintenance of the products;
•
Our ability to attract and retain qualified personnel;
•
The extent of our intellectual property protection or our ability to otherwise develop and safeguard proprietary
products and processes;
•
Our ability to successfully expand into new and developing markets;
•
Securing sufficient capital resources to expand both our continued research and development, and sales and marketing
efforts; and
•
Obtaining and maintaining any necessary United States or foreign regulatory approvals or clearances.
Our customers’ equipment purchase considerations typically include reliability, treatment quality, service capabilities,
patient throughput, price, payment terms and equipment supplier viability. We believe we compete favorably with our
competitors on price and value based upon the technology offered by our platforms. We strive to provide technologically
superior products that cover substantially all aspects of radiation therapy to deliver precise treatments with high-quality
clinical outcomes that meet or exceed customer expectations.
In addition to competition from technologies performing similar functions as our platforms, competition also exists for the
limited capital expenditure budgets of our customers. For example, our platforms may compete with other equipment
required by a radiation therapy department for financing under the same capital expenditure budget, which is typically
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limited. A purchaser, such as a hospital or cancer treatment center, may be required to select between the two items of capital
equipment. Our ability to compete may also be adversely affected when purchase decisions are based solely upon price, since
our products are premium priced systems due to their higher level of functionality and performance.
U.S. Reimbursement
In the United States, healthcare providers that purchase capital equipment such as the CyberKnife and/or TomoTherapy
platforms generally rely on government and private third-party payors for reimbursement for the healthcare treatment and
services they provide. Examples of these types of payors include Medicare, Medicaid, private health insurance plans, and
health maintenance organizations, which reimburse all or a portion of the cost of treatment, as well as related healthcare
services. Reimbursement involves three components: coverage, coding and payment.
Coverage
There are currently no National Coverage Determinations in place under Medicare for treatments provided on a
CyberKnife, TomoTherapy, or Radixact platform. Medicare coverage criteria for treatments performed on a CyberKnife,
TomoTherapy, or Radixact platform is outlined in Local Coverage Determinations or, in the absence of a formal policy,
treatment is covered as long as it is considered reasonable and necessary. The most common indications covered by Medicare
in Local Coverage Determinations for radiotherapy are primary and metastatic tumors in the brain, spine, lung, liver, kidney,
pancreas, adrenal gland, head and neck, breast, prostate, abdominal and retroperitoneal regions, as well as other cancers that
have failed previous treatment. Commercial payor policies vary with respect to coverage for radiotherapy including many of
the indications covered by Medicare, though coverage criteria may differ.
Coding
The codes that are used to report radiosurgery treatment delivery in 2025 for the hospital outpatient department are
Current Procedural Terminology (“CPT”) codes 77372 and 77373 for single fraction intracranial radiosurgery and single
fraction extracranial/multi-session radiosurgery/stereotactic body radiation therapy. For freestanding centers, robotic
radiosurgery is billed with robotic radiosurgery Healthcare Common Procedural Codes (“HCPCs”) G0339 and G0340. The
non-robotic SRS/SBRT codes 77372 and 77373 are also payable codes in the freestanding site of service for non-robotic
SRS/SBRT.
In 2025, in the hospital outpatient department, IMRT delivery is billed under CPT code 77385 for simple IMRT and
77386 for complex IMRT. For 3D CRT three codes are used to report simple, intermediate, and complex treatments. 3D-CRT
treatments delivered using the TomoTherapy and Radixact Systems are considered complex treatments and reported under
the complex 3D-CRT code 77412. In December 2015, the Patient Access and Medicare Protection Act (PAMPA) stopped the
IMRT and 3D CRT delivery codes from being implemented and prevented reimbursement reductions in the freestanding
center setting through calendar year 2019. Although the payment freeze was set to expire on December 31, 2019, the Centers
for Medicare and Medicaid Services (“CMS”) has continued to recognize these temporary HCPCS G codes in this setting.
We expect all valid delivery codes will be recognized by commercial payers. Other codes are used to report treatment
planning, dosimetry, treatment management, and other procedures routinely performed for treating radiosurgery or
radiotherapy patients.
Payment
In the United States, most procedures using the CyberKnife, TomoTherapy, and Radixact Systems are performed in the
hospital outpatient department. Payment rates under the Medicare fee-for-service methodology are established based on cost
data submitted by hospitals. CMS pays separately for ancillary procedures in addition to the delivery of IMRT, 3D CRT, and
SRS/SBRT as well as comprehensive ambulatory payment classifications that bundles delivery and some ancillary services
for single session cranial radiosurgery.
Payment for treatment with CyberKnife and TomoTherapy platforms are also available in the freestanding center setting.
In 2025, the primary treatment delivery codes for robotic radiosurgery are priced by the regional Medicare Administrative
Contractors. In 2025, the robotic SRS/SBRT delivery codes remain contractor priced for providers paid under the traditional
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fee-for-service methodology. Payment rates for IMRT and 3DRT procedures are set by CMS with adjustments to account for
geographic market variations.
The federal government reviews and adjust rates annually, and from time to time considers various Medicare and other
healthcare reform proposals that could significantly affect both private and public reimbursement for healthcare services,
including radiotherapy and radiosurgery, in hospitals and free-standing clinics. In the past, we have seen our customers’
decision making process complicated by the uncertainties surrounding reimbursement rates for radiotherapy and radiosurgery
in the United States. State government reimbursement for services is determined pursuant to each state’s Medicaid plan,
which is established by state law and regulations, subject to the requirements of federal law and regulations.
Foreign Reimbursement
Internationally, reimbursement and healthcare payment systems vary from country to country and include single payor,
government managed systems as well as systems in which private payors and government managed systems exist side-by-
side. In general, the process of obtaining coverage approvals has been slower outside of the United States. Our ability to
achieve adoption of our treatment systems, and significant sales volume in international markets, will depend in part on the
availability of reimbursement for procedures performed using our products.
Regulatory Matters
Domestic Regulation
Our products and software are medical devices subject to regulation by the FDA, as well as other regulatory bodies. FDA
regulations govern the following activities that we perform and will continue to perform to ensure medical products
distributed domestically or exported internationally are safe and effective for their intended uses:
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Product design and development;
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Document and purchasing controls;
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Production and process controls;
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Labeling and packaging controls;
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Product storage;
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Recordkeeping;
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Servicing;
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Corrective and preventive action and complaint handling;
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Pre-market clearance or approval;
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Advertising and promotion; and
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Product sales and distribution.
FDA pre-market clearance and approval requirements. Unless an exemption applies, each medical device we wish to
commercially distribute in the United States will require either 510(k) clearance or pre-market approval from the FDA. The
FDA classifies medical devices into one of three classes (I, II, III). The FDA categorizes devices based on risk in either class
I or II, depending upon the class, the manufacturer submits the applicable pre-market notification to the FDA requesting
permission to commercially distribute the device. For class II, the FDA requires 510(k) clearance before marketing and
distribution. Some low risk devices are exempted from this requirement. Devices deemed by the FDA to pose the greatest
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risks, such as life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a
previously cleared 510(k) devices, are placed in class III, requiring pre-market approval. All of our current products are class
II devices requiring 510(k) clearances.
510(k) clearance pathway. When a 510(k) clearance is required, we must submit a pre-market notification demonstrating
that our proposed device is substantially equivalent to a previously cleared and legally marketed 510(k) device or a device
that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of
pre-market approval (“PMA”) applications. By statute, the FDA has targets to clear or deny a 510(k) pre-market notification
after 90 days of FDA review time from submission of the application. Clearance generally takes longer as the FDA may
require further information, including clinical data, that require our response and pauses the 90-day review time to make a
determination regarding substantial equivalence.
In January 2002, we received 510(k) clearance for the TomoTherapy Hi Art System intended to be used as an integrated
system for the planning and delivery of IMRT for the treatment of cancer. In August 2008, we received 510(k) clearance for
our TomoDirect System. In June 2016, we introduced the Radixact Treatment Delivery Platform with 510(k) clearance. We
expanded the Radixact Treatment Delivery Platform through subsequent 510(k) clearances to include Synchrony in
November 2018 for real-time adaptive motion tracking and compensation, ClearRT in November 2020 for advanced
imaging, and VitalHoldTM in August 2023 for Surface Guided Radiation Therapy (“SGRT”).
In July 1999, we received 510(k) clearance for the CyberKnife System for stereotactic radiosurgery and radiotherapy in
the head and neck regions of the body. We received additional 510(k) clearances for CyberKnife System and options,
including in April 2002 for the Synchrony Motion Tracking System as a real-time adaptive option, intended to enable
dynamic image guided stereotactic radiosurgery and precision radiotherapy of lesions, tumors and conditions that move under
influence of respiration. We have grown our CyberKnife System with the July 2015 510(k) clearance of the M6 platform,
including the InCise Multileaf Collimator and introducing the CyberKnife Treatment Delivery System to leverage our
Accuray Precision Treatment Planning System in April 2017.
We introduced our new treatment planning and data management systems, Accuray Precision Treatment Planning System
with iDMS Data Management System with 510(k) clearances in June 2016.
PMA pathway. A PMA must be submitted to the FDA if the device is not eligible for the 510(k) clearance process. A
PMA must be supported by extensive data including, but not limited to, technical, preclinical, clinical trials, manufacturing
and labeling to demonstrate reasonable evidence of the device’s safety and efficacy to the FDA’s satisfaction. Currently, no
device we have developed and commercialized has required pre-market approval.
Product modifications. After a device receives 510(k) clearance or a PMA approval, it may be changed or modified. Any
modification that could significantly affect its safety or effectiveness, or that would constitute a significant change in its
intended use, will require a new clearance or approval. Regulations provide that the manufacturer initially determines when a
specific modification requires notification to FDA. The FDA has issued draft guidance that, if finalized and implemented,
will result in manufacturers needing to seek a significant number of new clearances for changes made to legally marketed
devices. The FDA reviews the manufacturer’s decision to file a 510(k) or PMA for modifications during facility audits.
We have modified aspects of our CyberKnife and TomoTherapy platforms since receiving initial regulatory clearance, and
we have applied for and obtained additional 510(k) clearances for these modifications when we determined such clearances
were required. The FDA may review our 510(k) filing decision, and can disagree with our initial determination. The FDA
may take regulatory action from requiring new filings to injunction if it disagrees with our determinations not to seek a new
510(k) clearance or PMA approval for modifications.
Pervasive and continuing regulation. After a device is placed on the market, numerous regulatory requirements apply.
These include:
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Quality System Regulation (“QSR”), which require manufacturers, including third-party manufacturers, to follow
stringent design, testing, documentation and other quality assurance procedures during product design and throughout
the manufacturing process;
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Labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off-label
uses; and
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Medical device reporting regulations, which require that manufacturers report to the FDA if their device may have
caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a
death or serious injury if the malfunction were to recur.
The FDA has broad post-market and regulatory enforcement powers, including cybersecurity as enhanced in March 2023
by the Food and Drug Omnibus Reform Act (“FDORA”). The latest FDA cybersecurity requirements apply to new devices at
pre-market submission, such as 510(k) clearance. We are subject to unannounced inspections by the FDA and the Food and
Drug Branch of the California Department of Health Services to determine our compliance with the QSR and other
regulations, and these inspections may include the manufacturing facilities of some of our subcontractors. Our Madison
facility, where we manufacture the finished TomoTherapy and CyberKnife Systems, was most recently inspected by the FDA
in August 2017. The August 2017 inspection resulted in no observations. We voluntarily participate in the Medical Device
Single Audit Program (“MDSAP”). The MDSAP program allows recognized Auditing Organization to conduct a single
regulatory audit of a medical device manufacturer that satisfies the relevant requirements of the regulatory authorities
participating in the program. The MDSAP participating members include FDA, Therapeutic Goods Administration of
Australia, Brazil’s Agência Nacional de Vigilância Sanitária, Health Canada, Japan’s Ministry of Health, Labour and
Welfare, and the Japanese Pharmaceuticals and Medical Devices Agency. FDA accepts MDSAP audit reports as a substitute
for routine Agency inspections. We are routinely audited by an MDSAP-recognized Auditing Organization to international
medical device requirements. We believe we are in substantial compliance with the QSR. Failure to comply with applicable
regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:
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Fines, injunctions, consent decrees and civil penalties;
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Recall or seizure of our products;
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Operating restrictions, partial suspension or total shutdown of production;
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Refusing our requests for 510(k) clearance or pre-market approval of new products or new intended uses;
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Withdrawing 510(k) clearance or pre-market approvals that are already granted; and
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Criminal prosecution.
The FDA also has the authority to require us to repair, replace or refund the cost of any medical device that we have
manufactured or distributed. If any of these events were to occur, they could have a material adverse effect on our business.
Radiological health. Because our CyberKnife and TomoTherapy platforms contain both laser and X-ray components, and
because we assemble these components during manufacturing and service activities, we are also regulated under the
Electronic Product Radiation Control Provisions of the United States Federal Food, Drug, and Cosmetic Act. This law
requires laser and X-ray products to comply with regulations and applicable performance standards, and manufacturers of
these products to certify in product labeling and reports to the FDA that their products comply with all such standards. The
law also requires manufacturers to file new product reports, and to file annual reports and maintain manufacturing, testing
and sales records, and report product defects. Various warning labels must be affixed. Assemblers of diagnostic X-ray
systems are also required to certify in reports to the FDA, equipment purchasers, and where applicable, to state agencies
responsible for radiation protection, that diagnostic and/or therapeutic X-ray systems they assemble meet applicable
requirements. Failure to comply with these requirements could result in enforcement action by the FDA, which can include
injunctions, civil penalties, and the issuance of warning letters.
Fraud and abuse laws. We are subject to various federal and state laws pertaining to healthcare fraud and abuse,
including anti-kickback laws and physician self-referral laws. Violations of these laws are punishable by significant criminal
and civil sanctions, including, in some instances, exclusion from participation in federal and state healthcare programs,
including Medicare and Medicaid. Because of the far-reaching nature of these laws, there can be no assurance that we would
not be required to alter one or more of our practices to be in compliance with these laws. Evolving interpretations of current
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laws or the adoption of new federal or state laws or regulations could adversely affect many of the arrangements we have
with customers and physicians. In addition, there can be no assurance that the occurrence of one or more violations of these
laws or regulations would not result in a material adverse effect on our financial condition and results of operations.
Anti-kickback laws. Our operations are subject to broad and changing federal and state anti-kickback laws. The Office of
the Inspector General of the Department of Health and Human Services (“OIG”) is primarily responsible for enforcing the
federal Anti-Kickback Statute and generally for identifying fraud and abuse activities affecting government programs. The
federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providing
remuneration directly or indirectly to induce either the referral of an individual, or the furnishing, recommending, or
arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and
Medicaid. “Remuneration” has been broadly interpreted to include anything of value, including such items as gifts, discounts,
the furnishing of supplies or equipment, credit arrangements, waiver of payments, and providing anything of value at less
than fair market value.
Penalties for violating the federal Anti-Kickback Statute include criminal fines of up to $25,000 and/or imprisonment for
up to five years for each violation, civil monetary penalties, which could result in treble damages plus fines of up to $50,000
for each violation, and possible exclusion from participation in federal healthcare programs such as Medicare and Medicaid.
Many states have adopted prohibitions similar to the federal Anti-Kickback Statute, some of which apply to the referral of
patients for healthcare services reimbursed by any source, not only by the Medicare and Medicaid programs, and do not
include comparable exceptions.
The OIG has issued safe harbor regulations which set forth certain activities and business relationships that are deemed
safe from prosecution under the federal Anti-Kickback Statute. There are safe harbors for various types of arrangements,
including, without limitation, certain investment interests, leases and personal services and management contracts. The
failure of a particular activity to comply in all regards with the safe harbor regulations does not mean that the activity violates
the federal Anti-Kickback Statute or that prosecution will be pursued. However, conduct and business arrangements that do
not fully satisfy each applicable safe harbor may result in increased scrutiny by government enforcement authorities such as
the OIG.
The OIG has identified the following arrangements with purchasers and their agents as ones raising potential risk of
violation of the federal Anti-Kickback Statute:
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Discount and free good arrangements that are not properly disclosed or accurately reported to federal healthcare
programs;
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Product support services, including billing assistance, reimbursement consultation and other services specifically tied
to support of the purchased product, offered in tandem with another service or program (such as a reimbursement
guarantee) that confers a benefit to the purchaser;
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Educational grants conditioned in whole or in part on the purchase of equipment, or otherwise inappropriately
influenced by sales and marketing considerations;
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Research funding arrangements, particularly post-marketing research activities, that are linked directly or indirectly to
the purchase of products, or otherwise inappropriately influenced by sales and marketing considerations; and
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Other offers of remuneration to purchasers that are expressly or impliedly related to a sale or sales volume, such as
“rebates” and “upfront payments,” other free or reduced-price goods or services, and payments to cover costs of
“converting” from a competitor’s products, particularly where the selection criteria for such offers vary with the
volume or value of business generated.
We have a variety of financial relationships with physicians who are in a position to generate business for us. For
example, physicians who own our stock also provide medical advisory and other consulting or collaboration services.
Similarly, we have a variety of different types of arrangements with our customers. In the case of our former placement
program, certain services and upgrades were provided without additional charge based on procedure volume. In the past, we
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have also provided loans to our customers. We also provide research or educational grants to customers to support customer
studies related to, among other things, our CyberKnife and TomoTherapy platforms.
If our past or present operations are found to be in violation of the federal Anti-Kickback Statute or similar government
regulations to which we or our customers are subject, we or our officers may be subject to the applicable penalty associated
with the violation, including significant civil and criminal penalties, damages, fines, imprisonment, and exclusion from the
Medicare and Medicaid programs. The impact of any such violation may lead to curtailment or restructuring of our
operations. Any penalties, damages, fines, or curtailment or restructuring of our operations could adversely affect our ability
to operate our business and our financial results. The risk of our being found in violation of these laws is increased by the fact
that some of these laws are open to a variety of interpretations. Any action against us for violation of these laws, even if we
successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the
operation of our business and damage our reputation. If an enforcement action were to occur, our reputation and our business
and financial condition could be harmed, even if we were to prevail or settle the action. Similarly, if the physicians or other
providers or entities with which we do business are found to be non-compliant with applicable laws, they may be subject to
sanctions, which could also have a negative impact on our business.
Transparency laws. The Physician Payment Sunshine Act (the “Sunshine Act”), which was enacted by Congress as part
of the Patient Protection and Affordable Care Act on December 14, 2011, requires each applicable manufacturer, which
includes medical device companies, such as Accuray, to track and report to the federal government on an annual basis all
payments and other transfers of value from such applicable manufacturer to U.S. licensed physicians and teaching hospitals
as well as physician ownership of such applicable manufacturer’s equity, in each case subject to certain statutory exceptions.
Such data will be made available by the government on a publicly searchable website. Failure to comply with the data
collection and reporting obligations imposed by the Sunshine Act can result in civil monetary penalties ranging from $1,000
to $10,000 for each payment or other transfer of value that is not reported (up to a maximum of $150,000 per reporting
period) and from $10,000 to $100,000 for each knowing failure to report (up to a maximum of $1 million per reporting
period). In addition, we are subject to similar state and foreign laws related to the tracking and reporting of payments and
other transfers of value to healthcare professionals. These laws require or will require that we implement the necessary and
costly infrastructure to track and report such payments and transfers of value. Failure to comply with these new tracking and
reporting laws could subject us to significant civil monetary penalties.
Physician self-referral laws. We are also subject to federal and state physician self-referral laws. The federal Ethics in
Patient Referrals Act of 1989, commonly known as the Stark Law, prohibits, subject to certain exceptions, physician referrals
of Medicare and Medicaid patients to an entity providing certain “designated health services” if the physician or an
immediate family member has any financial relationship with the entity. The Stark Law also prohibits the entity receiving the
referral from billing any good or service furnished pursuant to an unlawful referral.
In addition, in July 2008, CMS issued a final rule implementing significant amendments to the regulations under the Stark
Law. The final rule, which was effective October 1, 2009, imposes additional limitations on the ability of physicians to refer
patients to medical facilities in which the physician or an immediate family member has an ownership interest for treatment.
Among other things, the rule provides that leases of equipment between physician owners that may refer patients and
hospitals must be on a fixed rate, rather than a per use basis. Prior to enactment of the final rule, physician owned entities had
increasingly become involved in the acquisition of medical technologies, including the CyberKnife platform. In many cases,
these entities entered into arrangements with hospitals that billed Medicare for the furnishing of medical services, and the
physician owners were among the physicians who referred patients to the entity for services. The rule limits these
arrangements and could require the restructuring of existing arrangements between physicians owned entities and hospitals
and could discourage physicians from participating in the acquisition and ownership of medical technologies. The final rule
also prohibits percentage-based compensation in equipment leases. As a result of the finalization of these regulations, some
existing CyberKnife platform operators have modified or restructured their corporate or organizational structures. In addition,
certain customers that planned to open CyberKnife centers in the United States involving physician ownership have
restructured their legal ownership structure. Certain entities were not able to establish viable models for CyberKnife platform
operation and therefore, canceled their CyberKnife platform purchase agreements. Accordingly, these regulations have
resulted in cancellations of CyberKnife platform purchase agreements and could also reduce the attractiveness of medical
technology acquisitions, including CyberKnife platform purchases, by physician owned joint ventures or similar entities. As a
result, these regulations have had, and could continue to have, an adverse impact on our product sales and therefore, on our
business and results of operations.
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A person who engages in a scheme to circumvent the Stark Law’s referral prohibition may be fined up to $100,000 for
each such arrangement or scheme. In addition, any person who presents or causes to be presented a claim to the Medicare or
Medicaid programs in violations of the Stark Law is subject to civil monetary penalties of up to $15,000 per bill submission,
an assessment of up to three times the amount claimed, and possible exclusion from federal healthcare programs such as
Medicare and Medicaid. Various states have corollary laws to the Stark Law, including laws that require physicians to
disclose any financial interest they may have with a healthcare provider to their patients when referring patients to that
provider. Both the scope and exceptions for such laws vary from state to state.
Federal False Claims Act. The federal False Claims Act prohibits the knowing filing or causing the filing of a false claim
or the knowing use of false statements to obtain payment from the federal government. When an entity is determined to have
violated the False Claims Act, it may be required to pay three times the actual damages sustained by the government, plus
mandatory civil penalties of between $13,946 and $27,894 for each separate false claim. Suits filed under the False Claims
Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals,
sometimes known as “relators” or, more commonly, as “whistleblowers,” may share in any amounts paid by the entity to the
government in fines or settlement. In addition, certain states have enacted laws modeled after the federal False Claims Act.
Qui tam actions have increased significantly in recent years, causing greater numbers of healthcare companies to have to
defend a false claim action, pay fines or be excluded from Medicare, Medicaid or other federal or state healthcare programs
as a result of an investigation arising out of such action. We have retained the services of a reimbursement consultant, for
which we pay certain consulting fees, to provide us and facilities that have purchased a CyberKnife or TomoTherapy
platform, with general reimbursement advice. While we believe this will assist our customers in filing proper claims for
reimbursement, and even though such consultants do not submit claims on behalf of our customers, the fact that we provide
these consultant services could expose us to additional scrutiny and possible liability in the event one of our customers is
investigated and determined to be in violation of any of these laws.
HIPAA. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), created two new federal crimes:
healthcare fraud and false statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and
willfully executing a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is
a felony and may result in fines, imprisonment or exclusion from government sponsored programs. The false statements
statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false,
fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A
violation of this statute is a felony and may result in fines or imprisonment.
As a participant in the healthcare industry, we are also subject to extensive federal and state laws and regulations
protecting the privacy and integrity of patient medical information, including privacy and security standards required under
HIPAA. The HIPAA privacy standard was amended by the Health Information Technology for Economic and Clinical
Health Act (“HITECH”), enacted as part of the American Recovery and Reinvestment Act of 2009. HITECH significantly
increases the civil money penalties for violations of patient privacy rights protected under HIPAA. Although we are not a
covered entity under HIPAA, we have entered into agreements with certain covered entities under which we are considered to
be a “business associate” under HIPAA. As a business associate, we are required to implement policies, procedures and
reasonable and appropriate security measures to protect individually identifiable health information we receive from covered
entities. Furthermore, business associates are directly subject to regulations under HIPAA including the new enforcement
scheme, criminal and civil penalties for certain violations, and inspection requirements.
Foreign Corrupt Practices Act. The United States and foreign government regulators have increased regulation,
enforcement, inspections and governmental investigations of the medical device industry, including increased United States
government oversight and enforcement of the Foreign Corrupt Practices Act. Whenever the United States or another foreign
governmental authority concludes that we are not in compliance with applicable laws or regulations, such governmental
authority can impose fines, delay or suspend regulatory clearances, institute proceedings to detain or seize our products, issue
a recall, impose operating restrictions, enjoin future violations and assess civil penalties against us or our officers or
employees, and can recommend criminal prosecution to the Department of Justice. Moreover, governmental authorities can
ban or request the recall, repair, replacement or refund of the cost of any device or product we manufacture or distribute. In
addition, our third party agents in foreign countries can also subject us to prosecution under Foreign Corrupt Practices Act.
We are also subject to the UK Bribery Act, which could also lead to the imposition of civil and criminal fines and other
similar anti-bribery and anti-corruption laws. Any of the foregoing actions could result in decreased sales as a result of
negative publicity and product liability claims, and could have a material adverse effect on our financial condition, results of
operations and prospects.
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International Regulation
International sales of medical devices are subject to foreign government regulations, which vary substantially from
country to country. The time required to obtain clearance or approval by a foreign country may be longer or shorter than that
required for FDA clearance or approval, and the requirements are often different.
The primary regulatory environment in Europe is that of the European Union and the three additional member states of the
European Economic Area (“EEA”), which have adopted similar laws and regulations with respect to medical devices. The
European Union has adopted numerous regulations and directives and the European Committee for Standardization has
promulgated standards regulating the design, manufacture, clinical trials, labeling and adverse event reporting for medical
devices. Devices that comply with the requirements of the relevant regulation or directive will be entitled to bear the
Conformité Européene (“CE”) conformity marking, indicating that the device conforms to the essential requirements of the
applicable directives and, accordingly, may be commercially distributed throughout the member states of the EEA.
The method of assessing conformity to applicable regulations, directives, and standards depends on the type and class of
the product, but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a
notified body, an independent and neutral institution appointed by a European Union member state to conduct the conformity
assessment. This relevant assessment may consist of an audit of the manufacturer’s quality system (currently ISO 13485),
provisions of the Medical Devices Regulation (“MDR”) and specific testing of the manufacturer’s device. Our facilities were
first awarded the ISO 13485 certification in September 2002 and has been subsequently maintained through periodic
assessments. The European Union MDR was published in May 2017 and came into effect in May 2021. We are currently
authorized to affix the CE mark under the MDR to our products, allowing us to sell our products throughout the European
Economic Area. We are required to obtain certification against the MDR to CE mark new products or to make significant
changes to existing products. Under the MDR, our notified body may review the technical and clinical details of a product
before permitting the CE mark for new products or significant changes. There are fewer notified bodies authorized under the
MDR to qualify businesses and products. This may result in additional time for initial product reviews and to obtain
authorization to apply the CE mark.
We are also currently subject to regulations in Japan. Under the Pharmaceutical Affairs Law in Japan, a pre-market
approval necessary to sell, market and import a product (Shonin) must be obtained from the Ministry of Health, Labor and
Welfare (“MHLW”), for our products. A Japanese distributor received the first government approval to market the
CyberKnife System from MHLW in November 1996. We received and maintain Shonin approval from MHLW for
CyberKnife Treatment Delivery Systems, M6 Series with InCise MLC, TomoTherapy Treatment Delivery Systems, Radixact
Treatment Delivery Systems, and associated Precision and iDMS software products.
Additionally, our products are subject to regulations in China. The China Supervision and Regulation of Medical Devices
(No. 680) requires licensing from the NMPA to market, sell, and import our product type. Before application, the NMPA
licenses require testing by a laboratory accredited in China, such as the Beijing Institute for Medical Devices Testing
(“BIMT”) or Liaoning Medical Device Test Institute (“LMTI”). China has adopted international standards for safety and
performance with national variations specific to China. We received and maintain NMPA licenses for various configurations
of Radixact Treatment Delivery Systems, CyberKnife Treatment Delivery Systems, TomoTherapy Treatment Delivery
Systems, and Precision (including iDMS) software products.
We are subject to additional regulations in other foreign countries, including, but not limited to, Canada, Taiwan, Korea,
and Russia in order to sell our products. We expect that either we or our distributors will receive any necessary approvals or
clearance prior to marketing or importing our products as required by international markets.
State Certificate of Need Laws
In some states, a certificate of need or similar regulatory approval is required prior to the acquisition of high-cost capital
items or the provision of new services. These laws generally require appropriate state agency determination of public need
and approval prior to the acquisition of such capital items or addition of new services. Certificate of need regulations may
preclude our customers from acquiring one of our systems, and from performing stereotactic radiosurgery procedures using
one of our systems. Several of our prospective customers currently are involved in appeals of certificate of need
determinations. If these appeals are not resolved in favor of these prospective customers, they may be precluded from
purchasing and/or performing services using one of our systems. Certificate of need laws are the subject of continuing
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legislative activity, and a significant increase in the number of states regulating the acquisition and use of one of our systems
through certificate of need or similar programs could adversely affect us.
Backlog
For a discussion of our fiscal 2025 backlog, please refer to the section entitled “Backlog,” in Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
Employees and Human Capital Resources
Our employees are critical to the success of our business. As of June 30, 2025, we had 990 employees, including 432
employees employed outside of the United States. We also engage part-time employees and independent contractors to
supplement our workforce. None of our employees are represented by a labor union or covered by a collective bargaining
agreement. We have never experienced any employment-related work stoppages, and we believe our relationship with our
employees is good. We are dedicated to cultivating a diverse and inclusive work environment, essential for attracting and
retaining exceptional talent. We believe that much of Accuray’s work can be done in a workplace which consists of a blend
of flexible, digitally enabled remote work and purposeful in-person connection and collaboration; we have learned the
importance of providing flexibility and wellbeing resources to our employees. Through ongoing employee development,
comprehensive compensation and benefits, and other programs, we strive to help our employees in all aspects of their lives so
they can do their best work.
Talent Development
We believe that investing in our employees' development is essential for maintaining our competitive edge and fostering a
culture of innovation and excellence. We offer various opportunities for our employees to enhance their skills, knowledge,
and leadership abilities, such as online courses, mentoring programs, coaching sessions, and career development plans. We
also conduct regular performance reviews and feedback surveys to assess our employees' strengths, areas for improvement,
and career aspirations. Our goal is to enable our employees to achieve their full potential and grow with the company.
Compensation & Benefits
The principal purposes of our compensation and incentive plans are to attract, retain, and reward personnel, in order to
increase stockholder value and the success of our company by motivating our employees to perform to the best of their
abilities and achieve our objectives. Accordingly, we seek to offer competitive compensation and benefits packages that align
with our business objectives and reward our employees for their achievements. We also provide various incentives and
recognition programs, such as equity awards, bonuses, service awards, and employee referral bonuses, to motivate and
appreciate our employees. In addition to the comprehensive and competitive health plans that we offer, our employees
receive access to the following benefits: a 401(k) retirement plan with a company match, an employee stock purchase plan, a
company-provided basic life insurance and disability benefits, a corporate wellness program, an employee assistance
program, and local employee discounts programs.
Geographic Information
For financial reporting purposes, net revenues and long-lived assets attributable to significant geographic areas are
presented in Note 14, Segment Disclosure, to the consolidated financial statements, which are incorporated herein by
reference.
Available Information
Our main corporate website address is www.accuray.com. We make available on this website, free of charge, copies of our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and our proxy statements, and
any amendments to those reports, as soon as reasonably practicable after filing such material electronically or otherwise
furnishing it to the Securities and Exchange Commission, the SEC. All SEC filings are also available at the SEC’s website at
www.sec.gov.
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We also use our investor relations website as a channel of distribution for material company information in compliance
with Regulation FD. For example, webcasts of our earnings calls and certain events we participate in or host with members of
the investment community are on our investor relations website. Additionally, we announce investor information, including
news and commentary about our business and financial performance, SEC filings, notices of investor events, and our press
and earnings releases, on our investor relations website. Investors and others can receive notifications of new information
posted on our investor relations website in real time by signing up for email alerts and RSS feeds. Further corporate
governance information, including our corporate governance guidelines, board committee charters, and code of conduct, is
also available on our investor relations website under the heading “Governance.” The contents of our websites are not
incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC,
and any references to our websites are intended to be inactive textual references only.
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Item 1A. RISK FACTORS
Risk Factors Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in Part I, Item 1A titled “Risk
Factors.” These risks include, but are not limited to, the following:
Risks related to our business and results of operations
•
We face risks related to the current global economic environment, which could adversely affect our business,
financial condition and results of operations.
•
If our products do not achieve widespread market acceptance, we will not be able to generate the revenue
necessary to support our business.
•
Our ability to achieve profitability depends in part on maintaining or increasing our gross margins on product
sales and services, which we may not be able to achieve.
•
We have substantial indebtedness and may incur other debt in the future, which may adversely affect our
financial condition and future financial results. In the past, we have not been in compliance with certain financial
covenants relating to our indebtedness and have been required to obtain waivers to avoid defaulting under such
indebtedness.
•
Enhanced international tariffs, including tariffs imposed by the United States and China that affect our products
or components within our products, other trade barriers or a global trade war could decrease the volume of
product sales in China and increase our costs and materially and adversely affect our business condition and
results of operations.
•
Our operating results, including our cash flows, quarterly orders, revenues and margins fluctuate from quarter to
quarter and may be unpredictable.
•
Our industry is subject to intense competition and rapid technological change, which may result in products or
new tumor treatments that are superior to the CyberKnife and TomoTherapy platforms. If we are unable to
anticipate or keep pace with changes in the marketplace and the direction of technological innovation and
customer demands, our products may become obsolete or less useful and our operating results will suffer.
•
We are subject to risks arising from our international operations, which may adversely affect our business,
financial condition, and results of operations.
•
Our results have been and may continue to be impacted by changes in foreign currency exchange rates.
•
If we encounter manufacturing problems, or if our manufacturing facilities do not continue to meet federal, state
or foreign manufacturing standards, we may be required to temporarily cease all or part of our manufacturing
operations, which would result in delays and lost revenue.
•
If we are unable to develop new products or enhance existing products to meet our customers’ needs and
compete favorably in the market, we may be unable to attract or retain customers.
•
If we do not effectively manage our growth, our business may be significantly harmed.
•
We could become subject to product liability claims, product recalls, other field actions and warranty claims that
could be expensive, divert management’s attention and harm our business.
•
Our reliance on single-source suppliers for critical components of our products could harm our ability to meet
demand for our products in a timely and cost effective manner.
•
We depend on key employees, the loss of whom would adversely affect our business. If we fail to attract and
retain employees with the expertise required for our business, we may be unable to continue to grow our
business.
•
Disruption of critical information technology systems, infrastructure and data or cyberattacks or other security
breaches or incidents could harm our business and financial condition.
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•
Any actual or perceived failure by us to comply with legal or regulatory requirements related to privacy,
cybersecurity and data protection could result in proceedings, actions or penalties against us.
•
If third-party payors do not provide sufficient coverage and reimbursement to healthcare providers for use of our
product platforms or if the number of patients covered by health insurance reduces, demand for our products and
our revenue could be adversely affected.
•
The safety and efficacy of our products for certain uses is not yet supported by long-term clinical data, and our
products may therefore prove to be less safe and effective than initially thought.
•
Failures or disruptions at our logistics providers have occurred and could occur in the future, which could
adversely impact our business.
•
Third parties may claim we are infringing their intellectual property or that we are operating outside the scope of
or violating a license or other agreement relating to their intellectual property.
•
It is difficult and costly to protect our intellectual property and our proprietary technologies and we may not be
able to ensure their protection.
•
We previously identified material weaknesses in our system of internal controls as of June 30, 2024. Although
such material weaknesses were remediated as of March 31, 2025, if we fail to maintain an effective system of
internal control over financial reporting, our ability to produce timely and accurate financial results could be
adversely impacted.
Risks related to the regulation of our products and business
•
Modifications, upgrades, new indications and future products related to our products may require new Food and
Drug Administration (“FDA”) 510(k) clearances or premarket approvals and similar licensing or approvals in
international markets.
•
We are subject to federal, state and foreign laws and regulations applicable to our operations, the violation of
which could result in substantial penalties and harm our business.
•
If we or our distributors do not obtain and maintain the necessary regulatory approvals in a specific country, we
will not be able to market and sell our products in that country.
Risks related to our common stock
•
The price of our common stock is volatile and may continue to fluctuate significantly, which could lead to losses
for stockholders.
•
Future issuances of shares of our common stock could dilute the ownership interests of our stockholders.
•
The exercise of outstanding warrants for our common stock would increase the number of shares eligible for
future resale in the public market and result in dilution to our stockholders.
•
The conditional conversion features of the 2026 Notes, if triggered, may adversely affect our financial condition
and operating results.
•
Provisions in the indenture for the 2026 Notes, the financing agreement for our Credit Facilities (as defined
below), our certificate of incorporation and our bylaws could discourage or prevent a takeover, even if an
acquisition would be beneficial in the opinion of our stockholders.
General Risks
•
Our liquidity could be adversely impacted by adverse conditions in the financial markets.
Risk Factors
We operate in a rapidly changing environment that involves significant risks, a number of which are beyond our control.
In addition to the other information contained in this Form 10-K, the following discussion highlights some of these risks and
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the possible impact of these factors on our business, financial condition and future results of operations. If any of the
following risks actually occur, our business, financial condition or results of operations may be adversely impacted, causing
the trading price of our common stock to decline. In addition, these risks and uncertainties may impact the
“forward-looking” statements described elsewhere in this Form 10-K and in the documents incorporated herein by
reference. They could affect our actual results of operations, causing them to differ materially from those expressed in
“forward-looking” statements.
Risks Related to Our Business and Results of Operations
We face risks related to the current global economic environment, including risks arising in connection with tariffs,
inflation, recession or currency fluctuations, any of which could adversely affect our business, financial condition and
results of operations by, among other things, delaying or preventing our customers from obtaining financing to purchase
our products and services or implementing the required facilities to house our systems.
Our business and results of operations are materially affected by conditions in the global markets and the economy
generally. We expect that the business of our customers and our own business will continue to be adversely impacted,
directly or indirectly, by macroeconomic and geopolitical issues. Concerns over economic and political stability; inflation
levels and related efforts to mitigate inflation; a potential recession; the level of U.S. national debt, the U.S. debt credit rating
and U.S. budgetary concerns; currency fluctuations and volatility; the rate of growth of Japan, China and other Asian
economies, including the impact of the China anti-corruption campaign and timing of China stimulus program on those
economies; unemployment; the availability and cost of credit; trade relations, including the imposition of various sanctions,
export controls, and tariffs by the United States and other countries; energy costs; instability in the banking and financial
services sector; geopolitical uncertainty and conflict, including with respect to Russia-Ukraine and the Middle East conflicts,
including with respect to Iran; changes in government administration policy positions and recent executive orders to impose
new tariffs on global imports that could result in additional tariffs on specific industries, and uncertainties regarding impact,
retaliations and further escalation, have contributed to increased volatility and diminished expectations for the economy and
the markets in general. In turn, periods of economic slowdown or recession could lead to a reduction in demand for our
products and services, which in turn would reduce our revenues and adversely affect our results of operations and our
financial position. The results of these macroeconomic conditions, and the actions taken by governments, central banks,
companies, and consumers in response, have and may continue to result in higher inflation in the U.S. and globally, which
has led to an increase in costs and caused changes in fiscal and monetary policy, including increased interest rates. Other
adverse impacts of recent macroeconomic conditions that have impacted us and may continue to impact us are foreign
exchange rate fluctuations, supply chain constraints, logistics challenges, and fluctuations in labor availability. Thus, if
general macroeconomic conditions deteriorate, our business and financial results could be materially and adversely affected.
In an inflationary environment, we may be unable to raise the prices of our products and services sufficiently to keep up
with the rate of inflation. Impacts from inflationary pressures could be more pronounced and materially adversely impact
aspects of our business where revenue streams and cost commitments are linked to contractual agreements that extend many
years into the future, as we may not be able to quickly or easily adjust pricing, reduce costs, or implement counter measures.
A higher inflationary environment can also negatively impact raw material, component, and logistics costs that, in turn, has
increased the costs of producing and distributing our products. For example, inflationary pressures as well as ongoing supply
chain challenges beginning in fiscal year 2023 have resulted in rising costs for certain materials, including increased logistics
and duties costs, that have materially affected our gross margins and net income (loss), which have had a material effect on
our business, financial condition or results of operations. We expect that gross margins and net income (loss) will continue to
be adversely affected by increased material costs and freight and logistics expenses through at least calendar year 2025, and
potentially longer. In addition, we expect inflation and the ongoing supply chain challenges and logistics costs to impact our
cash from operations through at least calendar year 2025, as we are unable to pass all of these increased costs to our
customers.
Further, the U.S. federal government has called for, or enacted, substantial changes to healthcare, trade, fiscal, and tax
policies, which may include changes to existing trade agreements and may have a significant impact on our operations. For
example, the United States has imposed tariffs on many foreign products, including tariffs on imports from China, that in the
past have resulted in and may result in future retaliatory tariffs on U.S. goods and products and restrictions on exports to the
United States. In light of the uncertainty surrounding tariffs imposed by the United States and China and trade relations
between the two countries, we expect the volume of product sales in China to decrease and costs associated with tariffs to
increase. We cannot predict whether these policies will continue, or if new policies will be enacted, or the impact, if any, that
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any policy changes could have on our business. In addition, failure of the U.S. Government to pass a budget in a timely
manner or any reductions in healthcare spending in the budget may adversely impact us or our customers. If economic
conditions worsen, or new legislation is passed related to the healthcare system, trade, fiscal or tax policies, customer demand
may not materialize to levels we require to achieve our anticipated financial results, which could have a material adverse
effect on our business, financial condition and results of operations.
The uncertain macroeconomic environment, including volatile credit markets and concerns regarding the availability and
cost of credit, increased interest rates, inflation, reduced economic growth or a recession, instability in the banking and
financial services sector, and changes in government administration policy positions, in any of the geographic areas where we
do business, could impact consumer and customer demand for our products and services, as well as our ability to manage
normal commercial relationships with our customers, suppliers and creditors, including financial institutions, and the ability
of our customers to meet their obligations to us. For example, in the United States, at least one customer declared bankruptcy
in fiscal 2023 causing us to increase our bad debt reserve due to the expectation that they will be unable to pay us. Further,
some of our customers have been delayed in obtaining, or have not been able to obtain, necessary financing for their
purchases of the CyberKnife or TomoTherapy platforms. In addition, some of our customers have been delayed in obtaining,
or have not been able to obtain, necessary financing for the construction or renovation of facilities to house the CyberKnife or
TomoTherapy platforms, the cost of which can be substantial. These delays have, in some instances, led to our customers
postponing the shipment and installation of previously ordered systems or cancelling their system orders and may cause other
customers to postpone their system installation or to cancel their agreements with us. Reduced budgets and lower capital
deployment priority for radiotherapy equipment, along with longer customer installation timelines, in the United States have
also negatively impacted our net revenue since fiscal year 2024, and we expect this will continue to have an impact through
fiscal year 2026. A continuation or further deterioration of the adverse economic environment would further increase delays
and order cancellations, or affect our ability to collect from our customers, any of which would continue to adversely affect
revenues, and therefore, harm our business and results of operations.
If the CyberKnife or TomoTherapy platforms do not achieve widespread market acceptance, we will not be able to
generate the revenue necessary to support our business.
Achieving physician, patient, hospital administrator and third-party payor acceptance of the CyberKnife and
TomoTherapy platforms as preferred methods of tumor treatment is crucial to our continued success. Physicians will not
begin to use or increase the use of the CyberKnife or TomoTherapy platforms unless they determine, based on experience,
clinical data and other factors, that the CyberKnife and TomoTherapy platforms are safe and effective alternatives to
traditional treatment methods. Further, physicians may be slow to adopt new or updated versions of our CyberKnife and
TomoTherapy platforms because of the perceived liability risks arising from the use of new products and the uncertainty of
reimbursement from third-party payors, particularly in light of ongoing health care reform initiatives and the evolving U.S.
health care environment. If we are not able to expand market acceptance of our products and maintain and increase our base
of installed systems, or installed base, then sales of our products may not meet expectations. Any failure to expand and
protect our existing installed base could adversely affect our operating results.
We often need to educate physicians about the use of stereotactic radiosurgery, image guided radiation therapy (“IGRT”)
and adaptive radiation therapy, convince healthcare payors that the benefits of the CyberKnife and TomoTherapy platforms
and their related treatment processes outweigh their costs, and help train qualified physicians in the skilled use of these
systems. In addition, we also must educate prospective customers regarding the entire functionality of our radiation therapy
systems and their relative benefits compared to alternative products and treatment methods. We must also increase awareness
among potential patients, who are increasingly educated about treatment options and therefore, impact adoption of new
technologies by clinicians. We have expended and will continue to expend significant resources on marketing and
educational efforts to create awareness of stereotactic radiosurgery and robotic intensity-modulated radiotherapy (“IMRT”) as
well as adaptive radiation therapy and IGRT generally and to encourage the acceptance and adoption of our products for
these technologies. We cannot be sure that our products will gain significant market acceptance among physicians, patients
and healthcare payors, even if we spend significant time and expense on their education.
In addition to achieving market acceptance of our products and the need to educate physicians and others about the
benefits of our products, the CyberKnife and TomoTherapy platforms are major capital purchases, and purchase decisions are
greatly influenced by hospital administrators who are subject to increasing pressures to reduce costs. These and other factors,
including the following, may affect the rate and level of market acceptance of the CyberKnife and TomoTherapy platforms:
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•
the CyberKnife and TomoTherapy platforms’ price relative to other products or competing treatments;
•
our ability to develop new products and enhancements and receive regulatory clearances and approval, if
required, to such products in a timely manner;
•
increased scrutiny by state boards when evaluating certificates of need requested by purchasing institutions;
•
perception by patients, physicians and other members of the healthcare community of the CyberKnife and
TomoTherapy platforms’ safety, efficacy, efficiency and benefits compared to competing technologies or
treatments;
•
willingness of physicians to adopt new techniques and the ability of physicians to acquire the skills necessary to
operate the CyberKnife and TomoTherapy platforms;
•
extent of third-party coverage and reimbursement rates, particularly from Medicare, for procedures using the
CyberKnife and TomoTherapy platforms; and
•
development of new products and technologies by our competitors or new treatment alternatives.
If the CyberKnife or TomoTherapy platforms are unable to achieve or maintain market acceptance, new orders and sales
of our systems would be adversely affected, our revenue levels would decrease and our business would be harmed.
Our ability to achieve profitability depends in part on maintaining or increasing our gross margins on product sales and
services, which we may not be able to achieve.
As of June 30, 2025, we had an accumulated deficit of $519.3 million. We have incurred net losses, and expect to incur
net losses in the future, particularly as selling and marketing activities increase ahead of any expected revenue. Our ability to
achieve and sustain long-term profitability is largely dependent on our ability to successfully market and sell the CyberKnife
and TomoTherapy platforms, control our costs, and effectively manage our growth. We cannot assure you that we will be
able to achieve profitability and even if we do achieve profitability, we may not be able to sustain or increase profitability on
a quarterly or annual basis. In the event we fail to achieve profitability, our stock price could decline.
Our ability to achieve profitability also depends on our ability to maintain or increase our gross margins on product sales
and services. A number of factors have adversely impacted or could impact gross margins, including:
•
lower than expected manufacturing yields of high cost components leading to increased manufacturing costs;
•
low production volume, which will result in high levels of overhead cost per unit of production;
•
lower selling pricing;
•
our ability to sell products and services, recognize revenue from our sales and the timing of revenue recognition
and revenue deferrals;
•
increased labor costs or other costs as a result of increased inflation and supply chain constraints;
•
delays in receipt of or increased costs related to critical components parts, including as a result of supply chain
disruptions;
•
increased inventory costs and liabilities for excess inventory resulting from inventory held in excess of forecasted
demand;
•
increased service or warranty costs or the failure to reduce service or warranty costs;
•
increased price competition;
•
variation in the margins across products installed in a particular period;
•
changes to U.S. and foreign trade policies, including imposition of tariffs on goods imported into the U.S.
including, but not limited to, tariffs on goods imported from China and other countries, and any retaliatory tariffs
imposed by other countries on U.S. goods, including our products, and retaliatory export controls that could
impact our supply chain;
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•
fluctuations in foreign currency exchange rates; and
•
how well we execute on our strategic and operating plans.
If we are unable to maintain or increase our gross margins on product sales and service, our results of operations could be
adversely impacted, we may not achieve profitability and our stock price could decline.
We have substantial indebtedness in the form of a credit facility and convertible senior notes and may incur other debt in
the future, which may adversely affect our financial condition and future financial results. In the past, we have not been
in compliance with certain financial covenants relating to our indebtedness and have been required to obtain waivers to
avoid defaulting under such indebtedness.
As of June 30, 2025, we had outstanding borrowings of $150 million under our five-year term loan (the “Term Loan
Facility”) with additional borrowings available of $20 million under our revolving credit facility (the “Revolving Credit
Facility”) and $20 million under our delayed draw term loan (the “Delayed Draw Facility” and together with the Term Loan
Facility and Revolving Credit Facility, the “Credit Facilities”), each of which will mature on June 6, 2030, and $18.0 million
in principal amount outstanding of our 3.75% Convertible Senior 2026 Notes due June 1, 2026 (the “2026 Notes”). Our
existing and future levels of indebtedness could have important consequences to stockholders and note holders and may
adversely affect our financial conditions and future financial results by, among other things:
•
affecting our ability to satisfy our obligations under the 2026 Notes and Credit Facilities;
•
requiring a substantial portion of our cash flows from operations to be dedicated to interest and principal
payments, which may not be available for operations, working capital, capital expenditures, expansion,
acquisitions or general corporate or other purposes;
•
impairing our ability to obtain additional financing in the future;
•
limiting our flexibility in planning for, or reacting to, changes in our business and industry; and
•
increasing our vulnerability to downturns in our business, our industry or the economy in general.
Concurrently and in connection with our entry into the credit agreement governing the Credit Facilities (the “Financing
Agreement”), we issued to our lenders (i) an aggregate of 17,180,710 shares of our common stock issuable upon exercise of
outstanding warrants (the “Premium Warrants”), which are exercisable starting on December 7, 2025 and until June 6, 2032
and have an exercise price of $1.68 per share, and (ii) an aggregate of 6,247,531 shares of our common stock issuable upon
exercise of warrants (the “Penny Warrants” and, together with the Premium Warrants, the “Warrants”), which are exercisable
until June 6, 2032 and have an exercise price of $0.01 per share.
The Financing Agreement also includes certain restrictive covenants that limit, among other things, our ability and our
subsidiaries’ ability to (i) incur indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions,
(iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate, (vii) voluntarily repay or prepay certain
indebtedness and (viii) enter into transactions with affiliates, in each case, subject to certain exceptions. In addition, such
agreements require us to meet certain financial covenants, including a fixed charge coverage ratio, total leverage ratio and
liquidity level, as defined in the Financing Agreement. These restrictions could adversely affect our ability to finance our
future operations or capital needs, withstand a future downturn in our business or the economy in general, engage in business
activities, including future opportunities that may be in our interest, and plan for or react to market conditions or otherwise
execute our business strategies. Our ability to comply with the covenants and other terms governing the Credit Facilities will
depend in part on our future operating performance. If we fail to comply with such covenants and terms, we may be in default
and the maturity of the related debt could be accelerated and become immediately due and payable. In addition, because
substantially all of our assets are pledged as a security under the Credit Facilities, if we are not able to cure any default or
repay outstanding borrowings, such assets are subject to the risk of foreclosure by our lenders. From time to time, we have
not been in compliance with certain similar covenants or other terms governing the prior credit facilities and we have been
required to obtain waivers or amendments to the previous credit agreement from our lenders in order to maintain compliance.
There can, however, be no certainty that any such waiver or amendment will be available to us in the future, which may lead
to a default under the terms of the Financing Agreement governing the Credit Facilities, or what the cost of such waiver or
amendment, if obtained, would be. If we are unable to obtain necessary waivers or relevant amendments as required and the
debt under such credit facility is accelerated, we would be required to obtain replacement financing at prevailing market
rates, which may not be available to us on favorable terms or at all. Failure to obtain replacement financing could result in
33
certain of our long-term indebtedness being reclassified current, which could in turn impact our ability to continue as a going
concern. Additionally, a default on indebtedness would likely result in a default under the terms of the indenture governing
the 2026 Notes. We may not be able to satisfy our obligations if any of our indebtedness is accelerated.
In addition, the Credit Facilities expose us to interest rate risk. If the amount outstanding under the Credit Facilities
remained at the level outstanding as of June 30, 2025 for the next 12 months and interest rates increased or decreased by 50
basis point change, our annual interest expense would increase or decrease, respectively, approximately $0.8 million.
Enhanced international tariffs, including tariffs imposed by the United States and China that affect our products or
components within our products, other trade barriers or a global trade war could decrease the volume of product sales in
China and increase our costs and materially and adversely affect our business condition and results of operations.
Our global business has been and could continue to be negatively affected by trade barriers and other governmental
protectionist measures, any of which can be imposed or modified suddenly and unpredictably. There is currently significant
uncertainty about the future relationship between the U.S. and various other countries, most significantly China, with respect
to trade policies, treaties, government regulations and tariffs and such uncertainty could continue with the changes in
government administration policy positions. Recently, the U.S. presidential administration has indicated its intent to modify
U.S. trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade
agreements. It has also imposed or announced tariffs on certain imports, including a baseline tariff of 10% on virtually all
imports, higher tariffs on imports from China, as well as certain imports from Mexico and Canada. The administration has
also announced and subsequently paused higher tariffs on additional countries, including the European Union pending the
outcome of trade negotiations. These tariffs affect component parts including the linear accelerator for our CyberKnife
platforms, which we manufacture in China and import into the U.S., as well as other components that we import into the U.S.
from other suppliers, which could significantly impact the cost of these parts. Any retaliatory tariffs could also impact our
ability to export and sell our products into those countries. For example, during the last half of calendar year 2018, the U.S.
federal government imposed a series of tariffs ranging from 10% to 25% on a variety of imports from China, to which China
responded with retaliatory tariffs ranging from 5% to 25% on a wide range of products from the U.S., which included certain
of our products. If these tariffs continue, if additional tariffs are placed on certain of our components or products, or if any
related counter-measures are taken by China, the U.S. or other countries, our business, financial condition and results of
operations may be materially harmed. We have experienced increased costs associated with tariffs and in light of continued
uncertainty surrounding tariffs imposed by the United States and China, and overall trade relations between the two
countries, the volume of our product sales in China may decrease. An increase in our costs could require us to raise prices on
our products, which may negatively impact the demand for our products in the affected market. We may not be able to
forecast such impacts accurately. Although we continue to work with our vendors and customers to mitigate our exposure to
current or potential tariffs, there can be no assurance that we will be able to offset any increased costs. The ultimate impact of
any tariffs will depend on various factors, including if any tariffs are ultimately implemented, the timing of implementation,
and the amount, scope, and nature of the tariffs. If we are not successful in offsetting the impact of any such tariffs, our
revenue, gross margins and operating results may be adversely affected.
These tariffs are subject to a number of uncertainties as they are implemented, including future adjustments and changes.
The ultimate reaction of other countries and the impact of these tariffs or other actions on the U.S., the global economy and
our business, financial condition and results of operations, cannot be predicted at this time, nor can we predict the impact of
any other developments with respect to global trade. Further, the imposition of additional tariffs by the U.S. could result in
the adoption of additional tariffs by other countries, as well as export controls and further retaliatory actions by any affected
country. Any resulting trade war could negatively impact the global market for medical devices, including radiation therapy
devices, and could have a significant adverse effect on our business. These developments may have a material adverse effect
on global economic conditions and the stability of global financial markets, and they may significantly reduce global trade.
Any of these factors could depress economic activity, restrict our access to customers and have a material adverse effect on
our business, financial condition and results of operations.
In addition, economic sanctions imposed by the United States and other countries could negatively affect our global
business. For example, following Russia’s invasion of Ukraine, the United States and other countries imposed economic
sanctions and severe export control restrictions against Russia and Belarus, and the United States and other countries could
impose wider sanctions and export restrictions and take other actions should the conflict further escalate. Any exports or sales
of our products into Russia and Belarus may be impacted by these restrictions. For instance, we are not able to ship certain
spare or replacement parts into Russia and Belarus, which impacts our distributor's ability to service our installed base in such
34
countries as we have distributors in Russia. The military conflict in Ukraine has also led to an expansion of sanction
programs imposed against Russia by the United States, Canada, the EU, the United Kingdom, Switzerland, and Japan, among
others, that in relevant part, impose sanctions against some of the largest state-owned and private Russian financial
institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication
(“SWIFT”) payment system) and certain Russian businesses, some of which have significant financial and trade ties to the
EU, making it increasingly difficult to transfer money from Russia to other countries. In response to international sanctions,
and as part of measures to stabilize and support the volatile Russian financial and currency markets, the Russian authorities
imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia,
imposed various restrictions on transacting with non-Russian parties, banned exports of various products and imposed other
economic and financial restrictions. If we are unable to receive payment from customers in Russia or transfer money outside
of Russia, it could affect our ability to convert backlog from that region into revenue. The situation continues to evolve, and
the United States, the EU, the United Kingdom and other countries may implement additional sanctions, export controls or
other measures against Russia and other countries, regions, officials, individuals or industries in the respective territories.
Such sanctions and measures, as well as existing and potential further responses from Russia or other countries, could
adversely affect the global economy and financial markets, as well as our business, financial condition and results of
operations, which may also magnify the impact of other risks described in this “Risk Factors” section.
Our operating results, including our cash flows, quarterly orders, revenues and margins fluctuate from quarter to quarter
and may be unpredictable.
We have experienced and expect in the future to experience fluctuations in our operating results, including gross orders,
revenues and margins, from period to period. Drivers of orders include the introduction and timing of new product or product
enhancement announcements by us and our competitors, the timing of regulatory approvals, changes in price by us and our
competitors as well as changes or anticipated changes in third-party reimbursement amounts or policies applicable to
treatments using our products. The availability of economic stimulus packages or other government funding, or reductions
thereof, may also affect timing of customer purchases. Our products have a high unit price and require significant capital
expenditures by our customers. Accordingly, we experience long sales and implementation cycles, which is of greater
concern during a volatile economic environment where we have had customers delay or cancel orders. The timing of when
orders are placed, when installation, delivery or shipping, as applicable, is accomplished and when revenue is recognized
affect our quarterly results. Further, because of the high unit price of the CyberKnife and TomoTherapy platforms and the
relatively small number of units sold or installed each quarter, each sale or installation of a CyberKnife or TomoTherapy
platform can represent a significant percentage of our net orders, backlog or revenue for a particular quarter and shifts in sales
or installation from one quarter to another may have significant effects. For example, multi-system sales or sales involving
negotiations with integrated delivery networks involve additional complexities to the transaction and require a longer
timeline to finalize the sale, which make it more difficult to predict the quarter in which the sale will occur. In addition, we
have experienced delays in orders and installations due to the impact of macroeconomic factors.
Once orders are received and booked into backlog, there is a risk that we may not recognize revenue in the near term or at
all. The pace at which backlog converts to revenue has been adversely impacted in recent years, primarily due to delays in the
timing of deliveries and installations in fiscal 2020 through 2022 caused by the COVID-19 pandemic and the resulting effects
on the global economic environment. These delays in deliveries and installations could occur again in the future, which could
have a negative impact on our revenue. Factors that may affect whether these orders become revenue (or are cancelled or
deemed aged-out and reflected as a reduction in net orders) and the timing of revenue include:
•
economic or political instability, including volatility related to the current global economic environment;
•
delays in the customer obtaining or inability of a customer to obtain funding or financing;
•
delays in construction at the customer site and delays in installation;
•
delays in the customer obtaining or inability of such customer to obtain local or foreign regulatory approvals
such as certificates of need in certain states or Class A or Class B user licenses in China;
•
the terms of the applicable sales and service contracts of the CyberKnife and TomoTherapy platforms; and
•
the proportion of revenue attributable to orders placed by our distributors, which may be more difficult to
forecast due to factors outside our control.
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Our operating results have previously and may in the future also be affected by a number of other factors, some of which
are outside of our control, including:
•
delays in business operations of our customers or vendors, construction at customer sites and installation,
including delays caused by supply chain delays;
•
timing and level of expenditures associated with new product development activities;
•
regulatory requirements in some states for a certificate of need prior to the installation of a radiation device or
foreign regulatory approvals, such as Class A or Class B user licenses in China;
•
delays in shipment due to, among other things, unanticipated construction delays at customer locations where our
products are to be installed, cancellations by customers, natural disasters, global or regional health pandemics or
epidemics, or labor disturbances;
•
delays in our manufacturing processes or unexpected manufacturing difficulties, including due to supply chain
and logistics challenges;
•
the timing of the announcement, introduction and delivery of new products or product upgrades by us and by our
competitors;
•
timing and level of expenditures associated with expansion of sales and marketing activities such as trade shows
and our overall operations;
•
the timing and level of expenditures associated with our financing activities;
•
our ability to satisfy the covenants associated with our indebtedness and our ability to generate sufficient cash
flow or obtain additional financing to satisfy our obligations as they come due;
•
the effects of foreign currency adjustments;
•
the effects of macroeconomic factors, including the effects of enhanced international tariffs;
•
changes in accounting principles, such as those related to revenue recognition, or in the interpretation or the
application thereof; and
•
fluctuations in our gross margins and the factors that contribute to such fluctuations, as described in
Management’s Discussion and Analysis of Financial Condition and Results of Operations and the risk factor
entitled, “Our ability to achieve profitability depends in part on maintaining or increasing our gross margins on
product sales and services, which we may not be able to achieve.”
Because many of our operating expenses are based on anticipated sales and a high percentage of these expenses are fixed
for the short term, a small variation in the timing of revenue recognition can cause significant variations in operating results
from quarter to quarter. If our financial results fall below the expectation of securities analysts and investors, the trading price
of our common stock would almost certainly decline.
We report our orders and backlog on a quarterly and annual basis. Unlike revenues, orders and backlog are not defined by
United States generally accepted accounting principles (“U.S. GAAP”), and are not within the scope of the audit conducted
by our independent registered public accounting firm. Also, for the reasons discussed in Management’s Discussion and
Analysis of Financial Condition and Results of Operations, our orders and backlog cannot necessarily be relied upon as
accurate predictors of future revenues. Order cancellation or significant delays in installation date will reduce our backlog
and future revenues, and we cannot predict if or when orders will mature into revenues. Particularly high levels of
cancellations or age-outs in one or more periods may cause our revenue and gross margins to decline in current or future
periods and will make it difficult to compare our operating results from quarter to quarter. We cannot assure you that our
backlog will result in revenue on a timely basis or at all, or that any cancelled contracts will be replaced.
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Our industry is subject to intense competition and rapid technological change, which may result in products or new tumor
treatments that are superior to the CyberKnife and TomoTherapy platforms. If we are unable to anticipate or keep pace
with changes in the marketplace and the direction of technological innovation and customer demands, our products may
become obsolete or less useful and our operating results will suffer.
The medical device industry in general and the non-invasive cancer treatment field in particular are subject to intense and
increasing competition and rapidly evolving technologies. Because our products often have long development and
government approval cycles, we must anticipate changes in the marketplace and the direction of technological innovation and
customer demands. To compete successfully, we will need to continue to demonstrate the advantages of our products and
technologies over well-established alternative procedures, products and technologies, and convince physicians and other
healthcare decision makers of the advantages of our products and technologies. Traditional surgery and other forms of
minimally invasive procedures, brachytherapy, chemotherapy or other drugs remain alternatives to the CyberKnife and
TomoTherapy platforms.
We consider the competition for the CyberKnife and TomoTherapy platforms to be existing radiation therapy systems,
primarily using C-arm linacs, which are sold by large, well-capitalized companies with significantly greater market share and
resources than we have. Several of these competitors are also able to leverage their fixed sales, service and other costs over
multiple products or product lines. In particular, we compete with a number of existing radiation therapy equipment
companies, including Varian Medical Systems, Inc., a Siemens Healthineers company (“Varian”), Elekta AB (“Elekta”),
RefleXion Medical Inc. and Zap Surgical Systems. Varian has been the leader in the external beam radiation therapy market
for many years and has the majority market share for radiation therapy systems worldwide. In general, because of aging
demographics and attractive market factors in oncology, we believe that new competitors will enter the radiosurgery and
radiation therapy markets in the years ahead. In addition, some manufacturers of conventional linac based radiation therapy
systems, including Varian and Elekta, have products that can be used in combination with body and/or head frames and
image guidance systems to perform both radiosurgical and radiotherapy procedures.
Furthermore, many government, academic and business entities are investing substantial resources in research and
development of cancer treatments, including surgical approaches, radiation treatment, MRI-guided radiotherapy systems,
proton therapy systems, radiopharmaceutical/pharmaceutical treatments, gene therapy (which is the treatment of disease by
replacing, manipulating, or supplementing nonfunctional genes) and other approaches. Successful developments that result in
new approaches for the treatment of cancer could reduce the attractiveness of our products or render them obsolete.
Our future success will depend in large part on our ability to establish and maintain a competitive position in current and
future technologies. Rapid technological development may render the CyberKnife and TomoTherapy platforms and their
technologies obsolete. Many of our competitors have or may have greater corporate, financial, operational, sales and
marketing resources, and more experience and resources in research and development than we have. We cannot assure you
that our competitors will not succeed in developing or marketing technologies or products that are more effective or
commercially attractive than our products or that would render our technologies and products obsolete or less useful. We may
not have the financial resources, technical expertise, marketing, distribution or support capabilities to compete successfully in
the future. In addition, some of our competitors may compete by changing their pricing model or by lowering the price of
their products. If we are unable to maintain or increase our selling prices, our revenue and gross margins may suffer. Our
success will depend in large part on our ability to maintain a competitive position with our technologies.
In addition to competition from technologies performing similar functions as our platforms, competition also exists for the
limited capital expenditure budgets of our customers. For example, our platforms may compete with other equipment
required by a radiation therapy department for financing under the same capital expenditure budget, which is typically
limited. A purchaser, such as a hospital or cancer treatment center, may be required to select between the two items of capital
equipment. Our ability to compete may also be adversely affected when purchase decisions are based solely upon price, since
our products are premium-priced systems due to their higher level of functionality and performance.
We are subject to risks arising from our international operations, which may adversely affect our business, financial
condition, and results of operations.
We derive most of our revenue from our international operations, and we plan to continue expanding our business in
international markets in the future. In addition, we have employees engaged in R&D, manufacturing, administration,
manufacturing, support and sales and marketing activities.
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As a result of our international operations, in addition to similar risks we face in our U.S. operations, we are affected by
economic, business, regulatory, social, and political conditions in foreign countries, including the following:
•
economic or political instability in the world or in particular regions or countries in which we do business,
including the market volatility resulting from conflicts or war, such as the Russia-Ukraine and the Middle East
conflicts including with respect to Iran, and changes in government administration policy positions;
•
import delays;
•
changes in foreign laws and regulations governing, among other matters, the clearance, approval and sales of
medical devices;
•
compliance with differing foreign regulatory requirements to sell and market our products;
•
U.S. relations with the governments of the foreign countries in which we operate, which may, among other
things, affect our access to such markets, including China, where our JV is located;
•
protectionist laws, policies, business practices and nationalistic campaigns that favor local competitors, which
could slow our growth, increase our costs, or make our products less competitive in our international markets;
•
U.S. trade and economic sanctions policies that are in effect from time to time including, but not limited to,
tariffs on goods imported from China and other countries, and the possibility that foreign countries may impose
additional taxes, tariffs or other restrictions on foreign trade;
•
longer payment cycles associated with many customers outside the United States;
•
inability of customers to obtain requisite government approvals, such as customers in China, including customers
of the JV, obtaining one of the limited number of Class A or Class B user licenses available in order to purchase
our products;
•
effective compliance with privacy, data protection and information security laws, such as the European Union
(“EU”) General Data Protection Regulation (the “GDPR”) and new regulations in China;
•
adequate coverage and reimbursement for the CyberKnife and TomoTherapy platform treatment procedures
outside the United States;
•
failure of local laws to provide the same degree of protection against infringement of our intellectual property;
•
trade restrictions that are in effect from time to time, including U.S. prohibitions and restrictions on exports of
certain products and technologies to certain nations and customers;
•
the unfamiliarity of shipping companies and other logistics providers with U.S. export control laws, which may
lead to their unwillingness to ship or delays in shipping, our products to certain nations and customers despite
such shipments being permitted under such laws;
•
the inability to obtain required export or import licenses or approvals;
•
risks relating to foreign currency, including fluctuations in foreign currency exchange rates possibly causing
fewer sales due to any strengthening of the U.S. Dollar;
•
effects of and uncertainties caused by the United Kingdom’s withdrawal from the European Union;
•
contractual provisions governed by foreign laws; and
•
natural disasters, such as earthquakes and fires, and global or regional health pandemics or epidemics, such as
COVID-19 or data privacy or security incidents, that may have a disproportionate effect in certain geographies
resulting in decreased demand or decreased ability of our employees or employees of our customers and partners
to work and travel.
Our inability to overcome these obstacles could harm our business, financial condition and operating results. Even if we
are successful in managing these obstacles, our partners internationally are subject to these same risks and may not be able to
manage these obstacles effectively.
38
In addition, our partners internationally are subject to these same risks. If we or our partners are impacted by any of these
factors, our business, financial condition and operating results could be adversely affected.
Our results have been and may continue to be impacted by changes in foreign currency exchange rates.
Our operating results are subject to volatility due to fluctuations in foreign currency exchange rates. Currently, the
majority of our international sales are denominated in U.S. Dollars. As a result, an increase in the value of the U.S. Dollar
relative to foreign currencies could require us to reduce our sales price or make our products less competitive in international
markets. Foreign exchange has previously been and could in the future be a significant headwind if the U.S. Dollar
strengthens, which could affect our results of operations and could cause potential delays in orders and we may see our sales
and margins outside of the U.S. decline as we may not be able to raise local prices to fully offset any strengthening of the
U.S. Dollar. Also, if our international sales continue to increase, we may enter into a greater number of transactions
denominated in non-U.S. Dollars, which would expose us to foreign currency risks, including changes in currency exchange
rates. If we are unable to address these risks and challenges effectively, our international operations may not be successful
and our business would be materially harmed.
If we encounter manufacturing problems, or if our manufacturing facilities do not continue to meet federal, state or
foreign manufacturing standards, we may be required to temporarily cease all or part of our manufacturing operations,
which would result in delays and lost revenue.
The CyberKnife and TomoTherapy platforms are complex and require the integration of a number of components from
several sources of supply. We must manufacture and assemble these complex systems in commercial quantities in
compliance with regulatory requirements and at an acceptable cost. Our linear accelerator components are extremely complex
devices and require significant expertise to manufacture, and we may encounter difficulties in scaling up production of the
CyberKnife or TomoTherapy platforms, including problems with quality control and assurance, component supply shortages,
increased costs, shortages of qualified personnel, the long lead time required to develop additional radiation shielded facilities
for purposes of testing our products and/or difficulties associated with compliance with local, state, federal and foreign
regulatory requirements. In addition, the macroeconomic environment has and may continue to impact the supply of key
components such that we may not receive them in a timely manner, in sufficient quantities, or at a reasonable cost. If
component supply or our manufacturing capacity does not keep pace with demand, we will not be able to fulfill product
orders or service our products in a timely manner, which in turn may have a negative effect on our financial results and
overall business. Conversely, if demand for our products decreases, the fixed costs associated with excess manufacturing
capacity may adversely affect our financial results.
Our manufacturing processes and the manufacturing processes of our third-party suppliers are required to comply with the
FDA’s Quality System Regulations (“QSR”) for any products imported into, or sold within, the U.S. The QSR is a complex
regulatory scheme that covers the methods and documentation of the design, testing, production process and controls,
manufacturing, labeling, quality assurance, packaging, storage and shipping of our products. Furthermore, we are required to
verify that our suppliers maintain facilities, procedures and operations that comply with our quality requirements. We are also
subject to state licensing and other requirements and licenses applicable to manufacturers of medical devices, and we are
required to comply with International Organization for Standardization (“ISO”), quality system standards in order to produce
products for sale in Europe and Canada, as well as various other foreign laws and regulations. Because our manufacturing
processes include the production of diagnostic and therapeutic X-ray equipment and laser equipment, we are subject to the
electronic product radiation control provisions of the Federal Food, Drug and Cosmetic Act, which requires that we file
reports with the FDA, applicable states and our customers regarding the distribution, manufacturing and installation of these
types of equipment. The FDA enforces the QSR and the electronic product radiation control provisions through periodic
inspections, some of which may be unannounced. We have been and anticipate in the future being subject to such
inspections. FDA inspections usually occur every two to three years. During such inspections, the FDA may issue
Inspectional Observations on Form FDA 483, listing instances where the manufacturer has failed to comply with applicable
regulations and procedures, or warning letters.
If a manufacturer does not adequately address the observations, the FDA may take enforcement action against the
manufacturer, including the imposition of fines, restriction of the ability to export product, total shutdown of production
facilities and criminal prosecution. If we or a third-party supplier receive a Form FDA 483 with material or major
observations that are not promptly corrected, fail to pass a QSR inspection, or fail to comply with these, ISO and other
applicable regulatory requirements, our operations could be disrupted and our ability to generate sales could be delayed. Our
39
failure to take prompt and satisfactory corrective action in response to an adverse inspection or our failure to comply with
applicable standards could result in enforcement actions, including a public warning letter, a shutdown of our manufacturing
operations, a recall of our products, civil or criminal penalties, or other sanctions, which would cause our sales and business
to suffer. In addition, because some foreign regulatory approvals are based on approvals or clearances from the FDA, any
failure to comply with FDA requirements may also disrupt our sales of products in other countries. We cannot assure you that
the FDA or other governmental authorities would agree with our interpretation of applicable regulatory requirements or that
we or our third-party suppliers have in all instances fully complied with all applicable requirements. If any of these events
occur, our reputation could be harmed, we could lose customers and there could be a material adverse effect on our business,
financial condition and results of operations.
If we cannot achieve the required level and quality of production, we may need to outsource production or rely on
licensing and other arrangements with third parties who possess sufficient manufacturing facilities and capabilities in
compliance with regulatory requirements. Even if we could outsource needed production or enter into licensing or other
third-party arrangements, this could reduce our gross margin and expose us to the risks inherent in relying on others. We also
cannot assure you that our suppliers will deliver an adequate supply of required components on a timely basis or that they
will adequately comply with the QSR. Failure to obtain these components on a timely basis would disrupt our manufacturing
processes and increase our costs, which would harm our operating results.
If we are unable to develop new products or enhance existing products to meet our customers’ needs and compete
favorably in the market, we may be unable to attract or retain customers.
Our success depends on the successful development, regulatory clearance or approval, introduction and commercialization
of new generations of products, treatment systems, and enhancements to and/or simplification of existing products that will
meet our customers’ needs provide novel features and compete favorably in the market. The CyberKnife and TomoTherapy
platforms, which are currently our principal products, are technologically complex and must keep pace with, among other
things, the products of our competitors and new technologies. We are making significant investments in long-term growth
initiatives. Such initiatives require significant capital commitments, involvement of senior management and other
investments on our part, which we may be unable to recover. Our timeline for the development of new products or
enhancements may not be achieved and price and profitability targets may not prove feasible. Commercialization of new
products may prove challenging, and we may be required to invest more time and money than expected to successfully
introduce them. Once introduced, new products may adversely impact orders and sales of our existing products or make them
less desirable or even obsolete. Compliance with regulations, competitive alternatives, and shifting market preferences may
also impact the successful implementation of new products or enhancements. Our inability to develop, gain regulatory
approval for or supply competitive products to the market as quickly and effectively as our competitors could limit market
acceptance of our products and reduce our sales.
In addition, we depend on one of our customers for a substantial portion of our revenue, and the loss of, or a significant
reduction in orders from our major customer could have a material adverse effect on our revenue and operating results. We
had one customer that represented 10% or more of total net revenue for the years ended June 30, 2025 and 2024, respectively.
In the future, our major customer may decide not to purchase our products at all, may purchase fewer products than they did
in the past, or may defer or cancel purchases or otherwise alter their purchasing patterns.
Our ability to successfully develop and introduce new products, treatment systems and product enhancements and
simplifications, and the revenues and costs associated with these efforts, will be affected by our ability to:
•
properly identify and address customer needs;
•
prove feasibility of new products in a timely manner;
•
educate physicians about the use of new products and procedures;
•
comply with internal quality assurance systems and processes timely and efficiently;
•
manage the timing and cost of obtaining regulatory approvals or clearances;
•
accurately predict and control costs associated with inventory overruns caused by phase-in of new products and
phase-out of old products;
•
price new products competitively;
40
•
manufacture and deliver our products in sufficient volumes on time and accurately predict and control costs
associated with manufacturing, installation, warranty and maintenance of the products;
•
meet our product development plan and launch timelines;
•
enter into collaborations with third parties. For example, a key component of our research and development
program is our collaboration with research programs at selected hospitals, cancer treatment centers, academic
institutions and research institutions worldwide;
•
improve manufacturing yields of components; and
•
manage customer demands for retrofits of both old and new products.
Even if customers accept new products or product enhancements, the revenues from these products may not be sufficient
to offset the significant costs associated with making them available to customers.
We cannot be sure that we will be able to successfully develop, obtain regulatory approval or clearance for, manufacture
or introduce new products, treatment systems or enhancements, the roll-out of which involves compliance with complex
quality assurance processes, including QSR. Failure to obtain regulatory approval or clearance for our products or to
complete these processes in a timely and efficient manner could result in delays that could affect our ability to attract and
retain customers, or could cause customers to delay or cancel orders, causing our backlog, revenues and operating results to
suffer.
If we do not effectively manage our growth, our business may be significantly harmed.
In order to implement our business strategy, we expect continued growth in our infrastructure requirements, particularly as
we expand into new and growing markets as well as expand our manufacturing capacities and sales and marketing
capabilities. To manage our growth, we must expand our facilities, augment our management, operational and financial
systems, hire and train additional qualified personnel, scale-up our manufacturing capacity and expand our marketing and
distribution capabilities. Our manufacturing, assembly and installation process is complex and occurs over many months and
we must effectively scale this entire process to satisfy customer expectations and changes in demand. Further, to
accommodate our growth and compete effectively, we will be required to make improvements to our business operations. We
cannot be certain that our personnel, systems, procedures and internal controls will be adequate to support our future
operations and any expansion of our systems and infrastructure may require us to commit significant additional financial,
operational and management resources. If we cannot manage our growth effectively, our business will suffer.
We could become subject to product liability claims, product recalls, other field actions and warranty claims that could be
expensive, divert management’s attention and harm our business.
Our business exposes us to potential liability risks that are inherent in the manufacturing, marketing, sale, installation,
servicing, and support of medical device products. We may be held liable if one of our CyberKnife or TomoTherapy
platforms or our software, including the Precision Treatment Planning System with iDMS Data Management System
software, causes or contributes to injury or death or is found otherwise unsuitable during usage. Our products incorporate
sophisticated components and computer software. Complex software can contain errors, particularly when first introduced. In
addition, new products or enhancements may contain undetected errors or performance problems that, despite testing, are
discovered only after installation. Because our products are designed to be used to perform complex surgical and therapeutic
procedures involving delivery of radiation to the body, defects, even if small, could result in a number of complications,
some of which could be serious and could harm or kill patients. Any alleged weaknesses in physician training and services
associated with our products may result in unsatisfactory patient outcomes and product liability lawsuits. It is also possible
that defects in the design, manufacture or labeling of our products might necessitate a product recall or other field corrective
action, which may result in warranty claims beyond our expectations and may harm our reputation and create adverse
publicity. A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs
that may not be covered by insurance and be time-consuming to defend. We may also be subject to claims for personal
injury, property damage or economic loss related to, or resulting from, any errors or defects in our products, or the
installation, servicing and support of our products, or any professional services rendered in conjunction with our products.
Adverse publicity related to any product liability actions may cause patients to be less receptive to radiation therapy generally
or our products specifically and could also result in additional regulation that could adversely affect our ability to promote,
manufacture and sell our products. The coverage limits of our insurance policies may not be adequate to cover future claims.
41
If sales of our products increase or we suffer future product liability claims, we may be unable to maintain product liability
insurance in the future at satisfactory rates or with adequate amounts of coverage. A product liability claim, any product
recalls or other field actions or excessive warranty claims, whether arising from defects in design or manufacture or labeling,
could negatively affect our sales or require a change in the design, manufacturing process or the indications for which our
systems or software may be used, any of which could harm our reputation and business and result in a decline in revenue.
In addition, if a product we designed or manufactured is defective, whether because of design or manufacturing, supplied
parts, or labeling defects, improper use of the product or other reasons, we may be required to notify regulatory authorities
and/or to recall the product, possibly at our expense. We have voluntarily initiated recalls and other product corrections in the
past. For example, in fiscal year 2025, we voluntarily initiated one recall related to the couch for the CyberKnife System,
which was reported to the FDA. We are committed to the safety and precision of our products and while no serious adverse
health consequences have been reported in connection with these recalls and the costs associated with each such recall were
not material, we cannot ensure that the FDA will not require that we take additional actions to address problems that resulted
in previous recalls or that similar or more significant product recalls will not occur in the future. A required notification of a
correction or removal to a regulatory authority or recall could result in an investigation by regulatory authorities of our
products, which could in turn result in required recalls, restrictions on the sale of the products or other civil or criminal
penalties. The adverse publicity resulting from any of these actions could cause customers to review and potentially terminate
their relationships with us. These investigations, corrections or recalls, especially if accompanied by unfavorable publicity,
patient injury or termination of customer contracts, could result in incurring substantial costs, losing revenues and damaging
our reputation, each of which would harm our business.
Our reliance on single-source suppliers for critical components of the CyberKnife and TomoTherapy platforms could
harm our ability to meet demand for our products in a timely and cost effective manner.
We currently depend on single source suppliers for some of the critical components necessary to assemble the CyberKnife
and TomoTherapy platforms, including, with respect to the CyberKnife platform, the robot, couch and magnetron and, with
respect to the TomoTherapy platforms, the couch, solid state modulator and magnetron. Global supply chain disruptions in
parts of our supply chain, have occurred and could occur again in the future, causing delays in the receipt of certain
component parts for our products and increased pricing pressure for such parts, including with respect to parts purchased
from our single-source suppliers, adversely affecting our gross margins and increasing the risk that these supply chain
disruptions could materially affect our ability to meet customer demand. Furthermore, as a result of the effects of the
macroeconomic conditions, including inflation, and supply chain challenges, some of our suppliers have limited or reduced
the sale of such components to us or increased the cost of such components to us. If these conditions worsen, or if these
suppliers were to experience financial difficulties, additional supply chain or other problems that prevents them from
supplying us with the necessary components, we could fail to meet product demand, which could have a material adverse
effect on our business, financial condition and results of operations. These sole source and other suppliers could also be
subject to quality and performance issues, materials shortages, excess demand, reduction in capacity and other factors that
may disrupt the flow of goods to us; thereby adversely affecting our business and customer relationships. If any single-source
supplier was to cease delivering components to us or fail to provide the components to our specifications and on a timely
basis, we might be required to find alternative sources for these components. The disruption or termination of the supply of
components, including as a result of global shortages in important components, have resulted in, and will continue to cause,
inflationary pressure on our supply chain and a significant increase in the costs of these components, which have materially
affected and could continue to adversely affect our results of operations. In addition, we expect inflation and the ongoing
supply chain challenges and logistics costs to impact our cash from operations through at least calendar year 2025. In some
cases, alternative suppliers may be located in the same geographic area as existing suppliers, and are thus subject to the same
economic, political and geographic factors that may affect existing suppliers to meet our demand. We may have difficulty or
be unable to find alternative sources for these components. Difficulties in obtaining a sufficient supply of component
materials could increase as well as the costs associated with such components, and we expect such difficulties to persist
through at least calendar year 2025. As a result, we may be unable to meet the demand for the CyberKnife or TomoTherapy
platforms, which could harm our ability to generate revenue and damage our reputation. Even if we do find alternate
suppliers, we will be required to qualify any such alternate suppliers and we would likely experience a lengthy delay in our
manufacturing processes or a cessation in production, which would result in delays of shipment to end users. We cannot
assure you that our single-source suppliers will be able or willing to meet our future demands.
We generally do not maintain large volumes of inventory, which makes us even more susceptible to harm if a single
source supplier fails to deliver components on a timely basis or we experience quality issues with the components we do have
in inventory, and maintaining our historical levels of inventory has been adversely impacted by the macroeconomic
42
environment. For example, a supplier quality issue resulted in higher than anticipated failure rates for a component in our
platforms, which resulted in higher parts consumption costs that adversely affected our financial results in fiscal year 2024.
Furthermore, if we are required to change the manufacturer of a critical component of the CyberKnife or TomoTherapy
platforms, we will be required to verify that the new manufacturer maintains facilities, procedures and operations that comply
with our quality and applicable regulatory requirements and guidelines, which could further impede our ability to
manufacture our products in a timely manner. If the change in manufacturer results in a significant change to the product, a
new 510(k) clearance would be necessary, which would likely cause substantial delays. The disruption or termination of the
supply of key components for the CyberKnife or TomoTherapy platforms could harm our ability to manufacture our products
in a timely manner or within budget, harm our ability to generate revenue, lead to customer dissatisfaction and adversely
affect our reputation and results of operations.
Failures of components also affect the reliability and performance of our products, can reduce customer confidence in our
products, increase service parts consumption, and may adversely affect our financial performance. From time to time, we
may receive components that do not perform according to their specifications, which could result in the inability of such
customer utilize our systems in their practices until such components are replaced. Any future difficulty in obtaining reliable
component parts could result in increased customer dissatisfaction and adversely affect our reputation, our ability to protect
and retain our installed base of customers and results of operations.
We depend on key employees, the loss of whom would adversely affect our business. If we fail to attract and retain
employees with the expertise required for our business, we may be unable to continue to grow our business.
We are highly dependent on the members of our senior management, sales, marketing, operations and research and
development staff. Our future success will depend in part on our ability to retain our key employees and to identify, hire and
retain additional personnel. Competition for qualified personnel in the medical device industry is intense and finding and
retaining qualified personnel with experience in our industry is very difficult. We believe there are only a limited number of
individuals with the requisite skills to serve in many of our key positions and we face significant competition for key
personnel and other employees, from other medical equipment and software manufacturers, technology companies,
universities and research institutions. Fluctuations in labor availability globally, including labor shortages and staff burnout
and attrition, may also impact our ability to hire and retain personnel critical to our manufacturing, logistics, and commercial
operations. In addition, no payments were made under the company bonus plan in fiscal year 2025. As a result, we may not
be able to retain our existing employees or hire new employees quickly enough to meet our needs. Moreover, we have from
time to time conducted reductions in force in order to optimize our organizational structure and reduce costs, some of which
were substantial, and certain senior personnel have also departed for various reasons. At the same time, we may face high
turnover among employees that are critical to our ongoing operations, requiring us to expend time and resources, including
financial resources, to source, train and integrate new employees. The challenging markets in which we compete for talent
may also require us to invest significant amounts of cash and equity to attract and retain employees. In addition, a significant
portion of our compensation to our key employees is in the form of stock related grants. A prolonged depression in our stock
price could make it difficult for us to retain our key and other employees and recruit additional qualified personnel and we
may have to pay additional compensation to employees to incentivize them to join or stay with us. We do not maintain, and
do not currently intend to obtain, key employee life insurance on any of our personnel. If we fail to hire and retain key
personnel and other employees, we may be unable to continue to grow our business successfully.
Disruption of critical information technology systems, infrastructure and data or cyberattacks or other security breaches
or incidents could harm our business and financial condition.
Information technology helps us operate more efficiently, interface with customers, maintain financial accuracy and
efficiency and accurately produce our financial statements. If we do not allocate and effectively manage the resources
necessary to build, sustain and secure the proper technology infrastructure, we could be subject to transaction errors,
processing inefficiencies, the loss of customers, business disruptions or the loss, unavailability of or damage to data and
intellectual property through a cyberattack (including ransomware and other attacks) or other security breaches or incidents.
While management is committed to identifying cybersecurity risks and working to address them through oversight of data
security by our Chief Information Security Officer and implementation of various technical safeguards, procedural
requirements and policies, regardless of the resources we allocate and the effectiveness with which we manage them, we face
a risk of cyberattacks and other security breaches and incidents. Any cyberattacks or other security breaches or incidents we
suffer could expose us to a risk of lost, unavailable, or corrupted information, unauthorized disclosure or other processing of
information, claims, litigation and possible liability to employees, customers and others, and investigations and proceedings
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by regulatory authorities. Cyberattacks and other means of creating security breaches and incidents or disruptions continue to
increase in frequency, sophistication, and intensity and are becoming increasingly difficult to detect on a timely basis or
otherwise, especially as they relate to attacks on third-party providers or their vendors. Such attacks are often carried out by
motivated and highly skilled actors, who are increasingly well-resourced. Techniques used to compromise or sabotage
systems, including the use of advanced technologies, such as machine learning or artificial intelligence ("AI") change
frequently, may originate from less regulated and remote areas of the world, may be difficult to detect, and generally are not
recognized until after they are launched against a target. As a result, we may be unable to anticipate these techniques or
implement adequate preventative measures. Additionally, cyberattack activity may be heightened in connection with
geopolitical events such as the Russia-Ukraine and Middle East conflicts. In addition to potential exposure to cyberattacks,
security incidents, or other actions that may compromise the security of or interfere with the function of our products, defects
or vulnerabilities in the software or systems of our third-party vendors may expose failures in our internal controls and risk
management processes, which may adversely impact our business, financial condition, results of operations, or cash flows
and may also harm our reputation, brand, and customer relationships.
If our data management systems or those of our third-party providers do not effectively collect, store, process and report
relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies,
computer viruses, security breaches or incidents, cyberattacks, catastrophic events or human error, our ability to effectively
plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps
materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash
flows and the timeliness with which we internally and externally report our operating results. As a result, our information
systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and
develop new systems to keep pace with continuing changes in information processing technology, evolving legal and
regulatory standards, the increasing need to protect patient and customer information, and the information technology needs
associated with our changing products and services. There can be no assurance that our process of consolidating the number
of systems we operate, upgrading and expanding our information systems capabilities, continuing our efforts to build security
into the design of our products, protecting and enhancing our systems and developing new systems to keep pace with
continuing changes in information processing technology will be successful or that additional systems issues will not arise in
the future, or that we will not suffer from disruptions or other systems issues even if we devote substantial resources and
personnel to these efforts.
In addition, privacy and security breaches and incidents arising from errors, malfeasance or misconduct by employees,
contractors or others with permitted access to our systems may pose a risk that sensitive data, including individually
identifiable data, may be exposed to unauthorized persons or to the public and may compromise our security systems. There
can be no assurance that any efforts we make to prevent against such privacy or security breaches or incidents have been or
will be able to prevent breakdowns or breaches or incidents in our systems or those of our third-party service providers that
could adversely affect our business. Third parties may also attempt to fraudulently induce employees or customers into
disclosing usernames, passwords or other sensitive information, which may in turn be used to access our information
technology systems. For example, our employees have received in the past and likely will continue to receive “phishing” e-
mails attempting to induce them to divulge sensitive information. We may also face increased cybersecurity risks due to our
reliance on internet technology and many of our employees working remotely at least part of the time, which may create
additional opportunities for cybercriminals to exploit vulnerabilities. In addition, adversaries might attempt to gain
unauthorized access to our products or systems to obtain personal data relating to patients or employees, our confidential or
proprietary information or confidential information we hold on behalf of third parties, which, if successful, could pose a risk
of loss, unavailability, or corruption of, or unauthorized access to or acquisition of, data, risk to patient safety and risk of
product recall. The techniques used to obtain unauthorized access to our systems change frequently and may be difficult to
detect, and we may not be able to anticipate and prevent these intrusions or mitigate them when they occur. Third-party
service providers store and otherwise process certain personal data and other confidential or proprietary information of
ourselves and third parties on our behalf, and these service providers face similar risks. In addition, our employees, third-
party service providers, strategic partners, or other contractors or consultants may input personal or confidential information,
or other business data of ours, into an AI system (in particular, a system that is managed, owned, or controlled by a third
party), which may disrupt and otherwise compromise our business operations, divert the attention of management and key
information technology resources, potentially lead to security breaches or incidents or other unauthorized access to, or other
use or processing of, personal information, our confidential information or other business data. Moreover, we manufacture
and sell hardware and software products that allow our customers to store confidential information about their patients. Both
types of products are often connected to and reside within our customers’ information technology infrastructures. We do not
have measures to configure or secure our customers’ equipment or any information stored in our customers’ systems or at
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their locations, which is the responsibility of our customers. Our customers are also continually updating their cybersecurity
standards for the products that they purchase. While we have implemented security measures designed to protect our
hardware and software products from unauthorized access and cyberattacks, these measures may not meet the standards set
by our customers or be effective in securing these products, particularly since techniques used to obtain unauthorized access,
or to sabotage systems, change frequently and may not be recognized until launched against a target. A network security or
systems security breach of incident suffered by ourselves or our third-party service providers or other events that cause the
loss or unauthorized use or disclosure of, or access by third parties to, sensitive information stored by us or our customers
could result in loss, unavailability, or unauthorized acquisition, modification, or other processing of data, and any such
events, or the perception that these events have occurred or that our security measures for our products are lacking, could
have serious negative consequences for our business, including indemnity obligations, possible fines, penalties and damages,
reduced demand for our products and services, an unwillingness of our customers to use our products or services, harm to our
reputation and brand, and time consuming and expensive litigation, any of which could have an adverse effect on our
business, financial condition, and operating results.
Due to frequently changing attack techniques, along with the increased volume and sophistication of the attacks, including
the increasing use of tools and techniques that are designed to circumvent controls, avoid detection, and remove or obfuscate
forensic evidence, all of which hinders our ability to identify, investigate, and recover from incidents, we could be adversely
impacted by cybersecurity attacks or other security breaches or incidents. This impact could result in reputational,
competitive, operational, or other business harm as well as financial costs and claims, demands, litigation and regulatory
action.
While we do maintain insurance coverage that is intended to address certain aspects of data security risks, such insurance
coverage may be insufficient to cover all losses or all types of claims that may arise.
Any actual or perceived failure by us to comply with legal or regulatory requirements related to privacy, cybersecurity and
data protection in one or multiple jurisdictions could result in proceedings, actions or penalties against us.
There are numerous state, federal and foreign laws, regulations, decisions and directives regarding privacy and the
collection, storage, transmission, use, processing, disclosure and protection of personal information and other data, the scope
of which is continually evolving and subject to differing interpretations. Our worldwide operations mean that we are subject
to privacy, cybersecurity and data protection laws and regulations in many jurisdictions to varying degrees, and that some of
the data we process, store and transmit may be transmitted across countries. For example, in the U.S., privacy and security
rules implementing the Health Insurance Portability and Accountability Act (“HIPAA”) require us as a business associate, in
certain instances, to protect the confidentiality of patient health information, and the Federal Trade Commission has
consumer protection authority, including with regard to privacy and cybersecurity. In Europe, the GDPR imposes several
stringent requirements for controllers and processors of personal data that impose substantial obligations and, in the event of
violations, may impose significant fines of up to the greater of 4% of worldwide annual revenue or €20 million. In the UK,
the Data Protection Act of 2018 and the UK GDPR collectively implement material provisions of the GDPR and provide for
penalties for noncompliance of up to the greater of £17.5 million or four percent of worldwide revenues.
Data transfer and localization requirements also appear to be increasing and becoming more complex. With regard to
transfers to the U.S. of personal data from our employees and European customers and users, both the EU-U.S. Privacy
Shield and standard contractual clauses issued by the European Commission (the “EU SCCs”) have been subject to legal
challenge. In July 2020, the Court of Justice of the European Union (“CJEU”) released a decision in the Schrems II case
(Data Protection Commissioner v. Facebook Ireland, Schrems) (the “CJEU Decision”), declaring the EU-U.S. Privacy Shield
invalid and imposing additional obligations in connection with the use of the EU SCCs, another mechanism for cross-border
personal data transfers from the European Economic Area (“EEA”). Although the EU SCCs remain a valid means to transfer
personal data from the EEA, the CJEU imposed additional obligations in connection with their use and, on June 4, 2021, the
European Commission issued revised EU SCCs that address certain concerns of the CJEU. The United Kingdom also has
issued new standard contractual clauses (the “UK SCCs”) that became effective March 21, 2022, and which are required to
be implemented. In March 2022, the EU and U.S. reached an agreement in principle on a new EU-U.S. Data Privacy
Framework (“DPF”). In October 2022, the U.S. issued an executive order in furtherance of the DPF, on which basis the
European Commission adopted an adequacy decision with respect to the DPF in July 2023, allowing its implementation and
availability for companies to use to legitimize transfers of personal data from the E.U. to the U.S. It remains unclear,
however, whether this framework will be appropriate for us to rely upon. The DPF has faced a legal challenge and it may be
subject to additional challenges. Additionally, the European Commission’s adequacy decision regarding the DPF provides
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that the DPF will be subject to future reviews and may be subject to suspension, amendment, repeal, or limitations to its
scope by the European Commission. Additionally, the U.S. Department of Justice issued a final rule that took effect in April
2025 and places limitations, and in some cases prohibitions, on certain transfers of sensitive personal data to data to business
partners located in China or with other specified links to China and other designated countries (the “DOJ Sensitive Personal
Data Transfer Limitations Rule”). These and other developments relating to cross-border data transfer may require us to
implement additional contractual and technical safeguards for any personal data transferred out of various jurisdictions,
which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual
negotiations, and may adversely impact our business, financial condition and operating results.
Other jurisdictions have adopted laws and regulations addressing privacy, data protection, data security, or other aspects
of data processing, such as data localization. For example, the People’s Republic of China (“PRC”) and Russia have passed
laws that require individually identifiable data on their citizens to be maintained on local servers and that may restrict transfer
or processing of that data if certain data quantity thresholds are triggered. Additionally, the Personal Information Protection
Law (“PIPL”) of the PRC went into effect on November 1, 2021. The PIPL shares similarities with the GDPR, including
extraterritorial application, data minimization, data localization, and purpose limitation requirements, and obligations to
provide certain notices and rights to citizens of the PRC. The PIPL allows for fines of up to 50 million Renminbi or 5% of a
covered company’s revenue in the prior year. We may be required to modify our policies, procedures, and data processing
measures in order to address requirements under these or other privacy, data protection, or cybersecurity regimes, and may
face claims, litigation, investigations, or other proceedings regarding them and may incur related liabilities, expenses, costs,
and operational losses.
Further, the U.S. government has undertaken an evaluation of national security concerns and other risks relating to the
transfer of personally identifiable information from the United States to China, and on June 9, 2021, U.S. President Biden
signed an executive order instituting a framework for determining national security risks of transactions that involve
applications connected to governments or militaries of certain foreign adversaries or that collect sensitive personal data from
U.S. consumers, with the DOJ Sensitive Personal Data Transfer Limitations Rule issued in April 2025. In 2019, an executive
order citing national security risks in the telecommunications sector served to block U.S. companies from buying Chinese-
made Huawei and ZTE products. If our operations, including those involving the processing of U.S.-collected data such as
medical imagery, through the JV in China, come to be perceived as a U.S. national security risk, those operations may
become subject to executive orders, sanctions, or other measures. The DOJ Sensitive Personal Data Transfer Limitations
Rule, and any other ban or other restriction on our transfer of data to the JV in China, may increase costs as we seek
operational and data processing alternatives.
New and proposed privacy, cybersecurity, and data protection laws are also providing new rights to individuals and
increasing the penalties associated with non-compliance. For example, the California Consumer Privacy Act (the “CCPA”),
which became effective on January 1, 2020, imposes stringent data privacy and data protection requirements regarding the
personal information of California residents, and provides for penalties for noncompliance of up to $7,500 per violation, as
well as a private right of action from individuals in relation to certain security breaches.
The California Privacy Rights Act (“CPRA”), approved by California voters in November 2020, became effective on
January 1, 2023. The CPRA, significantly modified the CCPA, has resulted in further uncertainty and may require us to incur
additional costs and expenses in an effort to comply. We will continue to monitor developments related to the CPRA and
anticipate additional costs and expenses associated with CPRA compliance. The enactment of the CCPA, as modified by the
CPRA, is prompting a wave of similar legislative developments in other states in the U.S., which could potentially create a
patchwork of overlapping but different state laws. For example, Virginia, Colorado, Utah, and Connecticut all have enacted
state laws that became effective in 2023; Texas, Montana, Oregon, and Florida have adopted laws that became effective in
2024, Delaware, Iowa, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey and Tennessee have adopted laws that
have become or will become effective in 2025; and Indiana, Kentucky, and Rhode Island have adopted laws that will become
effective in 2026. These new state laws share similarities with the CCPA, CPRA, and legislation proposed in other states.
Other states have enacted other types of privacy legislation, such as Washington’s My Health, My Data Act, which includes a
private right of action. Additionally, the U.S. federal government is contemplating privacy legislation. We cannot fully
predict the impact of the CCPA, CPRA, or other new or proposed legislation on our business or operations, but the
restrictions imposed by these laws and regulations may require us to modify our data handling practices and impose
additional costs and burdens, including risks of regulatory fines, litigation and associated reputational harm. In addition, U.S.
and international laws that have been applied to protect consumer privacy (including laws regarding unfair and deceptive
practices in the U.S. and GDPR in the EU) may be subject to evolving interpretations or applications in light of privacy
46
developments. As a result, we may be subject to significant consequences, including penalties and fines, for any failure to
comply with such laws, regulations and directives.
Privacy, cybersecurity and data protection legislation around the world is comprehensive and complex and there has been
a trend towards more stringent enforcement of requirements regarding protection and confidentiality of personal data. The
restrictions imposed by such laws and regulations may limit the use and adoption of our products and services, reduce overall
demand for our products and services, require us to modify our data handling practices and impose additional costs and
burdens. With increasing enforcement of privacy, cybersecurity and data protection laws and regulations, there is no
guarantee that we will not be subject to investigation, enforcement actions or other proceedings by governmental bodies or
that our costs relating to privacy, data protection or cybersecurity laws and regulations will not increase significantly.
Enforcement actions, investigations and other proceedings can be costly, require significant time and attention of
management and other personnel and interrupt regular operations of our business. In addition, there has been a developing
trend of civil lawsuits and class actions relating to breaches of consumer data held by large companies. While we have not
been named in any such suits, we may be in the future, including if we were to suffer a security breach or incident. Any
inability to adequately address concerns relating to privacy, data protection or cybersecurity, even if unfounded, or to comply
with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations could result
in additional cost and liability to us, damage our reputation, inhibit sales and adversely affect our business. Our actual or
alleged failure to comply with applicable laws and regulations could result in investigation, enforcement actions or other
proceedings against us, including fines and public censure, claims for damages by customers and other affected individuals,
damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of
which could harm our business, results of operations and financial condition.
We have incorporated and continue to work to further incorporate artificial intelligence into our products, services, and
internal operations. Implementation of artificial intelligence and machine learning technologies may result in legal and
regulatory risks, reputational harm, or other adverse consequences to our business.
We have integrated AI, including machine learning, in certain of our products, services and internal operations. Some of
the uses in our internal operations include using AI to help detect and respond to abnormalities that could indicate a part is
about to break, provide our service engineers support on information about parts, analyzing datasets, creating documents for
internal purposes, and develop processes for internal departments to manage internal workflows. Further, certain of our third-
party vendors utilize AI and machine learning technologies in furnishing services to us. As with many technological
innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. Our products utilize,
and we plan to further examine, develop and introduce, machine learning algorithms, predictive analytics, and other AI
technologies to offer new or upgraded solutions and enhance our capabilities. If these AI or machine learning models are
incorrectly designed, the performance of our products, services, and business, as well as our reputation, could suffer or we
could incur liability through the violation of laws or contracts to which we are a party. Additionally, new and evolving laws
and regulations related to the development and use of AI and machine learning technologies have been proposed, and in
certain cases enacted, in various jurisdictions, including the United States, and the EU has adopted an AI Act that adopts an
overall regulatory framework for AI. These laws and regulations may impose onerous obligations and may require us to
unexpectedly rework or reevaluate improvements to be compliant. Use of AI technologies may expose us to an increased risk
of regulatory enforcement and litigation. Moreover, some of the AI features involve the processing of personal data and may
be subject to laws, policies, legal obligations, and codes of conduct related to privacy and data protection.
Though we have taken steps to be thoughtful in our development, training, and implementation of AI, it could pose certain
risks to our customers, including patients, clinicians, and healthcare institutions, and it is not guaranteed that regulators will
agree with our approach to limiting these risks or to our compliance more generally. Risks can include, but are not limited to,
the potential for errors or inaccuracies in the algorithms or models used by AI, the potential for bias or inaccuracies in the
data used to train the AI, the potential for improper processing of personal information, and the potential for cybersecurity
breaches that could compromise patient data or product functionality. Such risks could negatively affect the performance of
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our products, services, and business, as well as our reputation and the reputations of our customers, and we could incur
liability through the violation of laws or contracts to which we are a party or civil claims.
Continued consolidation in the healthcare industry could have an adverse effect on our business, financial condition, or
results of operations.
The healthcare industry has been consolidating, and organizations continue to consolidate purchasing decisions for many
of our customers, particularly in the United States. Numerous initiatives and reforms by legislators, regulators, and third-
party payors to curb the rising cost of healthcare have catalyzed a consolidation of aggregate purchasing power within the
markets in which we sell our products. As the healthcare industry consolidates, competition to provide products and services
is expected to continue to intensify, resulting in pricing pressures and decreased average selling prices. In addition, for
smaller hospitals or groups that do not consolidate with larger networks, these entities may face increasing cost and/or
competitive pressures, which could impact their ability to purchase additional products and services from us or make
contractual payments over time. We expect that market demand, government regulation, third-party payor coverage and
reimbursement policies, government contracting requirements, new entrants, technology, and societal pressures will continue
to change the worldwide healthcare industry, resulting in further consolidation, which may exert further downward pressure
on prices of our products and services and may have a material adverse impact on our business, financial condition, or results
of operations.
If third-party payors do not provide sufficient coverage and reimbursement to healthcare providers for use of the
CyberKnife and TomoTherapy platforms or if the number of patients covered by health insurance reduces, demand for
our products and our revenue could be adversely affected.
Our customers rely significantly on reimbursement from public and private third-party payors for CyberKnife and
TomoTherapy platform procedures. Our ability to commercialize our products successfully and increase market acceptance
of our products will depend in significant part on the extent to which public and private third-party payors provide adequate
coverage and reimbursement for procedures that are performed with our products and the extent to which patients that are
treated by our products continue to be covered by health insurance. Third-party payors may establish or change the
reimbursement for medical products and services that could significantly influence the purchase of medical products and
services. If reimbursement policies or other cost containment measures are instituted in a manner that significantly reduces
the coverage or payment for the procedures that are performed with our products or if there is a prolonged reduction in the
number of patients eligible to be treated by our products that are covered by health insurance, our revenue may decline, our
existing customers may not continue using our products or may decrease their use of our products, and we may have
difficulty obtaining new customers. Such actions would likely have a material adverse effect on our operating results.
In addition, the Centers for Medicare and Medicaid Services (“CMS”) reviews reimbursement rates annually and may
implement significant changes in future years, which could discourage existing and potential customers from purchasing or
using our products. Further, outside of the U.S., reimbursement practices vary significantly by country. Market acceptance of
our products may depend on the availability and level of coverage and reimbursement in any country within a particular time.
The safety and efficacy of our products for certain uses is not yet supported by long-term clinical data, and our products
may therefore prove to be less safe and effective than initially thought.
Although we believe that the CyberKnife and TomoTherapy platforms have advantages over competing products and
technologies, we do not have sufficient clinical data demonstrating these advantages for all tumor indications. In addition, we
have only limited five-year patient survival rate data, which is a common long-term measure of clinical effectiveness in
cancer treatment. We also have limited clinical data directly comparing the effectiveness of the CyberKnife platform to other
competing platforms. Future patient studies or clinical experience may indicate that treatment with the CyberKnife platform
does not improve patient survival or outcomes relative to other platforms.
Likewise, because the TomoTherapy platform has only been on the market since 2003, we have limited complication or
patient survival rate data with respect to treatment using the systems for all clinical indications. If future patient studies or
clinical experience do not support our beliefs that the TomoTherapy platform offer a more advantageous treatment for a wide
variety of cancer types, use of the systems could fail to increase or could decrease, and our business would therefore be
adversely affected.
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Such results could reduce the rate of reimbursement by both public and private third-party payors for procedures that are
performed with our products, slow the adoption of our products by physicians, significantly reduce our ability to achieve
expected revenues and could prevent us from being profitable. In addition, if future results and experience indicate that our
products cause unexpected or serious complications or other unforeseen negative effects, the FDA could rescind our
clearances, our reputation with physicians, patients and others may suffer and we could be subject to significant legal
liability.
We rely on third parties to perform shipping and logistics functions on our behalf. Failures or disruptions at our logistics
providers have occurred and could occur in the future, which could adversely impact our business.
Customer service is a critical element of our sales strategy. Third party logistics providers store most of our spare parts
inventory in depots around the world and perform a significant portion of our spare parts logistics and shipping activities. Our
logistics providers may terminate their relationship with us, suffer an interruption in their business, including as a result of
macroeconomic factors, significantly increase fees for services or experience delays, disruptions or quality control problems
in their operations, or we may have to change and qualify alternative logistics providers for our spare parts. For example, in
recent years, we have experienced delays in shipment of parts to customers as well as increased freight and logistics expenses
due to macroeconomic factors and these impacts could intensify. These delays and increased costs have adversely affected
our gross margins and net income (loss) and we currently expect such delays and increased costs to continue through at least
calendar year 2025, and potentially longer. If this continues for longer than we expect or if any of the above occurs our
customers may experience further delays and higher costs and our reputation, business, financial condition and results of
operations, including our ability to recognize revenue, may be adversely affected.
Third parties may claim we are infringing their intellectual property or that we are operating outside the scope of or
violating a license or other agreement relating to their intellectual property, and we could suffer significant audit,
litigation or licensing expenses, incur liabilities associated with indemnification obligations to customers, experience
disruptions in the supply of components of our products or related services, or be prevented from selling our product or
components of our product.
The medical device industry is characterized by a substantial amount of litigation over patent and other intellectual
property rights. In particular, the field of radiation treatment of cancer is well established and crowded with the intellectual
property of competitors and others. We also expect that other participants will enter the field. A number of companies in our
market, as well as universities and research institutions, have issued patents and have filed patent applications that relate to
the use of radiation therapy and stereotactic radiosurgery to treat cancerous and benign tumors.
Determining whether a product infringes a patent involves complex legal and factual issues, and the outcome of patent
litigation actions is often uncertain. We have not conducted an extensive search of patents issued to third parties, and no
assurance can be given that third-party patents containing claims covering our products, parts of our products, technology or
methods do not exist, have not been filed, or could not be filed or issued. Because of the number of patents issued and patent
applications filed in our technical areas or fields, our competitors or other third parties may assert that our products and the
methods we employ in the use of our products are covered by U.S. or foreign patents held by them.
In addition, because patent applications can take many years to issue and because publication schedules for pending
applications vary by jurisdiction, there may be applications now pending of which we are unaware, and which may result in
issued patents that our current or future products infringe. Also, because the claims of published patent applications can
change between publication and patent grant, there may be published patent applications that may ultimately issue with
claims that we infringe. There could also be existing patents that one or more of our products or parts may infringe and of
which we are unaware. As the number of competitors in the market for less invasive cancer treatment alternatives grows, and
as the number of patents issued in this area grows, the possibility of patent infringement claims against us increases.
Regardless of the merit of infringement claims, they can be time-consuming and result in costly litigation and diversion of
technical and management personnel. Some of our competitors may be able to sustain the costs of complex patent litigation
more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from
the initiation and continuation of any litigation could have a material adverse effect on our ability to raise funds, if necessary,
to continue our operations.
Also, because we purchase major components and software for each of our products from third party suppliers and
manufacturers, we face the additional risk that infringement claims may be brought against us based on patents and other
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intellectual property rights that are embodied or contained in, or practiced by, those components (including software
components) that we obtain from third parties, and any such claims against us, such as by our direct and indirect suppliers,
may additionally allege that we are operating outside the scope of or violating a license or other agreement relating to their
intellectual property. These third party suppliers or manufacturers may terminate their licenses with us for a variety of
reasons, including actual or perceived failures or breaches of contractual commitments, or they may choose not to renew their
licenses with us. The loss of, or inability to obtain, certain third-party licenses or other rights, including the right to resell, or
to obtain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could affect
the operability or performance of our products until equivalent technology can be identified, licensed or developed, if at all,
and integrated into our products, and it may have a material adverse effect on our business, financial condition, and results of
operations.
In the event that we become subject to a patent infringement or other intellectual property lawsuit and if the relevant
patents or other intellectual property were upheld as valid and enforceable and we were found to infringe or violate the terms
of a license or other agreement to which we are a party, we could be subject to third-party audit, experience disruptions in the
supply of third-party components or related services, or be prevented from selling our products (or components of our
products) unless we obtain a license or are able to redesign the product to avoid infringement. Required licenses may not be
made available to us on acceptable terms or at all. If we are unable to obtain a license or successfully redesign our system, we
might be prevented from selling such system. If there is an allegation or determination that we have infringed the intellectual
property rights of a competitor or other person, we may be required to pay damages, pay ongoing royalties or otherwise settle
such matter upon terms that are unfavorable to us. In these circumstances, we may be unable to sell our products at
competitive prices or at all, and our business and operating results could be harmed.
We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former
employers.
As is common in the medical device industry, we employ individuals who were previously employed at other medical
equipment or biotechnology companies, including our competitors or potential competitors. We may be subject to claims that
we or those employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of
their former employers. Litigation may be necessary to defend against these claims. If we fail in defending any such claims,
in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are
successful in defending against claims of this nature, litigation could result in substantial costs and be a distraction to
management.
It is difficult and costly to protect our intellectual property and our proprietary technologies and we may not be able to
ensure their protection.
Our success depends significantly on our ability to obtain, maintain and protect our proprietary rights to the technologies
used in our products. Patents and other proprietary rights provide uncertain protections, and we may be unable to protect our
intellectual property. For example, we may be unsuccessful in defending our patents and other proprietary rights against
third-party challenges. As key patents expire, our ability to prevent competitors from copying our technology may be limited.
In addition, patent reform legislation or precedent could increase the uncertainties and costs surrounding the prosecution of
our patent applications and the enforcement or defense of our issued patents.
In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, nondisclosure agreements
and other contractual provisions and technical security measures to protect our intellectual property rights. These measures
may not be adequate to safeguard the technology underlying our products, including in case of a security breach involving
our intellectual property. If these measures do not protect our rights adequately, third parties could use our technology, and
our ability to compete in the market would be reduced. Although we have attempted to obtain patent coverage for our
technology where available and appropriate, there are aspects of the technology for which patent coverage was never sought
or never received. There also may be countries in which we sell or intend to sell the CyberKnife or TomoTherapy platforms
but have no patents or pending patent applications. Our ability to prevent others from making or selling duplicate or similar
technologies will be impaired in those countries in which we have no patent protection. Although we have several issued
patents in the U.S. and in foreign countries protecting aspects of the CyberKnife and TomoTherapy platforms, our pending
U.S. and foreign patent applications may not issue, may issue only with limited coverage or may issue and be subsequently
successfully challenged by others and held invalid or unenforceable. In addition, many countries limit the enforceability of
patents against certain third parties, including government agencies or government contractors. In these countries, patents
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may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an
expensive and time consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection
in certain countries, and we will not have the benefit of patent protection in such countries.
Similarly, our issued patents and those of our licensors may not provide us with any competitive advantages. Competitors
may be able to design around our patents or develop products which provide outcomes comparable or superior to ours. Our
patents may be held invalid or unenforceable as a result of legal challenges by third parties, and others may challenge the
inventorship or ownership of our patents and pending patent applications. In addition, the laws of some foreign countries,
such as China where the JV operates, may not protect our intellectual property rights to the same extent as do the laws of the
United States and, even if they do, uneven enforcement and procedural barriers may exist in such countries. In the event a
competitor or other third party infringes upon our patent or other intellectual property rights or otherwise misappropriates
such rights, enforcing those rights may be difficult and time consuming. Even if successful, litigation to enforce our
intellectual property rights or to defend our patents against challenge could be expensive and time consuming and could
divert our management’s attention from our core business. Damage awards resulting from successful litigation in foreign
jurisdictions may not be in amounts commensurate with damage awards in the U.S. We may not have sufficient resources to
enforce our intellectual property rights or to defend our patents against a challenge. In addition, we may not prevail in any
lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially valuable. Litigation
also puts our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing.
Additionally, we may provoke third parties to assert claims against us.
We also license patent and other proprietary rights to aspects of our technology to third parties in fields where we
currently do not operate as well as in fields where we currently do operate. Disputes with our licensees may arise regarding
the scope and content of these licenses. Further, our ability to expand into additional fields with our technologies may be
restricted by our existing licenses or licenses we may grant to third parties in the future.
Additionally, we have written agreements with collaborators regarding the ownership of intellectual property arising from
our collaborations. These agreements generally provide that we must negotiate certain commercial rights with collaborators
with respect to joint inventions or inventions made by our collaborators that arise from the results of the collaboration. In
some instances, there may not be adequate written provisions to address clearly the resolution of intellectual property rights
that may arise from a collaboration. If we cannot successfully negotiate sufficient ownership and commercial rights to the
inventions that result from our use of a third-party collaborator’s materials where required, or if disputes otherwise arise with
respect to the intellectual property developed with the use of a collaborator’s technology, we may be limited in our ability to
utilize these intellectual property rights. In addition, we may face claims by third parties that our agreements with employees,
contractors or consultants obligating them to assign intellectual property to us are ineffective or in conflict with prior or
competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we
have developed or will develop and interfere with our ability to capture the commercial value of such intellectual property.
Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using
certain intellectual property or may lose our exclusive rights in that intellectual property. Either outcome could harm our
business.
The policies and procedures we have in place to protect our trade secrets may not be effective in preventing
misappropriation of our trade secrets by others. In addition, confidentiality agreements executed by our employees,
consultants and advisors may not be enforceable or may not provide meaningful protection for our trade secrets or other
proprietary information in the event of unauthorized use or disclosure. Litigating a trade secret claim is expensive and time
consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to
protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge methods and know-how.
If we are unable to protect our intellectual property rights, we may be unable to prevent competitors from using our own
inventions and intellectual property to compete against us and our business may be harmed.
Unfavorable results of legal proceedings could materially and adversely affect our financial condition.
We are and may become a party to legal proceedings, claims, investigations, demands and other legal matters in the
ordinary course of business or otherwise including intellectual property, product liability, employment, class action,
whistleblower and other litigation claims, and governmental and other regulatory investigations and proceedings. These legal
proceedings, claims and other legal matters, regardless of merit, may be costly, time-consuming and require the attention of
key management and other personnel. The outcomes of such matters are uncertain and difficult to predict. If any such matters
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are adjudicated against us, in whole or in part, we may be subject to substantial monetary damages, disgorgement of profits
and injunctions that prevent us from operating our business, any of which could materially and adversely affect our business
and financial condition. We cannot guarantee that our insurance coverage will be sufficient to cover any damages awarded
against us. Further, legal proceedings, and any adverse resolution thereof, can result in adverse publicity and damage to our
reputation, which could adversely impact our business.
Because the majority of our product revenue is derived from sales of the CyberKnife and TomoTherapy platforms, which
have a long and variable sales and installation cycle, our revenues and cash flows may be volatile and difficult to predict.
Our primary products are the CyberKnife and TomoTherapy platforms. We expect to generate substantially all of our
revenue for the foreseeable future from sales of and service contracts for the CyberKnife and TomoTherapy platforms. The
CyberKnife and TomoTherapy platforms have lengthy sales and purchase order cycles because they are major capital
equipment items and require the approval of senior management at purchasing institutions. In addition, sales to some of our
customers are subject to competitive bidding or public tender processes. These approval and bidding processes can be
lengthy. Selling our systems, from first contact with a potential customer to a complete order, generally spans six months to
30 months and involves personnel with multiple skills. The sales process in the U.S. typically begins with pre-selling activity
followed by sales presentations and other sales related activities. After the customer has expressed an intention to purchase a
CyberKnife or TomoTherapy platform, we negotiate and enter into a definitive purchase contract with the customer. The
negotiation of terms that are not standard for Accuray typically requires additional time and approvals. Typically, following
the execution of the contract, the customer begins the building or renovation of a radiation-shielded facility to house the
CyberKnife or TomoTherapy platform, which together with the subsequent installation of the CyberKnife or TomoTherapy
platform, can take up to 24 months to complete. In order to construct this facility, the customer must typically obtain
radiation device installation permits, which are granted by state and local government bodies, each of which may have
different criteria for permit issuance. If a permit was denied for installation at a specific hospital or treatment center, our
CyberKnife or TomoTherapy platform could not be installed at that location. In addition, some of our customers are cancer
centers or facilities that are new, and in these cases, it may be necessary for the entire facility to be completed before the
CyberKnife or TomoTherapy platform can be installed, which can result in additional construction and installation delays.
Our sales and installations of CyberKnife and TomoTherapy platforms tend to be heaviest during the third month of each
fiscal quarter.
Under our revenue recognition policy, we recognize revenue attributable to a CyberKnife or TomoTherapy platform and
related upgrades when control of a platform or upgrade is transferred, which generally happens when a system or upgrade is
shipped, while an element of installation is deferred until performed. Events beyond our control may delay shipment or
installation and the satisfaction of contingencies required to receive cash inflows and recognition of revenue associated with
shipment or installation. Such events may include a delay in the construction at the customer site or customer delay in
obtaining receipt of regulatory approvals such as certificates of need. In addition, disruption in operations of certain
customers macroeconomic factors have resulted in delays in construction, shipment or installation and some have failed to
timely pay their obligations when due. For example, reduced budgets and lower capital deployment priority for radiotherapy
equipment, along with longer customer installation timelines, in the United States have negatively impacted our net revenue
since fiscal year 2024, and we expect this will continue to have an impact through fiscal year 2026. If the events which are
beyond our control delay the customer from obtaining funding or financing of the entire transaction, we may not be able to
recognize revenue for the sale of the entire system because the collectability of contract consideration is not reasonably
assured.
The long sales cycle, together with delays in the shipment of CyberKnife and TomoTherapy platforms or customer
cancellations that could affect our ability to recognize revenue, could adversely affect our cash flows and revenue, which
would harm our results of operations and may result in significant fluctuations in our reporting of quarterly revenues. Our
historical experience indicates that some of our customers will cancel or renegotiate contracts as economic conditions change
or when product offerings change during the long sales cycle. We anticipate a portion of our open contracts may never result
in revenue recognition primarily due to the long sales cycle and factors outside of our control including changes in customers'
needs or financial condition, changes in government or health insurance reimbursement policies or changes to regulatory
requirements. As a result of these fluctuations, it is likely that in some future quarters, our operating results will fall below the
expectations of securities analysts or investors. If that happens, the market price of our stock would likely decrease. These
fluctuations also mean that you will not be able to rely upon our operating results in any particular period as an indication of
future performance.
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We depend on third-party distributors to market and distribute our products in international markets. If our distributors
fail to successfully market and distribute our products, our business will be materially harmed.
We have strategic relationships with a number of key distributors for sales and service of our products in certain foreign
countries, including the JV in China and other third-party distributors in other regions, including Europe, Russia, the Middle
East, Africa, the Asia Pacific region, and Latin America. Many of the countries in these regions are not highly developed at
this time and therefore, sales opportunities may be limited. We cannot control the efforts and resources our third party
distributors will devote to marketing the CyberKnife or TomoTherapy platforms. Our distributors may not be able to
successfully market and sell the CyberKnife or TomoTherapy platforms, may not devote sufficient time and resources to
support the marketing and selling efforts and may not market the CyberKnife or TomoTherapy platform at prices that will
permit the product to develop, achieve or sustain market acceptance. In some jurisdictions, we rely on our distributors to
manage the regulatory process and oversee their activities such that they are in compliance with all laws that govern their
activities, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), and we are dependent on their ability to do so
effectively. If a distributor is terminated by us or goes out of business, it may take us a period of time to locate an alternative
distributor, to seek appropriate regulatory approvals and to train its personnel to market the CyberKnife or TomoTherapy
platforms, and our ability to sell and service the CyberKnife or TomoTherapy platforms in the region formerly serviced by
such terminated distributor could be materially and adversely affected. Any of our distributors could become insolvent or
otherwise become unable to pay amounts owed to us when due. If any of these distributor relationships end and are not
replaced, our revenues from product sales or the ability to service our products in the territories serviced by these distributors
could be adversely affected. Any of these factors could materially and adversely affect our revenue from international
markets, increase our costs in those markets or damage our reputation. If we are unable to attract additional international
distributors, our international revenue may not grow. If our distributors experience difficulties, do not comply with regulatory
or legal requirements that results in fines or penalties, do not actively market the CyberKnife or TomoTherapy platforms or
do not otherwise perform under our distribution agreements, our potential for revenue from international markets may be
dramatically reduced, and our business could be harmed.
The high unit price of the CyberKnife and TomoTherapy platforms, as well as other factors, may contribute to substantial
fluctuations in our operating results, which could adversely affect our stock price.
Because of the high unit price of the CyberKnife and TomoTherapy platforms and the relatively small number of units
shipped each quarter, each shipment of a CyberKnife or TomoTherapy platform can represent a significant percentage of our
revenue for a particular quarter. Therefore, if we do not ship a CyberKnife or TomoTherapy platform when anticipated, we
will not be able to recognize the associated revenue and our operating results will vary significantly from our expectations.
This is of particular concern when the economic environment is volatile, such as the current economic environment. For
example, during periods of severe economic volatility, such as during the COVID-19 pandemic, we have had customers
cancel or postpone orders for our CyberKnife and TomoTherapy platforms and delaying any required build-outs. These
fluctuations and other potential fluctuations mean that you should not rely upon our operating results in any particular period
as an indication of future performance.
As a strategy to assist our sales efforts, we may offer extended payment terms, which may potentially result in higher days
sales outstanding, reduced cash flows in a particular period and greater payment defaults.
We offer longer or extended payment terms for qualified customers in some circumstances. As of June 30, 2025, customer
contracts with extended payment terms of more than one year amounted to approximately 4% of our total accounts receivable
balance. While we qualify customers to whom we offer longer or extended payment terms, their financial positions may
change adversely over the longer time period given for payment. This may result in an increase in payment defaults, which
would negatively affect our revenue. In addition, any increase in days sales outstanding could also negatively affect our cash
flow.
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We have entered into certain relationships with collaborators, partnerships, strategic alliances, joint venture partners and
other third parties, which are outside of our full control and may harm our existing business if we fail to realize the
expected benefits of such relationships.
We are a part of certain collaborations, partnerships, strategic alliances, joint ventures and other third-party relationships
and depend in part on them to grow our business and market share. Reliance on these third parties subjects us to a number of
risks, including that:
•
we may be required to contribute significant amounts of capital or incur losses in the initial stages of a
collaboration, partnership, alliance or joint venture, particularly as selling and marketing activities increase ahead
of expected long-term revenue. For example, we completed our capital contributions to the JV in the second
quarter of fiscal 2020 and one system upgrade in the first quarter of fiscal 2021. Further contributions may be
necessary in the future as the JV expands its operations in China in order to achieve our long-term strategy in
China;
•
the failure of a collaboration, partnership, strategic alliance, joint venture or other third-party relationship to meet
our performance and financial expectations, which could adversely impact our ability to meet internal forecasts
and expectations. For example, we have experienced losses in connection with our JV that has negatively
impacted our operating results;
•
the process for customers of the collaboration, partnership, alliance or joint venture to comply with local or
foreign regulatory requirements that may be required to purchase our products may cause delays in the
collaborator, partner, alliance partner or joint venture’s ability to conduct business. For example, any delays in
the JV obtaining necessary regulatory clearances for their products, in customers in China obtaining Class A or
Class B user licenses or in the subsequent tender process to complete the sale could affect the JV’s expected
ability to initiate sales, recognize revenue and achieve revenue and orders expectations in China;
•
we may not be in a position to exercise sole decision making authority regarding any collaboration, partnership,
alliance or joint venture, which could result in impasses on decisions or decisions made by our partners, and our
partners in such collaborations, partnerships, alliances or joint ventures may have economic or business interests
that are, or may become, inconsistent with our interests. For example, our JV partner, CNNC High Energy
Equipment (Tianjin) Co., Ltd., is a subsidiary of China Isotope and Radiation Corporation, which is a holding
subsidiary of China National Nuclear Corporation (“CNNC”), which is a Chinese state-owned entity. We may be
exposed to certain commercial, operational, and reputational risks as a result of CNNC being a state-owned entity
and thus controlled by the Chinese government where CNNC may make politically motivated business decisions
that do not align with our commercial interests. In addition, CNNC could conduct business with other companies,
organizations or institutions that attract unfavorable political attention in the United States, which could harm our
reputation. CNNC is also on the United States Department of Defense’s list of Chinese Military Companies
operating directly or indirectly in the United States under section 1260H of the National Defense Authorization
Act for Fiscal Year 2021. This designation may result in negative publicity for us and the JV. Further regulatory
changes adding CNNC or our JV partner to additional lists or export and sanctions related restricted or prohibited
parties or further controls on entities viewed as connected to the Chinese military could impact the JV. Any such
actions could negatively impact our relationship with CNNC, which could materially and adversely affect our
business, financial condition, results of operations and profitability;
•
collaborations, partnerships, alliances and joint ventures can be difficult to manage and may involve significant
expense and divert the focus and attention of our management and other key personnel away from our existing
businesses;
•
with respect to joint ventures, we may not be able to attract qualified employees, acquire customers or develop
reliable supply, distribution or other partnerships;
•
we could face potential damage to existing customer relationships or lack of customer acceptance or inability to
attract new customers as a result of certain collaborations, partnerships, alliances and joint ventures;
•
collaborators, partners, alliance partners and joint ventures may also operate in foreign jurisdictions with laws
and regulations with which we have limited familiarity, which could adversely impact our ability to comply with
such laws and regulations and may lead to increased litigation risk; and
54
•
foreign laws may offer us inadequate or less intellectual property protection relative to U.S. laws, which may
impact our ability, as well as the ability of the collaborator, partner, alliance partner and joint venture, to
safeguard our respective intellectual property from infringement and misappropriation.
As a result of these and other factors, we may not realize the expected benefits of any collaboration, partnership, strategic
alliance or joint venture or such benefits may not be realized at expected levels or within the expected time period.
We may attempt to acquire new businesses, products or technologies, including forming joint ventures, and if we are
unable to successfully complete these acquisitions or to integrate acquired businesses, products, technologies or
employees, we may fail to realize expected benefits or harm our existing business.
Our success will depend, in part, on our ability to expand our product offerings and grow our business in response to
changing technologies, customer demands and competitive pressures. In some circumstances, we may determine to do so
through the acquisition of complementary businesses, products or technologies rather than through internal development. The
identification of suitable acquisition candidates can be difficult, time consuming, and costly, and we may not be able to
successfully complete identified acquisitions. Other companies may compete with us for these strategic opportunities. In
addition, even if we successfully complete an acquisition, we may not be able to successfully integrate newly acquired
organizations, products or technologies into our operations or timely and effectively commence operations because the
process of integration could be expensive, time consuming and may strain our resources. Furthermore, the products and
technologies that we acquire may not be successful or may require significantly greater resources and investments than we
originally anticipated. Implementing or acquiring new lines of business or offering new products and services within existing
lines of business can affect the sales and profitability of existing lines of business or products and services, including as a
result of sales channel conflicts. With respect to any acquisition, we may be unable to retain employees of acquired
companies, or retain the acquired company’s customers, suppliers, distributors or other partners who are our competitors or
who have close relationships with our competitors. Future acquisitions could also result in potentially dilutive issuances of
equity securities or the incurrence of debt, contingent liabilities, or expenses or other charges, any of which could harm our
business and affect our financial results or cause a reduction in the price of our common stock. Further, acquisition targets
may also operate in foreign jurisdictions with laws and regulations with which we have limited familiarity, which could
adversely impact our ability to comply with such laws and regulations and may lead to increased litigation risk. Such laws
may also offer us inadequate or less intellectual property protection relative to U.S. laws, which may impact our ability, as
well as the ability of the acquisition target to safeguard our respective intellectual property from infringement and
misappropriation. As a result of these and other factors, we may not realize the expected benefits of any acquisition or such
benefits may not be realized at expected levels or within the expected time period. The failure to successfully consummate
such strategic transactions and effectively integrate and execute following such consummation may have an adverse impact
on our growth, profitability, financial position and results of operations.
We previously identified material weaknesses in our system of internal controls as of June 30, 2024. Although such
material weaknesses have been remediated, if we fail to maintain an effective system of internal control over financial
reporting, our ability to produce timely and accurate financial results could be adversely impacted. As a result, current
and potential stockholders could lose confidence in our financial reporting, which could have an adverse effect on our
business and our stock price.
Effective internal controls are necessary for us to provide reliable financial reports and to protect from fraudulent, illegal,
or unauthorized transactions. If we cannot maintain effective controls and provide timely and reliable financial reports, our
business and operating results could be harmed. In the course of preparing the audited consolidated financial statements for
the Company’s Annual Report on Form 10-K for the year ended June 30, 2024, the Company concluded that as of June 30,
2024, its internal control over financial reporting was not effective as a result of two material weaknesses at the control
activity level related to ensuring all manual journal entries consistently enforced segregation of duties in the approval process
and ensuring that the existence of inventory at manufacturing warehouse locations was accurate. These material weaknesses
were specifically related to the implementation of the Company’s new ERP system in August 2023 and did not result in any
material identified misstatements to the consolidated financial statements, and there were no changes to previously issued
financial results. Management also concluded that the Company's disclosure controls and procedures were not effective as of
June 30, 2024, September 30, 2024, and December 31, 2024 due to the material weaknesses. For a discussion of
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management’s considerations of the Company’s disclosure controls and procedures, internal control over financial reporting,
and the material weaknesses identified, refer to Controls and Procedures in Part I, Item 4.
Although the material weaknesses have both been remediated as of March 31, 2025, these remediation efforts have been
time consuming and costly and may continue to incur additional time and expense. We may not be able to identify and
remediate additional control deficiencies, including material weaknesses, in the future. We cannot assure you that the
measures we have taken to date, or any measures we may take in the future, will be sufficient to prevent or avoid potential
future material weaknesses. Our management may also be unable to conclude in future periods that our disclosure controls
and procedures are effective due to the effects of various factors, which may, in part, include unremediated material
weaknesses in internal control over financial reporting. Any further disruptions or difficulties that may occur in connection
with our ERP system or other systems (whether in connection with the regular operation, periodic enhancements,
modifications or upgrades of such systems or the integration of any acquired businesses into such systems, or due to
cybersecurity events such as ransomware attacks) could adversely impact the effectiveness of our internal control over
financial reporting as well as affect our ability to manufacture products, process orders, deliver products, provide customer
support, fulfill contractual obligations, track inventories, or otherwise operate our business, in particular as a result of our
limited experience implementing such systems and the complex nature of the system itself. Any failure to establish and
maintain effective disclosure controls and procedures and internal control over financial reporting, including due to a failure
to remediate the material weaknesses mentioned above or the discovery or occurrence of any additional material weaknesses
in our internal control over financial reporting in the future, could adversely affect our ability to prepare financial statements
within required time periods and record, process and report financial information accurately, which could result in material
misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, negatively
impact the price of our common stock, limit our liquidity and access to capital markets, adversely affect our business, harm
our reputation or subject us to litigation or investigations requiring management resources and payment of legal and other
expenses.
In addition, it may be difficult to timely determine the effectiveness of our financial reporting systems and internal
controls in the future because of the complexity of our financial model. We recognize revenue from a range of transactions
including CyberKnife and TomoTherapy platform sales and services. The CyberKnife and TomoTherapy platforms are
complex products that contain both hardware and software elements. The complexity of the CyberKnife and TomoTherapy
platforms and of our financial model used to recognize revenue on such systems requires us to process a greater variety of
financial transactions than would be required by a company with a less complex financial model. Accordingly, efforts to
timely remediate deficiencies or weaknesses in our internal controls would likely be more challenging for us than they would
for a company with a less complex financial model. Furthermore, if we were to find an internal control deficiency or material
weakness, we may be required to amend or restate historical financial statements, which would likely have a negative impact
on our stock price.
Additionally, our internal control over financial reporting will not prevent or detect all errors and all fraud. A control
system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control
system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of
fraud will be detected.
Our ability to raise capital or obtain financing in the future may be limited, and our failure to raise capital when needed
could prevent us from executing our growth strategy.
While we believe that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at
least the next twelve months, the timing and amount of our working capital and capital expenditure requirements may vary
significantly depending on numerous factors, including the other risk factors described above and below.
If our capital resources are insufficient to satisfy our liquidity requirements, we may seek to sell additional equity
securities or debt securities or obtain other debt financing, which could be difficult or impossible depending on the state of
economic and capital markets environments at the time, as well as the state of our business, operating results and financial
condition. For example, any sustained disruption in the capital markets from the global economic environment could
negatively impact our ability to raise capital. Our ability to raise additional capital or access capital can be affected by
macroeconomic events which affect the economy and the financial and banking sectors in particular. Failures at banks and
other financial institutions, or issues in the broader U.S. financial system, including uncertainty related to the debt ceiling,
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increased interest rates, and lack of availability of credit, which may have an impact on the broader capital markets and, in
turn, our ability to access those markets. In addition, the tightening of the credit markets and lending standards could it make
more difficult to raise capital through either debt or equity offerings on commercially reasonable terms or at all. Also, our
debt levels may impair our ability to obtain additional financing in the future. The sale of additional equity securities or
convertible debt securities would result in additional dilution to our stockholders. In particular, the Warrants that we issued to
the lenders in connection with the Credit Facilities contain anti-dilution provisions, among other things, including price
protection anti-dilution protection in the event that the Company sells stock at a price below $1.00 per share in the case of the
Penny Warrants and $1.25 per share in the case of the Premium Warrants. We cannot assure that additional financing, if
required or desired, will be available in amounts or on terms acceptable to us, if at all.
If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to
continue to support our business growth and to respond to business challenges, and our business and ability to continue as a
going concern may be adversely affected. If we need to accept less favorable terms, it could increase our cost of capital,
reduce our cash balances or otherwise restrict our ability to grow.
We may not be able to fully utilize certain tax loss carryforwards.
As of June 30, 2025, we had approximately $260.9 million and $119.9 million in federal and state net operating loss
carryforwards, respectively. The federal and state carryforwards expire in varying amounts beginning in 2029 for federal and
2026 for state purposes. In addition, as of June 30, 2025, we had federal and state research and development tax credit
carryforwards of approximately $28.5 million and $22.8 million, respectively. The California research credits have no
expiration date, but if not utilized, the federal research credits and other non-California state research credits will begin to
expire in 2026.
Federal net operating losses arising in tax years beginning after December 31, 2017 are subject to an 80% of taxable
income limitation (as calculated before taking the net operating losses into account). It is uncertain if and to what extent
various states will conform to these limitations. In addition, utilization of our net operating loss and credit carryforwards is
subject to annual limitation due to the application of the ownership change limitations provided by Section 382 of the Internal
Revenue Code (“IRC”) and similar state provisions to us. Future changes in our stock ownership, including future offerings,
as well as changes that may be outside of our control, could result in an ownership change under Section 382 of the IRC. In
addition, the use of our net operating losses and other tax attributes may be subject to other limitations under applicable law.
Additionally, one of the provisions under the Tax Cuts and Jobs Act that became effective in tax years beginning after
December 31, 2021 required the capitalization and amortization of domestic and foreign research and experimental
expenditures. On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”) was enacted, which makes a number of
changes to U.S. federal income tax law, including permanently suspending the requirement to capitalize and amortize
domestic research and development expenditures and permitting such deductions on a current basis. We are currently
evaluating the full impact of the OBBB Act on us.
We are subject to the tax laws of various foreign jurisdictions, as well as within the United States, which are subject to
unanticipated changes and interpretation and could harm our future results.
The application of tax laws of various foreign jurisdictions and within the United States is subject to interpretation and
depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany
arrangements. The taxing authorities of jurisdictions in which we operate may challenge our methodologies for valuing
intercompany arrangements including our transfer pricing or determine that the manner in which we operate our business
does not achieve the intended tax consequences. The application of tax laws can also be subject to conflicting interpretations
by tax authorities in the various jurisdictions we operate. It is not uncommon for taxing authorities in different countries to
have conflicting views, with respect to, among other things, the manner in which the arm’s length standard is applied for
transfer pricing purposes. Further, tax laws are subject to change, which could adversely impact our tax rate. A number of
countries, as well as organizations such as the Organization for Economic Cooperation and Development, support the 15%
global minimum tax initiative ("Pillar Two"), and have adopted or intend to adopt laws to implement this initiative. However,
on June 28, 2025, the G7 released a joint statement that it had reached an understanding with the United States for a side-by-
side system based on certain accepted principles, including that U.S.-parented groups, such as ours, would be exempt from
certain provisions of Pillar Two. Many countries and organizations are also actively considering changes to existing tax laws
or have proposed or enacted new laws, such as the OBBB Act, that could increase our tax obligations in countries where we
do business or cause us to change the way we operate our business, which could materially impact our results of operation.
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Risks Related to the Regulation of our Products and Business
Modifications, upgrades, new indications and future products related to the CyberKnife or TomoTherapy Systems or the
Precision Treatment Planning and iDMS Data Management System software may require new FDA 510(k) clearances or
premarket approvals and similar licensing or approvals in international markets. Such modifications, or any defects in
design, manufacture or labeling may require us to recall or cease marketing the affected systems or software until
approvals or clearances are obtained.
The CyberKnife and TomoTherapy platforms as well as the Precision Treatment Planning software are medical devices
that are subject to extensive regulation in the United States by local, state and the federal government, including the FDA.
The iDMS Data Management System may be regulated as a medical device in some markets. The FDA most recently cleared
Surface Guided Radiation Therapy (SGRT) on Radixact System under K223159 on June 23, 2023. ClearRTTM for onboard
kVCT imaging was previously cleared on the Radixact System under K202412 on December 18, 2020. The FDA regulates
virtually all aspects of a medical device design, development, testing manufacturing, labeling, storage, record keeping,
adverse event reporting, sale, promotion, distribution and shipping. Before a new medical device, or a new intended use or
indication or claim for an existing product, can be marketed in the United States, it must first receive either premarket
approval or 510(k) clearance from the FDA, unless an exemption exists. Either process can be expensive, lengthy and
unpredictable. The FDA’s 510(k) clearance process generally takes from three to twelve months, but it can last longer. The
process of obtaining premarket approval is much more costly and uncertain than the 510(k) clearance process and it generally
takes from one to three years, or even longer, from the time the application is filed with the FDA. Additionally, outside of the
United States, our products are subject to clearances and approvals by foreign governmental agencies similar to the FDA. In
order to market our products internationally, we must obtain licenses or approvals from these governmental agencies, which
could include local requirements, safety standards, testing or certifications, and can be time consuming, burdensome and
uncertain. Despite the time, effort and cost, there can be no assurance that a particular device or a modification of a device
will be approved or cleared by the FDA or any foreign governmental agency in a timely fashion, if at all. Even if we are
granted regulatory clearances or approvals, they may include significant limitations on the indicated uses of the product,
which may limit the market for those products, and how those products can be promoted.
Medical devices may only be marketed for the indications for which they are approved or cleared. The FDA and other
foreign governments also may change their policies, adopt additional regulations, or revise existing regulations, each of
which could prevent or delay approval or clearance of our device, or could impact our ability to market our currently
approved or cleared device. We are also subject to medical device reporting regulations, which require us to report to the
FDA and other international governmental agencies if our products cause or contribute to a death or a serious injury, or
malfunction in a way that would likely cause or contribute to a death or a serious injury. We also are subject to the QSR in
the U.S. and ISO 13485 certification in many international markets, compliance with which is necessary to receive FDA and
other international clearances or approvals to market new products and is necessary for us to be able to continue to market a
cleared or approved product in the United States or globally. After a product is placed in the market, we are also subject to
regulations by the FDA and Federal Trade Commission related to the advertising and promotion of our products to ensure our
claims are consistent with our regulatory clearances, that there is scientific data to substantiate our claims and that our
advertising is not false or misleading. Our products are also subject to state regulations and various worldwide laws and
regulations.
A component of our strategy is to continue to upgrade the CyberKnife and TomoTherapy platforms as well as the
Precision Treatment Planning with iDMS Data Management System software. Upgrades previously released by us required
510(k) clearance and international registration before we were able to offer them for sale. We expect our future upgrades will
similarly require 510(k) clearance or approval; however, future upgrades may be subject to substantially more time-
consuming data generation requirements and uncertain premarket approval or clearance processes. If we were required to use
the premarket approval process for future products or product modifications, it could delay or prevent release of the proposed
products or modifications, which could harm our business.
The FDA requires device manufacturers to make their own determination of whether or not a modification requires an
approval or clearance; however, the FDA can review a manufacturer’s decision not to submit for additional approvals or
clearances. Any modification to an FDA approved or cleared device that would significantly affect its safety or efficacy or
that would constitute a major change in its intended use would require a new premarket approval or 510(k) clearance. We
cannot assure you that the FDA will agree with our decisions not to seek approvals or clearances for particular device
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modifications or that we will be successful in obtaining premarket approvals or 510(k) clearances for modifications in a
timely fashion, if at all.
We have obtained 510(k) clearance for the CyberKnife platform for the treatment of conditions anywhere in the body
when radiation treatment is indicated, and we have obtained 510(k) clearance for the TomoTherapy platform to be used as
integrated systems for the planning and delivery of IMRT for the treatment of cancer. We have made modifications to the
CyberKnife and TomoTherapy platforms in the past and may make additional modifications in the future that we believe do
not or will not require additional approvals or clearances. If the FDA disagrees, based on new finalized guidance and requires
us to obtain additional premarket approvals or 510(k) clearances for any modifications to the CyberKnife or TomoTherapy
platforms and we fail to obtain such approvals or clearances or fail to secure approvals or clearances in a timely manner, we
may be required to cease manufacturing and marketing the modified device or to recall such modified device until we obtain
FDA approval or clearance and we may be subject to significant regulatory fines or penalties.
The FDA and similar governmental authorities in other countries in which we market and sell our products have the
authority to require the recall of our products in the event of material deficiencies or defects in design, manufacture or
labeling. A government mandated recall, or a voluntary recall by us, could occur as a result of component failures,
manufacturing errors or design defects, including defects in labeling and user manuals. Any recall could divert management’s
attention, cause us to incur significant expenses, generate negative publicity, harm our reputation with customers, negatively
affect our future sales and business, require redesign of the CyberKnife or TomoTherapy platform, and harm our operating
results. In these circumstances, we may also be subject to significant enforcement action. If any of these events were to occur,
our ability to introduce new or enhanced products in a timely manner would be adversely affected, which in turn would harm
our future growth.
We are subject to federal, state and foreign laws and regulations applicable to our operations, the violation of which could
result in substantial penalties and harm our business.
In addition to regulation by the FDA and similar governmental authorities in other countries, our operations are subject to
other laws and regulations, such as laws and rules governing interactions with healthcare providers, anti-corruption laws,
privacy rules and transparency laws. In order to maintain compliance with these laws and requirements, we must continually
keep abreast of any changes or developments to be able to integrate compliance protocols into the development and
regulatory documentation of our products. Failure to maintain compliance could result in substantial penalties to us and harm
our business.
Laws and ethical rules governing interactions with healthcare providers. The Medicare and Medicaid “anti-kickback”
laws, and similar state laws, prohibit soliciting, offering, paying or accepting any payments or other remuneration that is
intended to induce any individual or entity to either refer patients to or purchase, lease or order, or arrange for or recommend
the purchase, lease or order of, healthcare products or services for which payment may be made under federal and state
healthcare programs, such as Medicare and Medicaid. Such laws impact our sales, marketing and other promotional activities
by reducing the types of financial arrangements we may have with our customers, potential customers, marketing consultants
and other service providers. They particularly impact how we structure our sales offerings, including discount practices,
customer support, product loans, education and training programs, physician consulting, research grants and other service
arrangements. Many of these laws are broadly drafted and are open to a variety of interpretations, making it difficult to
determine with any certainty whether certain arrangements violate such laws, even if statutory safe harbors are available.
Generally, courts have taken a broad interpretation of the scope of the “anti-kickback” laws, holding that these laws may be
violated if merely one purpose of a payment arrangement is to induce referrals or purchases. Further, a person or entity does
not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Violations of these laws can be punishable with prison time, and can also result in criminal fines, administrative civil money
penalties and exclusion from participation in federal healthcare programs. In addition, a claim including items or services
resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the
federal False Claims Act.
Federal and state “false claims” laws generally prohibit the knowing filing or causing the filing of a false claim or the
knowing use of false statements to obtain payment from government payors. Although we do not submit claims directly to
payors, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent
claims by providing inaccurate billing or coding information to customers, or through certain other activities, including
promoting products for uses or indications that are not approved by the FDA. In addition to actions initiated by the
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government itself, the federal False Claims Act authorizes actions to be brought on behalf of the federal government by a
private party having knowledge of the alleged fraud called a “relator.” Because the complaint is initially filed under seal, the
action may be pending for some time before the defendant is even aware of the action. If the government is ultimately
successful in obtaining redress in the matter or if the relator succeeds in obtaining redress without the government’s
involvement, then the relator is typically entitled to receive a percentage of the recovery. When an entity is determined to
have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the
government, plus civil penalties for each separate false claim, and may be excluded from participation in federal health care
programs, and, although the federal False Claims Act is a civil statute, violations may also implicate various federal criminal
statutes. Several states have also adopted comparable state false claims act, some of which apply to all payors.
We are also subject to federal and state physician self-referral laws. The federal Ethics in Patient Referrals Act of 1989,
commonly known as the Stark Law, prohibits, subject to certain exceptions, physician referrals of Medicare and Medicaid
patients to an entity providing certain “designated health services” if the physician or an immediate family member has any
financial relationship with the entity. The Stark Law also prohibits the entity receiving the referral from billing any good or
service furnished pursuant to an unlawful referral. Various states have corollary laws to the Stark Law, including laws that
require physicians to disclose any financial interest they may have with a healthcare provider to their patients when referring
patients to that provider. Both the scope and exceptions for such laws vary from state to state.
If our past or present operations are found to be in violation of any of these “anti-kickback,” “false claims,” “self-referral”
or other similar laws in foreign jurisdictions, we may be subject to the applicable penalty associated with the violation, which
may include significant civil and criminal penalties, damages, fines, imprisonment and exclusion from healthcare programs.
The impact of any such violations may lead to curtailment or restructuring of our operations, which could adversely affect
our ability to operate our business and our financial results.
Anti-corruption laws. We are also subject to laws regarding the conduct of business overseas, such as the FCPA, the U.K.
Bribery Act of 2010, the Brazil Clean Companies Act, and other similar laws in foreign countries in which we operate. The
FCPA prohibits the provision of illegal or improper inducements to foreign government officials in connection with the
obtaining of business overseas. Becoming familiar with and implementing the infrastructure necessary to ensure that we and
our distributors comply with such laws, rules and regulations and mitigate and protect against corruption risks could be quite
costly, and there can be no assurance that any policies and procedures we do implement will protect us against liability under
the FCPA or related laws for actions taken by our employees, executive officers, distributors, agents and other intermediaries
with respect to our business. Violations of the FCPA or other similar laws by us or any of our employees, executive officers,
distributors, agents or other intermediaries could subject us or the individuals involved to criminal or civil liability, cause a
loss of reputation in the market, and materially harm our business.
Laws protecting patient health information. There are a number of federal and state laws protecting the confidentiality of
certain patient health information, including patient records, and restricting the use and disclosure of that protected
information. In particular, the U.S. Department of Health and Human Services (“HHS”) has promulgated patient privacy
rules under the HIPAA. These privacy rules protect medical records and other personal health information of patients by
limiting their use and disclosure, giving patients the right to access, amend and seek accounting of their own health
information and limiting most uses and disclosures of health information to the minimum amount reasonably necessary to
accomplish the intended purpose. The HIPAA privacy standard was amended by the Health Information Technology for
Economic and Clinical Health Act, enacted as part of the American Recovery and Reinvestment Act of 2009. Although we
are not a “covered entity” under HIPAA, we are considered a “business associate” of certain covered entities and, as such, we
are directly subject to HIPAA, including its enforcement scheme and inspection requirements, and are required to implement
policies, procedures as well as reasonable and appropriate physical, technical and administrative security measures to protect
individually identifiable health information we receive from covered entities. Our failure to protect health information
received from customers in compliance with HIPAA or other laws could subject us to civil and criminal liability to the
government and civil liability to the covered entity, could result in adverse publicity, and could harm our business and impair
our ability to attract new customers.
Transparency laws. The Sunshine Act, which was enacted by Congress as part of the Patient Protection and Affordable
Care Act on December 14, 2011, requires each applicable manufacturer, which includes medical device companies such as
Accuray, to track and report to the federal government on an annual basis all payments and other transfers of value from such
applicable manufacturer to U.S. licensed physicians and teaching hospitals as well as physician ownership of such applicable
manufacturer’s equity, in each case subject to certain statutory exceptions. Furthermore, on October 25, 2018, President
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Trump signed into law the “Substance Use-Disorder Prevention that Promoted Opioid Recovery and Treatment for Patients
and Communities Act” which in part (under a provision entitled “Fighting the Opioid Epidemic with Sunshine”) extends the
reporting and transparency requirements for physicians in the Physician Payments Sunshine Act to physician assistants, nurse
practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. Such data is
available by the government on a publicly searchable website. Failure to comply with the data collection and reporting
obligations imposed by the Sunshine Act can result in civil monetary penalties ranging from $1,000 to $10,000 for each
payment or other transfer of value that is not reported (up to a maximum of $150,000 per reporting period) and from $10,000
to $100,000 for each knowing failure to report (up to a maximum of $1 million per reporting period). In addition, we are
subject to similar state and foreign laws related to the tracking and reporting of payments and other transfers of value to
healthcare professionals, the violation of which could, among other things, result in civil monetary penalties and adversely
impact our reputation and business.
Conflict minerals. The Dodd Frank Wall Street Reform and Consumer Protection Act and the rules promulgated by the
SEC under such act require companies, including Accuray, to disclose the existence in their products of certain metals,
known as “conflict minerals,” which are metals mined from the Democratic Republic of the Congo and adjoining countries.
These rules require investigative efforts, which has caused and will continue to cause us to incur associated costs, could
adversely affect the sourcing, availability and pricing of minerals used in our products and may cause reputational harm if we
determine that certain of our components contain such conflict minerals or if we are unable to alter our processes or sources
of supply to avoid using such materials, all of which could adversely impact sales of our products and results of operations.
If we or our distributors do not obtain and maintain the necessary regulatory approvals in a specific country, we will not
be able to market and sell our products in that country.
To be able to market and sell our products in a specific country, we or our distributors must comply with applicable laws
and regulations of that country. In jurisdictions where we rely on our distributors to manage the regulatory process, we are
dependent on their ability to do so effectively. While the laws and regulations of some countries do not impose barriers to
marketing and selling our products or only require notification, others require that we or our distributors obtain the approval
of a specified regulatory body. These laws and regulations, including the requirements for approvals, and the time required
for regulatory review vary from country to country. The governmental agencies regulating medical devices in some countries,
for example, require that the user interface on medical device software be in the local language. We currently provide user
guides and manuals, both paper copies and electronically, in the local language but only provide an English language version
of the user interface. Obtaining regulatory approvals is expensive and time-consuming, and we cannot be certain that we or
our distributors will receive regulatory approvals in each country in which we market or plan to market our products. If we
modify our products, we or our distributors may need to apply for additional regulatory approvals before we are permitted to
sell them. We may not continue to meet the quality and safety standards required to maintain the authorizations that we or our
distributors have received. It can also be costly for us and our distributors to keep up with regulatory changes issued or
mandated from time to time. If we change distributors, it may be time-consuming and disruptive to our business to transfer
the required regulatory approvals, particularly if such approvals are maintained by our third-party distributors on our behalf.
If we or our distributors are unable to maintain our authorizations, or fail to obtain appropriate authorizations in a particular
country, we will no longer be able to sell our products in that country, and our ability to generate revenue will be materially
adversely affected.
Within the EU, we are required under the Medical Device Directive to affix the Conformité Européene (“CE”) mark on
our products in order to sell the products in member countries of the EU. This conformity to the applicable directives is done
through self-declaration and is verified by an independent certification body, called a Notified Body, before the CE mark can
be placed on the device. Once the CE mark is affixed to the device, the Notified Body will regularly audit us to ensure that
we remain in compliance with the applicable European laws or directives. CE marking demonstrates that our products
comply with the laws and regulations required by the European Union countries to allow free movement of trade within those
countries. If we cannot support our performance claims and/or demonstrate or maintain compliance with the applicable
European laws and directives, we lose our CE mark, which would prevent us from selling our products within the European
Union. In addition, the EU’s Medical Device Regulation (“MDR”), which replaced the existing Medical Device Directive,
became effective in May 2021. The MDR establishes new requirements and oversight for maintaining the CE mark. The
official guidance continues to be published for the implementation of these requirements and the number of Notified Bodies
are still limited. There may be variability in review timeframes and requirements as both manufacturers and authorities
navigate these new requirements. In addition, the EU and Switzerland failed to establish a Mutual Recognition Agreement
(“MRA”) for medical devices to include Switzerland within the MDR and as a result, Switzerland has initiated its own
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medical device regulation similar to the EU MDR, which will require additional registrations for economic operators and
products within Switzerland for our devices.
Under the Pharmaceutical Affairs Law in Japan, a pre-market approval necessary to sell, market and import a product, or
Shonin, must be obtained from the Ministry of Health, Labor and Welfare (“MHLW”), for our products. Before issuing
approvals, MHLW examines the application in detail with regard to the quality, efficacy, and safety of the proposed medical
device. The Shonin is granted once MHLW is content with the safety and effectiveness of the medical device. The time
required for approval varies. A delay in approval could prevent us from selling our products in Japan, which could impact our
ability to generate revenue and harm our business.
In addition to laws and regulations regarding medical devices, we are subject to a variety of environmental laws and
regulations around the world regulating our operations, including those relating to the use, generation, handling, storage,
transportation, treatment and disposal of hazardous materials, which laws impose compliance costs on our business and can
also result in liability to us. Although we follow procedures intended to comply with existing environmental laws and
regulations, risk of accidental contamination or injury can never be fully eliminated. In the event of an accident, state or
federal or other applicable authorities may curtail our use of these materials and interrupt our business operations. In addition,
future changes in these laws and regulations could also increase our costs of doing business. We must continually keep
abreast of these standards and requirements and integrate our compliance into the development and regulatory documentation
for our products. Failure to meet these standards could limit our ability to market our products in those regions that require
compliance to such standards. For example, the European Union has adopted directives that may lead to restrictions on the
use of certain hazardous substances or other regulated substances in some of our products sold there, unless such products are
eligible for an exemption. While we believe that certain of our products are exempt, there can be no guarantee that such
determination would not be challenged or that the regulations would not change in a way that would subject our products to
such regulation. These directives, along with other laws and regulations that may be adopted by other countries, could
increase our operating costs in order to maintain access to certain markets, which could adversely affect our business.
Healthcare reform legislation could adversely affect demand for our products, our revenue and our financial condition.
In March 2010, the Patient Protection and Affordable Care Act, as amended by Health Care and Education Reconciliation
Act (collectively, the “ACA”) were signed into law. Since its enactment, there have been judicial and Congressional
challenges to certain aspects of the ACA. In particular, on December 14, 2018, a Texas U.S. District Court Judge ruled that
the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax
Cuts and Jobs Act. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District
Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine
whether the remaining provisions of the ACA are invalid as well. On June 18, 2021, the United States Supreme Court upheld
the ACA, holding that the individuals who brought the lawsuit did not have standing to challenge the law. It is unclear how
this decision and the decisions of the current administration will impact the ACA and our business. Complying with any new
legislation or reversing changes implemented under the ACA could be time-intensive and expensive, resulting in a material
adverse effect on our business.
The ACA includes a large number of health related provisions, including expanding Medicaid eligibility, requiring most
individuals to have health insurance, establishing new regulations on health plans, establishing health insurance exchanges,
requiring manufacturers to report payments or other transfers of value made to physicians and teaching hospitals, modifying
certain payment systems to encourage more cost-effective care and a reduction of inefficiencies and waste and including new
tools to address fraud and abuse. The laws also include a decrease in the annual rate of inflation for Medicare payments to
hospitals and the establishment of an independent payment advisory board to suggest methods of reducing the rate of growth
in Medicare spending. We do not yet know the full impact that the ACA will have on our business. The expansion in the
government's role in the U.S. healthcare industry may result in decreased profits to us, lower reimbursement by third-party
payors for our products, or reduced volume of medical procedures conducted with our products, all of which could have a
material adverse effect on our business, financial condition and results of operations. We cannot predict the ultimate content,
timing or effect of any healthcare reform legislation or the impact of potential legislation on us.
Future legislative or policy initiatives directed at reducing costs or limiting coverage or amounts of reimbursement
available for our products could be introduced at either the federal or state level, which could have a negative impact on the
demand for our products and services, and therefore on our financial position and results of operations. We cannot predict
what healthcare reform legislation or regulations, if any, including any potential repeal or amendment of the ACA, will be
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enacted in the United States or elsewhere, what impact any legislation or regulations related to the healthcare system that may
be enacted or adopted in the future might have on our business, or the effect of ongoing uncertainty or public perception
about these matters will have on the purchasing decisions of our customers. However, the implementation of new legislation
and regulation may materially lower reimbursements for our products, materially reduce medical procedure volumes and
significantly and adversely affect our business.
Risks Related to Our Common Stock
The price of our common stock is volatile and may continue to fluctuate significantly, which could lead to losses for
stockholders.
The stock market in general has recently experienced relatively large price and volume fluctuations, particularly in
response to macroeconomic factors. In addition, the trading prices of the stock of healthcare companies of our size can
experience extreme price and volume fluctuations. These fluctuations often have been unrelated or out of proportion to the
operating performance of these companies. Our stock price has experienced periods of volatility, including in recent quarters.
Broad market fluctuations may also harm our stock price. Continued market fluctuations could result in extreme volatility in
the price of our common stock, which could cause a decline in the value of our common stock. Any negative change in the
public’s perception of the prospects of companies that employ similar technology or sell into similar markets could also
depress our stock price, regardless of our actual results.
In addition to the other risk factors described above and below, factors affecting the trading price of our common stock
include:
•
variations in our operating results, as well as costs and expenditures;
•
impacts to our business, operations or financial condition caused by concerns in connection with the global
economic environment, supply chain disruptions or as a result of changes in government administration policy
positions;
•
regulatory developments related to manufacturing, marketing or sale of the CyberKnife or TomoTherapy
platform;
•
political or social uncertainties, including as a result of the Russia-Ukraine and the Middle East conflicts
including with respect to Iran;
•
changes in product pricing policies;
•
announcements of technological innovations, new services or service enhancements, strategic alliances or
significant agreements by us or by our competitors;
•
changes in analysts’ estimates, investors’ perceptions, recommendations by securities analysts or our failure to
achieve analysts’ and our own estimates;
•
recruitment or departure of key personnel;
•
the performance of our competitors and investor perception of the markets and industries in which we compete;
•
announcement of strategic transactions or capital raising activities; and
•
market conditions in our industry, the industries of our customers and the economy as a whole, including the
impact of increased inflation, a recession or instability in the banking and financial services sector.
Future issuances of shares of our common stock could dilute the ownership interests of our stockholders.
Any issuance of equity securities could dilute the interests of our stockholders and could substantially decrease the trading
price of our common stock. We may issue equity securities in the future for a number of reasons, including to finance our
operations and business strategy (including in connection with acquisitions, strategic collaborations or other transactions), to
adjust our ratio of debt to equity, to satisfy our obligations upon the exercise of outstanding options or for other reasons.
In addition, to the extent we issue common stock upon conversion of any outstanding convertible notes such as the 2026
Notes, that conversion would dilute the ownership interests of our stockholders.
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The exercise of outstanding warrants for our common stock would increase the number of shares eligible for future resale
in the public market and result in dilution to our stockholders.
The exercise of outstanding warrants to acquire our common stock will increase the number of shares eligible for future
resale in the public market and result in dilution to our stockholders. As of June 30, 2025, there are (i) an aggregate of
17,180,710 shares of our common stock issuable upon exercise of the Premium Warrants, and (ii) an aggregate of 6,247,531
shares of our common stock issuable upon exercise of the Penny Warrants (together, the “Warrants”). If we use the Delayed
Draw Down Facility, we will be subject to issuing additional detachable warrants to our lender and its investors. Sales of
substantial numbers of such shares in the public market could adversely affect the market price of our shares. In addition, the
perceived risk of dilution as a result of the number of outstanding Warrants may cause our stockholders to be more inclined
to sell their shares, which would contribute to a downward movement in the price of our common stock. Moreover, the
perceived risk of dilution and the resulting downward pressure on our common stock price could encourage investors to
engage in short sales of our common stock, which could further contribute to price declines in our common stock. The fact
that our warrant holders can sell substantial amounts of our common stock in the public market could make it more difficult
for us to raise additional funds through the sale of equity or equity-related securities in the future at a time and price that we
deem reasonable or appropriate, or at all.
In addition, the Warrants have certain anti-dilution protection provisions, including price protection anti-dilution
protection in the event that the Company sells stock at a price below $1.00 per share in the case of the Penny Warrants and
$1.25 per share in the case of the Premium Warrants. Depending on the nature and price of any equity issuances by us, the
number of shares of common stock issuable upon the exercise of such Warrants could be increased and that would likely
make an equity financing more difficult.
The conditional conversion features of the 2026 Notes, if triggered, may adversely affect our financial condition and
operating results.
In the event the conditional conversion features of the 2026 Notes are triggered, holders of the 2026 Notes, as applicable,
will be entitled to convert such notes at any time during specified periods at their option. If one or more holders elect to
convert such notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock
(other than paying solely cash in lieu of any fractional share), including if we have irrevocably elected full physical
settlement upon conversion, we would be required to make cash payments to satisfy all or a portion of our conversion
obligation based on the applicable conversion rate, which could adversely affect our liquidity.
Provisions in the indenture for the 2026 Notes, the Financing Agreement for our Credit Facilities, our certificate of
incorporation and our bylaws could discourage or prevent a takeover, even if an acquisition would be beneficial in the
opinion of our stockholders.
Provisions of our certificate of incorporation and bylaws could make it more difficult for a third-party to acquire us, even
if doing so would be beneficial in the opinion of our stockholders. These provisions include:
•
authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to
increase the number of outstanding shares and thwart a takeover attempt;
•
establishing a classified board of directors, which could discourage a takeover attempt;
•
prohibiting cumulative voting in the election of directors, which would limit the ability of less than a majority of
stockholders to elect director candidates;
•
limiting the ability of stockholders to call special meetings of stockholders;
•
prohibiting stockholder action by written consent and requiring that all stockholder actions be taken at a meeting
of our stockholders; and
•
establishing advance notice requirements for nominations for election to the board of directors or for proposing
matters that can be acted upon by stockholders at stockholder meetings.
In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change of control
of our company. Generally, Section 203 prohibits stockholders who, alone or together with their affiliates and associates,
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own more than 15% of the subject company from engaging in certain business combinations for a period of three years
following the date that the stockholder became an interested stockholder of such subject company without approval of the
board or 662/3% of the independent stockholders. The existence of these provisions could adversely affect the voting power of
holders of common stock and limit the price that investors might be willing to pay in the future for shares of our common
stock.
A change of control will also trigger an event of default under the Credit Facilities. If an event of default occurs, the agent
for the lenders under the Credit Facilities may, at its discretion, suspend or terminate any of the lenders’ loan obligations
thereunder and/or declare all or any portion of the loan then-outstanding under the Credit Facilities, including all accrued but
unpaid interest thereon, to be accelerated and immediately due and payable.
Furthermore, if a “fundamental change” (as such term is defined in the applicable indenture of the 2026 Notes) occurs,
holders of the 2026 Notes will have the right, at their option, to require us to repurchase all or a portion of their convertible
notes. A “fundamental change” generally occurs when there is a change in control of Accuray (acquisition of 50% or more of
our voting stock, liquidation or sale of Accuray not for stock in another publicly traded company) or trading of our stock is
terminated. In the event of a “make-whole fundamental change” (as such term is defined in the applicable indenture of the
2026 Notes), we may also be required to increase the conversion rate applicable to the 2026 Notes surrendered for conversion
in connection with such make-whole fundamental change. A “make-whole fundamental change” is generally a sale of
Accuray not for stock in another publicly traded company. In addition, the applicable indentures for the Notes prohibits us
from engaging in certain mergers or acquisitions unless, among other things, the surviving entity assumes our obligations
under the 2026 Notes.
General Risks
Our liquidity could be adversely impacted by adverse conditions in the financial markets.
At June 30, 2025, we had $57.4 million in cash and cash equivalents. The available cash and cash equivalents are held in
accounts managed by third-party financial institutions and consist of cash in our operating accounts and cash invested in
money market funds. To date, we have experienced no material realized losses on or lack of access to our invested cash, or
cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be
impacted by adverse conditions in the financial markets.
Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect
domestic and international financial institutions or other companies in the financial services industry or the financial services
industry generally, or concerns or rumors about any events of these kinds may in the future lead to market-wide liquidity
problems. In addition, the tightening of the credit markets would it make more difficult to raise capital through either debt or
equity offerings on commercially reasonable terms or at all.
At any point in time, we also have funds in our operating accounts that are with third-party financial institutions that
exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. While we monitor daily the cash balances in
our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying
financial institutions fail or become subject to other adverse conditions in the financial markets. To date, we have
experienced no loss or lack of access to cash in our operating accounts.
Our operations are vulnerable to interruption or loss because of climate change, natural disasters, global or regional
health pandemics or epidemics, terrorist acts and other events beyond our control, which has impacted and could in the
future adversely affect our business.
Unexpected events beyond our control, including as a result of responses to epidemics or pandemics; fires or explosions;
natural disasters, such as hurricanes, floods, tornadoes and earthquakes; war or terrorist activities (including the conflicts in
Russia-Ukraine and the Middle East including with respect to Iran); unplanned outages; supply disruptions; and failures of
equipment or systems, including telecommunications systems, or the failure to take adequate steps to mitigate the likelihood
or potential impact of such events, could significantly disrupt our operations, delay or prevent product manufacturing and
shipment for the time required to repair, rebuild or replace our manufacturing facilities, which could be lengthy, result in
large expenses to repair or replace the facilities, and adversely affect our business, financial condition and results of
operation.
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Moreover, global climate change could result in certain types of natural disasters occurring more frequently or with more
intense effects. The impacts of climate change may include physical risks (such as frequency and severity of extreme weather
conditions), social and human effects (such as population dislocations or harm to health and well-being), compliance costs,
transition risks, shifts in market trends, and other adverse effects. Such impacts may disrupt parties in our supply chain, our
customers, and our operations. We have facilities in countries around the world, including two manufacturing facilities in
Madison, Wisconsin and Chengdu, China, each of which is equipped to manufacture unique components of our products. We
do not maintain backup manufacturing facilities for any of our manufacturing facilities or for our IT facilities, so we depend
on each of our current facilities for the continued operation of our business. In addition, we conduct a significant portion of
other activities, including administration and data processing, at facilities located in California, which has experienced major
earthquakes and fires in the past, as well as other natural disasters. Chengdu, China, where one of our manufacturing facilities
is located, has also experienced major earthquakes in the past. We do not carry earthquake insurance. Further, concerns about
terrorism, the effects of a terrorist attack, political turmoil or an epidemic outbreak could have a negative effect on our
operations and the operations of our suppliers and customers and the ability to travel, which could harm our business,
financial condition and results of operations.
In addition, risks associated with climate change are subject to increasing societal, regulatory and political focus in the
U.S. and globally. While the effects of climate change in the near-and long-term are difficult to predict, shifts in weather
patterns caused by climate change are expected to increase the frequency, severity, or duration of certain adverse weather
conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, wildfires, droughts, extreme temperatures, or
flooding, which could cause more significant business and supply chain interruptions, damage to our products and facilities
as well as the infrastructure of hospitals, medical care facilities, and other customers, reduced workforce availability,
increased costs of raw materials and components, increased liabilities, and decreased revenues than what we have
experienced in the past from such events. In addition, increased public concern over climate change has and could result in
new legal or regulatory requirements designed to mitigate the effects of climate change, including regulating greenhouse gas
emissions, alternative energy policies, and sustainability initiatives. Although the SEC issued an order implementing a stay of
its final climate-related disclosure rules, there have also been substantial legislative and regulatory developments on climate-
related issues, including proposed, issued and implemented legislation and rulemakings that would require companies to
assess and/or disclose climate metrics, risks, opportunities, policies and practices by both the Securities and Exchange
Commission and California. These initiatives could result in the adoption of more stringent environmental laws and
regulations or stricter enforcement of existing laws and regulations, which could result in increased compliance burden and
costs to meet such regulatory obligations and could also impact how we source raw materials from suppliers, our
manufacturing operations, and how we distribute our products. There has also been increasing scrutiny and changing
expectations from the market and other stakeholders with respect to Environmental, Social, and Governance ("ESG")
practices. Opinions, perspectives and expectations on ESG matters may differ among our stakeholders and may evolve over
time. We have been and may continue to be subject to conflicting expectations and views on various matters, and legal
requirements and interpretations may change. Any such developments could have a significant effect on our operating and
financial decisions, including those involving capital expenditures to comply with new regulatory requirements or
stakeholder expectations, which could harm our business, financial condition and results of operations. If we fail to comply
with certain ESG-related laws, our products become non-compliant with such laws, or we fail to meet the expectations of our
stakeholders on ESG-related matters, it could result in a loss of market access or a decline in our success in competitive
bidding or public tender processes, and we could incur costs or face other sanctions, such as restrictions on our products
entering certain jurisdictions, fines, and/or civil or criminal sanctions.
Changes in interpretation or application of generally accepted accounting principles may adversely affect our operating
results.
We prepare our financial statements to conform to U.S. GAAP. These principles are subject to interpretation by the
Financial Accounting Standards Board, American Institute of Certified Public Accountants, the Public Company Accounting
Oversight Board, the Securities and Exchange Commission and various other regulatory or accounting bodies. A change in
interpretations of, or our application of, these principles can have a significant effect on our reported results and may even
affect our reporting of transactions completed before a change is announced. Additionally, as we are required to adopt new
accounting standards, our methods of accounting for certain items may change, which could cause our results of operations to
fluctuate from period to period. Under the previous accounting guidance, we recognized system revenue upon acceptance
when and if we have installation responsibilities. If circumstances change over time or interpretation of the revenue
recognition rules change, we could be required to adjust the timing of recognizing revenue and our financial results could
suffer.
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We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future.
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all future earnings for
the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends in the
foreseeable future. The payment of dividends will be at the discretion of our board of directors and will depend on our results
of operations, capital requirements, financial condition, prospects, contractual arrangements, and other factors our board of
directors may deem relevant. If we do not pay dividends, a return on a stockholders’ investment will only occur if our stock
price appreciates.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 1C. CYBERSECURITY
Risk Management and Strategy
We recognize the importance of cybersecurity in safeguarding sensitive information, maintaining operational integrity,
and working to ensure the safety and efficacy of our products. We evaluate and monitor cybersecurity risk as part of our
overall enterprise risk management program, which considers cybersecurity risks alongside other company risks as part of
our overall risk assessment process. In addition, the risk oversight responsibility of our Board of Directors and its committees
is supported by our cybersecurity risk assessment program, which includes policies and processes that are designed to
provide visibility and information about the identification, assessment, and management of critical risks and management’s
risk mitigation strategies to our Board of Directors and personnel that are responsible for risk assessment. These policies also
govern the security of our products and the protection of customer and patient data and provide for vulnerability remediation,
regular system updates and patches, employee training on cybersecurity and HIPAA best practices, incident reporting, and
the use of encryption to secure sensitive information. To identify, assess, and manage material cybersecurity risks, our team
uses a cybersecurity risk assessment process aligned with leading frameworks such as the National Institute of Standards and
Technology’s Cyber Security Framework and HIPAA. Our cybersecurity risk assessment program provides the underlying
basis for the activities of our team to identify and mitigate risks from, as well as develop risk management and response
strategies for, evolving and emerging cybersecurity threats.
Our cybersecurity program includes a variety of processes to assess, identify and manage risks from cybersecurity threats
arising from our own and third-party provided systems, including annual training requirements, simulation exercises, threat
monitoring and detection tools (including those using artificial intelligence and machine learning), threat containment
methods, risk assessments, third-party penetration testing and security requirements for our suppliers and other third parties.
We have established processes providing for review of identified cybersecurity incidents by a cross-functional cybersecurity
incident response team who monitors and manages the detection, assessment, mitigation and remediation of cybersecurity
incidents and escalates incidents to the Chief Information and Security Officer and to our disclosure review board, which
evaluates such incidents for materiality and potential disclosure, and works to ensure that members of management
responsible for overseeing the operation of our disclosure controls and procedures are informed of such cybersecurity risks
and incidents. Our cybersecurity incident response team and disclosure review board are comprised of subject matter experts,
including employees in cybersecurity, information technology and other areas, to evaluate potential security, financial,
operational, reputational and other risks, and to address our process. We also engage third parties to enhance and strengthen
our cybersecurity program, to provide additional capabilities and support and to provide periodic independent assessments
and evaluations of our cybersecurity program. Third parties also provide managed services for security operations, incident
response, and security remediation services.
We monitor and periodically enhance our cybersecurity program, processes, techniques and procedures to combat
evolving and adaptive cybersecurity threats. To this end, we engage in the periodic assessment of our policies, standards,
processes, and practices that are designed to address cybersecurity threats and incidents, internally and through assessments
by external providers. The results of such assessments, audits, and reviews are reported to the Audit Committee and the
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Board of Directors, and we adjust our cybersecurity policies, standards, processes, and practices as necessary based on the
information provided by these assessments, audits, and reviews.
We also monitor and test our safeguards and train all our employees on cybersecurity safeguards related to our
information technology systems. Personnel at all levels and departments are made aware of our cybersecurity policies
through periodic cybersecurity trainings and tests. Further, we are focused on building and maintaining a positive
cybersecurity culture through a combination of trainings, educational tools, videos, and other cybersecurity awareness
initiatives. Our security training incorporates awareness of cyber threats (including malware, ransomware, and social
engineering attacks), password hygiene, the importance of multifactor authentication and our incident reporting process.
In addition to the assessment of internal cybersecurity risks, we have implemented processes to oversee, identify and
monitor material risks from cybersecurity threats relating to potential compromises of sensitive information at our third-party
business partners where relevant and we reevaluate these risks periodically. These processes include vetting of certain service
providers for security, reliability, and availability; execution of a Business Associate Agreement with relevant providers for
compliant management, storage, or processing of PHI if necessary; and confirmation by each service provider that its SOC-2
reports, or equivalent reports, are current and available, where applicable. In the event a service provider does not have a
current and available SOC-2 or equivalent report, we review the service provider’s cybersecurity risk management and advise
relevant business stakeholders of any significant identified risks.
While we regularly experience cybersecurity incidents, and we expect to continue to be subject to such incidents, as of the
date of this report, we are not aware of any cybersecurity incidents that have had or are reasonably likely to have a material
impact on our business or operations. However, we are subject to ongoing risks from cybersecurity threats that could
materially affect us, including our business strategy, results of operations, or financial condition, as further described in Item
1A. Risk Factors in the risk factor entitled “Disruption of critical information technology systems, infrastructure and data or
cyberattacks or other security breaches or incidents could harm our business and financial condition.”
Governance
Our Board of Directors, both directly and through the delegation of responsibilities to the Audit Committee, oversees the
functioning of our cybersecurity risk management program and ensures strategic alignment and governance of our
cybersecurity efforts at the highest level. Our Board of Directors receives periodic briefings on the outcome of our
cybersecurity risk management program, including steps that we are taking to mitigate risks that the program identifies, and
each quarter, the Audit Committee reviews cybersecurity incidents, metrics, and the state of the program.
Our cybersecurity risk management program is principally managed by our Global Information Systems team, which is
led by our Chief Information and Security Officer, who reports directly to our Chief Executive Officer, as well as our Deputy
Chief Information Security Officer (Deputy CISO). Our Chief Information and Security Officer and Deputy CISO combined
have more than 40 years of experience in cybersecurity and/or information technology risk management, have relevant
certification, and are active in a variety of cybersecurity related boards and organizations. Our Chief Information and Security
Officer also serves as the officer who reports directly to senior management and makes regular reports to the Audit
Committee and Board of Directors as described in this Item 1C. Under the direction of our Chief Information and Security
Officer and Deputy CISO, we monitor developments that could affect our long-term organizational cybersecurity strategy
based on threats globally and work to enhance our cybersecurity program as needed in response to such developments.
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Item 2. PROPERTIES
Facilities
Our corporate headquarters are in Madison, Wisconsin. We lease approximately 460,000 square feet world-wide. We
lease approximately 289,000 square feet in Madison, Wisconsin for product development, manufacturing, administrative,
training and warehouse space. We lease approximately 59,000 square feet in Sunnyvale and Santa Clara, California for
product research and development and administrative functions. We lease approximately 20,000 square feet in Morges,
Switzerland, for administrative functions, and lease approximately 5,400 square feet in Genolier, Switzerland for training.
We lease approximately 42,000 square feet of space in a manufacturing facility in Chengdu, China. We also lease offices in
Solon, Ohio for research and development functions; and lease international offices in China; Hong Kong; Japan; Korea;
India; and Spain.
We believe our current facilities are adequate to meet our current needs, but additional space, including additional
radiation shielded areas in which systems can be assembled and tested, may be required in the future to accommodate
anticipated increases in manufacturing needs.
Item 3. LEGAL PROCEEDINGS
Refer to Note 8. Commitments and Contingencies, to the consolidated financial statements for a description of certain
legal proceedings currently pending against the Company. From time to time, we are involved in legal proceedings arising in
the ordinary course of our business.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Stock Information
Our common stock is traded on the Nasdaq Global Select Market under the symbol “ARAY.”
As of August 22, 2025, there were 164 stockholders of record of our common stock. Because many of our shares of
common stock are held by brokers or other institutions on behalf of stockholders, we are unable to estimate the total number
of beneficial stockholders and believe the number of stockholders of record underestimates our total number of stockholders.
We have never paid cash dividends on our common stock. Our Board of Directors intends to use any future earnings to
support operations and reinvest in the growth and development of our business. There are no current plans to pay cash
dividends to common stockholders in the foreseeable future.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Accuray Incorporated, the NASDAQ Composite Index and the S&P Health Care Index 6/14 6/15 6/16 6/17 6/18 6/19 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Accuray Incorporated NASDAQ Composite S&P Health Care *$100 invested on 6/30/14 in stock or index, including reinvestment of dividends. Fiscal year ending June 30. Copyright© 2019 Standard & Poor's, a division of S&P Global. All rights reserved
Item 6. [RESERVED]
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion of our consolidated financial condition and results of operations in conjunction
with the financial statements and the notes thereto included elsewhere in this report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those
discussed below and elsewhere in this report on Form 10-K, particularly in “Risk Factors.” See “Special Note Regarding
Forward-Looking Statements” for more information. This section generally discusses the results of our operations for the
year ended June 30, 2025, compared to the year ended June 30, 2024. For a discussion of the year ended June 30, 2024
compared to the year ended June 30, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2024, as
filed with the SEC on September 19, 2024.
Overview
Company
We are a radiation therapy company that develops, manufactures, sells and supports market-changing solutions that are
designed to deliver radiation treatments for even the most complex cases, while making commonly treatable cases even more
straightforward, to meet the full spectrum of patient needs. We believe in comparison to conventional linear accelerators, our
treatment delivery, planning, and data management solutions provide better accuracy, flexibility, and control; fewer
treatments with shorter treatment times; and the technology to expand beyond cancer, making it easier for clinical teams
around the world to provide treatments that help patients get back to living their lives, faster.
Our innovative technologies, the CyberKnife and TomoTherapy® platforms, including the Radixact System, our next
generation TomoTherapy platform, are designed to deliver advanced treatments, including stereotactic radiosurgery (“SRS”),
stereotactic body radiation therapy (“SBRT”), intensity modulated radiation therapy (“IMRT”), image-guided radiation
therapy (“IGRT”), and adaptive radiation therapy (“ART”). The CyberKnife and TomoTherapy platforms have
complementary clinical applications with the same goal: to empower our customers to deliver the most precise and accurate
treatments while still minimizing dose to healthy tissue, helping to reduce the risk of side effects that may impact patients’
quality of life. Each of these systems serves patient populations treated by the same medical specialty, radiation oncology,
with advanced capabilities. The CyberKnife platform is also used by neurosurgeons specializing in radiosurgery to treat
patients with tumors in the brain and spine, and neurologic and/or endocrine disorders. In addition to these products, we also
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provide services which include post-contract customer support (warranty period services and post-warranty services),
installation services, training, and other professional services.
Current Economic Conditions
We are subject to risks and uncertainties caused, directly or indirectly, by events with significant geopolitical and
macroeconomic impacts, including, but not limited to, inflation; actions taken to counter inflation, including high interest
rates; foreign currency exchange rate fluctuations; uncertainty and volatility in the banking and financial services sector;
tightening credit markets; geopolitical concerns, such as the Russian-Ukraine and the Middle East conflicts and increasing
tension between China and the U.S., including with respect to Taiwan; uncertainty caused by the China anti-corruption
campaign and timing of the China stimulus program; changes in government administration policy positions; recent
executive orders to impose new tariffs on global imports and uncertainties regarding impact, retaliations and further
escalation, including against other countries; as well as other factors that may emerge. In particular, we are continuing to
navigate supply chain and inflation challenges both of which continues to have a negative impact on our results of operations.
We expect that our customers’ business and our business will continue to be adversely impacted, directly or indirectly, by
these macroeconomic and geopolitical issues. Inflation and the ongoing supply chain challenges and logistics costs have
materially affected our gross margins and net income (loss), and we expect that gross margins and net income (loss) will
continue to be adversely affected by increased material costs and freight and logistics expenses through at least calendar year
2025, and potentially longer. In addition, the Company expects inflation and the ongoing supply chain challenges and
logistics costs to impact its cash from operations through at least calendar year 2025. In addition, reduced budgets and lower
capital deployment priority for radiotherapy equipment, along with longer customer installation timelines, in the United
States have negatively impacted our net revenue since fiscal year 2024, and we expect this will continue to have an impact
through fiscal year 2026. The extent of the ongoing impact of these macroeconomic events on our business, our markets and
on global economic activity however, is uncertain and the related financial impact cannot be reasonably estimated with any
certainty at this time.
As a global company, approximately 70% of our raw materials and product components are sourced within the U.S. and
finished products are assembled and manufactured within the U.S. with over 80% exported throughout the world. There
remains significant tariff uncertainty, including related to existing tariffs associated with U.S.-China trade, which we expect
will continue to have incremental costs to the company. If existing tariffs increase, we would expect minimal shipments to
China despite customer demand. We are working to implement mitigations to the tariff policy impacts, however, we cannot
predict the full impact or timing of such efforts and expect that sales to China will be adversely impacted, and our financial
results will be adversely impacted through at least the first half of fiscal year 2026.
Our past results may not be indicative of our future performance, and historical trends including conversion of backlog to
revenue, income (loss) from operations, net income (loss), net income (loss) per share and cash flows may differ materially.
Accordingly, management is carefully evaluating our liquidity position, communicating with and monitoring the actions of
our customers and suppliers, and reviewing our near-term financial performance as the uncertainty related to these factors
continues to unfold. We also continue to evaluate our operating expenses. Our Board of Directors and our Compensation
Committee determined that no payouts pursuant to the company bonus plan would be paid for fiscal year 2025 given that we
would not have been compliant with the debt covenants in effect at the beginning of fiscal year 2025 and to reduce operating
expenses and conserve cash in light of the uncertain macroeconomic environment due to tariffs. We also continue to evaluate
our real estate needs and continue to assess our operations and how and to what extent we will continue to utilize our current
real estate assets. The risks related to our business, including further discussion of the impact and possible future impacts of
current economic conditions on our business, are further described in the section titled “Risk Factors” in Part I, Item 1A of
this Annual Report on Form 10-K.
Sale of Our Products
Generating revenue from the sale of our platforms is a lengthy process. Selling our platforms, from first contact with a
potential customer to a signed sales contract that meets our backlog criteria (as discussed below) varies significantly and
generally spans between six months and 30 months. The length of time between receipt of a signed contract and revenue
recognition is generally governed by the time required by the customer to build, renovate or prepare the treatment room for
installation of the platform. We report our customer revenues in five geographic regions: the Americas, EIMEA, Japan,
China and Asia Pacific. The Americas region includes the United States, Canada and Latin America. The EIMEA region
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includes Europe, India, the Middle East and Africa. The Asia Pacific region consists of Asia (excluding Japan and China),
Australia and New Zealand.
In the United States, we primarily market directly to customers, including hospitals and stand-alone treatment facilities,
through our sales organization we also market to customers through sales agents and group purchasing organizations. Outside
the United States, we market to customers directly and through use of distributors and sales agents. In addition to our offices
in the United States, we have international offices in Morges, Switzerland; Hong Kong, China; Shanghai, China and Tokyo,
Japan and direct sales staff in most countries in Western Europe, Japan, India and Canada. In addition, we have distributors in
Europe, Russia, the Middle East, Africa, the Asia Pacific region, and Latin America.
Joint Venture
In January 2019, our wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with
CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope &
Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (the “JV”), to
manufacture and sell radiation oncology systems in China. The JV aims to be uniquely positioned to serve China, which we
believe is the world’s largest growth market for radiation oncology systems. China represents a significantly underserved
market for linacs based on the country’s population and cancer incidence rates on both an absolute and relative country basis.
Accuray Asia has a 49% ownership interest in the JV and the CIRC Subsidiary has a 51% ownership interest in the JV.
The JV sells our products in China, much like a distributor and also manufactures and sells a locally branded “Made in
China” radiotherapy device, the Tomo C radiation therapy system, in the Class B license category. We believe this strategy
will allow us to best maximize both near and longer-term opportunities in China. In September 2023, we received approval
for our Class B device from the National Medical Products Administration (“NMPA”) and our Accuray Precision Treatment
Planning System for the Class B device was approved by the NMPA in June 2024. The JV also distributes other Accuray
treatment delivery systems like the Radixact and CyberKnife treatment delivery systems, including the Radixact SynC and
CyberKnife S7 Systems, which received NMPA approval in January 2025. The JV also distributes other Accuray treatment
delivery systems like the Radixact and CyberKnife treatment delivery systems.
There remains significant tariff uncertainty, including related to existing tariffs associated with U.S.-China trade, which
we expect will continue to have incremental costs to the company. We are working to implement mitigations to the tariff
policy impacts, however, we cannot predict the full impact or timing of such efforts and expect that sales to China will be
adversely impacted, and our financial results will be adversely impacted through at least the first half of fiscal year 2026.
Backlog
In order for the product portion of a system sales agreement to be included in backlog, it must meet the following criteria:
•
The contract is properly executed by both the customer and us. A customer purchase order that incorporates the
terms of our contract quote will be considered equivalent to a signed and executed contract. The contract has
either cleared all its contingencies or contained no contingencies when signed;
•
We have received a minimum deposit or a letter of credit; or the sale is to a customer where a deposit is deemed
not necessary or customary (i.e., sale to a government entity, a large hospital, group of hospitals or cancer care
group that has sufficient credit, customers with trade-in of existing equipment, sales via tender awards, or
indirect channel sales that have signed contracts with end-customers);
•
The specific end-customer site has been identified by the customer in the written contract or written amendment;
and
•
Less than 30 months have passed since the contract met all the criteria above.
Our backlog includes contractual agreements with our customers for the purchase of our CyberKnife or TomoTherapy
platforms, including the Radixact Systems and related upgrades. The amount of backlog recognized into revenue is primarily
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impacted by three items: cancellations, age-outs and age-ins, and foreign currency fluctuations. We cannot provide assurance
that we will convert backlog into recognized revenue, primarily due to factors outside of our control, such as:
•
Orders could be cancelled for reasons such as, changes in customers’ priorities or financial condition, changes in
government or health insurance reimbursement policies, or changes to regulatory requirements. Cancellations are
outside of our control and are difficult to forecast; however, we continue to work closely with our customers to
minimize the impact of cancellations on our business;
•
Orders are considered aged-out and removed from reported backlog if we have not been able to recognize
revenue on an agreement after 30 months. Agreements may age-out for many reasons, including but not limited
to, the inability of the customer to pay, the inability of the customer to adapt their facilities to accommodate our
products in a timely manner, or the inability to timely obtain licenses necessary for customer facilities or
operation of our equipment. Age-ins represent orders that previously aged-out but have been recognized as
revenue in the current period; and
•
Orders include amounts not denominated in U.S. Dollars and therefore, fluctuations in the U.S. Dollar as
compared to other currencies will impact revenue. Generally, strengthening of the U.S. Dollar will negatively
impact revenue. Backlog is stated at historical foreign currency exchange rates, and revenue is released from
backlog at current exchange rates, with any difference recorded as a backlog adjustment.
A summary of gross orders, net orders, and order backlog is as follows (in thousands):
Years Ended June 30,
2025
2024
Gross orders
$
288,035
$
342,148
Age-ins
25,753
21,726
Age-outs
(125,529)
(127,113)
Cancellations
(7,725)
(14,504)
Currency impacts and other
(3,301)
(11,343)
Net orders
$
177,233
$
210,914
Order backlog at the end of the period
$
426,972
$
487,319
Gross Orders and Book-to-Bill Ratio
Gross orders are defined as the sum of new orders recorded during the period, adjusted for any revisions to existing orders
during the period.
Gross orders decreased by $54.1 million during the year ended June 30, 2025, as compared to the year ended June 30,
2024, mostly due to a decrease in gross orders from the Americas region.
Our book-to-bill ratio is defined as gross orders for the period divided by product revenue for the period. Our book-to-bill
ratio for the year ended June 30, 2025, was 1.2 as compared to 1.5 for the year ended June 30, 2024. A book-to-bill ratio
greater than 1.2 indicates strong demand for our products. This metric allows management to monitor our business
development efforts to ensure we grow our backlog and our business over time.
In recent years, the percentage of gross orders received from our distribution partners in the international markets
represented 81% and 74% of gross orders for fiscal year ended June 30, 2025 and 2024, respectively. We anticipate that
distributor orders from international markets will continue to represent a significant portion of our gross orders in the
foreseeable future. International orders are affected by foreign currency fluctuation as well as government programs that
stimulate the purchase of healthcare products, both of which could affect the demand for our products and timing of orders
from period to period. In addition, our order-to-revenue conversion cycle for international distributor orders has been
generally longer, compared to that of direct channel sales and could cause fluctuations in our age-outs from period to period.
73
Net Orders
Net orders are defined as gross orders, less cancellations, age-outs net of age-ins, foreign exchange and other adjustments
during the period. Net orders decreased by $33.7 million during the year ended June 30, 2025, as compared to the year ended
June 30, 2024, primarily due to the decrease in gross orders, partially offset by $6.8 million in lower cancellations and $8.0
million in favorable foreign exchange currency impacts.
Results of Operations
Fiscal 2025 results compared to fiscal 2024
Net revenue
Net revenue by sales classification is as follows:
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Products (a)
$
237,580
$
234,164
1%
Services (b)
220,925
212,387
4%
Net revenue
$
458,505
$
446,551
3%
Products revenue as a percentage of net revenue
52%
52%
Services revenue as a percentage of net revenue
48%
48%
a)
Includes sales of products to the JV, an equity method investment, of $101,563 during the year ended June 30, 2025, and
$77,497 during the year ended June 30, 2024, respectively. See Note 11.
b)
Includes sales of services to the JV, an equity method investment, of $18,521 during the year ended June 30, 2025, and
$15,039 during the year ended June 30, 2024, respectively. See Note 11.
Products net revenue increased by $3.4 million during the year ended June 30, 2025, as compared to the year ended June
30, 2024, mostly driven by a $5.9 million increase in revenue from upgrades, partially offset by lower revenue from unit sales
due to product mix.
Services net revenue increased by $8.5 million during the year ended June 30, 2025, as compared to the year ended June
30, 2024, primarily due to a $4.0 million increase in revenue from service contracts as a result of growth in our installed base
and a $3.8 million increase in revenue from the purchase of spare parts from customers.
Net revenue by geographic region, which is based on the shipping location of our customer, is as follows:
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Americas
$
88,768
$
90,156
(2)%
EIMEA
144,264
168,611
(14)%
China
124,475
103,412
20%
Japan
53,622
55,682
(4)%
Asia Pacific
47,376
28,690
65%
Net revenue
$
458,505
$
446,551
3%
Net revenue increased $12.0 million during the year ended June 30, 2025, as compared to the year ended June 30, 2024.
Products net revenue increased primarily due to a higher volume of the shipment of systems in our China and APAC regions,
partially offset by a decrease in the volume of the shipment of systems in our EIMEA region. Services net revenue increased
primarily in our EIMEA, China and Japan regions, partially offset by a decrease in services net revenue in our Americas
region. The decrease in net revenue from EIMEA was due to lower product sales in fiscal year 2025, which was impacted by
geopolitical disruptions in the region.
74
Gross profit
Gross profit is as follows:
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Gross profit
$
146,967
$
142,921
3%
Total gross profit as a percentage of net revenue
32.1%
32.0%
Gross profit increased by $4.0 million during the year ended June 30, 2025, as compared to the year ended June 30, 2024,
due to an increase in net revenue, partially offset by a $3.6 million increase in the net deferred gross profit on sales to the JV.
Operating Expenses
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Research and development
$
47,942
$
49,732
(4)%
Selling and marketing
43,315
42,619
2%
General and administrative
47,871
50,066
(4)%
Total operating expenses
$
139,128
$
142,417
Research and development as a percentage of net revenue
10%
11%
Selling and marketing as a percentage of net revenue
9%
10%
General and administrative as a percentage of net revenue
10%
11%
Total operating expenses as a percentage of net revenue
30%
32%
Research and development expenses decreased by $1.8 million during the year ended June 30, 2025, as compared to the
year ended June 30, 2024, primarily due to $2.5 million in lower compensation and benefits resulting from a reduction in
headcount in fiscal year 2025 driven by our restructuring program in fiscal year 2024, and $1.7 million for the capitalization
of internal labor for software development to be sold, partially offset by $1.1 million in higher spending for research and
development projects and an a $1.0 million increase in facility and information system costs.
Selling and marketing expenses increased by $0.7 million during the year ended June 30, 2025, as compared to the year
ended June 30, 2024, primarily due to investments in our sales operations infrastructure and an increase in travel
costs, partially offset by a $1.6 million decrease in commissions due to lower sales in the Americas and EIMEA regions in
fiscal year 2025.
General and administrative expenses decreased by $2.2 million during the year ended June 30, 2025, as compared to the
year ended June 30, 2024, primarily due to a $2.1 million decrease in consulting costs driven by the completion of the
implementation of our ERP system in fiscal year 2024 and a $1.9 million reduction in rental expense due to cost savings
measures, partially offset by a $1.9 million increase in compensation and benefits that was driven by merit increases and
stock-based compensation.
Income from equity method investment
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Income from equity method investment
$
4,714
$
1,838
156%
Income from the equity method investment increased by $2.9 million during the year ended June 30, 2025, as compared
to the year ended June 30, 2024, primarily as a result of an increase in revenues from the JV.
75
Interest expense
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Contractual interest coupon
$
(10,221) $
(10,552)
(3)%
Accrued paid-in-kind interest
(616)
-
n/a
Amortization of debt financing costs and discount for warrants issued to
lenders
(1,439)
(956)
51%
Other
(678)
(116)
484%
Total interest expense
$
(12,954) $
(11,624)
11%
Interest expense increased $1.3 million during the year ended June 30, 2025, as compared to the year ended June 30, 2024,
primarily due to interest paid-in-kind accrued on the new Term Loan Facility and additional debt financing costs related to
the new Term Loan Facility.
Gain on extinguishment of debt
We recorded a $1.5 million gain on the extinguishment of a portion of our Convertible Notes and our prior term loan
facility. The gain on extinguishment is comprised of a $2.4 million gain on the settlement of shares issued to the holders of
the Convertible Notes offset by $0.9 million from the write-off of unamortized debt issuance costs.
Loss from change in fair value of warrant liability
We recorded a $0.5 million loss due to the change in the fair value of the Penny Warrants from the issuance date through
June 30, 2025.
Other income (expense), net
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Interest income
$
1,192
$
1,231
(3)%
Foreign currency exchange gain (loss)
1,573
(2,046)
177%
Costs for foreign currency forward contracts
(2,376)
(1,811)
31%
Other, net
170
88
93%
Total other income (expense), net
$
559
$
(2,538)
122%
Other income (expense), net, increased by $3.1 million during the year ended June 30, 2025, as compared to the year
ended June 30, 2024, primarily driven by foreign currency transaction gains in fiscal year 2025.
Provision for income taxes
Years Ended June 30,
(Dollars in thousands)
2025
2024
Percent
Change
Provision for income taxes
$
2,725
$
3,725
(27)%
Provision for income taxes decreased by $1.0 million during the year ended June 30, 2025, as compared to the year ended
June 30, 2024, primarily due to lower foreign earnings and lower deferred tax liabilities on unremitted foreign earnings not
considered permanently reinvested.
Liquidity and Capital Resources
At June 30, 2025, we had $57.4 million in cash and cash equivalents. Cash from operations could be affected by various
risks and uncertainties, including, declines in our revenue, particularly without a corresponding decrease in our expenses, the
76
timing of payments from our customers and our expenditures, as well as but not limited to, macroeconomic conditions,
inflation, actions taken to counter inflation, foreign currency exchange rate fluctuations, and the risks included in Part I, Item
1A titled “Risk Factors.” In particular, we expect inflation and the ongoing supply chain challenges and logistics costs to
impact our cash from operations through at least calendar year 2025. In addition, reduced budgets and lower capital
deployment priority for radiotherapy equipment, along with longer customer installation timelines, in the United States have
negatively impacted net revenue since fiscal year 2024, and we expect that this will continue to have an impact through fiscal
year 2026. Based on our cash and cash equivalents balance, available debt facilities, current business plan and revenue
prospects, we believe we will have sufficient cash resources and anticipated cash flows to fund our operations for at least the
next 12 months. However, we continue to critically review our liquidity and anticipated capital requirements in light of the
significant uncertainty created by macroeconomic conditions.
Our liquidity and cash flows have been and could continue to be materially impacted by factors other than our cash from
operations and factors that are not in our control, such as current macroeconomic factors, including facility closures, supply
chain disruptions, inflation, foreign currency exchange rate fluctuations, increased volatility in the financial markets,
uncertainty caused by the China anti-corruption campaign and timing of the China stimulus program, changes in government
administration policy positions, recent executive orders to impose new tariffs on global imports and uncertainties regarding
impact, retaliations and further escalation, including against other countries, and tightening of credit markets which could
impact debt availability. These factors have and could continue to negatively impact our business operations and cash flows
for the foreseeable future, including reductions in revenue, decreases in gross margin and delays in payments from customers,
as well as declines or delays in the conversion of backlog to revenue. Certain of our revenue may not be collectible to the
extent our customers suffer financial difficulty. There remain uncertainties as to how the current macroeconomic
environment will impact our business, results of operations, access to sources of liquidity and financial condition in the
future. As a result, we are unable to predict with certainty the impact of these factors on our ability to maintain compliance
with the financial covenants contained in the Financing Agreement (as defined below).
On June 6, 2025, we entered into a senior secured credit agreement (the “Financing Agreement”) by and among the
Company, as borrower (the “Borrower”), TCW Asset Management Company LLC, a leading global asset manager (“TCW”),
as collateral agent for the lenders (in such capacity, together with its successors and assigns in such capacity, the “Collateral
Agent”) and as administrative agent for the lenders (in such capacity, together with its successors and assigns in such
capacity, the “Administrative Agent”, and together with the Collateral Agent, each an “Agent” and collectively, the
“Agents”), and certain other parties signatory thereto. The Financing Agreement provides for (a) $150 million of new five-
year term loan facilities (the “Term Loan Facilities”), (b) a new $20 million delayed draw term loan facility (the “Delayed
Draw Facility”) and (c) a new $20 million revolving credit facility (the “Revolving Credit Facility” and, together with the
Term Loan Facilities and Delayed Draw Facility, the “Facilities”). The proceeds of the Term Loan Facilities were used to
fully refinance our existing senior secured indebtedness, which provided for a five-year $80 million term loan facility (the
"Prior Term Loan Facility") and a $40 million revolving credit facility (the “Prior Revolving Credit Facility”), and which had
$58.0 million and $17.0 million of outstanding balances of the Prior Term Loan Facility and Prior Revolving Credit Facility,
respectively, and to fund the aggregate cash payment of approximately $68.5 million as part of the Exchange (as defined
below) of a portion of the Company’s 3.75% Convertible Senior Notes due 2026 (the “Convertible Notes”). The proceeds of
the Delayed Draw Facility may be used to fund any future repurchases of outstanding Convertible Notes. The proceeds of
loans drawn under the Revolving Credit Facility will be used to fund the general working capital needs and general corporate
purposes of the Company and its subsidiaries. The Facilities’ stated maturity date is June 6, 2030.
On June 6, 2025, concurrently with its entry into the Financing Agreement, the Company issued detachable warrants to
purchase the Company’s common stock to certain of its lenders (the “Warrant Holders”) under the Financing Agreement. The
Warrant Holders were issued warrants to purchase (i) 17,180,710 shares of common stock with an exercise price of $1.68 per
share, exercisable on and after December 7, 2025 and expiring on June 6, 2032 (the “Premium Warrants”) and (ii) 6,247,531
shares of common stock with an exercise price of $0.01 per share (“Penny Warrants” and together with the Premium
Warrants, the “Warrants”), exercisable immediately and expiring on June 6, 2032. No Penny Warrants were exercised as of
June 30, 2025. Pursuant to the terms of the Financing Agreement, if the Company uses the Delay Draw Facility, the
Company will be obligated to issue additional detachable warrants on terms substantially similar to the Warrants to certain of
its lenders under the Financing Agreement.
The Warrants have certain anti-dilution protection provisions, including price protection anti-dilution protection in the
event that we sell stock at a price below $1.00 in the case of the Penny Warrants and $1.25 in the case of the Premium
77
Warrants. We agreed to issue the Warrants in connection with, and to induce the lenders to enter into, the Financing
Agreement.
Interest on the borrowings under the Facilities is payable in arrears on the applicable interest payment date at an interest
rate equal to, at the Company’s option, either: (i) a term SOFR-based rate (subject to a 2.00% per annum floor), plus an
applicable margin of 8.50%, per annum or (ii) a base rate (subject to a 3.00% per annum floor), plus an applicable margin of
7.50% per annum. The agreement provides the option for payment-in-kind (“PIK”) interest up to 6.00% per annum (subject
to an increase in applicable margin of 1/3 of 1.00% per annum for each 1.00% per annum of interest elected to be paid in
kind), which PIK interest will be capitalized on the applicable interest payment date and will be added to the then-outstanding
principal amount of the term loan. In June 2025, we accrued $0.6 million in PIK interest and we elected the maximum PIK
option for the first interest payment date of fiscal year 2026. The Financing Agreement requires the Borrower to pay the
lenders with commitments under the Revolving Credit Facility an unused commitment fee equal to 0.50% per annum of the
average unused portion of the Revolving Credit Facility. See Note 8. Commitments and Contingencies to the consolidated
financial statements for future cash payments related to the Term Loan Facilities.
In addition, on June 5, 2025, we entered into separate, privately-negotiated exchange agreements with a limited number of
existing holders of the Convertible Notes (the “Convertible Noteholders”) to exchange (the “Exchange”) approximately
$82.0 million aggregate principal amount of the Convertible Noteholders’ existing Convertible Notes for (i) an aggregate of
8,881,579 shares of the Company’s common stock (the “Shares”), valued at $1.52 per share based on the closing stock price
on June 5, 2025, or $13.5 million in the aggregate and (ii) an aggregate cash payment of approximately $68.5 million. On
June 11, 2025, we issued the Shares to the Convertible Noteholders valued at $1.25 per share based on the closing stock price
on June 11, 2025, which resulted in a $2.4 million gain. Following the closing of the Exchange, approximately $18.0 million
aggregate principal amount of the Convertible Notes remain outstanding and will be due on June 1, 2026. We intend to use
operating cash to pay the remaining balance of the Convertible Notes, but we can also access the $20.0 million Delayed Draw
Facility to fund the repayment if necessary. The Convertible Notes are classified as short-term debt on consolidated balance
sheets.
Additionally, the undistributed earnings of our foreign subsidiaries as of June 30, 2025, for all countries except Japan,
France, Switzerland and the United Kingdom are considered to be indefinitely reinvested and unavailable for distribution in
the form of dividends or otherwise. Future repatriation of our foreign earnings could be subject to income taxes. As of June
30, 2025, we had $10.5 million of cash and cash equivalents at our foreign subsidiaries that are considered to be indefinitely
reinvested. If such funds were repatriated, there will be additional foreign tax withholdings imposed, depending on the
country from which the funds were repatriated.
Cash Flows
Years Ended June 30,
2025
2024
Net cash provided by (used in) operating activities
$
2,860
$
(11,904)
Net cash used in investing activities
(8,523)
(3,601)
Net cash used in financing activities
(4,252)
(3,951)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
1,657
(1,354)
Net decrease in cash, cash equivalents and restricted cash
$
(8,258)
$
(20,810)
Cash Flows From Operating Activities
Net cash provided by operating activities was $2.9 million during the year ended June 30, 2025, resulting primarily from
an increase of $22.7 million in non-cash items partially offset by a decrease of $18.2 million in the net changes in assets and
liabilities.
•
Non-cash items primarily consisted of share-based compensation expense of $10.2 million, a $7.7 million increase in
the net deferred gross profit on sales to the JV, $6.2 million in depreciation and amortization expense, partially offset
by $4.7 million in income from our equity method investment.
78
•
The major contributors to the decrease in net changes of assets and liabilities during the year ended June 30, 2025
were as follows: a $18.7 million decrease in accounts payable due to the timing of payments, and a $9.1 million
increase in inventories primarily due to increased costs for parts, partially offset by a $13.4 million decrease in
accounts receivable primarily due to improved collections fiscal year 2025.
Cash Flows From Investing Activities
Net cash used in investing activities was $8.5 million during the year ended June 30, 2025, was due to spending $4.3
million for the purchase of property and equipment and $4.2 million in costs for capitalized investments for software to be
sold.
Cash Flows From Financing Activities
Net cash used in financing activities was $4.3 million during the year ended June 30, 2025 and was due to paying $13.1
million in debt financing costs, which included $4.8 million in debt discount costs, for the new Term Loan Facility. The
$150.0 million of proceeds from the new Term Loan Facility was used to refinance the Convertible Notes, Prior Term Loan
Facility and Prior Revolving Credit Facility. As part of the refinancing, the Company paid $68.5 million to settle a portion of
the Convertible Notes, and $58.0 million and $17.0 million to fully settle the outstanding balances of the Prior Term Loan
Facility and Prior Revolving Credit Facility, respectively.
Operating Capital and Capital Expenditure Requirements
Our future capital requirements depend on numerous factors. These factors include but are not limited to the following:
•
Revenue generated by sales of our products and service plans;
•
Our ability to generate cash flows from operations;
•
Costs associated with our sales and marketing initiatives and manufacturing activities;
•
Facilities, equipment and IT systems required to support current and future operations;
•
Rate of progress and cost of our research and development activities;
•
Costs of obtaining and maintaining FDA and other regulatory clearances of our products;
•
Effects of competing technological and market developments;
•
Number and timing of acquisitions and other strategic transactions;
•
Our ability to refinance our current indebtedness in a timely manner, and servicing and maturity of our current
and future indebtedness, including interest rates;
•
The implementation of our cost savings initiatives, including the reduction of our workforce;
•
The impact of inflation on our expenses; and
•
The impact of the macroeconomic environment, including on collections, supply chain, and logistics.
We believe that our current cash and cash equivalents balance will be sufficient to meet our anticipated cash needs for
working capital and capital expenditures for at least the next 12 months. If these sources of cash and cash equivalents are
insufficient to satisfy our liquidity requirements, or we believe market conditions are favorable, we may seek to sell
additional equity or debt securities or enter into additional credit facilities. The sale of additional equity or convertible debt
securities could result in dilution to our stockholders. If additional funds are raised through the issuance of debt securities,
these securities could have rights senior to those associated with our common stock and could contain covenants that would
restrict our operations. Additional financing may not be available at all, or in amounts or on terms acceptable to us. If we are
unable to obtain this additional financing, we may be required to reduce the scope of our planned product development and
marketing efforts.
Operating and Capital Expenditure Requirements and Contractual Obligations
79
Our purchase commitments and obligations include all open purchase orders and contractual obligations in the ordinary
course of business, including commitments with contract manufacturers and suppliers, for which we have not received the
goods or services and acquisition and licensing of intellectual property. A majority of these purchase obligations are due
within a year. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us
the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or
performance of services. Our long-term material cash requirements include principal and interest payments and lease
obligations. See Note 4, “Leases” to the Notes to the consolidated financial statements for further information.
Inflation
In recent years, we experienced rising costs for certain materials, including increased logistics and duties costs that
adversely affected our gross margins and net income (loss), and had a material effect on our business, financial condition and
results of operations. Gross margins and net income (loss) may continue to be adversely affected by increased material costs
and freight and logistics expenses through at least calendar year 2025, and potentially longer, as we are unable to pass all of
these increased costs to our customers. In addition, we expect inflation and the ongoing supply chain challenges and logistics
costs to impact our cash from operations through at least calendar year 2025. Continued pressure from inflationary factors,
such as further increases in the cost of materials for our products, cost of labor, interest rates, overhead costs, logistics and
duties costs could further exacerbate these effects and harm our business, operating results, and financial condition.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations is based on our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States of
America (“U.S. GAAP”). The preparation of these consolidated financial statements requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements, as well as revenue and expenses during the reporting periods. We
evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various
other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities. The economic uncertainty in the current environment however, could limit
our ability to accurately make and evaluate our estimates and judgments. Actual results could therefore differ materially from
those estimates if actual conditions differ from our assumptions.
All of our significant accounting policies and methods used in the preparation of our consolidated financial statements are
described in Note 1, The Company and its Significant Accounting Policies, to the consolidated financial statements. The
methods, estimates and judgments that we use in applying our accounting policies require us to make difficult and subjective
judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Management
believes the critical accounting policies and estimates are those related to revenue recognition and the assessment of stand-
alone selling price ("SSP"), and the valuation of inventories.
Revenue Recognition and the Assessment of Stand-Alone Selling Price
Our revenue is primarily derived from new system and upgrade sales of CyberKnife and TomoTherapy platforms and
services, which include post-contract customer support (“PCS”) contracts (warranty period services and post-warranty
services), installation services, training and other professional services. We record our revenue net of any value-added or
sales tax. We recognize revenue for certain performance obligations at the point in time when control is transferred, such as
delivery of products and the right to use. We recognize revenue for certain other performance obligations over a period of
time as control of the goods or services is transferred, such as PCS and construction contracts. Payments received in advance
of system shipment are recorded as customer advances and are deferred until product shipment when they are recognized in
revenue. We assess the probability of collection based on a number of factors, including past payment history with the
customer and creditworthiness of the customer. We generally do not request collateral from our customers but will request
advance payments or letter’s of credit when deemed necessary.
We frequently enter into sales arrangements that contain multiple performance obligations. For sale arrangements that
contain multiple performance obligations, we account for individual products and services separately if a product or service is
separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other
resources that are readily available to the customer. The SSP is determined based on observable prices at which we separately
80
sell the products and services. If the SSP is not directly observable, then we will estimate the SSP considering market
conditions, entity-specific factors, and information about the customer or class of customer that is reasonably available.
Valuation of Inventories
The valuation of inventory requires us to estimate obsolete or excess inventory as well as damaged inventory. The
determination of obsolete or excess inventory requires us to estimate the future demand for our products. We regularly review
inventory quantities on hand and adjust for excess and obsolete inventory based primarily on historical usage rates and our
estimates of product demand to support future sales and service. If our demand forecast for specific products is greater than
actual demand and we fail to reduce purchasing and manufacturing output accordingly, we could be required to write off
inventory beyond the current reserve, which would negatively impact our gross margin.
Item 7A. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive
instruments, positions or transactions.
Concentration of Credit and Other Risks
Our cash and cash equivalents are deposited with several major financial institutions. At times, deposits in these
institutions exceed the amount of insurance provided on such deposits. We have not experienced any losses in such accounts
and do not believe that we are exposed to any significant risk of loss on these balances.
For the years ended June 30, 2025, and 2024, there was one customer that represented 10% or more of total net revenue.
We had one customer as of June 30, 2025 and June 30, 2024, respectively, that accounted for more than 10% of our total
accounts receivable, net.
We perform ongoing credit evaluations of our customers and maintain reserves for potential credit losses. Accounts
receivable are deemed past due in accordance with the contractual terms of the agreement with such customer. Accounts
receivable balances are charged against the allowance for doubtful accounts once collection efforts are unsuccessful.
Single-source suppliers presently provide us with several components. In most cases, if a supplier was unable to deliver
these components, we believe that we would be able to find other sources for these components subject to any regulatory
qualifications, if required.
Foreign Currency Exchange Rate Risk
A portion of our net sales are denominated in foreign currencies, most notably the Swiss Franc, Euro and the Japanese
Yen. Future fluctuations in the value of the U.S. Dollar may affect the price competitiveness of our products outside the
United States. For direct sales outside the United States, we sell in both U.S. Dollars and local currencies, which could
expose us to additional foreign currency risks, including changes in currency exchange rates. Our operating expenses in
countries outside the United States are payable in foreign currencies and therefore, expose us to currency risk. To the extent
that management can predict the timing of payments under sales contracts or for operating expenses that are denominated in
foreign currencies, we may engage in hedging transactions to mitigate such risks in the future. We expect the changes in the
fair value of the net foreign currency assets arising from fluctuations in foreign currency exchange rates to be materially
offset by the changes in the fair value of the forward contracts. As of June 30, 2025, we had open currency forward contracts
to purchase or sell foreign currencies with stated, or notional value, of approximately $43.5 million.
The purpose of these foreign currency forward contracts is to mitigate the risk associated with foreign exchange rate
fluctuations. We have developed a foreign exchange policy to govern our forward contracts. These foreign currency forward
contracts do not qualify as cash flow hedges and all changes in fair value are reported in earnings as part of other expenses,
net. We have not entered into any other types of derivative financial instruments for trading or speculative purpose. Our
foreign currency forward contract valuation inputs are based on quoted prices and quoted pricing intervals from public data
and do not involve management judgment.
81
Interest Rate Risk
Our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not
limited to the Financing Agreement and our Convertible Notes. The interest rates on the Convertible Notes are fixed and the
interest rate on the Term Loan Facilities are tied to a variable rate. As of June 30, 2025, the Financing Agreement included
borrowings under the Term Loan Facility of $150.0 million. The interest on the borrowings under the Financing Agreement
is payable at the Company’s option, either: (i) a term SOFR-based rate (subject to a 2.00% per annum floor), plus an
applicable margin of 8.50%, per annum or (ii) a base rate (subject to a 3.00% per annum floor), plus an applicable margin of
7.50% per annum. If the amount outstanding under the Financing Agreement remained at this level for the next 12 months
and interest rates increased or decreased by a 50 basis point change, our annual interest expense would increase or decrease,
respectively, approximately $0.8 million. Refer to Note 7, Debt to our consolidated financial statements included in this
Annual Report on Form 10-K for a discussion regarding our debt obligations.
Equity Price Risk
On May 13, 2021, we issued approximately $100.0 million aggregate principal amount of Convertible Notes. Upon
conversion, we can settle the obligation by issuing our common stock, cash or a combination thereof at an initial conversion
rate equal to 170.5611 shares of common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to
a conversion price of approximately $5.86 per share of common stock, subject to adjustment. On June 5, 2025, as part of the
Financing Agreement, we paid $82.0 million to the Convertible Note holders. As of June, 30, 2025, the Company currently
has $18.0 million Convertible Notes outstanding. There is no equity price risk if the share price of our common stock is
below $5.86 upon conversion of the Convertible Notes. For every $1 that the share price of our common stock exceeds $5.86,
we expect to issue an additional $3.1 million in cash or shares of our common stock, or a combination thereof, if all of the
remaining Convertible Notes are converted.
82
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ACCURAY INCORPORATED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page No.
Report of Independent Registered Public Accounting Firm (PCAOB ID 248)............................................................
83
Consolidated Balance Sheets.........................................................................................................................................
85
Consolidated Statements of Operations and Comprehensive Income (Loss) ...............................................................
86
Consolidated Statements of Stockholders’ Equity........................................................................................................
87
Consolidated Statements of Cash Flows .......................................................................................................................
88
Notes to Consolidated Financial Statements.................................................................................................................
90
83
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Accuray Incorporated
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Accuray Incorporated (a Delaware corporation) and
subsidiaries (the “Company”) as of June 30, 2025 and 2024, the related consolidated statements of operations and
comprehensive income (loss), stockholders’ equity, and cash flows for each of the two years in the period ended June 30,
2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30,
2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended June 30,
2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2025, based on criteria established in the
2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated August 28, 2025 expressed an unqualified opinion.
Basis for opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Determination of standalone selling price
As described further in note 1 to the consolidated financial statements, the Company’s contracts with customers often include
multiple performance obligations. The Company applies the five steps of Financial Accounting Standards Board Topic 606,
Revenue from Contracts with Customers, in the determination of revenue to be recognized, with step four related to the
allocation of the transaction price to multiple performance obligations. The transaction price of each contract is allocated to
individual performance obligations based upon relative stand-alone selling price (“SSP”). The SSP of performance
obligations is determined based on observable prices at which the Company separately sells the products and services. If the
SSP is not directly observable, the Company will estimate the SSP considering market conditions, entity specific factors, and
information about the customer or class of customer that is reasonably available. We identified the determination of the SSP
of performance obligations as a critical audit matter.
84
The principal consideration for our assessment that the determination of the SSP of performance obligations represents a
critical audit matter is that the estimates made in determining SSP involve significant judgment due to the absence of directly
observable data which requires the Company to make subjective assumptions used to estimate the SSP for each performance
obligation. Evaluating the appropriateness of these estimates requires a high degree of auditor judgment and an increased
extent of effort.
Our audit procedures related to the determination of the SSP of performance obligations included the following, among
others:
•
We tested the design and operating effectiveness of internal controls over the Company’s determination of the SSP
of performance obligations, including controls covering the validation of the completeness and accuracy of
underlying data used in the analysis.
•
We evaluated the appropriateness of the overall methodology used by management, including considering whether
the methodology maximized the use of observable inputs available.
•
We tested management’s process by evaluating key assumptions for performance obligations that do not include
directly observable sales or for performance obligations that do not include sufficient directly observable sales.
Specifically, we:
•
considered how management determined the disaggregation of distinct customer groups;
•
determined the appropriateness of discount rates applied to list prices based on the Company’s pricing
strategy and target margins for customer groups, including comparing the discount rates to internal pricing
policies;
•
recalculated and validated the inputs used in the calculation;
•
made inquiries of staff members outside of the accounting department to determine if there are factors that
could have indicated a change in the Company’s go-to market strategy;
•
compared the SSP indicated by management’s analysis to known orders at the performance obligation level
for a sample of items; and
•
compared SSP at the performance obligation level to the prior year and evaluated the reasons for significant
relative fluctuations.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2006.
San Jose, California
August 28, 2025
85
Accuray Incorporated
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
June 30,
2025
June 30,
2024
ASSETS
Current assets:
Cash and cash equivalents
$
57,416
$
68,570
Restricted cash
574
485
Accounts receivable, net of allowance for credit losses of $369 and $2,251 as of June 30,
2025 and June 30, 2024, respectively (a)
83,192
92,001
Inventories
141,020
138,324
Prepaid expenses and other current assets (b)
33,501
23,006
Deferred cost of revenue
1,762
850
Total current assets
317,465
323,236
Noncurrent assets:
Property and equipment, net
28,658
24,774
Investment in joint venture
4,612
9,826
Operating lease right-of-use assets, net
33,115
33,773
Goodwill
57,802
57,672
Restricted cash
4,144
1,337
Other assets
24,443
18,009
Total assets
$
470,239
$
468,627
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
34,033
$
50,020
Accrued compensation
14,573
17,128
Operating lease liabilities
7,375
6,218
Other accrued liabilities
29,361
28,508
Customer advances
12,197
13,988
Deferred revenue
82,306
71,649
Short-term debt, net
12,734
7,756
Total current liabilities
192,579
195,267
Noncurrent liabilities:
Operating lease liabilities
32,482
32,373
Long-term other liabilities
5,160
7,389
Warrant liability
8,497
—
Deferred revenue
26,566
24,114
Long-term debt, net
123,786
164,400
Total liabilities
389,070
423,543
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.001 par value; authorized: 200,000,000 shares as of June 30, 2025 and
June 30, 2024, respectively; issued and outstanding: 112,643,852 and 100,194,932 shares
at June 30, 2025 and June 30, 2024, respectively
113
100
Additional paid-in-capital
602,165
566,887
Accumulated other comprehensive loss
(1,837)
(4,222)
Accumulated deficit
(519,272)
(517,681)
Total stockholders' equity
81,169
45,084
Total liabilities and stockholders’ equity
$
470,239
$
468,627
(a)
Included accounts receivable from the joint venture, an equity method investment, of $28,452 and $25,339 at June 30, 2025, and
June 30, 2024, respectively. See Note 11.
(b)
Included other receivable from the joint venture, an equity method investment, of $377 and $743 at June 30, 2025, and June 30,
2024, respectively.
The accompanying notes are an integral part of these consolidated financial statements
86
Accuray Incorporated
Consolidated Statements of Operations and Comprehensive Income (Loss)
(in thousands, except per share amounts)
Years Ended June 30,
2025
2024
Net revenue:
Products (a)
$
237,580
$
234,164
Services (b)
220,925
212,387
Total net revenue
458,505
446,551
Cost of revenue:
Cost of products
162,569
161,061
Cost of services
148,969
142,569
Total cost of revenue (c)
311,538
303,630
Gross profit
146,967
142,921
Operating expenses:
Research and development (d)
47,942
49,732
Selling and marketing
43,315
42,619
General and administrative
47,871
50,066
Total operating expenses
139,128
142,417
Income from operations
7,839
504
Income from equity method investment
4,714
1,838
Interest expense
(12,954)
(11,624)
Gain on extinguishment of debt
1,475
—
Loss from change in fair value of warrant liability
(499)
—
Other income (expense), net
559
(2,538)
Income (loss) before provision for income taxes
1,134
(11,820)
Provision for income taxes
2,725
3,725
Net loss
$
(1,591)
$
(15,545)
Net loss per share - basic and diluted
$
(0.02)
$
(0.16)
Weighted average common shares used in computing net loss per share:
Basic and diluted
102,768
98,272
Net loss
$
(1,591)
$
(15,545)
Foreign currency translation adjustment
1,557
(2,445)
Change in defined benefit pension obligation
828
(2,199)
Comprehensive income (loss)
$
794
$
(20,189)
(a)
Includes sales of products to the joint venture, an equity method investment, of $101,563 during the year ended June 30, 2025, and
$77,497 during the year ended June 30, 2024. See Note 11.
(b)
Includes sales of services to the joint venture, an equity method investment, of $18,521 during the year ended June 30, 2025, and
$15,039 during the year ended June 30, 2024. See Note 11.
(c)
Includes cost of revenue from sales to the joint venture, an equity method investment, of $74,421 during the year ended June 30,
2025, and $59,853 during the year ended June 30, 2024. See Note 11.
(d)
Includes charge backs to the joint venture, an equity method investment, related to research and development of $1,482 during the
year ended June 30, 2025 and $942 during the year ended June 30, 2024.
The accompanying notes are an integral part of these consolidated financial statements.
87
Accuray Incorporated
Consolidated Statement of Stockholders’ Equity
(in thousands)
Common Stock
Additional
Paid-in
Accumulated
Other
Comprehensive
Accumulated
Total
Stockholders’
Shares
Amount
Capital
Income (Loss)
Deficit
Equity
Balance at June 30, 2023
96,535
97
555,276
422
(502,136)
53,659
Issuance of common stock to employees
3,707
3
2,244
—
—
2,247
Tax withholding upon vesting of restricted stock units
(47)
—
(117)
—
—
(117)
Share-based compensation
—
—
9,484
—
—
9,484
Net loss
—
—
—
—
(15,545)
(15,545)
Cumulative translation adjustment
—
—
—
(2,445)
—
(2,445)
Change in defined benefit pension obligation
—
—
—
(2,199)
—
(2,199)
Balance at June 30, 2024
100,195
$
100
$
566,887
$
(4,222)
$
(517,681)
$
45,084
Issuance of common stock to employees
3,612
4
1,623
—
—
1,627
Tax withholding upon vesting of restricted stock units
(45)
—
(90)
—
—
(90)
Share-based compensation
—
—
10,201
—
—
10,201
Fair value of warrants issued with debt
—
—
12,822
—
—
12,822
Stock issued to settle Convertible Notes
8,882
9
10,722
—
—
10,731
Net loss
—
—
—
—
(1,591)
(1,591)
Cumulative translation adjustment
—
—
—
1,557
—
1,557
Change in defined benefit pension obligation
—
—
—
828
—
828
Balance at June 30, 2025
112,644
$
113
$
602,165
$
(1,837)
$
(519,272)
$
81,169
The accompanying notes are an integral part of these consolidated financial statements.
88
Accuray Incorporated
Consolidated Statements of Cash Flows
(in thousands)
Years Ended June 30,
2025
2024
Cash flows from operating activities
Net loss
$
(1,591)
$
(15,545)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization
6,150
5,905
Share-based compensation
10,201
9,484
Amortization of debt financing costs and discount for warrants issued to lenders
1,439
955
Gain on extinguishment of debt
(1,475)
—
Non-cash interest paid-in-kind
616
—
Loss from change in fair value of warrant liability
499
—
Recovery from credit losses
(101)
(479)
Provision for write-down of inventories
2,216
6,022
Income from equity method investment
(4,714)
(1,838)
Net deferred gross profit on sales to the JV
7,666
4,098
Provision for deferred income taxes
156
1,402
Changes in assets and liabilities:
Accounts receivable
13,356
(15,826)
Inventories
(9,109)
(3,998)
Prepaid expenses and other assets
(2,542)
6,116
Deferred cost of revenue
(912)
(275)
Accounts payable
(18,674)
17,365
Operating lease liabilities, net of operating lease right-of-use assets
620
321
Accrued liabilities
(5,906)
(16,506)
Customer advances
(2,440)
(6,619)
Deferred revenues
7,405
(2,486)
Net cash provided by (used in) operating activities
2,860
(11,904)
Cash flows from investing activities
Purchases of property and equipment, net
(4,272)
(3,601)
Capitalized costs for software to be sold
(4,251)
—
Net cash used in investing activities
(8,523)
(3,601)
Cash flows from financing activities
Proceeds from the issuance of common stock to employees
1,627
2,247
Taxes paid related to net share settlement of equity awards
(90)
(117)
Proceeds from Term Loan due 2030
150,000
—
Debt financing costs
(13,289)
(81)
Paydown of Prior Convertible Notes
(68,500)
—
Paydown of Prior Term Loan Facility
(64,000)
(6,000)
Borrowings under the Prior Revolving Credit Facility
27,000
5,000
Repayments under the Prior Revolving Credit Facility
(37,000)
(5,000)
Net cash used in financing activities
(4,252)
(3,951)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
1,657
(1,354)
Net decrease in cash, cash equivalents and restricted cash
(8,258)
(20,810)
Cash, cash equivalents and restricted cash at beginning of period
70,392
91,202
Cash, cash equivalents and restricted cash at end of period
$
62,134
$
70,392
The accompanying notes are an integral part of these consolidated financial statements.
89
Accuray Incorporated
Consolidated Statements of Cash Flows (continued)
(in thousands)
Years Ended June 30,
2025
2024
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes
$
3,870
$
1,749
Cash paid for interest
$
9,737
$
10,520
Supplemental non-cash disclosure:
Fair value of stock issued to settle Convertible Notes
$
11,102
$
—
Fair value of warrants issued with debt
$
21,105
$
—
Unpaid purchase of property and equipment at end of year
$
888
$
445
Unpaid capitalized software costs at end of year
$
258
$
—
Transfers from inventory to property and equipment
$
3,709
$
3,438
Transfer of inventory to other assets
$
1,218
$
—
Transfer of lease liabilities to leasehold improvements
$
1,251
$
2,593
Transfer of other assets to property and equipment
$
242
$
—
Dividend receivable from joint venture
$
2,453
$
2,460
The accompanying notes are an integral part of these consolidated financial statements.
90
Accuray Incorporated
Notes to Consolidated Financial Statements
Note 1. The Company and its Significant Accounting Policies
The Company
Accuray Incorporated (together with its subsidiaries, the “Company” or “Accuray”) designs, develops and sells advanced
radiosurgery and radiation therapy systems for the treatment of tumors throughout the body. The Company is incorporated in
Delaware and is headquartered in Madison, Wisconsin. The Company has primary offices in the United States, Switzerland,
China, Hong Kong, and Japan, and conducts its business worldwide.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been eliminated in consolidation. The accompanying consolidated
financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S.
GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Reclassifications
Certain amounts in the notes to consolidated financial statements have been reclassified to conform to current year
presentation. Such reclassifications had no impact on the Company’s consolidated financial statements.
Risks and Uncertainties
The Company is subject to risks and uncertainties caused, directly or indirectly, by events with significant geopolitical and
macroeconomic impacts, including, but not limited to, inflation; actions taken to counter inflation, including high interest
rates; foreign currency exchange rate fluctuations; uncertainty and volatility in the banking and financial services sector;
tightening credit markets; geopolitical concerns, such as the Russia-Ukraine and Middle East conflicts and increasing tension
between China and the U.S., including with respect to Taiwan; uncertainty caused by the China anti-corruption campaign and
timing of the China stimulus program; changes in government administration policy positions; recent executive orders to
impose new tariffs on global imports and uncertainties regarding impact, retaliations and further escalation, including against
other countries; and other factors that may emerge. The Company is also continuing to navigate supply chain and inflation
challenges, both of which continues to be a significant headwind that affects the Company’s results of operations.
The Company expects that the business of its customers and its own business will continue to be adversely impacted,
directly or indirectly, by these macroeconomic and geopolitical issues. In addition, ongoing supply chain challenges and
logistics costs, including difficulties in obtaining a sufficient supply of component materials and increased component costs,
have adversely affected the Company's gross margins and net income (loss), and the Company currently expects that gross
margins and net income (loss) will continue to be adversely affected by increased material costs and freight and logistics
expenses through at least calendar year 2025, and potentially longer. In addition, the Company expects inflation and the
ongoing supply chain challenges and logistics costs to impact its cash from operations through at least calendar year 2025. In
addition, reduced budgets and lower capital deployment priority for radiotherapy equipment, along with longer customer
installation timelines, in the United States have negatively impacted net revenue since fiscal year 2024, and the Company
expects this will continue to have an impact through fiscal year 2026. The extent of the ongoing impact of these
macroeconomic events on our business, our markets and on global economic activity, however, is uncertain and the related
financial impact cannot be reasonably estimated with any certainty at this time. The Company’s past results may not be
indicative of its future performance, and historical trends, including conversion of backlog to revenue, income (loss) from
operations, net income (loss), net income (loss) per share and cash flows may differ materially.
The Company continues to critically review its liquidity and anticipated capital requirements in light of the significant
uncertainty created by geopolitical and macroeconomic conditions. Based on the balance of the Company’s cash and cash
equivalents, available debt facilities, current business plan and revenue prospects, the Company believes that it will have
sufficient cash resources and anticipated cash flows to fund its operations for at least the next 12 months. The Company,
however, is unable to predict with certainty the impact that geopolitical and macroeconomic conditions, including their effect
91
on the global supply chain, inflation and foreign currency exchange rates, will have on its ability to maintain compliance with
the covenants contained in the Financing Agreement (as defined below), including financial covenants regarding the
consolidated fixed charge coverage ratio, consolidated leverage ratio and minimum liquidity requirements.
Failing to comply with the covenants to the Financing Agreement could adversely affect the Company’s ability to finance
its future operations or capital needs, withstand a future downturn in its business or the economy in general, engage in
business activities, including future opportunities that may be in its interest, and plan for or react to market conditions or
otherwise execute its business strategies. The Company’s ability to comply with the covenants and other terms governing the
Financing Agreement will depend in part on its future operating performance. In addition, because substantially all of the
Company’s assets are pledged as collateral under the Financing Agreement, if the Company is not able to cure any default or
repay outstanding borrowings, such assets are subject to the risk of foreclosure by the Company’s lenders. Failure to satisfy
the covenants and other terms governing the Financing Agreement in the future could cause the Company to be in default and
the maturity of the related debt could be accelerated and become immediately payable. This may require the Company to
obtain waivers or additional amendments to the Financing Agreement in order to maintain compliance and there can be no
certainty that any such waiver or amendment will be available, or what the cost of such waiver or amendment, if obtained,
would be. If the Company is unable to obtain necessary waivers or amendments and the debt under such credit facility is
accelerated, the Company would be required to obtain replacement financing. There can be no assurance that the Company
would be able to obtain replacement financing on acceptable terms, or at all, on a timely basis. There can be no assurance that
the Company would be able to satisfy its obligations if any of its indebtedness is extended. There is no guarantee that the
Company would be able to satisfy its obligations if any of its indebtedness is accelerated.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at
the date of the financial statements. The Company assessed certain accounting matters that generally require consideration of
forecasted financial information in context with the information reasonably available to the Company. Actual results could
differ materially from those estimates.
Foreign Currency
The Company’s international subsidiaries use their local currencies as their functional currencies. For those subsidiaries,
assets and liabilities are translated at exchange rates in effect at the balance sheet date and income and expense accounts at
the average exchange rate. Resulting translation adjustments are excluded from the determination of net income or loss and
are recorded in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. Net foreign
currency exchange transaction gains or losses are included as a component of other expense, net, in the Company’s
consolidated statements of operations and comprehensive income (loss).
Cash, Cash Equivalents and Restricted Cash
The Company considers currency on hand, demand deposits, time deposits, and all highly liquid investments with an
original maturity of three months or less at the date of purchase to be cash and cash equivalents. Cash and cash equivalents
are held in various financial institutions in the United States and internationally.
Restricted cash primarily consists of cash held in bank accounts which are for certificates of deposit held as guarantees in
connection with customer contracts and corporate leases, and funds held as guarantees for Value-Added Tax (“VAT”)
obligations in a foreign jurisdiction.
Fair Value Measurements
The carrying values of the Company’s financial instruments including cash equivalents, restricted cash, accounts
receivable, and accounts payable, are approximately equal to their respective fair values due to the relatively short-term
nature of these instruments. The Company’s Term Loan Facilities approximated fair value due to variable interest rate
charged on the borrowings, which reprice frequently. The Company’s convertible debt is measured on a recurring basis. The
Company’s Premium Warrants were recorded at their relative fair value in additional paid-in capital at the time of issuance,
92
and its warrant liabilities are remeasured to their respective fair value each reporting period. See Note 6, Fair Value
Measurements, of the notes to consolidated financial statements for further information.
Concentration of Credit Risk and Other Risks and Uncertainties
The Company’s cash and cash equivalents are primarily deposited with several major financial institutions. At times,
deposits in these institutions exceed the amount of insurance provided on such deposits. The Company has not experienced
any losses in such accounts and believes that it is not exposed to any significant risk on these balances.
The Company had one customer that represented 10% or more of total net revenue for the years ended June 30, 2025 and
2024, respectively. The Company had one customer as of June 30, 2025 and 2024, respectively, that accounted for more than
10% of accounts receivable, net.
Single-source suppliers presently provide the Company with several components. In most cases, if a supplier was unable
to deliver these components, the Company believes that it would be able to find other sources for these components subject to
any regulatory qualifications, if required.
Accounts Receivable
Accounts receivable consist of amounts billed and unbilled from customers and are recorded at the invoiced amount. The
Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses based upon
the expected collectability of all accounts receivable. Accounts receivable are deemed past due in accordance with the
contractual terms of the agreement. The Company writes off accounts receivable when they are determined to be
uncollectible.
Inventories
Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. Excess and obsolete
inventories are written down based on historical sales and forecasted demand, as judged by management.
Revenue Recognition
The Company’s revenue consists of product revenue resulting from the sale of systems, system upgrades and service
revenue. The Company accounts for a contract with a customer when there is a legally enforceable contract between the
Company and its customer, the rights of the parties are identified, the contract has commercial substance, and collectability of
the contract consideration is probable. The Company’s revenues are measured based on the consideration specified in the
contract with each customer, net of any discounts and taxes collected from customers that are remitted to government
authorities.
The Company’s revenue is primarily derived from sales of CyberKnife and TomoTherapy platforms and services, which
include post-contract customer support (“PCS”), installation services, training and other professional services.
The majority of the Company's revenue arrangements consist of multiple performance obligations, which can include
system, upgrades, installation, training, services, construction, and consumables. For bundled arrangements, the Company
accounts for individual products and services separately if a product or service is separately identifiable from other items in
the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the
customer.
The Company’s products are generally sold without a right of return, and the Company’s contracts generally provide a
fixed transaction price. The Company may offer incentives in the form of discounts, including volume system discounts,
which are included in the contract and used to calculate the final fixed price of the arrangement. These discounts may pertain
to all performance obligations in a specific contract or may be allocated to a specific performance obligation. The Company
reviews payment terms extending beyond one year. If it is determined that a material financing component exists, we
recognize this as interest income over time. The Company applies the practical expedient to not adjust for a material
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financing component if the gap between payment and delivery was expected, at the contract inception, to be less than one
year.
The Company offers customers the opportunity to trade in their older systems for a discount off the purchase of a new
system. The Company generally does not provide specific trade-in prices or upgrade rights at the time of purchase of the
original system. Trade-in or upgrade transactions are based on the fair value of the products when sold and are separately
negotiated, taking into consideration circumstances existing at the time the trade-in or upgrade is delivered. Accordingly,
implied trade-ins and upgrades discounts are not considered separate performance obligations in system sales agreements.
During fiscal years 2025 and 2024, no fair value has been assigned to any of the systems that were traded-in.
The stand-alone selling price ("SSP") of performance obligations is determined based on observable prices at which the
Company separately sells the products and services. If the SSP is not directly observable, then the Company estimates the
SSP considering market conditions, entity-specific factors, and information about the customer or class of customer that is
reasonably available. The contract consideration allocation is based on the SSP at contract inception and updated should a
significant contract modification occur. The consideration (net of any discounts) is allocated among separate products and
services in a bundle based on their relative SSPs. Contract modifications typically add additional goods or services or change
pricing. For such modifications, the most recent SSP is used for reallocation to the remaining performance obligations.
The Company recognizes revenue for certain performance obligations at the point in time when control is transferred, such
as the delivery and right to use the products and upgrades occurs. Service revenue is recognized over the term of the service
period as the customer benefits from the services throughout the service period. Revenue related to services that are not part
of a service contract and performed on a time-and-materials basis are recognized when performed. Service contracts comprise
a single stand-ready performance obligation satisfied over time as our customers simultaneously receive and consume
benefits from the Company's performance. This performance obligation constitutes a series of services that are substantially
the same and provided over time using the same measure of progress. Revenues derived from these arrangements are
recognized over time using an output method based upon the passage of time as this provides a faithful depiction of the
pattern of transfer of control.
The Company recognizes an asset for the incremental costs of obtaining a contract with a customer when the Company
expects to generate future economic benefits from the related revenue-generating contracts. The Company capitalizes
incremental contract acquisition costs, and amortizes such costs over a five year period, the period which the Company
expects to benefit, based on historical service renewal rates, and expectations of future customer renewals. Most of the
Company’s contract costs are associated with its internal sales force compensation program and a portion of its employee
bonus program. The Company capitalizes and amortizes the incremental costs of obtaining a contract, primarily related to
certain bonuses and sales commissions. The capitalized bonuses and sales commissions are amortized over a period of five
years commencing upon the initial transfer of control of the system to the customer. The pattern of amortization is
commensurate with the pattern of transfer of control of the performance obligations to the customer. The amortization of
these contract assets is included in cost of sales, research and development, sales and marketing, and general and
administrative expenses based on department headcount allocations in the consolidated statements of operations. The
Company elected to use the practical expedient and expense as incurred commissions related to service renewals and
upgrades because the amortization period is one year or less.
The Company invoices its customers based on the billing schedules in its sales arrangements. Payment terms vary from 30
to 90 days, or longer, from the date of invoice. Contract assets for the periods presented primarily represent the difference
between the revenue that was recognized based on the relative standalone selling price of the related performance obligations
satisfied, and the contractual billing terms. Deferred revenue for periods presented primarily relates to service contracts
where the service fees are billed up-front, generally quarterly or annually, prior to services being performed. The associated
deferred revenue is generally recognized over the term of the service period. The Company did not have any significant
impairment losses on its contract assets for any period presented.
Deferred Revenue and Customer Advances
Deferred revenue represents the amount billed under an arrangement in excess of the amount of revenue recognized. It
primarily consists of unfulfilled obligations from open contracts for which performance has already started including short-
shipped items, deferred warranty, training, maintenance services and other unperformed or incomplete performance
obligations. Service contracts outside of the warranty period, for maintenance services, in general, are considered month-to-
94
month contracts. Deferred revenue includes deferred warranty expected to be recognized over the remaining warranty period
for systems already installed.
Customer advances represent payments made by customers in advance of product shipment per the agreed upon contract
terms.
Property and Equipment
Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives
of the related assets. Leasehold improvements are depreciated on a straight-line basis over the remaining term of the lease or
the estimated useful life of the asset, whichever is shorter. Machinery and equipment are depreciated over five years.
Furniture and fixtures are depreciated over four years. Computer and office equipment and computer software are depreciated
over three years. Repairs and maintenance costs, which are not considered improvements and do not extend the useful life of
the property and equipment, are expensed as incurred.
Software Capitalization Costs
Certain costs for the development of new software products and the substantial enhancements to existing software
products for internal use are capitalized when it is considered probable that the software will be fully developed and used to
perform its intended function. Capitalized costs for the development of internal use software are included in property, plant
and equipment, net on the consolidated balance sheets. Capitalized costs for internal use software are amortized on a straight-
line basis over its estimated useful life, which is generally five years. Costs related to the preliminary project stage, post-
implementation, training and maintenance are expensed as incurred.
Certain costs for the development of software the Company plans to sell, lease or market on its own or as part of another
product is capitalized once technological feasibility is achieved. The Company will capitalize costs until the product is ready
to be sold, at which time, it will amortize the capitalized costs over the estimated useful life. Costs for the development of
software the Company plans to sell is recorded in Other assets on the consolidated balance sheets.
Impairment of Long-Lived Assets
The Company reviews long-lived assets, including intangible assets, equity method investment in the JV, property and
equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the
assets may not be fully recoverable using pretax undiscounted cash flows. Impairment, if any, is measured as the amount by
which the carrying value of a long-lived asset exceeds its fair value.
Goodwill
Goodwill is not amortized but is evaluated for impairment on an annual basis and when impairment indicators are present.
The Company has assessed that it has one operating segment and one reporting unit, and the consolidated net assets,
including existing goodwill and other intangible assets, are considered to be the carrying value of the reporting unit. The
Company estimates the fair value of the reporting unit based on the Company’s closing stock price on the trading day closest
to the annual review date multiplied by the outstanding shares on that date. If the carrying value of the reporting unit is in
excess of its fair value, an impairment may exist, and the Company must perform the second step of the analysis, in which
the estimated fair value of the goodwill is compared to its carrying value to determine the impairment charge, if any. If the
estimated fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired and no
further analysis is required. There was no impairment of goodwill identified in the fiscal years ended June 30, 2025 and 2024.
Shipping and Handling
The Company’s billings for shipping and handling for product shipments to customers are included in cost of products.
Shipping and handling costs incurred for inventory purchases are capitalized in inventory and expensed in cost of products.
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Research and Development Costs
Costs related to research, design and development of products are charged to research and development expense as
incurred. These costs include direct compensation, benefits, and other headcount related costs for research and development
personnel, costs for materials used in research and development activities, costs for outside services, and allocated portions of
facilities and other corporate costs. The Company has entered into research and clinical study arrangements with selected
hospitals, cancer treatment centers, academic institutions and research institutions worldwide. These agreements support the
Company’s internal research and development capabilities.
Share-Based Compensation
The Company issues share-based compensation awards to employees and directors in the form of stock options, restricted
stock units (“RSUs”), performance units (“PSUs”) and employee stock purchase plan (“ESPP”) awards (collectively,
“awards”).
The exercise price of stock options granted is equal to the market value of the Company’s common stock on the date of
grant. Share-based compensation for stock options and ESPP awards are measured on the date of grant using a Black-Scholes
option pricing model. Share-based compensation expense for RSUs and PSUs is measured based on the value of the
Company’s common stock on the date of grant.
The Company measures and recognizes compensation expense for all stock-based awards based on the awards’ fair value.
Share-based compensation expense for stock options, RSUs, and the ESPP awards is recognized on a straight-line basis over
the service period of the award. Share-based compensation expense for PSUs is recognized on a straight-line basis over the
period of time for the performance conditions to be satisfied and only for those awards expected to vest. Forfeitures are
recorded as they occur.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment
of the warrant’s specific terms and applicable authoritative guidance in Distinguishing Liabilities from Equity ASC
480 (“ASC 480”) and Derivatives and Hedging ASC 815, (“ASC 815”). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed
to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the
use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end
date while the warrants are outstanding.
For issued warrants that meet all of the criteria for equity classification, the warrants are recorded at their relative fair
value in additional paid-in capital at the time of issuance. For issued warrants that do not meet all the criteria for equity
classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and remeasured at
each balance sheet date thereafter. In accordance with the guidance contained in ASC 815, the Premium Warrants (as defined
in Note 7) qualify for equity treatment. The fair value of the Premium Warrants was estimated using a Black-Scholes method
(see Note 9 “Stockholders’ Equity” for more information). The Penny Warrants (as defined in Note 7) do not qualify as
equity and are recorded as a liability at fair value. Changes in the estimated fair value of the Penny Warrants are recognized
as a non-cash gain or loss on the statements of operations and comprehensive income (loss).
Loss Contingencies
The Company is involved in various lawsuits, claims and proceedings that arise in the ordinary course of business. The
Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the
amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated
amount. The Company reviews these provisions quarterly and adjusts these provisions to reflect the impact of negotiations,
settlements, rulings, advice of legal counsel, and updated information.
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Earnings Per Common Share
Basic earnings per share is computed based on the weighted average number of shares of common stock and warrants
outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of
common stock plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common
shares include outstanding share awards. Potentially dilutive shares of the Company’s common stock are excluded from the
computation of diluted net loss per share for loss periods presented because including them would have been anti-dilutive.
Dilutive earnings per share is the same as basic earnings per share for the periods in which the Company had a net loss
because the inclusion of outstanding common stock would be anti-dilutive.
A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share
attributable to stockholders is as follows (in thousands):
Years Ended June 30,
2025
2024
Numerator:
Net loss used to compute basic and diluted loss per share
$
(1,591)
$
(15,545)
Denominator:
Weighted average shares used to compute basic and diluted loss per share
102,768
98,272
Basic and dilutive net loss per share
$
(0.02)
$
(0.16)
Anti-dilutive share-based awards, excluded
12,236
14,052
Anti-dilutive warrants
17,181
—
Warrants Issued in Connection with the Long-term Debt
The Company issued approximately 6.2 million detachable warrants with an exercise price of $0.01 per share (“Penny
Warrants”) and 17.2 million detachable warrants with an exercise price of $1.68 per share (“Premium Warrants”) to the
lenders of our long-term debt (See Note 9. Stockholders’ Equity, for more information). Accounting guidance dictates that
shares issuable for little or no cash consideration upon the satisfaction of certain conditions shall be considered outstanding
common shares and included in the computation of basic earnings per share. Since the Penny Warrants are issuable for little
or no consideration, they are considered outstanding and are included in the weighted average shares to calculate basic and
diluted earnings per share for the year ended June 30, 2025.
Outstanding Convertible Notes—Diluted Share Impact
Due to the optional cash settlement feature and management’s intent to settle the principal amount thereof, in cash, the
shares of common stock issuable upon conversion of the outstanding principal amount of the 3.75% Convertible Senior Notes
due 2026 (the “Notes”) are included in the calculation of diluted net income (loss) per share only if their inclusion is dilutive
for periods during which the Notes were outstanding. The shares of common stock issuable upon conversion of the
outstanding principal amount of the Notes as of June 30, 2025, and 2024 were 3.1 million, and 17.1 million, respectively, and
were not included in the basic and diluted net loss per common share as the effect of adding the shares were anti-dilutive (See
Note 7. Debt, for more information).
Leases
The Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are
included in the line items right-of-use assets, lease liabilities, current, and lease liabilities, long-term in the consolidated
balance sheet. Right-of-use asset represents the Company’s right to use an underlying asset for the lease term and lease
obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized
based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with
a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a
straight-line basis over the lease term in the consolidated statements of operations. The Company determines the lease term
by agreement with lessor, including lease renewal and extension. As the leases do not provide an implicit interest rate, the
Company uses its incremental borrowing rate based on the information available at commencement date in determining the
97
present value of future payments. The Company elected a practical expedient to account for lease and non-lease components
together as a single lease component.
Equity Method Investment
The Company has an equity investment in CNNC Accuray (Tianjin) Medical Technology Co. Ltd., the Company’s JV.
The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability to
exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The
Company's investment in the JV is measured at cost and adjusted for the Company’s share of the JV's income or loss, intra-
entity profits, dividend distributions, currency translation adjustments, and impairments, if any. The Company recognizes its
proportionate share of income or loss from the JV on a one-quarter lag due to the timing of the availability of the JV’s
financial records. Profit earned by the Company from the JV is eliminated through cost of goods sold until it is realized; such
profits would generally be considered realized when the inventory has been sold through to third parties.
The JV's equity method goodwill is not amortized but is evaluated for impairment on an annual basis and when
impairment indicators are present. Our impairment analysis considers qualitative and quantitative factors that may have a
significant impact on the JV's fair value. Qualitative factors include the investee's financial condition and business outlook,
industry and sector performance, operational and financing cash flow activities, and other relevant factors affecting the JV.
When indicators of impairment exist, we prepare quantitative assessments of the fair value of our non-marketable equity
investments, which require judgment and the use of estimates, including discount rates, investee revenue and costs, and
comparable market data, among others.
Income Taxes
The Company is required to estimate its income taxes in each of the tax jurisdictions in which it operates prior to the
completion and filing of tax returns for such periods. This process involves estimating actual current tax expense together
with assessing temporary differences in the treatment of items for tax purposes versus financial accounting purposes that may
create net deferred tax assets and liabilities. The Company accounts for income taxes under the asset and liability method,
which requires, among other things, that deferred income taxes be provided for temporary differences between the tax bases
of the Company’s assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are
recorded for the future benefit of utilizing net operating losses, research and development credit carryforwards and other
deferred tax assets.
The Company records a valuation allowance to reduce its deferred tax assets to the amount the Company believes is more
likely than not to be realized. Because of the uncertainty of the realization of the deferred tax assets, the Company has
recorded a full valuation allowance against its domestic and certain foreign net deferred tax assets.
The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax
regulations. Management regularly assesses the Company’s tax positions in light of legislative, bilateral tax treaty, regulatory
and judicial developments in the countries in which the Company does business. The Company anticipates there will be no
material changes in uncertain tax positions in the next 12 months.
Accumulated Other Comprehensive Income (Loss)
The components of comprehensive income (loss) consist of net income (loss), changes in foreign currency exchange rate
translation and net changes related to a defined benefit pension plan. The changes in foreign currency exchange rate
translation and net changes related to the defined benefit pension plan are excluded from earnings and reported as a
component of stockholders’ equity. The foreign currency translation adjustment results from those subsidiaries not using the
United States dollar as their functional currency since the majority of their economic activities are denominated in their
applicable local currency. Accordingly, all assets and liabilities related to these operations are translated at the current
exchange rates at the end of each period, whereas revenues and expenses are translated at average exchange rates in effect
during the period. The resulting cumulative translation adjustments are recorded directly to the accumulated other
comprehensive loss account in stockholders’ equity.
98
Recent Accounting Pronouncements
Accounting Pronouncements - Adopted
In November 2023, the FASB issued ASU 2023-07 to improve reportable segment disclosures. The ASU is intended to
improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The
ASU requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision
maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's
profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures to be
disclosed in interim periods. The update is effective for annual periods beginning after December 15, 2023 and interim
periods within annual periods beginning after December 15, 2024. The Company adopted ASU 2023-07 on July 1, 2024. The
Company assessed the impact of this update and it did not have a material impact on its consolidated financial statement
disclosure requirements.
Accounting Pronouncements - Not Yet Effective
In November 2024, the Financial Accounting Standards Board (“FASB”) issued accounting standard update (“ASU”)
2024-03 requiring additional disclosure of the nature of expenses included in the income statement. The new standard
requires disclosures about specific types of expenses included in the expense captions presented on the face of the income
statement as well as disclosures about selling expenses. The update is effective for annual periods beginning after December
15, 2026. The Company plans to adopt ASU 2024-03 on July 1, 2027. The requirements will be applied prospectively with
the option for retrospective application. Early adoption is permitted. The Company is currently assessing the impact of
adopting the updated provisions.
In December 2023, the FASB issued ASU 2023-09 to improve the transparency and usefulness of income tax disclosures.
The accounting standard expands disclosures to the entity’s income tax rate reconciliation table and requires cash taxes paid
disaggregated by jurisdiction. These changes will be applied on a prospective basis. The update is effective for annual periods
beginning after December 15, 2024, with early adoption permitted. The Company plans to adopt ASU 2023-09 on July 1,
2025. The ASU requires retrospective application to all prior periods presented in the financial statements. The Company is
currently assessing the timing and impact of adopting the updated provisions.
Note 2. Revenue
Contract Balances
The timing of revenue recognition, billings, and cash collections results in trade receivables, unbilled receivables, and
deferred revenues on the consolidated balance sheets. The Company may offer longer or extended payment terms of more
than one year for qualified customers in some circumstances. At times, revenue recognition occurs before the billing,
resulting in an unbilled receivable, which represents a contract asset. The contract asset is a component of accounts
receivable and other assets for the current and non-current portions, respectively.
When the Company receives advances or deposits from customers before revenue is recognized, this results in a contract
liability. It can take two or more years from the time of order to revenue recognition due to the Company’s long sales cycle.
99
Changes in the contract assets and contract liabilities are as follows (dollars in thousands):
Change
June 30,
2025
June 30,
2024
$
%
Contract assets:
Unbilled accounts receivable – current (1)
$
11,823
$
19,131
(7,308)
(38)
Interest receivable – current (2)
284
305
(21)
(7)
Long-term accounts receivable (3)
3,777
2,859
918
32
Interest receivable – non-current (3)
172
432
(260)
(60)
Contract liabilities:
Customer advances
12,197
13,988
(1,791)
(13)
Deferred revenue – current
82,306
71,649
10,657
15
Deferred revenue – non-current
26,566
24,114
2,452
10
(1)
Included in accounts receivable on the consolidated balance sheets
(2)
Included in prepaid expenses and other current assets on the consolidated balance sheets
(3)
Included in other assets on the consolidated balance sheets
During the year ended June 30, 2025, contract assets changed primarily due to changes in the timing of billings that
occurred after revenues were recognized, and changes in transactions with payment terms exceeding 12 months. During the
year ended June 30, 2025, contract liabilities changed due to changes in the timing of revenue recognition as a result of
changes in shipping timing, modifications to the transaction price, reduced customer deposits for system sales, and for which
the warranty was deferred.
During the years ended June 30, 2025 and June 30, 2024, the Company recognized revenues of $62.4 million and $75.3
million, respectively, which were included in the deferred revenue balances at June 30, 2024, and June 30, 2023, respectively.
Remaining Performance Obligations
Remaining performance obligations represent deferred revenue from open contracts, for which performance has already
started and the transaction price from executed contracts, for which performance has not yet started. Service contracts in
general are considered month-to-month contracts.
As of June 30, 2025, total remaining performance obligations amounted to $818.2 million. Of this total amount, $64.1
million related to long-term warranty and non-cancellable post-warranty services, which is the estimated revenue expected to
be recognized over the remaining service period and warranty period for systems that have been delivered (the time bands
reflect management’s best estimate of when the Company will transfer control to the customer and may change based on
timing of shipment, readiness of customers’ facilities for installation, installation requirements, and availability of products).
The Company has elected the practical expedient to not disclose the unsatisfied performance obligations of contracts with an
original expected duration of one year or less.
The following table represents the Company's expected revenue recognition based on the remaining performance
obligations related to long-term warranty and non-cancellable post-warranty services as of June 30, 2025 (in thousands):
Fiscal years
2026
2027
2028
Thereafter
Long-term warranty and service
$
28,029
$
22,559
$
10,369
$
3,160
100
For the remaining $64.1 million of performance obligations (open systems sales, upgrades, training and other
miscellaneous items), the Company estimates 32% to 38% will be recognized in the next 12 months, and the remaining
portion will be recognized thereafter. The Company’s historical experience indicates that some of its customers will cancel or
renegotiate contracts as economic conditions change or when product offerings change during the long sales cycle. The
Company anticipates a portion of its open contracts may never result in revenue recognition, primarily due to the long sales
cycle and factors outside of its control, including changes in customers' needs or financial condition, changes in government
or health insurance reimbursement policies, or changes to regulatory requirements. Based on historical experience and
management's best estimate, approximately 26% of the Company’s $776.9 million open system sales contracts may never
result in revenue.
Capitalized Contract Costs
As of June 30, 2025, and 2024, the balance of capitalized costs to obtain a contract was $7.3 million and $9.6 million,
respectively. The Company has classified the capitalized costs to obtain a contract as a component of prepaid expenses and
other current assets and other assets with respect to the current and non-current portions of capitalized costs, respectively, on
the consolidated balance sheets.
Years Ended June 30,
2025
2024
Capitalized contract costs
$
852
$
2,958
Amortization of capitalized contract costs
2,726
4,068
Impairment loss on capitalized contracts
421
128
Note 3. Supplemental Financial Information
Consolidated Balance Sheets
Financing receivables
A financing receivable is a contractual right to receive money, on demand or on fixed or determinable dates, that is
recognized as an asset on the Company’s balance sheets. The Company’s financing receivables, consisting of its accounts
receivable with contractual maturities of more than one year, are included in other assets on the consolidated balance sheets.
The Company evaluates the credit quality of a customer at contract inception and monitors credit quality over the term of the
underlying transactions. The Company performs a credit analysis for all new orders and reviews payment history, current
order backlog, financial performance of the customers and other variables that augment or mitigate the inherent credit risk of
a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the
equipment, the contract term and the inclusion of credit enhancements, such as guarantees, letters of credit or security
deposits. Actual cash collections may differ from the contracted maturities due to early customer buyouts, refinancing, or
defaults. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when
management believes there is a significant near-term risk of non-payment. The Company performs an assessment each
quarter on the allowance for credit losses related to its financing receivables.
A summary of the Company’s financing receivables is presented as follows (in thousands):
June 30, 2025
June 30, 2024
Financing receivable
$
3,842
$
2,871
Allowance for credit losses
—
—
Total, net
$
3,842
$
2,871
Reported as:
Current
$
1,082
$
1,340
Non-current
2,760
1,531
Total, net
$
3,842
$
2,871
101
Inventories
Inventories consisted of the following (in thousands):
June 30,
2025
June 30,
2024
Raw materials
$
49,001
$
57,699
Work-in-process
14,844
13,629
Finished goods
77,175
66,996
Total inventories
$
141,020
$
138,324
The Company's inventories on the consolidated balance sheets are net of reserves.
Prepaid and Other Current Assets
Prepaid and other current assets consisted of the following (in thousands):
June 30,
2025
June 30,
2024
Value added tax receivables
$
11,381
$
4,026
Prepaid commissions
4,388
5,288
Capitalized contract costs
1,949
1,876
Income tax receivable
841
368
Debt financing costs
470
—
Dividend receivable from JV
2,453
2,460
Other prepaid assets
5,560
5,018
Other current assets
6,459
3,970
Total prepaid and other current assets
$
33,501
$
23,006
Debt financing costs are related to the $20 million delayed draw term loan facility and the short-term financing costs
related to the $20 million revolving credit facility included in the Financing Agreement (see Note 7. Debt, for more
information).
Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
June 30,
2025
June 30,
2024
Machinery and equipment
$
49,147
$
45,539
Leasehold improvements
32,491
30,994
Software
11,534
11,308
Computer and office equipment
6,797
6,347
Furniture and fixtures
1,959
1,719
Construction in progress
4,641
2,550
106,569
98,457
Less: Accumulated depreciation
(77,911)
(73,683)
Total property and equipment, net
$
28,658
$
24,774
Depreciation expense related to property and equipment was $6.1 million, and $5.8 million during the years ended June
30, 2025, and 2024, respectively.
102
Goodwill
Activity related to goodwill consisted of the following (in thousands):
As of June 30,
2025
2024
Balance at the beginning of the period
$
57,672
$
57,681
Currency translation adjustment
130
(9)
Balance at the end of the period
$
57,802
$
57,672
The Company performed its annual goodwill impairment test in the quarter ended December 31, 2024, and determined
that there was no impairment to goodwill. The Company did not identify any triggering events that would indicate a potential
impairment of its goodwill as of June 30, 2025. The Company will continue to monitor its recorded goodwill for indicators of
impairment every fiscal quarter.
Other Assets
Other assets consisted of the following (in thousands):
June 30,
2025
June 30,
2024
Capitalized software costs to be sold
$
10,252
$
4,683
Capitalized contract costs
5,359
7,768
Long-term accounts receivable
3,777
2,859
Purchased intangible assets, net
15
59
Deferred tax asset
756
659
Debt financing costs
669
—
Other long-term assets
3,615
1,981
Total other assets
$
24,443
$
18,009
There was no amortization expense or amounts written down to net realizable value for the capitalized software costs to be
sold during the years ended June 30, 2025 and 2024, respectively. Amortization expense related to purchased intangible
assets during the year ended June 30, 2025, was not material and during the year ended June 30, 2024, was $0.2 million. The
Company’s purchased intangible assets at June 30, 2025, will be fully amortized in fiscal year 2026. The Company did not
identify any triggering events that would indicate a potential impairment of its definite-lived intangible and long-lived assets
as of June 30, 2025. Debt financing costs are related to the $20 million revolving credit facility included in the Financing
Agreement (see Note 7. Debt, for more information).
Other Accrued Liabilities
Other accrued liabilities consisted of the following (in thousands):
June 30,
2025
June 30,
2024
Value added tax liabilities
$
12,408
$
5,048
Commissions due to third parties
573
5,202
Refunds due to customers
3,581
6,079
Accrued royalties
3,082
2,939
Accrued consulting
1,648
1,238
Interest payable
967
485
Income tax payable
973
1,206
Other liabilities
6,129
6,311
Total other accrued liabilities
$
29,361
$
28,508
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Consolidated Statements of Operations
Interest expense consisted of the following (in thousands)
Years Ended June 30,
2025
2024
Contractual interest coupon
$
(10,221)
$
(10,552)
Accrued paid-in-kind interest
(616)
-
Amortization for financing costs and discount for warrants issued to lenders
(1,439)
(956)
Other
(678)
(116)
Total interest expense
$
(12,954)
$
(11,624)
Other income (expense), net, consisted of the following (in thousands):
Years Ended June 30,
2025
2024
Interest income
$
1,192
$
1,231
Foreign currency exchange gain (loss)
1,573
(2,046)
Costs for foreign currency forward contracts
(2,376)
(1,811)
Other, net
170
88
Total other income (expense), net
$
559
$
(2,538)
Note 4. Leases
The Company has operating leases for corporate offices and warehouse facilities worldwide. Additionally, the Company
leases cars and copy machines that are considered operating leases. Some of the Company’s leases are non-cancellable
operating lease agreements with various expiration dates through August 2035. Certain lease agreements include options to
renew or terminate the lease, which are not reasonably certain to be exercised, and therefore are not factored into the
determination of lease payments.
The following table provides information related to the Company’s operating leases (in thousands):
Years Ended June 30,
2025
2024
Operating lease costs (1)
$
8,980
$
9,146
Short-term operating lease costs
286
305
Cash paid for amounts included in the measurement of lease liabilities
8,011
9,013
(1)
Excludes expenses related to short-term lease operating costs.
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Operating lease right-of-use assets and operating lease obligations are represented in the table below (in thousands):
June 30,
2025
June 30,
2024
Beginning balance operating lease right-of-use assets
$
33,773
$
25,853
Lease assets added
4,624
14,389
Amortization for the year
(5,282)
(6,469)
Ending balance operating lease right-of-use assets
$
33,115
$
33,773
Beginning balance operating lease obligations
$
38,591
$
27,753
Lease liabilities added
5,726
16,775
Repayment and interest accretion
(4,460)
(5,937)
Ending balance operating lease obligations
$
39,857
$
38,591
Current portion of operating lease obligations
$
7,375
$
6,218
Noncurrent portion of operating lease obligations
$
32,482
$
32,373
The weighted-average remaining lease term and weighted-average discount rate for operating leases were as follows:
June 30,
2025
June 30,
2024
Weighted average remaining lease term (in years)
7.8
8.2
Weighted average discount rate
10.4%
10.4%
Maturities of operating lease liabilities as of June 30, 2025, are presented in the table below (in thousands):
Year Ending June 30,
Amount
2026
$
7,201
2027
8,257
2028
7,135
2029
5,515
2030
4,789
Thereafter
24,948
Total operating lease payments
57,845
Less: imputed interest
(17,988)
Present value of operating lease liabilities
$
39,857
Note 5. Derivative Financial Instruments
The Company utilizes foreign currency forward contracts with reputable financial institutions to manage its exposure of
fluctuations in foreign currency exchange rates on certain intercompany balances and foreign currency denominated cash,
customer receivables and liabilities. The Company does not use derivative financial instruments for speculative or trading
purposes. These forward contracts are not designated as hedging instruments for accounting purposes. Principal hedged
currencies primarily include the Japanese Yen, Swiss Franc, and Euro. The periods of these forward contracts range up to
approximately three months and the notional amounts are intended to be consistent with changes in the underlying exposures.
The Company intends to exchange foreign currencies for U.S. Dollars at maturity. The Company enters into forward
currency exchange contracts to hedge its overseas operating expenses and other liabilities when deemed appropriate.
105
The notional amount of the Company's outstanding forward currency exchange contracts consisted of the following (in
thousands):
As of June 30,
2025
2024
Swiss Franc
$
7,438
$
59,392
Japanese Yen
8,700
7,762
Euro
11,431
2,755
Indian Rupee
7,485
8,916
Chinese Yuan
5,491
5,156
Korean Won
1,306
1,735
Canadian Dollar
—
1,510
British Pound
1,617
730
Total outstanding forward currency exchange contracts
$
43,468
$
87,956
The Company entered into the foreign currency forward contracts on June 30, 2025 and June 30, 2024. There is no
significant change in our mark-to-market analysis, and therefore, there was no amount recorded on the balance sheets.
Gains and losses on the Company's foreign currency forward contracts are recorded in Other expense, net, on the
Company's consolidated statements of operations and comprehensive income (loss). The following table provides
information about the gain or loss associated with the Company’s derivative financial instruments not designated as hedging
instruments (in thousands):
Years ended June 30,
2025
2024
Foreign currency exchange gain (loss) on forward contracts
$
655
$
(613)
Note 6. Fair Value Measurements
Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as
follows:
Level 1— Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the
measurement date.
Level 2— Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either
directly or indirectly, including:
•
Quoted prices for similar assets or liabilities in active markets;
•
Quoted prices for identical or similar assets in non-active markets;
•
Inputs other than quoted prices that are observable for the asset or liability; and
•
Inputs that are derived principally from or corroborated by other observable market data.
Level 3— Unobservable inputs that cannot be corroborated by observable market data and require the use of significant
management judgment. These values are generally determined using pricing models for which the assumptions utilize
management’s estimates of market participant assumptions.
Items Measured at Fair Value on a Recurring Basis
Warrant Liabilities
The Penny Warrants (as defined in Note 7) are accounted for as a liability with the changes in fair value of the warrants
are recognized in the statement of operations and comprehensive income (loss). The fair value of the Penny Warrants at
issuance date was based on the closing listed stock price on June 6, 2025, and remeasured based on the listed market price of
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such warrants at June 30, 2025. The estimated fair value of the Penny Warrants liabilities represent Level 2 measurements
because the fair value of the warrant is being implied based on market trades of the stock.
The following table shows the changes in fair value of the Penny Warrants:
Years Ended
2025
2024
Balance at the beginning of the period
$
—
$
—
Issuance of Penny warrants on June 6, 2025
7,998
—
Change in fair value
499
—
Balance at the end of the period
$
8,497
$
—
Other Fair Value Disclosures
At June 30, 2025, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated,
or notional, value of $43.5 million. The fair value of the forward contract based upon the June 30, 2025 exchange rate was
$43.3 million, which it considers to be a Level 2 fair value measurement. At June 30, 2024, the Company had open currency
forward contracts to purchase or sell foreign currencies with a stated, or notional, value of $88.0 million. The fair value of the
forward contract based upon the June 30, 2024 exchange rate was $87.7 million, which it considers to be a Level 2 fair value
measurement.
The Company’s convertible debt is measured on a recurring basis using Level 2 based upon observable inputs. The
Company's Term Loan Facilities due 2030 (as defined in Note 7) reflect the bank quoted market rates, which the Company
considers to be a Level 2 fair value measurement. The Company believes that the carrying value of the Prior Term Loan
Facility and Revolving Credit Facility approximates its estimated fair value based on the effective interest rate, compared to
the current market rate available to the Company at quarter-end.
The following table summarizes the carrying value, net of debt financing costs, and the fair value of the 3.75%
Convertible Senior Notes due 2026, Term Loan Facilities due 2030, the Prior Term Loan Facility, and the Prior Revolving
Credit Facility, (in thousands):
June 30, 2025
June 30, 2024
Carrying
Value
Fair Value
Carrying
Value
Fair Value
3.75% Convertible Notes due June 1, 2026
$
17,893
$
17,322
$
98,782
$
85,762
Term Loan Facilities due 2030
118,627
118,627
—
—
Prior Term Loan Facility
—
—
63,374
63,374
Prior Revolving Credit Facility
—
—
10,000
10,000
Total
$
136,520
$
135,949
$
172,156
$
159,136
The carrying value and fair value of the Term Loan Facilities due 2030 excludes $21.0 million for the fair value of the
warrants issued to the lenders to purchase the Company’s common stock.
The Premium Warrants (as defined in Note 7) met all of the criteria for equity classification and were recorded at their
relative fair value in additional paid-in capital at the time of issuance. The fair value of $12.8 million is not subject to
remeasurement and was estimated using a Black-Scholes method, which incorporates significant unobservable inputs,
including expected volatility, risk-free interest rate and expected term. As these inputs are not observable in the market, the
fair value measurement of the Premium Warrants represent a Level 3 measurement.
107
Note 7. Debt
The Company's outstanding debt as of June 30, 2025 and June 30, 2024 is as follows (in thousands):
As of June 30,
2025
2024
Term Loan Facilities due 2030
$
150,000
$
—
Convertible Senior Notes due June 1, 2026
18,000
100,000
Prior Term Loan Facility
-
64,000
Prior Revolving Credit Facility
-
10,000
Total debt
168,000
174,000
Paid-in-kind interest
616
-
Unamortized debt financing costs
(11,101)
(1,844)
Unamortized discount for warrants issued to lenders
(20,995)
-
Total debt, net
136,520
172,156
Reported as:
Short-term debt, net
$
12,734
$
7,756
Long-term debt, net
123,786
164,400
Total debt, net
$
136,520
$
172,156
A summary of interest expense on the Company’s outstanding debt is as follows (in thousands):
Year ended June 30,
2025
2024
Contractual interest coupon
$
10,221
$
10,552
Accrued paid-in-kind interest
616
-
Amortization of debt financing costs and discount for warrants issued to lenders
1,439
956
Total interest expense on debt
$
12,276
$
11,508
A summary of weighted average effective interest rate on the Company’s debt is as follows:
Year ended June 30,
2025
2024
Term Loan Facility due 2030
22.0%
—
Convertible Senior Notes due June 1, 2026
4.3%
4.3%
Prior Term Loan Facility
8.6%
8.6%
Prior Revolving Credit Facility
9.1%
9.5%
The weighted average effective interest rate includes coupon interest rates, paid-in-kind interest, the amortization of debt
financing costs, and the amortization of the discount for warrants issued to lenders.
Financing Agreement June 2025
On June 6, 2025, the Company entered into a new five-year senior secured credit agreement, due June 6, 2030, (the
“Financing Agreement”) by and among the Company, as borrower (the “Borrower”), TCW Asset Management Company
LLC, a leading global asset manager (“TCW”), as collateral agent for the lenders (in such capacity, together with its
successors and assigns in such capacity, the “Collateral Agent”) and as administrative agent for the lenders (in such capacity,
together with its successors and assigns in such capacity, the “Administrative Agent”, and together with the Collateral Agent,
each an “Agent” and collectively, the “Agents”), and certain other parties signatory thereto. The Financing Agreement
provides for a $150 million term loan (the “Term Loan Facility”), a $20 million delayed draw term loan facility (the
“Delayed Draw Facility”), and a $20 million revolving credit facility (“Revolving Credit Facility”). The proceeds of the Term
Loan Facilities were used to fully refinance the Company’s existing senior secured indebtedness, which provided for a five-
year $80 million term loan facility (the "Prior Term Loan Facility") and a $40 million revolving credit facility (the “Prior
Revolving Credit Facility”), and which had $58.0 million and $17.0 million of outstanding balances of the Prior Term Loan
108
Facility and Prior Revolving Credit Facility, respectively, and to fund the aggregate cash payment of approximately $68.5
million as part of the Exchange (as defined below) of a portion of the Company’s 3.75% Convertible Senior Notes due 2026
(the “Convertible Notes”). The proceeds of the Delayed Draw Facility may be used to fund any future repurchases of
outstanding Convertible Notes. The proceeds of loans drawn under the Revolving Credit Facility will be used to fund the
general working capital needs and general corporate purposes of the Company and its subsidiaries. In connection with the
repayment of the Prior Term Loan Facility and the Prior Revolving Credit Facility, the Company wrote-off $0.4 million in
unamortized debt issuance costs which is recorded as a loss on extinguishment of debt.
As of June 30, 2025, no proceeds were drawn on the Revolving Credit Facility. The Company will be able to access the
Delayed Draw Down Facility from the date financial reports are delivered under the Financing Agreement for the fiscal
quarter ending December 31, 2025 through June 6, 2026, if certain the total leverage ratio of the Company is not greater than
5.25:1.00 and certain other conditions, as described in the Financing Agreement, are met. The proceeds from the Delayed
Draw Facility may be used to fund the remaining $18.0 million outstanding Convertible Notes due June 1, 2026.
The Borrower’s obligations under the Financing Agreement are secured by first-priority liens on substantially all assets of
the Borrower, subject to certain exceptions. The Financing Agreement requires the Borrower to cause certain of its direct and
indirect subsidiaries to, within 90 days of the closing date of the Financing Agreement, grant first-priority liens on
substantially all of their assets, in each case, subject to certain exceptions.
Interest on the borrowings under the Facilities is payable in arrears on the applicable interest payment date at an interest
rate equal to, at the Company’s option, either: (i) a term SOFR-based rate (subject to a 2.00% per annum floor), plus an
applicable margin of 8.50%, per annum or (ii) a reference rate (subject to a 3.00% per annum floor), plus an applicable
margin of 7.50% per annum. The agreement provides the option for payment-in-kind interest (“PIK”) up to 6.00% per annum
(subject to an increase in applicable margin of 1/3 of 1.00% per annum for each 1.00% per annum of interest elected to be
paid in kind which PIK interest will be capitalized on the applicable interest payment date and will be added to the then-
outstanding principal amount of the term loans. The Financing Agreement requires the Borrower to pay the lenders with
commitments under the Revolving Credit Facility an unused commitment fee equal to 0.50% per annum of the average
unused portion of the Revolving Credit Facility.
On June 6, 2025, concurrently with its entry into the Financing Agreement, the Company issued detachable warrants to
purchase the Company’s common stock to certain of its lenders (the “Warrant Holders”) under the Financing Agreement. The
Warrant Holders were issued warrants to purchase (i) 17,180,710 shares of common stock with an exercise price of $1.68 per
share, exercisable on and after December 7, 2025 and expiring on June 6, 2032 (the “Premium Warrants”) and (ii)
6,247,531 shares of common stock with an exercise price of $0.01 per share (“Penny Warrants”) exercisable immediately and
expiring on June 6, 2032.
The Company determined that the Premium Warrants qualified as freestanding instruments that met all of the criteria for
equity classification. The Premium Warrants were valued at $13.1 million at the issuance date and were recorded as a debt
discount to the Term Loan Facility (see Note 9. Stockholders’ Equity, for more information). The Company will amortize the
debt discount using the effective interest rate method over the life of the Term Loan Facility as interest expense.
The Company determined that the Penny Warrants qualified for liability classification. The Company calculated the fair
value of the Penny Warrants to be $8.0 million at the issuance date and were recorded as a debt discount (see Note 6. Fair
value Measurements, for more information). The Company will amortize the debt discount using the effective interest rate
method over the life of the Term Loan Facility as interest expense.
The Company paid $13.1 million in debt financing fees (including a $5.4 million Original Issue Discount Fee).
Approximately $1.2 million of the debt financing fees are associated with the Delayed Draw Facility and Revolving Credit
Facility and are included in prepaid and current assets and other assets on the consolidated balances sheets. The debt
financing fees will be amortized using the effective interest rate method over the life of the Term Loan Facility as interest
expense.
The Financing Agreement contains restrictions and covenants applicable to the Company and its subsidiaries. Among
other requirements, the Company may not permit (i) the total leverage ratio (as defined in the Financing Agreement) to be
greater than a certain specified ratio for each fiscal quarter during the term of the Financing Agreement, (ii) the fixed charge
coverage ratio (as defined in the Financing Agreement) to be less than a certain specified ratio for each fiscal quarter during
109
the term of the Financing Agreement or (iii) liquidity (as defined in the Financing Agreement) to be less than a certain
specified threshold for each month during the term of the Financing Agreement. The Company was in compliance with its
covenants and other requirements of the Financing Agreement as of June 30, 2025.
The Financing Agreement also contains customary covenants that limit, among other things, the ability of the Company
and its subsidiaries to (i) incur indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions,
(iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate, (vii) voluntarily repay or prepay certain
indebtedness and (viii) enter into transactions with affiliates, in each case subject to certain exceptions. The Financing
Agreement contains customary representations and warranties and events of default.
3.75% Convertible Senior Notes due June 1, 2026
In May 2021, the Company issued $100.0 million aggregate principal amount of its 3.75% Convertible Senior Notes due
June 1, 2026 (the “Convertible Notes”) under an indenture between the Company and The Bank of New York Mellon Trust
Company, N.A., as trustee.
On June 5, 2025, the Company entered into separate, privately-negotiated exchange agreements with a limited number of
existing holders of the Convertible Notes (the “Convertible Noteholders”) to exchange (the “Exchange”) approximately
$82.0 million aggregate principal amount of the Convertible Noteholders’ existing Convertible Notes for (i) an aggregate of
8,881,579 shares of the Company’s common stock (the “Shares”), valued at $1.52 per share based on the closing stock price
on June 5, 2025, or $13.5 million in the aggregate and (ii) an aggregate cash payment of approximately $68.5 million. (See
Note 9. Shareholders’ Equity, for more information). Holders of the remaining $18.0 million aggregate principal amount of
the Convertible Notes did not receive cash or shares of common stock in the Exchange mentioned above and the original
terms of such Convertible Notes were not modified. In connection with the repayment of the Convertible Notes in the
Exchange, the Company wrote-off $0.5 million in unamortized debt issuance costs which is recorded as a loss on
extinguishment of debt.
Holders of the remaining Convertible Notes may convert their notes at any time on or after March 6, 2026 until the close
of the business day immediately preceding the maturity date. Prior to June 1, 2026, the remaining holders of the Convertible
Notes may convert their notes only under certain circumstances. Upon conversion, the Company will have the right to pay
cash, or deliver shares of common stock of the Company or a combination thereof, at the Company’s election. The initial
conversion rate is 170.5611 shares of the Company’s common stock per $1,000 principal amount (which represents an initial
conversion price of approximately $5.86 per share of the Company’s common stock). The conversion rate, and therefore, the
conversion price, is subject to adjustment, as further described below.
Holders of the remaining Convertible Notes who convert their notes in connection with a “make-whole fundamental
change,” as defined in the indenture, may be entitled to a make-whole premium in the form of an increase in the conversion
rate. Additionally, in the event of a “fundamental change,” as defined in the indenture, holders of the remaining Convertible
Notes may require the Company to purchase all or a portion of their note at a fundamental change repurchase price equal to
100% of the principal amount of the Convertible Notes, plus accrued and unpaid interest, if any, to, but not including, the
fundamental change repurchase date. As of June 30, 2025 and June 30, 2024, the if-converted value of the remaining
Convertible Notes did not exceed the outstanding principal amount.
Note 8. Commitments and Contingencies
Debt Commitments
The Company is required to make semi-annual interest payments on the Convertible Notes, principal and interest
payments on the Term Loan Facility. Future minimum principal payments and interest on the Convertible Notes and Term
Loan Facility (as defined in Note 7. Debt), as of June 30, 2025, are as follows (in thousands):
110
Year Ending June 30,
Long-Term
Debt (1)
2026
$
33,943
2027
21,787
2028
21,650
2029
21,403
2030
172,186
Total
$
270,969
(1)
These amounts represent principal and interest cash payments over the contractual life of the debt obligations, including anticipated
interest payments that are not recorded on the Company’s consolidated balance sheet. Any conversion, premium, redemption or
purchase of the Convertible Notes that would impact cash payments is noted in the preceding table.
Purchase Commitments
The Company’s purchase commitments and obligations include all open purchase orders and contractual obligations in the
ordinary course of business, including commitments with contract manufacturers and suppliers, for which the Company has
not received the goods or services and acquisition and licensing of intellectual property. A majority of these purchase
obligations are due within a year. Although open purchase orders are considered enforceable and legally binding, the terms
generally allows the Company the option to cancel, reschedule, and adjust its requirements based on the Company’s business
needs prior to the delivery of goods or performance of services, and hence, these purchase orders have not been included in
the table above.
Indemnities and Commitments
The Company enters into standard indemnification agreements with its landlords and all superior mortgages and their
respective directors, officers’ agents, and employees in the ordinary course of business. Pursuant to these agreements, the
Company will indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the
indemnified party, generally the landlords, in connection with any loss, accident, injury, or damage by any third-party with
respect to the leased facilities. The term of these indemnification agreements is from the commencement of the lease
agreements until termination of the lease agreements. The maximum potential amount of future payments the Company could
be required to make under these indemnification agreements is unlimited; however, historically, the Company has not
incurred claims or costs to defend lawsuits or settle claims related to these indemnification agreements. The Company has not
recorded any liability associated with its indemnification agreements as it is not aware of any pending or threatened actions
that represent probable losses as of June 30, 2025.
Guarantees
As of June 30, 2025 and June 30, 2024, the Company had various bank guarantees totaling approximately $1.5 million
and $1.1 million, respectively, primarily related to a bidding process with customers.
Royalty Agreements
The Company enters into software license agreements with third parties that may require royalty payments for each
license used. The Company records royalty costs in cost of revenue or deferred cost of revenue. The Company had
approximately $3.1 million and $2.9 million accrued liabilities as of June 30, 2025 and 2024, respectively, related to this
agreement. The following table provides information about the Company’s royalty expense and royalty payments (in
thousands):
Years Ended June 30,
2025
2024
Royalty expense
$
1,716
$
1,913
Royalty payments
1,573
1,371
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Software License Indemnity
Under the terms of the Company’s agreements with its customers, the Company agrees that in the event the certain
Company software sold under such agreement infringes upon any patent, copyright, trademark, or any other proprietary right
of a third-party, it will indemnify its customer licensees against any loss, expense, or liability from any damages that may be
awarded against its customer. The Company includes this infringement indemnification in its agreements with customers
where Company software is licensed. In the event the customer cannot use the software or service due to infringement and
the Company cannot obtain the right to use, replace or modify the license in a commercially feasible manner so that it no
longer infringes, then the Company may terminate the license and provide the customer a refund of the fees paid by the
customer for the infringing license or service. The Company has not recorded any liability associated with this
indemnification, as it is not aware of any pending or threatened actions that represent probable losses as of June 30, 2025.
Litigation
From time to time, the Company is involved in legal proceedings, including claims, investigations, and inquiries, arising
in the ordinary course of its business. The Company records a provision for a loss when it believes that it is both probable
that a loss has been incurred and the amount can be reasonably estimated. To the extent that there is a reasonable possibility
that a loss exceeding amounts already recognized may be incurred and the amount of such additional loss would be material,
we will either disclose the estimated additional loss or state that such an estimate cannot be made. Currently, management
believes the Company does not have any probable and reasonably estimable material losses related to any current legal
proceedings and claims. Although occasional adverse decisions or settlements may occur, management does not believe that
an adverse determination with respect to any of these claims would individually, or in the aggregate, materially and adversely
affect the Company’s financial condition or operating results. Litigation is inherently unpredictable and is subject to
significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates and assumptions
change or prove to have been incorrect, the Company could incur significant charges related to legal matters that could have a
material impact on its results of operations, financial position, and cash flows.
Note 9. Stockholders’ Equity
Common Stock
The Company has 200.0 million shares authorized as of June 30, 2025 and 2024 and 112.6 million and 100.2 million
shares issued and outstanding as of June 30, 2025 and 2024, respectively.
Common stock purchase warrants issued in connection with long-term debt
On June 6, 2025, concurrently with its entry into the Financing Agreement, the Company issued detachable warrants to
purchase the Company’s common stock to certain of its Warrant Holders under the Financing Agreement. The Warrant
Holders were issued warrants to purchase 17,180,710 Premium Warrants with an exercise price of $1.68 per share,
exercisable on and after December 7, 2025 and expiring on June 6, 2032 and 6,247,531 Penny Warrants with an exercise
price of $0.01 per share exercisable immediately and expiring on June 6, 2032. No Penny Warrants were exercised as of June
30, 2025. Pursuant to the terms of the Financing Agreement, if the Company uses the Delay Draw Facility, the Company will
be obligated to issue additional detachable warrants on terms substantially similar to the Warrants to certain of its lenders
under the Financing Agreement.
The Warrants have certain anti-dilution protection provisions, including price protection anti-dilution protection in the
event that we sell stock at a price below $1.00 in the case of the Penny Warrants and $1.25 in the case of the Premium
Warrants. We agreed to issue the Warrants in connection with, and to induce the lenders to enter into, the Financing
Agreement.
The Warrants and the shares of common stock issuable upon the exercise of such Warrants have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), and may not be sold absent registration or an applicable
exemption from the registration requirements of the Securities Act. Based in part upon the representations of each holder in
each warrant, the offering and sale of each warrant is exempt from registration under Section 4(a)(2) of the Securities Act
and/or Rule 506 of Regulation D promulgated under the Securities Act.
112
The Premium Warrants were valued at $13.1 million using a relative fair value method and is recorded in additional paid-
in capital. Further, $0.3 million in financing fees incurred in connection with the issuance of the Premium Warrants is
recorded in a contra-equity account.
Common shares issued to Convertible Note holders
On June 5, 2025, the Convertible Noteholders agreed to Exchange approximately $82.0 million aggregate principal
amount of the Convertible Noteholders’ existing Convertible Notes for (i) an aggregate of 8,881,579 Shares, valued at $1.52
per share based on the closing stock price on June 5, 2025, or $13.5 million in the aggregate and (ii) an aggregate cash
payment of approximately $68.5 million. On June 11, 2025, the Exchange was consummated and the Company issued the
Shares to the Convertible Noteholders. On their issuance date, the Shares were valued at $1.25 per share based on the closing
stock price on June 11, 2025, or $11.1 million in the aggregate. The decrease in stock price from the agreement date to the
issuance date resulted in a $2.4 million gain, which was recorded as a gain on extinguishment of debt. The Company paid
approximately $0.4 million in fees to issue the common shares which was recorded as a permanent adjustment to paid-in-
capital.
Treasury Stock
The Company records treasury stock at cost. Treasury stock is comprised of shares of common stock purchased by the
Company in the secondary market. As of June 30, 2025, and June 30, 2024, the Company had 3.1 million shares of treasury
stock valued at $14.1 million. Treasury stock is included in Additional paid-in capital on the consolidated balance sheets.
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated other comprehensive income (loss) by component (in
thousands):
Cumulative
Translation
Adjustment
Defined
Pension
Benefit
Obligation
Total
Balance at June 30, 2023
$
(2,332)
$
2,754
$
422
Other comprehensive loss
(2,445)
(2,199)
(4,644)
Balance at June 30, 2024
$
(4,777)
$
555
$
(4,222)
Other comprehensive loss
1,557
828
2,385
Balance at June 30, 2025
$
(3,220)
$
1,383
$
(1,837)
Note 10. Stock Incentive Plan and Employee Stock Purchase Plan
As of June 30, 2025, the Company had two outstanding stock incentive plans: the 2016 Equity Incentive Plan (“2016
Plan”) and the 2007 Incentive Award Plan (“2007 Plan”). The 2016 Plan permits the granting of stock options, stock
appreciation rights, restricted stock awards, performance shares, performance units, and RSUs. The vesting of RSUs granted
under the 2016 Plan are primarily service-based (over the requisite service period) while the vesting of performance units
granted under the 2016 Plan consist of PSUs. Only employees of the Company are eligible to receive incentive stock options.
Non-employees may be granted non-qualified stock options.
Stock options granted under the 2016 Plan have an exercise price of at least 100% of the fair market value of the
underlying stock on the grant date. The stock options have 10-year contractual terms and generally become exercisable for
25% of the option shares one year from the date of grant and then ratably over the following 36 months. Service-based RSUs
granted generally vest 25% of the share units covered by the grant on each of the first through fourth anniversaries of the date
of the grant, subject to the continued service of the grantee through each such date. RSUs granted to the Board of Directors
vest over one year. PSUs granted generally vest at the end of a three year performance period and the amount of shares that
vest are based on the Company's actual performance relative to predefined performance conditions. The Board of Directors
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has the discretion to use different vesting schedules. As of June 30, 2025, the 2007 Plan continued to remain in effect;
however, the Company can no longer grant equity awards under such plans.
The following table summarizes the share-based compensation charges included in the Company’s consolidated
statements of operations and comprehensive loss (in thousands):
Years ended June 30,
2025
2024
Cost of revenue - product
$
634
$
866
Cost of revenue - service
709
509
Research and development
1,508
1,456
Selling and marketing
2,167
1,905
General and administrative
5,183
4,748
Total
$
10,201
$
9,484
The following table summarizes the share-based compensation charges for the Company’s equity awards (in thousands):
Years ended June 30,
2025
2024
Stock options
$
344
$
741
Restricted stock units
7,948
7,307
Performance stock units
1,166
386
Employee stock purchase plan
743
1,050
Total
$
10,201
$
9,484
Stock Options
The Company did not grant any stock options during the years ended June 30, 2025 and June 30, 2024.
The fair value of stock options grants are determined by using the Black-Scholes option-pricing model. This fair value is
then amortized over the requisite service periods of the awards. The Company estimates the expected term of stock option by
taking the average of the vesting term and the contractual term of the option. The expected volatility is derived from the
Company’s historical stock volatility over a period approximately equal to the expected term of the options. The risk-free
interest rate is based on the U.S. Treasury constant maturity rate on the date of grant. The dividend yield assumption is based
on the Company’s history and expectation of no dividend payouts.
A summary of option activity under the Company’s incentive plan is presented below (in thousands except per share and
term amounts):
Options
Outstanding
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life
(In Years)
Aggregate
Intrinsic
Value (1)
Balance at June 30, 2024
5,270
$
3.40
2.95
$
—
Options granted
—
—
Options exercised
—
—
Options forfeited/expired
(3,431)
$
3.59
Balance at June 30, 2025
1,839
$
3.03
5.62
$
—
Vested or expected to vest at June 30, 2025
1,839
$
3.03
5.62
$
—
Exercisable at June 30, 2025
1,662
$
3.13
5.48
$
—
1.
The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between
the exercise price and the closing price of Accuray common stock of $1.37 and $1.82 on June 30, 2025 and June 30, 2024,
114
respectively, The amount represents what would have been received by the option holders had all option holders exercised
their options and sold the shares received upon exercise as of that date.
There were no options exercised during the year ended June 30, 2025. The total intrinsic value of options exercised during
the year ended June 30, 2024 was not material. The total cash received from option exercises during the year ended June 30,
2024 was $0.3 million. Tax benefits from tax deductions for exercised options and disqualifying dispositions in excess of the
deferred tax asset, attributable to share compensation costs for such options was zero for the years ended June 30, 2025, and
2024. As of June 30, 2025, there was $0.2 million of unrecognized compensation cost related to unvested stock options,
which is expected to be recognized over a weighted average period of 0.5 years.
The following table summarizes information about outstanding and exercisable options at June 30, 2025 (in thousands,
except years and exercise price):
Options Outstanding
Options Exercisable
Range of Exercise Prices
Number
Outstanding
Weighted
Average
Remaining
Contractual
Life (Years)
Weighted
Average
Exercise
Price
Number
Outstanding
Weighted
Average
Exercise
Price
$1.96 – $1.96
200
7.00
$
1.96
150
$
1.96
$2.08 – $2.08
556
6.92
$
2.08
429
$
2.08
$2.60 – $2.60
397
4.34
$
2.60
397
$
2.60
$4.10 – $4.46
553
4.64
$
4.32
553
$
4.32
$4.52 – $4.52
133
6.00
$
4.52
133
$
4.52
Total outstanding
1,839
5.62
$
3.03
1,662
$
3.13
Restricted Stock and Performance Stock
The following table summarizes the activity of RSUs and PSUs (in thousands, except fair value per share):
Unvested Restricted Stock
Restricted
Stock Units
Performance
Stock Units
Total
Number of
Shares
Underlying
Stock
Awards
Weighted
Average
Grant Date
Fair Value
Per Share
Unvested at June 30, 2024
5,969
2,813
8,782
$
2.66
Granted
4,343
1,235
5,578
$
2.13
Vested
(2,752)
—
(2,752)
$
2.68
Cancelled/forfeited
(394)
(817)
(1,211)
$
3.39
Unvested at June 30, 2025
7,166
3,231
10,397
$
2.29
Restricted Stock Units
The grant date fair value of the RSUs granted was $9.2 million and $9.7 million during the years ended June 30, 2025 and
2024, respectively. The aggregate fair market value of the RSUs that vested during the years ended June 30, 2025 and 2024,
was $5.5 million and $5.9 million, respectively. As of June 30, 2025, there was $11.5 million of unrecognized compensation
cost related to the RSUs, which is expected to be recognized over a weighted average period of 1.4 years.
Performance Stock Units
The grant date fair value of PSUs granted was $2.8 million and $3.3 million during the years ended June 30, 2025 and
2024, respectively. There were no PSUs that vested during the year ended June 30, 2025 because the performance conditions
were not met. The aggregate fair value of the PSUs that vested during the year ended June 30, 2024, was $0.4 million. As of
June 30, 2025, there was $2.9 million of unrecognized compensation cost related to the PSUs, which is expected to be
recognized over a weighted average period of 1.7 years.
115
Employee Stock Purchase Plan
Under the Company’s Amended and Restated 2007 Employee Stock Purchase Plan, or ESPP, qualified employees are
permitted to purchase the Company’s common stock at 85% of the lower of the fair market value of the common stock on the
commencement date of each six month offering period, or the fair market value on the specified purchase date. Employees’
payroll deductions may not exceed 10% of their salaries. Employees may purchase up to 2,500 shares per each six month
offering period, provided that the value of the shares purchased in any calendar year may not exceed $25,000, as calculated
pursuant to the purchase plan.
The Company estimates the fair value of ESPP shares at the date of grant using the Black-Scholes option pricing model.
The weighted average assumptions were as follows:
Years Ended June 30,
2025
2024
Risk–free interest rate
4.12% -4.43%
5.05% - 5.39%
Dividend yield
—%
—%
Expected term
0.5 - 1.0
0.5 - 1.0
Expected volatility
44.02% - 83.32%
37.22% - 61.48%
The risk-free rate for the expected term of the ESPP option was based on the U.S. Treasury constant maturity rate for each
offering period; expected volatility was based on the historical volatility of the Company’s common stock; and the expected
term was based upon the offering period of the ESPP.
The Company issued 1.2 million and 1.1 million shares under the ESPP during the years ended June 30, 2025 and 2024,
respectively, at a weighted average purchase price per share of $1.37 and $1.79, respectively. As of June 30, 2025, total
unrecognized compensation cost related to the ESPP plan was $0.6 million, which the Company expects to recognize over a
weighted average period of 0.9 years.
Common Stock Available For Issuance
In November 2024, the Company’s stockholders approved to increase the number of shares of common stock available for
issuance by 5.0 million shares under its Amended and Restated 2016 Equity Incentive Plan, and to increase the number of
shares of common stock available for issuance by 2.5 million shares under its Amended and Restated Accuray Incorporated
2007 Employee Stock Purchase Plan. At June 30, 2025, the Company had 5.2 million shares of common stock reserved for
issuance under the stock incentive plans and 2.6 million shares of common stock reserved for issuance under the employee
stock purchase plan.
Note 11. Joint Venture
In January 2019, the Company’s wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an
agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of
China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (the
“JV”), to manufacture and sell radiation oncology systems in China. As of June 30, 2025, the Company owned a 49% interest
in the JV, which is reported as an investment in joint venture on the Company’s consolidated balance sheets.
The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability
to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The
Company recognizes the 49% proportionate share of the JV income or loss on a one-quarter lag due to the timing of the
availability of the JV’s financial records. The Company recognizes revenue on sales to the JV in the current period of control
transfer, eliminating a portion of profit to the extent goods sold have not been sold through by the JV to an end customer by
the end of each reporting period. With the receipt of the necessary permits and licenses to operate, the JV has begun to
manufacture and sell a locally branded “Made in China” radiotherapy device, the Tomo C radiation therapy system, in the
Class B license category. The JV also distributes other Accuray treatment delivery systems like the Radixact and CyberKnife
treatment delivery systems, including the Radixact SynC and CyberKnife S7 Systems, which received NMPA approval in
116
January 2025. The JV also distributes other Accuray treatment delivery systems like the Radixact and CyberKnife treatment
delivery systems.
The following table shows the reconciliation between the carrying value of the Company's investment in the JV and its
proportional share of the underlying equity in net assets of the JV (in thousands):
June 30,
2025
June 30,
2024
Carrying value of investment in joint venture
$
4,612
$
9,826
Deferred intra-entity profit margin
17,501
9,835
Dividend declared
2,453
-
Equity method goodwill
(4,720)
(4,720)
Proportional share of equity investment in joint venture
$
19,846
$
14,941
As of June 30, 2025 and June 30, 2024, the Company’s carrying value of the investment in the JV for the Company's
proportional share of the JV's currency translation adjustment was decreased by $0.4 million and $0.6 million, respectively.
In June 2025, the JV declared a $2.5 million dividend to the Company that was paid in July 2025. In June 2024, the JV
declared a $2.5 million dividend to the Company paid in fiscal year 2025. The Company records the dividends as a reduction
to its carrying value in the JV. No impairment was identified as of June 30, 2025 and June 30, 2024.
Summarized financial information of the JV is as follows (in thousands):
Statement of Operations Data:
Twelve Months
Ended
March 31, 2025
Twelve Months
Ended
March 31, 2024
Revenue
$
160,213
$
114,942
Gross profit
$
29,438
$
22,137
Net income
$
9,617
$
3,750
Net income attributable to the Company
$
4,714
$
1,838
Summarized Balance Sheet Data:
As of
March 31, 2025
As of
March 31, 2024
Assets
Current assets
$
172,109
$
102,500
Non current assets
16,426
12,425
Total assets
$
188,535
$
114,925
Liabilities and Stockholders' Equity
Current liabilities
$
146,587
$
79,300
Non current liabilities
1,334
113
Stockholder's equity
40,614
35,512
Total liabilities and stockholders' equity
$
188,535
$
114,925
The following table shows the activity of the Company’s deferred intra-entity profit margin from sales to the JV (in
thousands):
Years Ended June 30,
2025
2024
Deferred gross profit recognized on sales to the JV
$
(16,738)
$
(9,061)
Deferred gross profit on sales to the JV
24,404
13,159
Net deferred gross profit on sales to the JV (1)
$
7,666
$
4,098
(1)
Profit earned by the Company from the JV is eliminated through cost of goods sold until it is realized; such profits would generally be considered
realized when the inventory has been sold through to third parties.
117
Note 12. Income Taxes
Income (loss) before provision for income taxes on the accompanying statements of operations and comprehensive loss
included the following components (in thousands):
Years Ended June 30,
2025
2024
Domestic
$
(12,908)
$
(25,184)
Foreign
14,042
13,364
Total income (loss) before provision for income taxes
$
1,134
$
(11,820)
The provision for income taxes consisted of the following (in thousands):
Years Ended June 30,
2025
2024
Current:
Federal
$
—
$
—
State
4
133
Foreign
2,565
2,190
Total current
$
2,569
$
2,323
Deferred:
Federal
—
—
State
—
—
Foreign
156
1,402
Total deferred
156
1,402
Total provision for income taxes
$
2,725
$
3,725
A reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the
accompanying consolidated statements of operations and comprehensive loss is as follows (in thousands):
Years Ended June 30,
2025
2024
U.S. federal taxes (benefit):
At federal statutory rate
$
238
$
(2,482)
State tax, net of federal benefit
4
133
Share-based compensation expense
1,028
629
Research and development credits
(14)
(209)
Foreign taxes
203
219
Deferred tax on foreign earnings
558
952
Global intangible low-taxed income
1,471
1,335
Equity in earnings of unconsolidated affiliates
(990)
(386)
Chane in valuation of warrants
105
—
Change in valuation allowance
(113)
3,202
Other non-deductible permanent items
235
332
Total provision for income taxes
$
2,725
$
3,725
118
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the
Company’s net deferred tax assets (liabilities) were as follows (in thousands):
June 30,
2025
2024
Deferred tax assets:
Federal and state net operating losses
$
61,745
$
66,463
Accrued expenses and reserves
3,128
4,523
Lease liability
6,475
6,332
Deferred revenue
3,681
3,269
Research and development credits
26,678
26,669
Share-based compensation expense
1,416
1,405
Capitalized research and development
23,795
19,464
Unicap
527
541
Fixed assets and intangibles
250
644
Section 163(j) interest
3,244
2,776
Other
374
6
Total deferred tax assets
131,313
132,092
Deferred tax liabilities:
Contract acquisition costs
(857)
(1,228)
Right of use assets
(5,124)
(5,288)
Deferred tax on foreign earnings
(2,120)
(2,499)
Total deferred tax liabilities
(8,101)
(9,015)
Valuation allowance
(125,287)
(125,944)
Net deferred tax liabilities
$
(2,075)
$
(2,867)
As of June 30, 2025, the Company had $260.9 million and $119.9 million in federal and state net operating loss
carryforwards, respectively. The federal and state carryforwards expire in varying amounts beginning in 2029 for federal and
2026 for state purposes.
In addition, as of June 30, 2025, the Company had federal and state research and development tax credits of $28.5 million
and $22.8 million, respectively. If not utilized, the federal research credits will begin to expire in 2026, the California
research credits have no expiration date and the other state research credits will begin to expire in 2026.
Under the Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of our net operating loss and research tax
credit carryforwards to offset taxable income may be limited based on cumulative changes in ownership. Although ownership
changes have occurred in the prior years, the carryovers should be available for utilization by the Company before they
expire, provided the Company generates sufficient future taxable income. An analysis of the impact of this provision through
March 31, 2022 has been performed and it was determined that no ownership change has occurred after December 2009.
Based on the available objective evidence and history of losses, the Company has established a 100% valuation allowance
against its combined domestic net deferred tax assets because of uncertainty surrounding the realization of such deferred tax
assets.
119
Certain income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the
CFCs United States shareholder. The income required to be included in gross income is referred to as global intangible low
tax income (“GILTI”) and is defined under IRC Section 951A as the excess of the shareholder’s net CFC tested income over
the net deemed tangible income return. The GILTI inclusion amount has been absorbed by net operating loss carryforwards.
The Company has made a policy decision to record GILTI tax as a current-period expense when incurred.
One of the provisions under the Tax Cuts and Jobs Act that became effective in tax years beginning after December 31,
2021 required the capitalization and amortization of research and experimental expenditures. The change in this United States
tax law did not have an impact on the Company's consolidated financial statements. The Company will continue to evaluate
the impact of this tax law change on future periods.
At June 30, 2025, the Company has $2.1 million of deferred tax liability related to withholding tax expected to be paid on
the remittance of unrepatriated distributable reserves in France, Japan and Switzerland. At June 30, 2025, the Company has
undistributed earnings of certain foreign subsidiaries of $11.8 million that it has indefinitely invested, and on which it has not
recognized deferred taxes.
The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands):
Years Ended June 30,
2025
2024
Balance at beginning of year
$
22,044
$
21,565
Tax positions related to current year:
Additions
1,165
1,064
Tax positions related to prior years:
Additions
—
—
Reductions
(560)
(585)
Balance at end of year
$
22,649
$
22,044
The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax
regulations. Management regularly assesses the Company’s tax positions with respect to legislative, bilateral tax treaty,
regulatory and judicial developments in the countries in which the Company does business. The reduction in prior year's tax
positions primarily relates to lapses of applicable statutes of limitations. The Company anticipates there will be no material
changes in uncertain tax positions in the next 12 months. As of June 30, 2025, the amount of gross unrecognized tax benefits
was $22.6 million, of which $21.8 million would not affect income tax expense before consideration of any valuation
allowance.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As
of June 30, 2025 and 2024, the Company’s cumulative accrued interest and penalties related to uncertain tax positions, was
not material.
The Company files income tax returns in the United States federal, various states, and foreign jurisdictions. Due to tax
attributes being carried forward and utilized during open years, the statute of limitations remains open for the U.S. federal
jurisdiction and domestic states for tax years from 2006 and forward. The statutes of limitation with respect to the foreign
jurisdictions where the Company files income tax returns vary from jurisdiction to jurisdiction and range from 3 to 10 years
and the material foreign jurisdictions are France, Switzerland and Japan.
The Company is also subject to examination of its income tax returns by the Internal Revenue Service (“IRS”) and other
foreign tax authorities, and in some cases the Company has received additional tax assessments which have not been
significant. The Company is under audit by the Indian tax authorities for the fiscal year 2021 and we do not expect a material
impact on the consolidated financial statements.
On July 4, 2025, new federal tax legislation was enacted, introducing significant changes to U.S. corporate income tax
law. Key provisions include the optional expensing of domestic research and development costs under Section 174,
modifications to business interest deductions under Section 163(j), and changes to international tax rules such as GILTI.
Some provisions are effective retroactively to January 1, 2025, while others phase in through 2027. As the legislation was
120
enacted after the balance sheet date, its effects are not reflected in the financial statements for the fiscal period ended June 30,
2025. The Company is currently evaluating the potential impact, including implications for deferred tax assets and related
disclosures in the subsequent period.
Note 13. Retirement Plans
Employee Benefit Plan
The Company’s employee savings and retirement plan is qualified under Section 401(k) of the United States Internal
Revenue Code. Employees may make voluntary, tax-deferred contributions to the 401(k) Plan up to the statutorily prescribed
annual limit. The Company makes discretionary matching contributions to the 401(k) Plan on behalf of employees up to the
limit determined by the Board of Directors. The Company contributed $2.2 million and $2.1 million to the 401(k) Plan during
the years ended June 30, 2025 and 2024, respectively.
Defined Benefit Pension Obligation
The Company has established a defined benefit pension plan for its employees in its Switzerland subsidiary. The plan
provides benefits to employees upon retirement, death or disability. The Company uses June 30 as the year-end measurement
date for this plan.
Obligations and Funded Status
The following table presents the funded status of the defined benefit pension plan (in thousands):
June 30,
2025
2024
Change in benefit obligation:
Benefit obligation—beginning of fiscal year
$
24,059
$
19,388
Service cost
1,553
1,245
Interest cost
322
381
Plan participants’ contributions
1,806
3,548
Actuarial loss
1,493
2,236
Foreign currency changes
3,275
(124)
Settlements
—
(2,434)
Amendments
(131)
—
Benefit and expense payments
(1,436)
(181)
Benefit obligation—end of fiscal year
$
30,941
$
24,059
Change in plan assets:
Plan assets—beginning of fiscal year
$
21,329
$
18,761
Employer contributions
1,353
1,265
Actual return on plan assets
2,502
467
Plan participants’ contributions
1,806
3,548
Foreign currency changes
2,996
(97)
Settlements
—
(2,434)
Benefit and expense payments
(1,437)
(181)
Plan assets—end of fiscal year
$
28,549
$
21,329
Funded status
$
(2,392)
$
(2,730)
Amounts recognized within the consolidated balance sheets:
Long-term other liabilities
$
(2,392)
$
(2,730)
Net amount recognized
$
(2,392)
$
(2,730)
121
The following table presents the amounts recognized in accumulated other comprehensive loss (before tax) for the defined
benefit pension plan (in thousands):
June 30,
2025
2024
Net actuarial gain
$
1,128
$
428
Prior service credit
254
127
Total gain recognized in accumulated other comprehensive loss
$
1,382
$
555
The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets
for this defined benefit pension plan where accumulated benefit obligation exceeded the fair value of plan assets (in
thousands):
June 30,
2025
2024
Projected benefit obligation
$
30,941
$
24,059
Accumulated benefit obligation
$
22,747
$
20,946
Fair value of plan assets
$
28,549
$
21,329
Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss
The following table shows the components of the Company’s net periodic benefit costs and the other amounts recognized
in other comprehensive loss, before tax, related to the Company’s defined benefit pension plan (in thousands):
Year ended June 30,
2025
2024
Net Periodic Benefit Costs:
Service cost
$
1,553
$
1,245
Interest cost
322
381
Expected returns on assets
(330)
(284)
Amortization of prior service credit
(24)
(24)
Amortization of net gain
—
(92)
Gain on settlement
—
(65)
Net periodic benefit costs
1,521
1,161
Other Amounts Recognized in Other Comprehensive Loss:
Net (gain) loss arising during the year
(715)
2,019
Prior service credit
26
24
Amortization of prior service credit
(139)
—
Amortization of net gain
—
91
Effect of settlement
—
65
Total (gain) loss recognized in other comprehensive loss
(828)
2,199
Total recognized in net periodic benefit costs and other comprehensive loss
$
693
$
3,360
The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic
benefit cost during fiscal year 2026 related to the Company’s defined benefit pension plan are as follows (in thousands):
2026
Net loss
$
—
Prior service cost
32
Accumulated other comprehensive income
$
32
122
Assumptions
The assumptions used to determine net periodic benefit cost and to compute the expected long-term return on assets for
the Company’s defined benefit pension plan were as follows:
Fiscal Years
2025
2024
Net Periodic Benefit Costs:
Discount rate
1.20%
1.30%
Rate of compensation increase
1.75%
1.75%
Expected long-term return on assets
1.50%
1.50%
The assumptions used to measure the benefit obligation for the Company’s defined benefit pension plan were as follows:
June 30,
2025
2024
Benefit Obligation:
Discount rate
1.20%
1.30%
Rate of compensation increase
1.75%
1.75%
Contributions and Future Benefit Payments
The Company made contributions of approximately $1.4 million and $1.3 million to the defined benefit pension plan
during fiscal years 2025 and 2024, respectively. The Company expects total contributions to the defined benefit pension plan
for fiscal year 2026 will be approximately $1.5 million.
Estimated future benefit payments expected to be paid by the defined benefit pension plan at June 30, 2025 are as follows
(in thousands):
Year Ending June 30,
Future
Benefits
2026
$
1,745
2027
1,530
2028
1,580
2029
1,648
2030
2,564
Thereafter
10,841
Total estimated future benefit payments
$
19,908
Plan Assets
The plan assets are invested in insurance contracts with Copré Collective Foundation based in Lausanne, Switzerland at
the end of fiscal years 2025 and 2024. In fiscal 2025 and 2024, the risks of death and disability are reinsured with Zurich Life
Insurance. The Copré Foundation for Occupational Benefits (“Copré Foundation”) defines and is responsible for the asset
strategy and invests the plan assets for the Company. The Copré Foundation invests the plan assets in insurance contracts
which can be measured at Level 2 in the fair value hierarchy. In fiscal 2025 and 2024, the expected interest rate for
mandatory retirement savings was 1.5% and 1.5%, respectively. The technical administration and management of the savings
account are guaranteed by the Copré Foundation. Insurance benefits due are paid directly to the entitled persons by the Copré
Foundation. Accuray International Sàrl has committed itself to pay the annual contributions and costs due under the pension
fund regulations.
123
The contract of affiliation between the Company and the Copré Collective Foundation can be terminated by either side. In
the event of a termination, recipients of retirement and survivors’ benefits would remain with the collective foundation. The
Company commits itself to transfer its active insured members and recipients of disability benefits to the new employee
benefits institution, thus releasing the Copré Collective Foundation from all obligations.
Note 14. Segment Disclosure
The Company has one operating and reporting segment (oncology systems group), which develops, manufactures and
markets proprietary medical devices used in radiation therapy for the treatment of cancer patients. The Company’s Chief
Executive Officer, its Chief Operating Decision Maker (“CODM”), assesses financial performance by reviewing a reporting
package based on consolidated results of the Company when making decisions about allocating resources and assessing
performance. The CODM evaluates performance based on net revenues, gross profit, and operating income which are
consistent with what is reported on the consolidated statements of comprehensive income (loss). Significant segment
expenses regularly provided to the CODM are consolidated research and development expenses, sales and marketing, and
general and administrative expenses as reported on the consolidated financial statements. In addition, the CODM regularly
reviews the budget and forecast-to-actual variances to evaluate performance and to make decisions about allocating capital
and other resources. The Company does not assess the performance of its individual product lines on measures of profit or
loss, or asset-based metrics. Therefore, the information below is presented only for revenues and long-lived tangible assets by
geographic areas.
Disaggregation of Revenues
The Company disaggregates its revenues from contracts by geographic region, as the Company believes this best depicts
how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. The Company
reports its customer revenues in five geographic regions: the Americas, EIMEA, Japan, China and Asia Pacific. The
Americas region primarily includes the United States, Canada, and Latin America. The EIMEA region includes Europe,
India, the Middle East and Africa. The Asia Pacific region consists of Asia (excluding Japan and China), Australia and New
Zealand.
Additionally, the Company typically recognizes revenue at a point in time for product revenue and recognizes revenue
over time for service revenue. Revenues attributed to a country or region are based on the shipping addresses of the
Company’s customers.
The following summarizes net revenue by geographic region (in thousands):
Years ended June 30,
2025
2024
Americas
$
88,768
$
90,156
EIMEA
144,264
168,611
China
124,475
103,412
Japan
53,622
55,682
Asia Pacific
47,376
28,690
Total net revenues
$
458,505
$
446,551
The following summarizes countries that represent more than ten percent of the Company’s net revenues (in thousands):
Years ended June 30,
2025
2024
United States
16%
18%
China
27%
23%
Japan
12%
12%
Rest of world
45%
47%
Total net revenues
100%
100%
124
Disaggregation of long-lived assets
Information regarding geographic areas in which the Company has long-lived assets, which consists of property, plant and
equipment, net, and operating lease right-of-use assets are as follows (in thousands):
June 30,
2025
June 30,
2024
Americas
$
49,466
$
46,570
EIMEA
9,220
9,327
China
1,577
1,211
Japan
999
1,304
Asia Pacific
511
135
Total long-lived assets
$
61,773
$
58,547
The long-lived assets in the Americas region are located in the United States as of June 30, 2025, and June 30, 2024.
125
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Exchange Act) as of the end of the period covered by our Annual Report on Form 10-K for the fiscal year ended June 30,
2025 (the “Evaluation Date”).
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation
Date, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to
be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such
term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal
control over financial reporting based upon the guidelines established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) 2013.
Based on this evaluation, management concluded that as of June 30, 2025 our internal control over financial reporting was
effective. The effectiveness of our internal control over financial reporting as of June 30, 2025 has been audited by Grant
Thornton LLP, an independent registered public accounting firm, as stated in their report included herein.
Remediation of Previously Disclosed Material Weaknesses
As noted in our 2024 Annual Report on Form 10-K (the “2024 Annual Report”), management identified a material
weakness within our system of internal control over financial reporting due to our SAP S/4HANA ERP system not being
designed for and not maintaining effective controls to ensure that all manual journal entries consistently enforced segregation
of duties in the approval process prior to being posted to the general ledger system. Remediation of this material weakness
was completed during the three months ended December 31, 2024, and included establishing new controls and procedures to
ensure segregation of duties is maintained between the creation, posting and approval of manual journal entries. As of
December 31, 2024, these control activities have been appropriately designed and implemented, and have operated
effectively for a sufficient period of time to conclude that the previously identified material weakness has been remediated.
Also as noted in our 2024 Annual Report, management identified a second material weakness within our system of
internal control over financial reporting due to our SAP S/4HANA ERP system not being designed for and not maintaining
effective controls to ensure the existence of inventory at the Madison manufacturing warehouse locations because its controls
relied on a cycle count program that, due to initial limitations associated with certain ERP system reports, was not
sufficiently precise. This material weakness was remediated as of March 31, 2025, which included establishing new controls
to allow for full capture of inventory with proper count timing required for an effective cycle count program, inclusive of
reinforcement for proper cycle count process through policy statements, regular communications and periodic reviews and
meetings with managers and staff. As of March 31, 2025, these control activities have been appropriately designed and
126
implemented, and have operated effectively for a sufficient period of time to conclude that the previously identified material
weakness has been remediated.
Furthermore, the remediation of the two material weaknesses associated with the aforementioned control activities
resulted from the remediation of the deficiency in the risk assessment component of the COSO framework disclosed in our
2024 Annual Report, which we remediated by performing a comprehensive risk analysis of the affected areas and
implemented control activities that effectively managed the risks.
Management has concluded that the Company’s consolidated financial statements included in this Annual Report on Form
10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods
presented with accounting principles generally accepted in the United States of America.
Changes in Internal Control over Financial Reporting
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated any
changes in our internal control over financial reporting that occurred during the year ended June 30, 2025, and has concluded
that other than the changes described above under "Remediation of Previously Disclosed Material Weaknesses" there were
no changes in our internal control over financial reporting that occurred that have materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.
Inherent Limitations of Internal Controls
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives
because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over
financial reporting also can be circumvented by collusion or improper management override. Because of such limitations,
there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is
possible to design into the process safeguards to reduce, though not eliminate, this risk.
Item 9B. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
During the fourth quarter of fiscal 2025, no director or officer, as defined in Rule 16a-1(f), adopted, or terminated a “Rule
10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
127
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Accuray Incorporated
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Accuray Incorporated (a Delaware corporation) and
subsidiaries (the “Company”) as of June 30, 2025, based on criteria established in the 2013 Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2025,
based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended June 30, 2025, and our report
dated August 28, 2025 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
San Jose, California
August 28, 2025
128
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors, Executive Officers and Corporate Governance
The information in our 2025 Proxy Statement regarding directors and executive officers appearing under the headings
“Election of Directors,” “Executive Officers” and “Delinquent Section 16(a) Reports” is incorporated herein by reference.
In addition, the information in our 2025 Proxy Statement regarding the director nomination process, the Audit Committee
financial expert and the identification of the Audit Committee members appearing under the heading “Corporate Governance
and Board of Directors Matters” is incorporated herein by reference.
There have been no material changes to the procedures by which stockholders may recommend nominees to our Board of
Directors.
Item 11. EXECUTIVE COMPENSATION
The information in our 2025 Proxy Statement appearing under the headings “Executive Compensation,” “Compensation
Committee Report,” “Compensation Discussion and Analysis,” “Compensation of Non-Employee Directors” and “Corporate
Governance and Board of Directors Matters—Compensation Committee Interlocks and Insider Participation” is incorporated
herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information in our 2025 Proxy Statement appearing under the heading “Security Ownership of Certain Beneficial
Owners and Management” and “Equity Compensation Plan Information” is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information in our 2025 Proxy Statement appearing under the headings “Certain Relationships and Related
Transactions” and “Corporate Governance and Board of Directors Matters—Director Independence” is incorporated herein
by reference.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information in our 2025 Proxy Statement appearing under the headings “Ratification of Appointment of Independent
Registered Public Accounting Firm—Audit and Non-Audit Services” and “Ratification of Appointment of Independent
Registered Public Accounting Firm—Audit Committee Pre-Approval Policies and Procedures” is incorporated herein by
reference.
129
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) We have filed the following documents as part of this report:
1.
Consolidated Financial Statements (as set forth in Item 8)
Page No.
Report of Independent Registered Public Accounting Firm (PCAOB ID 248)...............................................................
83
Consolidated Balance Sheets............................................................................................................................................
85
Consolidated Statements of Operations and Comprehensive Income (Loss) ..................................................................
86
Consolidated Statements of Stockholders’ Equity ...........................................................................................................
87
Consolidated Statements of Cash Flows ..........................................................................................................................
88
Notes to Consolidated Financial Statements....................................................................................................................
90
2.
Consolidated Financial Statement Schedules
All financial statement schedules have been omitted, since the required information is not applicable or is not present in
amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated
financial statements and notes thereto included in this Annual Report on Form 10-K.
3.
Exhibits
The following exhibits are incorporated by reference or filed herewith.
Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
File No.
Exhibit
Filing Date
Furnished
or Filed
Herewith
3.1
Amended and Restated Certificate of
Incorporation of Registrant.
8-K
001-33301
3.1
02/06/2013
3.2
Amended and Restated Bylaws of
Registrant.
8-K
001-33301
3.1
09/20/2023
4.1
Form of Common Stock Certificate.
S-1/A
333-138622
4.3
02/05/2007
4.2
Indenture, dated as of May 13, 2021,
between the Registrant and The Bank of
New York Mellon Trust Company, N.A.,
as trustee.
8-K
001-33301
4.1
05/18/2021
4.3
Form of 3.75% Convertible Senior Note
due 2026 (included in Exhibit 4.5)
8-K
001-33301
4.1
05/18/2021
4.4
Description of the Registrant’s Securities
10-K
001-33301
4.7
09/07/2023
4.5
Form of Premium Warrant
8-K
001-33301
4.1
06/06/2025
4.6
Form of Penny Warrant
8-K
001-33301
4.2
06/06/2025
4.7
Form of DDTL Premium Warrant
8-K
001-33301
4.3
06/06/2025
4.8
Form of DDTL Penny Warrant
8-K
001-33301
4.4
06/06/2025
10.1
Office Lease between Old Sauk Trails
Park Limited Partnership and
TomoTherapy Incorporated, dated
October 22, 2001.
10-K
001-33301
10.1
09/07/2023
10.2
First Amendment to Lease between Old
Sauk Trails Park Limited Partnership and
TomoTherapy Incorporated, dated May 1,
2004.
10-K
001-33301
10.2
09/07/2023
10.3
Second Amendment to Lease between Old
Sauk Trails Park Limited Partnership and
10-K
001-33301
10.3
09/07/2023
130
Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
File No.
Exhibit
Filing Date
Furnished
or Filed
Herewith
Accuray, Inc FKA TomoTherapy, Inc.,
dated October 19, 2016.
10.4
Third Amendment to Lease between Old
Sauk Trails Park Limited Partnership and
Accuray Incorporated, dated March 27,
2020.
10-K
001-33301
10.4
09/07/2023
10.5
Fourth Amendment to Lease Deming Way
Property Group LLC and Accuray
Incorporated, dated August 19, 2022.
10-K
001-33301
10.5
09/07/2023
10.6
Accuray Incorporated 1998 Equity
Incentive Plan and forms of agreements
relating thereto.
S-1
333-138622
10.4
11/13/2006
10.7*
Accuray Incorporated 2007 Incentive
Award Plan.
10-K
001-33301
10.8
09/19/2011
10.8*
Form of Performance Stock Unit Grant
Notice and Performance Stock Unit
Agreement.
8-K
001-33301
99.2
09/02/2014
10.9*
Form of Restricted Stock Unit Grant
Notice and Restricted Stock Unit
Agreement.
8-K
001-33301
99.1
09/02/2014
10.10*
Form of Stock Option Grant Notice and
Stock Option Agreement.
8-K
001-33301
99.3
11/23/2011
10.11*
Form of 2016 Market Stock Unit Grant
Notice and Award Agreement.
8-K
001-33301
99.1
10/02/2015
10.12*
Accuray Incorporated Amended and
Restated 2016 Equity Incentive Plan and
forms of award agreements thereunder.
8-K
001-33301
10.1
11/15/2023
10.13*
Amended and Restated 2007 Employee
Stock Purchase Plan.
8-K
001-33301
10.2
11/16/2022
10.14*
Accuray Incorporated Company Bonus
Plan.
10-Q
001-33301
10.6
11/06/2018
10.15*
Form of Accuray Incorporated Stand-
Alone Inducement Restricted Stock Unit
Agreement for Suzanne Winter.
S-8
333-234412
99.1
10/31/2019
10.16*
Form of Accuray Incorporated Stand-
Alone Inducement Stock Option
Agreement for Suzanne Winter.
S-8
333-234412
99.2
10/31/2019
10.17*
Form of Accuray Incorporated Stand-
Alone Inducement Restricted Stock Unit
Agreement for Jim Dennison.
S-8
333-251038
99.4
11/30/2021
10.18*
Form of Accuray Incorporated Stand-
Alone Inducement Stock Option
Agreement for Jim Dennison.
S-8
333-251038
99.5
11/30/2021
10.19*
Form of Accuray Incorporated Stand-
Alone Inducement Restricted Stock Unit
Agreement for Sandeep Chalke.
S-8
333-265330
99.1
05/31/2022
10.20*
Form of Accuray Incorporated Stand-
Alone Inducement Stock Option
Agreement for Sandeep Chalke.
S-8
333-265330
99.2
05/31/2022
131
Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
File No.
Exhibit
Filing Date
Furnished
or Filed
Herewith
10.21*
TomoTherapy Incorporated 2000 Stock
Option Plan, as amended, and forms of
option agreements thereunder.
S-8
333-174952
99.1
06/17/2011
10.22*
TomoTherapy Incorporated 2002 Stock
Option Plan, as amended, and forms of
option agreements thereunder.
S-8
333-174952
99.2
06/17/2011
10.23*
TomoTherapy Incorporated 2007 Equity
Incentive Plan, as amended, and forms of
option agreements thereunder.
S-8
333-174952
99.3
06/17/2011
10.24*
Form of Indemnification Agreement by
and between Registrant and each of its
directors and executive officers.
10-Q
001-33301
10.7
05/10/2011
10.25*
Executive Employment Agreement by and
Between Registrant and Jesse Chew,
dated February 3, 2025.
10-Q
001-33301
10.5
02/05/2025
10.26*
Executive Employment Agreement by and
Between Registrant and Suzanne Winter,
dated February 3, 2025
10-Q
001-33301
10.2
02/05/2025
10.27*
Executive Employment Agreement by and
between Registrant and Leonel Peralta,
dated February 3,2025.
10-Q
001-33301
10.1
05/02/2025
10.28*
Executive Employment Agreement by and
between Registrant and Ali Pervaiz, dated
February 3, 2025.
10-Q
001-33301
10.3
02/05/2025
10.29*
Executive Employment Agreement by and
between Registrant and Sandeep Chalke,
dated February 3, 2025.
10-Q
001-33301
10.4
02/05/2025
10.30*
Letter Agreement for Interim CEO Role
by and between Registrant and Sandeep
Chalke, dated September 3, 2024.
X
10.31*
Separation Agreement and General
Release by and between Registrant and
Michael Hoge, dated January 6, 2025
10-Q
001-33301
10.1
02/05/2025
10.32
Form of Exchange Agreement
8-K
001-33301
10.1
06/06/2025
10.33
Governance Agreement, dated as of June
6, 2025, between the Registrant and TCW
Asset Management Company LLC
8-K
001-33301
10.2
06/06/2025
10.34
Financing Agreement, dated as of June 6,
2025, between the Registrant as the
Administrative Borrower, the guarantors
listed hereto, the lenders from time to time
party hereto, as lenders, TCW Asset
Management Company LLC, as collateral
agent and administrative agent, and
Wingspire Capital LLC, as servicing
agent
X
10.35
Form of Subscription Agreement, dated as
of May 6, 2021, between the Registrant
and each signatory thereto.
8-K
001-33301
10.2
05/12/2021
19.1
Insider Trading Policy
X
21.1
List of subsidiaries.
X
132
Incorporated by Reference
Exhibit
No.
Exhibit Description
Form
File No.
Exhibit
Filing Date
Furnished
or Filed
Herewith
23.1
Consent of Grant Thornton LLP,
independent registered public accounting
firm.
X
24.1
Power of Attorney (incorporated by
reference to the signature page of this
annual report on Form 10-K).
X
31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
X
31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
X
32.1
Certification of Chief Executive Officer
and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
X
97.1
Compensation Recovery Policy
X
101.INS
Inline XBRL Instance Document—the
instance document does not appear in the
Interactive Data File as its XBRL tags are
embedded within the Inline XBRL
document
X
101.SCH
Inline XBRL Taxonomy Extension
Schema With Embedded Linkbase
Documents
X
104
Cover Page Interactive Data File
(formatted as inline XBRL and contained
in Exhibit 101)
* Management contract or compensatory plan or arrangement.
† Certain portions of this exhibit have been omitted because they are both not material and would be competitively harmful if
publicly disclosed.
The certification attached as Exhibit 32.1 that accompanies this Annual Report on Form 10-K is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by reference into any filing of Accuray Incorporated
under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Annual
Report on Form 10-K, irrespective of any general incorporation language contained in such filing. Form 10-K, irrespective of
any general incorporation language contained in such filing.
Item 16. FORM 10-K SUMMARY
None.
133
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Madison, State of
Wisconsin, on August 28, 2025.
ACCURAY INCORPORATED
By:
/s/ SUZANNE WINTER
Suzanne Winter
President and Chief Executive Officer
By:
/s/ ALI PERVAIZ
Ali Pervaiz
Senior Vice President and Chief Financial Officer
134
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and
appoints Suzanne Winter and Ali Pervaiz, and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to
this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys- in- fact and agents,
and any of them or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
and on the dates indicated.
Signature
Title
Date
/s/ SUZANNE WINTER
Suzanne Winter
President, Chief Executive Officer and Director (Principal Executive
Officer)
August 28, 2025
/s/ ALI PERVAIZ
Ali Pervaiz
Senior Vice President and Chief Financial Officer (Principal
Financial Officer)
August 28, 2025
/s/ MICHAEL J. MURPHY
Michael J. Murphy
Corporate Controller (Principal Accounting Officer)
August 28, 2025
/s/ JOSEPH E. WHITTERS
Joseph E. Whitters
Chairperson of the Board and Director
August 28, 2025
/s/ ROBERT C. KILL
Robert C. Kill
Director
August 28, 2025
/s/ BYRON C. SCOTT
Byron C. Scott
Director
August 28, 2025
/s/ BEVERLY A. HUSS
Beverly A. Huss
Director
August 28, 2025
/s/ ANNE B. LE GRAND
Anne B. Le Grand
Director
August 28, 2025
/s/ JAMES M. HINDMAN
James M. Hindman
Director
August 28, 2025
/s/ MIKA NISHIMURA
Mika Nishimura
Director
August 28, 2025
/s/ STEVEN F. MAYER
Steven F. Mayer
Director
August 28, 2025
STOCK MARKET INFORMATION
Accuray common stock is traded on the
NASDAQ stock market under symbol “ARAY”.
CORPORATE HEADQUARTERS
1240 Deming Way
Madison, WI 53717
Tel: +1.608.824.2800
Fax: +1.608.824.2996
www.accuray.com
www.cyberknife.com
www.tomotherapy.com
LEGAL COUNSEL
Wilson Sonsini Goodrich & Rosati, P.C.
Palo Alto, CA 94304
TRANSFER AGENT
Mailing Address:
Accuray Incorporated
c/o Computershare
Investor Services
P.O. Box 50500
Louisville, KY 40233-5005
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Grant Thornton LLP
San Jose, CA 95113
INQUIRIES
Communications concerning stock transfer
requirements, lost certificates and changes
of address should be directed to the Transfer
Agent. Inquiries regarding company financial
information should be directed to:
Accuray Incorporated
Attn: Investor Relations
1240 Deming Way
Madison, WI 53717
Email: investorrelations@accuray.com
ANNUAL REPORT AND FORM 10-K
A copy of the company’s 2025 Annual Report on
Form 10-K is filed with the Securities and Exchange
Commission and is available, without charge, by
calling or writing the company at the address
under Inquiries.
Certainty
Matters.
Accuray Corporate Headquarters
1240 Deming Way
Madison, WI 53717
USA
Tel: +1.608.824.2800
Toll Free: 1.888.522.3740
Fax: +1.608.824.2996
Email: sales@accuray.com
Accuray Incorporated
3979 Freedom Circle
Suite 700
Santa Clara, CA 95054
USA
Tel: +1.408.716.4600
Fax: +1.408.716.4601
Accuray Japan K.K.
Shin Otemachi Building 7F
2-2-1 Otemachi, Chiyoda-ku
Tokyo 100-0004
Japan
Tel: +81.3.6265.1526
Fax: +81.3.3272.6166
Accuray Asia Ltd.
Suite 401, 4/F, Empire Centre
68 Mody Road
Tsim Sha Tsui, Kowloon
Hong Kong
Tel: +852.2247.8688
Fax: : +852.2175.5799
Accuray Accelerator
Technology (Chengdu) Co., Ltd.
No. 8, Kexin Road
Hi-Tech Zone (West Area)
Chengdu
611731 Sichuan
China
Accuray International Sarl
Route de la Longeraie 9
CH – 1110 Morges
Switzerland
Tel: +41.21.545.9500
Fax: +41.21.545.9501
#AccurayExpandRT
© 2025 Accuray Incorporated. All Rights Reserved.
Important Safety Information:
Most side effects of radiotherapy, including radiotherapy delivered with Accuray systems, are mild and temporary, often involving fatigue, nausea, and skin irritation. Side effects can be severe, however, leading to pain, alterations in
normal body functions (for example, urinary or salivary function), deterioration of quality of life, permanent injury, and even death. Side effects can occur during or shortly after radiation treatment or in the months and years following
radiation. The nature and severity of side effects depend on many factors, including the size and location of the treated tumor, the treatment technique (for example, the radiation dose), and the patient’s general medical condition, to
name a few. For more details about the side effects of your radiation therapy, and to see if treatment with an Accuray product is right for you, ask your doctor.