Accuray (NASDAQ:ARAY) reported lower fourth-quarter and full-year fiscal 2026 revenue as product sales declined sharply, particularly in China, while service revenue grew and the company advanced a transformation plan aimed at reducing costs, improving margins and strengthening its balance sheet.
For the quarter ended June 30, 2026, Accuray recorded net revenue of $100.9 million, down 21% from the prior-year period on both a reported and constant-currency basis. Full-year revenue totaled $402 million, down 12% year over year, or 14% on a constant-currency basis. Chief Financial Officer Ali Pervaiz said lower product revenue drove the declines, partly offset by higher service revenue.
Service Revenue Rises as Product Orders Remain Below Target
Service revenue increased 6% in the fourth quarter to $60.1 million and rose 4% for the full year to $229 million. The company said pricing actions contributed $1.4 million to quarterly service-revenue growth and $5.4 million to annual growth. Growth in the installed base and higher out-of-contract time-and-material billings also contributed.
Accuray’s service contract capture rate remained near 90% across its active installed base. Service gross margin improved to 36.8% in the fourth quarter from 34.4% a year earlier, supported by pricing actions and a lower service labor cost structure. For the full year, however, service gross margin declined to 31% from 32.6%, as higher net parts consumption offset pricing and labor improvements.
Product gross orders were approximately $38 million in the fourth quarter, producing a book-to-bill ratio of 0.9. For the full year, gross orders totaled $192 million, with a trailing 12-month book-to-bill ratio of 1.1. Accuray ended the quarter with reported backlog of about $313 million, including only orders younger than 30 months.
Pervaiz said the company considers a 1.2 book-to-bill ratio healthy for a growing backlog. He said Accuray fell short of that level during fiscal 2026 while implementing commercial changes, including sales-region realignment and leadership changes. Management said those actions are largely complete and that it has worked to build a healthier pipeline, improve products and strengthen distributor engagement.
Margins Affected by Tariffs, Mix and One-Time Items
Overall fourth-quarter gross profit was $35.1 million, representing a 34.8% gross margin, compared with 30.6% a year earlier. The quarter included $5.8 million of favorable impact from IEEPA tariff expenses incurred before those tariffs were invalidated by the Supreme Court, according to Pervaiz. A non-recurring obsolete-component write-down reduced gross margin by $1.5 million.
Excluding those items, the company said fourth-quarter pro forma gross margin was 30.5%. Product gross margin was 31.7% in the quarter, but 17.5% excluding the IEEPA tariff favorability. Product margins were affected by the obsolete inventory charge, non-IEEPA tariff expense and unfavorable product and regional shipment mix.
For the full year, gross margin was 27.7%, down from 32.1% in fiscal 2025. Product gross margin declined to 23.4% from 31.6%, driven by tariff costs and mix, including significantly fewer CyberKnife shipments to China.
Fourth-quarter operating expenses were $29.6 million, down from $34.7 million in the prior-year quarter. Excluding $700,000 of restructuring expense, operating expenses fell 17%. Full-year operating expenses were $137.9 million, including $16.2 million of non-recurring restructuring expenses. Excluding those costs, full-year operating expenses declined 13% to $121.7 million.
The company posted fourth-quarter operating income of $5.5 million, compared with $4.2 million a year earlier, and adjusted EBITDA of $12.9 million, up from $9.4 million. For the full year, Accuray reported an operating loss of $26.4 million, compared with operating income of $7.8 million in fiscal 2025. Full-year adjusted EBITDA was $10.6 million, down from $28.3 million.
Transformation Efforts and TCW Financing
President and Chief Executive Officer Steve La Neve said Accuray realized more than $20 million in cost and margin improvements during fiscal 2026, exceeding its prior target of about $12 million. Management expects those actions to support roughly $15 million in incremental annualized cost and margin improvement in fiscal 2027, although the degree of contribution will depend on product demand, costs and macroeconomic conditions.
La Neve said the company has entered the second phase of its transformation, focused on differentiated innovation, further cost reductions, commercial expansion, and service revenue and margin growth. The company has also entered non-binding letters of intent with Samsung HME America and RaySearch Laboratories and continued to expand its relationship with Tata Consultancy Services. In May, Accuray announced a 10-year collaboration with the University of Wisconsin School of Medicine and Public Health centered on adaptive radiation therapy research, education and training using its Stellar platform.
The company also outlined a proposed transaction with TCW Asset Management Company LLC. Under the agreement, TCW would exchange $40 million of existing term debt for convertible preferred equity, while also making a $15 million convertible preferred equity investment and providing access to a delayed-draw term loan of up to $5 million. The agreement includes a covenant holiday through Dec. 31, 2027. Portions of the transaction remain subject to shareholder approval and other customary closing conditions.
Accuray ended the quarter with $48.8 million in cash equivalents and restricted cash, compared with $44.4 million at the end of the prior quarter. The company also said it plans to implement a reverse stock split at a ratio to be determined, subject to shareholder approval.
No Formal Fiscal 2027 Guidance
Management did not provide formal fiscal 2027 revenue or adjusted EBITDA guidance, citing geopolitical developments, trade-policy uncertainty, tariff effects, market conditions in China and the Middle East, and broader macroeconomic factors. La Neve said the company expects continued service-revenue growth, improved service margins, operating-expense discipline and ongoing benefits from transformation initiatives, while product revenue and margin performance remain difficult to predict.
About Accuray (NASDAQ:ARAY)
Accuray Incorporated (NASDAQ: ARAY) is a global medical device company that develops, manufactures and markets innovative radiation therapy solutions for the treatment of cancer. The company’s flagship products include the CyberKnife® System, a robotic radiosurgery platform offering sub-millimeter precision, and the TomoTherapy® System, which combines helical computed tomography (CT) imaging with intensity-modulated radiation therapy (IMRT). More recently, Accuray introduced the Radixact® System, an advanced iteration of its TomoTherapy technology designed to enhance treatment speed and clinical workflow.
Accuray’s suite of products enables clinicians to deliver highly targeted radiation doses while minimizing exposure to surrounding healthy tissue.
