Accuray Q1 FY2027 Adjusted EBITDA Turns Positive as Product Sales Fall

Accuray (ARAY) reported positive adjusted EBITDA for its fiscal first quarter as service revenue growth and cost reductions helped offset a sharp decline in product sales. The medical-device company did not provide formal fiscal 2027 revenue or adjusted EBITDA guidance, describing the year as focused on execution following its fiscal 2026 transformation efforts.

Revenue for the quarter ended September 30, 2026, fell 8% year over year to $86.5 million. Product revenue declined 26% to $27.3 million, while service revenue increased 4% to $59.2 million, supported by service-contract pricing actions and nearly 3% growth in Accuray’s global installed base.

The company reported a gross margin of 26.1%, down 3% year over year. Service gross margin increased by 120 basis points, reflecting pricing measures and lower service labor costs.

Adjusted EBITDA, a non-GAAP measure, was $2.5 million, compared with an adjusted EBITDA loss of $4.1 million in the prior-year quarter. Accuray said its transformation initiatives generated approximately $13 million of year-over-year cost and margin improvement through workforce reductions, strategic partnerships, more focused product development and marketing plans, and continued control of discretionary spending.

Operating expenses rose 63% to $62.6 million, including a $35.4 million non-cash goodwill impairment charge. Excluding that charge, operating expenses decreased 29% from a year earlier, underscoring the effect of the company’s lower cost structure.

Accuray also said its financial position benefited from a $15 million investment associated with its previously announced TCW financing transaction in July. The quarter’s adjusted EBITDA reconciliation included a $59.6 million gain on extinguishment of debt, along with the goodwill impairment and other specified adjustments.

Fiscal 2027 priorities

Management’s priorities for fiscal 2027 include converting the commercial pipeline and customer engagement into orders and product revenue. The company also plans to pursue further service revenue and margin growth through pricing and a lower cost to serve, while maintaining operating-expense discipline and building on efficiencies achieved during its transformation.

Accuray expects greater operating leverage if product volumes increase and plans to advance innovation through strategic partnerships. However, it continues to withhold formal full-year revenue and adjusted EBITDA guidance.

The company identified several factors that could affect its plans, including global macroeconomic conditions, inflation, tariffs, supply-chain disruptions and higher logistics costs. Other risks include the ability to convert backlog into revenue, maintain product and service margins, meet debt covenants, secure regulatory approvals and realize expected benefits from its China joint venture and other partnerships. Foreign-exchange movements and geopolitical instability could also affect installations, customer-site readiness, service revenue recognition and transaction timing in international markets.