Accuray Navigates Market Headwinds with Cautious Optimism

Radiation therapy specialist Accuray Incorporated has reported a mixed financial performance for its most recent fiscal year. The company’s service division demonstrated resilience, though declining equipment sales and contracting margins weighed on overall results. A newly issued forecast for fiscal 2026, however, suggests management anticipates a potential stabilization.

Financial Performance and Shifting Dynamics

For the fourth quarter, the company posted total revenue of $127.5 million, representing a 5% year-over-year decline. This downturn was primarily driven by a significant 11% contraction in product-related revenue. Offsetting this weakness, the service segment proved to be a dependable revenue source, growing by 4%. Net income for the quarter was markedly subdued, coming in at just $1.1 million.

Profitability Challenges and Executive Departures

A key area of concern emerging from the report is intensified margin pressure. The product gross margin fell to 27.5%, reflecting competitive and pricing challenges. Compounding this issue, operating expenses climbed by 10%, further squeezing profitability. Amid this period of operational pressure, Accuray also announced a leadership transition, confirming the upcoming departures of two senior executives, including its Chief Legal Officer.

Should investors sell immediately? Or is it worth buying Accuray?

Regional Order Patterns Present a Contrast

An analysis of the company’s order backlog reveals a complex picture. The total backlog decreased by 12.4% from the prior year to $427 million, indicating softer overall demand. Despite this broader trend, Accuray secured robust growth in key Asian markets, with orders in China increasing by 15% and orders in Japan surging by an impressive 34%. Nevertheless, these regional successes were insufficient to counterbalance pronounced weakness in other geographic areas, most notably within the Americas.

Fiscal 2026 Guidance Suggests Stabilization

Looking ahead, Accuray’s leadership has projected a cautiously optimistic outlook for fiscal year 2026. The company forecasts total revenue to land between $471 million and $485 million, which would indicate a slight improvement. Furthermore, its projected adjusted EBITDA of $31 million to $35 million points toward an anticipated recovery in its underlying operational performance.

The central question for investors remains whether Accuray can leverage its specialized radiation oncology technology to recapture market share and restore healthier profit margins. For now, the conflicting signals from its diverse business units and international markets warrant a measured perspective.