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.
−Removed: We believe in comparison to conventional linear accelerators, the Company’s treatment delivery, planning, and data management solutions provide better accuracy, flexibility, and control;
+Added: 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;
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during each individual treatment, throughout the treatment process, and at each stage of the cancer treatment journey, from curative to palliative treatments.
−Removed: Our solutions:
+Added: Our solutions include:
Novel artificial intelligence 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.
−Removed: Powerful treatment planning software and optimizer 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.
+Added: Powerful treatment planning software and optimizer 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.
−Removed: Automated tools help to identify the interfraction changes for which re-planning is clinically beneficial and facilitate adaptation of the radiation dose precisely to the patient’s tumor.
−Removed: Distinctive software 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.
−Removed: 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).
+Added: Automated tools that help to identify the interfraction changes for which re-planning is clinically beneficial and facilitate adaptation of the radiation dose precisely to the patient’s tumor.
+Added: 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.
+Added: Advanced architecture that accommodates third party surface guidance interfaces that can enable Deep Inspiration Breath Hold (“DIBH”) for highly accurate and precise breast treatments.
+Added: 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:
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quality of life.
−Removed: Each of these systems serves patient populations treated by the same medical specialty, radiation oncology, with advanced capabilities.
−Removed: The CyberKnife platform is also used by neurosurgeons specializing in radiosurgery to treat patients with tumors in the brain and spine, and neurologic disorders.
+Added: Each of these systems serve patient populations treated by the same medical specialty, radiation oncology, with advanced capabilities.
+Added: 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.
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We reincorporated in Delaware in 2007.
−Removed: Our principal offices are located at 1310 Chesapeake Terrace, Sunnyvale, CA 94089, and our telephone number is (408) 716‑4600.
−Removed: In March 2020, the World Health Organization declared the outbreak of a strain of coronavirus, SARS-CoV-2, which causes novel coronavirus disease 2019 (“COVID-19”) pandemic.
−Removed: The COVID-19 pandemic has had, and continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.
−Removed: Federal and state governments implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of non-essential businesses, and, while there has been some reopening and reduction of restrictions, the emergence of new variants and increased cases has led to the reimplementation of restrictions in many areas.
−Removed: To protect the health and well-being of our employees, suppliers, and customers, we have made substantial modifications to employee travel and suspended non-essential work travel, implemented remote work arrangements as employees are advised to work from home, and cancelled or shifted most of our conferences and other marketing events to virtual through calendar year 2022.
−Removed: The COVID-19 pandemic has impacted and may continue to impact our business operations, including our employees, customers and partners, and there is substantial uncertainty in the nature and degree of its continued effects over time.
−Removed: Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations (Part II, Item 7 of this Form 10-K) for further discussion regarding the impact of the COVID-19 pandemic on our fiscal year 2021 and 2022 financial results.
−Removed: Market Overview
−Removed: Despite significant improvements in cancer diagnosis and treatment, cancer rates continue to increase globally and remain a leading cause of death.
−Removed: According to the World Health Organization, cancer is one of the leading causes of death globally and was responsible for nearly 10 million deaths in 2020.
−Removed: Globally, about 1 in 6 deaths are due to cancer, and the economic impact of cancer is significant and is expected to increase.
−Removed: The total annual economic cost of cancer in 2017 was estimated at approximately $1.16 trillion.
−Removed: In addition, while the real impact of the COVID-19 pandemic on cancer prevention, diagnosis and treatment will not be known for many years, the American Cancer Society (“ACS”) anticipates that decreased resources and access to care will result in “lower incidence (in 2020), higher mortality and decreased survival in the future.”
−Removed: Cancers can be broadly divided into two groups:
−Removed: solid tumor cancers, which are characterized by the growth of malignant tumors within the body in areas such as the brain, lung, liver, breast or prostate, and hematological, or blood‑borne cancers, such as leukemia.
−Removed: The most common causes of cancer deaths are cancers of lung, liver, colorectal, stomach and breast.
−Removed: The ACS estimates that solid tumor cancers will account for approximately 1.6 million, or approximately 92% of new cancer cases diagnosed annually.
−Removed: Traditional methods for the treatment of solid tumor cancers include chemotherapy, surgery and radiation therapy.
−Removed: The most common type of radiation therapy is external beam radiation therapy, in which patients are treated with high‑energy radiation generated by medical equipment external to the patient.
−Removed: The global radiotherapy equipment and software market has three main segments:
−Removed: Linear Accelerators (linacs), Treatment Planning Systems, and Radiation Therapy Simulators.
−Removed: Approximately 50% to 60% of cancer patients worldwide will undergo some form of radiation therapy during the course of their treatment.
−Removed: While radiation therapy is widely available in the United States and Western Europe, many developing countries currently do not have a sufficient number of linacs to adequately treat their domestic cancer patient populations.
−Removed: We believe increasing demand for advanced medical treatments in many international markets and growth in cancer incidences worldwide will continue to drive demand for linacs with more sophisticated capabilities in the coming years.
−Removed: Emerging markets are especially underequipped with external beam radiation therapy systems.
−Removed: According to a publication called the Lancet Oncology Commission in 2015, radiation therapy is required in more than half of the newly diagnosed cancer patients.
−Removed: There was an estimated shortage of over 15,000 linacs globally in 2015, expected to grow to over 21,000 by 2035.
−Removed: This gap is most pronounced in low and middle income countries, where only 10% of patients have access to radiotherapy.
−Removed: China alone is estimated to have a shortfall of over 5,000 systems because of increasing cancer incidence and an aging population that is estimated to more than double by 2040.
−Removed: Radiation Therapy
−Removed: Radiation therapy uses high‑energy X-rays (photons) to destroy cancer cells and shrink or control the growth of tumors.
−Removed: Radiation therapy works by exposing clusters of cancer cells, or tumors, to a dose of high energy radiation sufficient to cause cell death and prevent cells from multiplying.
−Removed: During external beam radiation therapy, the clinician’s goal is to target radiation delivery to the tumor as precisely as possible in order to maximize the radiation dose delivered to cancerous tissue and minimize the exposure of healthy tissue.
−Removed: Recent advances in radiation therapy technologies have allowed clinicians to further improve the ability to target the radiation dose more precisely at cancer cells while minimizing the exposure of healthy tissue.
−Removed: These advances include the following:
−Removed: Intensity-modulated radiation therapy.
−Removed: Intensity-modulated radiation therapy (IMRT) involves varying, or modulating, the radiation beam intensity across the treatment area.
−Removed: This technique aims to conform the high dose region of the radiation beam more closely with the shape of the tumor, enabling the delivery of higher doses of radiation to tumors with a reduced impact on surrounding healthy tissue.
−Removed: Image-guided radiation therapy.
−Removed: Image-guided radiation therapy (IGRT) involves delivering radiation guided by images of the treatment area taken shortly before and/or during treatment using CT scan, X‑ray, ultrasound or other imaging technologies.
−Removed: By combining imaging with radiation treatment, clinicians can adjust the patient’s position relative to the radiation source prior to each treatment to target the tumor more precisely.
−Removed: Today, IGRT is very often combined with IMRT.
−Removed: Stereotactic Radiosurgery and Stereotactic Body Radiation Therapy.
−Removed: Radiosurgery is a form of radiation therapy that uses precisely targeted high doses of radiation to destroy tumors.
−Removed: Radiosurgery is non‑invasive;
−Removed: there is no incision involved.
−Removed: Stereotactic radiosurgery (SRS) and stereotactic body radiation therapy (SBRT) both provide a high degree of targeting accuracy with very high doses of extremely precise, externally delivered radiation, thereby maximizing the cell-killing effect on the tumor(s) while minimizing the radiation dose to nearby healthy tissue.
−Removed: SRS and SBRT are advanced external beam radiation treatment techniques used to deliver (ultra) hypofractionated radiation therapy.
−Removed: SRS is used to treat conditions within the brain, while SBRT is commonly used to treat tumors outside the brain.
−Removed: SRS and SBRT typically involve the delivery of a single high-dose radiation treatment or a few fractionated radiation treatments (usually up to five) to ablate (destroy) the tumor.
−Removed: To achieve the accuracy and precision required for both SRS and SBRT, image guidance during treatment, the ability to adjust the aim of the beam in real‑time to correct for tumor motion, and a wide range of beam angles, are critical for treatment.
−Removed: Adaptive radiation therapy.
−Removed: Adaptive radiation therapy (ART) involves adjusting a patient’s radiation therapy plan during or between fractions to account for changes in the patient’s anatomy, the amount and location of the radiation received by the patient, and the size, shape and location of the tumor.
−Removed: While there is no widely accepted definition of adaptive radiation therapy, it has been characterized to include as little as an adjustment to the physical position of the patient relative to the radiation source prior to treatment, as occurs during IGRT, rather than an adjustment to the treatment plan.
−Removed: Our approach is based on the belief that adaptive radiation therapy requires monitoring and adjustments to the treatment plan facilitated by both the regular acquisition of updated quantitative images showing the location, size, and shape of the tumor, and verification of the radiation dose received by the patient throughout the entire course of treatment.
−Removed: Hypofractionation.
−Removed: Hypofractionation involves the delivery of higher doses of radiation per fraction over fewer total fractions than are used in conventional radiation therapy.
−Removed: Hypofractionated radiation therapy has been proven to deliver clinical outcomes as good as conventional fractionation, while dramatically reducing both the number of treatments and the total cost of care.
−Removed: The advent of innovative technological features in radiation therapy treatment planning and delivery has enabled clinicians to maximize the radiation dose administered to tumors in the patient, improving local tumor control and, in some cases, improving patient survival rates.
−Removed: Patients, too, benefit from the efficiency of hypofractionated radiation therapy.
−Removed: Fewer treatments mean fewer clinical visits and a faster return to family, friends and other aspects of life.
−Removed: Hypofractionation is used most frequently in clinical applications where the radiobiology is appropriate for fewer fractions of higher doses, including the breast.
−Removed: Despite advances in radiation therapy techniques, most commercially available radiation therapy systems from other manufacturers still present significant limitations that restrict clinicians’
−Removed: ability to provide the most precise treatment possible.
−Removed: These limitations include:
−Removed: Limited versatility and precision.
−Removed: The C‑arm configuration of traditional radiation therapy systems has limitations because of its size and mechanical structure.
−Removed: C‑arm linac architecture is constrained to delivering radiation in a single plane (coplanar) and a single isocenter thus limiting its radiation delivery capability for complex and advanced cases.
−Removed: Additionally, most previously existing multi-leaf collimators (MLCs), which modulate or shape the radiation beams, have mechanical limitations that reduce their beam‑shaping ability and the speed at which they operate.
−Removed: These design elements limit the motion and dynamic range of IMRT intensities capable of being delivered by traditional radiation therapy systems and often make it challenging to achieve the precision needed to maximize dose to the tumor while minimizing damage to surrounding healthy tissue and potential associated side effects.
−Removed: Such imprecision may prevent clinicians from treating tumors near sensitive anatomic structures, such as the eye or the spinal cord, or from re‑treating patients in an area of the body that was previously exposed to radiation and may be unable to tolerate additional exposure.
−Removed: Limited ability to provide high-fidelity images.
−Removed: Precise radiation therapy requires frequent images that accurately depict the size, shape and location of the tumor with no or little distortion of anatomic shapes.
−Removed: Many traditional radiation therapy systems use imaging technologies that are not able to generate a quantitative assessment of the patient’s and/or target volume’s position.
−Removed: The lack of quantitative imaging prevents clinicians from understanding the actual amount of radiation that was received by tissue within the patient’s body.
−Removed: Since it is common for internal organs to shift and for the size of the tumor to change during the course of treatment, failure to adapt the plan throughout the course of treatment may result in a portion, or potentially all, of the radiation dose missing the tumor and instead being absorbed by healthy tissue.
−Removed: Failure to integrate multiple functions.
−Removed: The basic architecture for traditional radiation therapy systems pre‑dates many recent advances that enable integrated imaging, treatment planning, dose verification or quality assurance capabilities necessary for more advanced treatment protocols.
−Removed: Some conventional systems have been subsequently adapted to include certain elements of this functionality by incorporating modular add‑on devices to legacy linac designs.
−Removed: These separate modular components can provide imaging, treatment planning, quality assurance procedures or post‑treatment analysis functionality.
−Removed: However, this add‑on architectural approach can have safety, accuracy, and workflow implications because of the manual methods used for checking proper system operation.
−Removed: Development of Radiosurgery
−Removed: Advanced radiation therapy systems designed to deliver radiosurgery or stereotactic body radiation therapy differ from traditional radiation therapy systems in that they are designed to deliver a very high cumulative dose of radiation, in a single or a small number of treatments precisely targeted at the tumor rather than at a region that consists of the tumor plus healthy tissue that surrounds the tumor area.
−Removed: The more accurate delivery of radiation allows higher doses to be delivered, increasing the probability of tumor cell death and better local control.
−Removed: In addition, radiosurgery can be administered to patients who have inoperable or surgically complex tumors, or who may prefer a clinically effective, non‑surgical treatment option.
−Removed: 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 disorders, get back to living their lives, faster.
−Removed: We endeavor to achieve this goal by expanding the clinical options for healthcare providers, helping them offer the best radiation treatment for each patient and by providing patients with treatment tailored to their specific needs.
+Added: Our principal offices in the United States are located in Madison, Wisconsin and Sunnyvale, California.
+Added: 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.
+Added: We endeavor to achieve this goal by expanding the clinical options for healthcare providers, helping them offer the best radiation treatment for each patient and by providing patients with treatment tailored to their specific
Our vision is to expand the curative power of radiation therapy to improve as many lives as possible.
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The CyberKnife System is a robotic radiosurgery system capable of treating tumors throughout the body.
−Removed: There are now over 1,900 peer reviewed publications supporting use of the CyberKnife System in the treatment of various targets, including cancers, benign tumors, or functional diseases.
+Added: 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 two decades of clinical evidence, the CyberKnife System offers distinct advantages in the treatment of diseases in the head, base of the skull, and spine.
−Removed: These areas of the body require extremely accurate treatment because of the proximity of the tumors to critical structures that may impact a person’s ability to perform basic functions and to think, see, hear and walk.
+Added: 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.
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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.
−Removed: 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.
−Removed: Combined with distributors in Eastern Europe, Russia, the Middle East, the Asia Pacific region, and Latin America.
−Removed: However, many of these countries are not highly developed at this time and therefore sales opportunities may be limited.
+Added: 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 Eastern Europe, Russia, the Middle East, the Asia Pacific region, and Latin America.
+Added: Many of these countries however, 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.
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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.
−Removed: 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).
−Removed: In fiscal 2017, we signed an agreement with Photo Diagnostic Systems, Incorporated to enhance image quality of our TomoTherapy System through an enhanced tomographic reconstruction software.
+Added: 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”).
+Added: 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.
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In fiscal 2021, we announced a collaboration with Brainlab to enhance and expand the CyberKnife platform’s capabilities for the neuro-radiosurgery market.
−Removed: In fiscal 2022, we signed an agreement with C-RAD to provide customers with a solution for deep inspiration breath hold (DIBH) using the C-RAD Catalyst+ HD and Radixact System and with Limbus AI to augment Accuray adaptive radiotherapy capabilities by leveraging Limbus’
−Removed: artificial intelligence (AI)-driven autocontouring algorithms, which is expected to enable automated contouring to further streamline the treatment planning process.
+Added: In fiscal 2022, we signed an agreement with C-RAD to provide
+Added: customers with a solution for deep inspiration breath hold (“DIBH”) using the C-RAD Catalyst+ HD and Radixact System and with Limbus AI to augment our adaptive radiotherapy capabilities by leveraging Limbus’
+Added: artificial intelligence (“AI”)-driven autocontouring algorithms, which is expected to enable automated contouring to further streamline the treatment planning process.
+Added: 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.
From oncology to radiosurgery and beyond, our solutions enable clinicians to deliver shorter, more personalized, and more effective treatments.
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The CyberKnife Platform
−Removed: The CyberKnife platform is the only robotic, full-body stereotactic radiosurgery (SRS) and stereotactic body radiation therapy (SBRT) delivery device on the market.
−Removed: The latest generation is the CyberKnife S7 System, which combines speed, advanced precision, and real-time artificial intelligence (AI)-driven motion tracking and synchronized treatment delivery for all SRS and SBRT treatments, in as little as 15 minutes.
−Removed: The platform is designed to treat cancerous and benign tumors throughout the body, as well as neurologic disorders.
+Added: The CyberKnife platform is the only robotic, full-body SRS and SBRT delivery device on the market.
+Added: 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.
+Added: 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.
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The CyberKnife S7 System is available for sale in most major markets globally.
−Removed: 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 dose to healthy tissue.
−Removed: The CyberKnife S7 System has the option of fixed collimators plus the Iris Variable Aperture Collimator and/or InCise MLC.
−Removed: With the addition of the InCise MLC, the system enables the treatment of larger tumors that were previously thought untreatable with radiosurgery and SBRT.
−Removed: The InCise MLC and IMRT planning tools enable expansion of indications that can be treated with a CyberKnife platform to include many IMRT indications.
+Added: 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.
+Added: The CyberKnife S7 System has the option of fixed collimators plus the Iris Variable Aperture Collimator and/or InCise multi-leaf collimators (“MLC”).
+Added: 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.
+Added: 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.
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, detect and correct for even the slightest tumor and patient movement in real‑time throughout the entire treatment.
−Removed: This design is intended to enable the CyberKnife platform to deliver high‑dose radiation with precision and accuracy, which minimizes damage to surrounding healthy tissue and eliminates the need for invasive head or body immobilization frames.
−Removed: We believe the CyberKnife platform offer clinicians and patients the following benefits:
+Added: 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.
+Added: The Accuray Precision® Treatment Planning System (“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.
+Added: 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.
+Added: We believe the CyberKnife platform offers clinicians and patients the following benefits over other vendors’
+Added: radiation therapy systems in the market:
The only truly robotic system in the market.
−Removed: 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 dose to healthy tissue while maintaining sub millimeter accuracy and precision even for targets that move during treatment.
+Added: 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.
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Treatment of tumors throughout the body.
−Removed: The CyberKnife platform has been cleared by the FDA to provide treatment planning and image‑guided radiation treatment for tumors anywhere in the body where radiation treatment is indicated.
−Removed: By comparison, traditional frame‑based radiosurgery systems are generally limited to treating brain tumors and use cobalt 60 radioactive material, which decays over time and is difficult to replace.
+Added: The CyberKnife platform has been cleared by the Food and Drug Administration (“FDA”) to provide treatment planning and image‑guided radiation treatment for tumors anywhere in the body where radiation treatment is indicated.
+Added: 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 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.
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Significant patient benefits.
−Removed: The CyberKnife platform maximizes patient comfort.
+Added: 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.
−Removed: 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 for trained breath holding or gating instruments.
+Added: 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.
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compact X‑band linear accelerator;
−Removed: robotic manipulator, real‑time image‑guidance system with continuous target tracking and correction;
−Removed: X‑ray sources;
−Removed: image detectors.
+Added: robotic manipulator arm, real‑time image‑guidance system with continuous target tracking and correction;
+Added: imaging sources and detectors.
Key features of the main components include:
+Added: Compact X-band linear accelerator.
+Added: The CyberKnife S7 System utilizes a compact X-band linear accelerator (linac) mounted on a robotic manipulator arm.
+Added: The side-coupled-cavity radiofrequency standing wave linac is fitted with a triode electron gun, demountable target, and demountable radiofrequency window.
Robotic manipulator arm.
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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.
−Removed: Furthermore, the rapid response time of the manipulator arm allows tracking of tumors that move with respiration.
+Added: Furthermore, the rapid response time of the manipulator arm allows tracking of tumors that are prone to movement.
Real‑time image‑guidance system with continuous target tracking and correction.
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The beams of radiation are delivered continuously throughout the treatment session as the patient behaves naturally.
−Removed: The Synchrony technology provides what we believe is unsurpassed clinical accuracy for tumors that move with respiration without the need for implanted fiducials.
−Removed: It makes it possible and practical for clinicians to deliver radiation dose with sub-millimeter precision and accuracy, even for tumors that move with respiration.
−Removed: X‑ray sources.
−Removed: The low‑energy X‑ray sources generate the X‑ray images that help determine the location of bony or other anatomic landmarks, or implanted fiducials, which are used for tracking throughout the entire treatment.
−Removed: Image detectors.
+Added: The Synchrony technology provides what we believe is unsurpassed clinical accuracy for lung tumors that move with respiration without the need for implanted fiducials.
+Added: 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.
+Added: Imaging sources.
+Added: 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.
+Added: Imaging detectors.
The image detectors capture high‑resolution anatomical images throughout the treatment.
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InCise Multileaf Collimator.
−Removed: The InCise MLC, originally designed for the CyberKnife M6 Series, is also available on the CyberKnife S7 System.
−Removed: It is designed to deliver the same precise SRS and SBRT treatments clinicians expect from the CyberKnife platform, while significantly reducing treatment times.
+Added: 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.
+Added: The long-term success of the CyberKnife platform is dependent on a number of factors including the following:
+Added: Continued adoption of our CyberKnife platform, including the CyberKnife M6 System and CyberKnife S7 System, in markets where they are available;
+Added: 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;
+Added: 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;
+Added: Change in medical practice leading to utilization of stereotactic body radiation therapy more regularly as an alternative to surgery or other treatments;
+Added: Continued advances in our technology that improve the quality of treatments and ease of use of the CyberKnife platform;
+Added: Receipt of regulatory approvals in various countries which are expected to improve access to radiosurgery with the CyberKnife S7 System in such countries;
+Added: Medical insurance reimbursement policies that cover CyberKnife platform treatments;
+Added: 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.
The Radixact System, the Next-Generation TomoTherapy Platform
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Additionally, the Radixact 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.
−Removed: The system seamlessly integrates with ClearRT helical kVCT high-fidelity imaging, providing clinicians with an option to produce exceptional diagnostic-like quality CT images, quickly and cost-effectively, to improve patient care.
+Added: The system seamlessly integrates with ClearRT helical kilovoltage computerized tomography (“kVCT”) high-fidelity imaging, providing clinicians with an option to produce exceptional diagnostic-like quality CT images, quickly and cost-effectively, to improve patient care.
Synchrony on the Radixact System tracks and automatically adapts radiation delivery for targets that move, offering the possibility to decrease margins and hypofractionate treatments while efficiently delivering truly personalized care.
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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).
−Removed: 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 tangential beam radiation delivery.
−Removed: 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.
+Added: 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.
+Added: 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.
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Real-time tracking of tumor movement.
−Removed: The Accuray proprietary Synchrony® artificial intelligence (AI)-driven tumor 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.
+Added: 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 artificial intelligence, through image guidance, to automatically adapt and synchronize the radiation beam to the position of the tumor if and when it moves during treatment.
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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.
−Removed: Diagnostic-like quality kVCT images enable better identification of tumors, dose verification and treatment planning We recently launched ClearRT helical kVCT imaging technology for the Radixact System.
+Added: Diagnostic-like quality kVCT images enable better visualization of tumors, dose verification and re-planning.
+Added: We recently launched ClearRT helical kVCT imaging technology for the Radixact System.
+Added: The Radixact System seamlessly integrates with ClearRT helical kVCT 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.
−Removed: 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.
−Removed: ClearRT offers excellent uniformity and low noise across the entire image, improved soft tissue visualization and exceptional spatial resolution, which is intended to enhance the versatility and efficiency of the Radixact System in the radiation therapy department.
+Added: 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.
+Added: 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.
Integrated treatment system for precise radiation delivery.
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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.
−Removed: Efficient clinical workflow for Image-Guided Radiation Therapy, or IGRT, and adaptive radiation therapy.
+Added: 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.
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Conversely, the integrated imaging and treatment features of the Radixact System allows clinicians to scan, plan and treat cancer patients efficiently.
−Removed: Treatment plans as well as daily images can be easily accessed remotely, enabling clinical teams to collaboratively work together, regardless of location, ensuring high quality plan development and delivery.
−Removed: Additionally, ClearRT provides clear, high-fidelity images that is designed to reduce the time required for patient imaging and registration, a crucial part of the treatment delivery process, thereby enabling clinical staff to serve more patients.
−Removed: Also, ClearRT helical kVCT images will be 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.
+Added: 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.
+Added: Additionally, ClearRT provides clear, high-fidelity images that are designed to reduce the time required for patient imaging and registration, a crucial part of the treatment delivery process, thereby enabling clinical staff to serve more patients.
+Added: 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.
Low barriers to installation and implementation.
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clinical and market reach within the conventional and stereotactic radiotherapy spaces.
+Added: We believe the TomoTherapy platform offers clinicians and patients significant benefits over other vendors’
+Added: radiation therapy systems in the market.
+Added: The long-term success of the TomoTherapy platform is dependent on a number of factors, including the following:
+Added: Continued adoption of our TomoTherapy platform, including the Radixact System, in markets where it is available;
+Added: 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;
+Added: Advances in our technology that improve the quality of treatments and ease of use of the TomoTherapy platform;
+Added: Greater awareness among doctors of the reliability of the TomoTherapy platform;
+Added: 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
−Removed: Our Accuray Precision Treatment Planning with iDMS Data Management Systems provide fully integrated treatment planning and data management systems for use with all compatible Accuray delivery platforms.
+Added: Our Accuray Precision TPS with iDMS Data Management Systems provide fully integrated treatment planning and data management systems for use with all compatible Accuray delivery platforms.
Accuray Precision Treatment Planning.
−Removed: With a streamlined and intuitive interface, Accuray Precision Treatment Planning System enables clinicians to efficiently generate high quality radiation therapy treatment plans for all case types.
+Added: 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 auto‑contouring options for head and neck, brain, and prostate, side‑by‑side treatment plan comparison, plan summation and evaluation.
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The VOLO solution features high‑speed parallel 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.
−Removed: The Accuray Precision Treatment Planning System can be further enhanced with optional advanced capabilities described below:
+Added: The Accuray Precision TPS can be further enhanced with optional advanced capabilities described below:
PreciseART Adaptive Radiation Therapy Option.
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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.
−Removed: 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.
+Added: It offers automated processing of daily imaging to enable clinicians to monitor all patients and set protocol‑specific action levels to flag cases for
+Added: 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.
−Removed: It also maintains the integrity of original treatment plans to ensure tumor coverage, preserve Organ‑At‑Risk (OAR) doses and reduce toxicity.
−Removed: We believe our PreciseART software is the only practically usable adaptive therapy solution available to the mainstream radiation therapy market.
+Added: It is also designed to maintain the integrity of original treatment plans to ensure tumor coverage, preserve Organ‑At‑Risk (“OAR”) doses and reduce toxicity.
PreciseRTX Retreatment Option.
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The option helps to accelerate and enhance the process of creating new treatment plans for patients who have received previous irradiation.
−Removed: 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
−Removed: re-treatment plan based on the information from existing plan and summation of the original and new treatment plans to review the total dose.
+Added: 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 .
−Removed: Accuray iDMS creates a centralized platform for storing and managing all patient and treatment plan data.
+Added: 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.
−Removed: Information for patients to be treated or previously treated on any iDMS compatible Accuray platform will be maintained as a single treatment record, providing the flexibility to treat patients on any available Accuray platform compatible with iDMS.
+Added: 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.
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OIS Connect Option .
−Removed: The OIS Connect software option is a DICOM standard-based solution that provides the ability to interface all iDMS enabled Accuray platform to a compatible Oncology Information System (OIS).
+Added: 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 platform to a compatible OIS.
This integration with electronic medical record generates a comprehensive export of the radiotherapy treatment history delivered using Accuray platforms.
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Delivery Analysis .
−Removed: Delivery Analysis is a software option for the TomoTherapy platform that enables easy pretreatment patient QA.
+Added: Delivery Analysis is a software 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.
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Sales and Marketing
−Removed: In the United States, we primarily market to customers directly through our sales organization, and we also market to customers through sales agents and Integrated Delivery Networks (IDNs).
−Removed: Outside the United States, we market to customers directly and through distributors.
−Removed: We have sales and service offices in Europe, Japan, China, and other countries in Asia, Latin America, and throughout the world.
+Added: 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.
+Added: Outside the United States, we market to customers directly and through the use of distributors and sales agents.
+Added: We currently have international offices in Morges, Switzerland;
+Added: Hong Kong, China;
+Added: Shanghai, China and Tokyo, Japan and direct sales staff in most countries in Western Europe, Japan, India and Canada.
+Added: In addition, we have distributors in Eastern Europe, Russia, the Middle East, 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.
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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.
−Removed: Our marketing activities also include efforts to inform and educate patients with cancerous or benign tumors, or neurologic disorders, about the benefits of the CyberKnife and TomoTherapy platforms.
+Added: 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 platforms.
Under our standard distribution agreement, we generally appoint a distributor for a specific country.
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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.
−Removed: In China, our joint venture in China (the “JV”) has begun selling our products, much like a distributor.
+Added: The JV aims to be uniquely positioned to serve China, which we believe is the world’s largest growth market for radiation oncology systems.
+Added: 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.
+Added: Accuray Asia has a 49% ownership interest in the JV and the CIRC Subsidiary has a 51% ownership interest in the JV.
+Added: With the receipt of the necessary permits and licenses to operate, the JV has begun selling products in China, much like a distributor.
In the long term, we anticipate that the JV will manufacture and sell a locally branded “Made in China”
−Removed: radiotherapy device in the Class B license category, which would replace our current offering in that category.
+Added: radiotherapy device in the Class B license category, or Class B device, which would replace our current offering in that category.
We believe this strategy will allow us to best maximize both near and longer-term opportunities in China.
+Added: The regulatory submission to the National Medical Products Administration (“NMPA”) has been completed and we expect to receive NMPA clearance in the first half of calendar year 2024 and take orders shortly thereafter.
+Added: For more information on the JV, see Note 11, “Joint Venture,”
+Added: of the Notes to the consolidated financial statements.
Manufacturing
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Our facilities employ state‑of‑the‑art manufacturing techniques and equipment.
−Removed: The components manufactured at our Chengdu facility are produced under the International Standard Organization (ISO), 13485:2016 certified quality management systems.
+Added: The components manufactured at our Chengdu facility are produced under the International Standard Organization (“ISO”), 13485:2016 certified quality management systems.
The completed medical devices are designed, manufactured, installed, serviced and distributed at our Sunnyvale, Madison and Morges facilities under quality management systems which are compliant to the internationally recognized quality system standard for medical devices ISO, 13485:2016, and the Quality System regulations enforced by the FDA.
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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.
−Removed: As of June 30, 2022, we held exclusive field of use licenses or ownership of approximately 392 U.S.
−Removed: and foreign patents, and approximately 162 U.S.
+Added: As of June 30, 2023, we held an exclusive field of use licenses or ownership of 439 U.S.
+Added: and foreign patents, and 159 U.S.
and foreign patent applications.
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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.
−Removed: The modular design of our systems supports rapid development for new clinical capabilities and performance enhancements by generally allowing each subsystem to evolve within the overall platform design.
+Added: 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.
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New product sales in this competitive market are primarily dominated by two companies:
−Removed: Elekta AB (Elekta) and Varian, a Siemens Healthineers company.
+Added: Elekta AB (Elekta) and Varian Medical Systems, Inc, a Siemens Healthineers company (“Varian”).
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.
−Removed: Our other competitors include ViewRay Inc.
−Removed: (ViewRay), RefleXion Medical Inc., ZAP® Surgical Systems, and other companies in the radiosurgical and radiation therapy markets.
−Removed: 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
−Removed: systems, proton therapy systems, drug treatment, immunotherapy, gene therapy, and other approaches.
+Added: Our other competitors include RefleXion Medical Inc., ZAP® Surgical Systems, Inc., and other companies in the radiosurgical and radiation therapy markets.
+Added: 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, 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.
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cancer treatment policies as an effective treatment modality;
−Removed: Published, peer‑reviewed data supporting the efficacy and safety of our platforms;
+Added: Published, peer‑reviewed data supporting the efficiency, efficacy and safety of our platforms;
Limiting the time required from proof of feasibility to routine production;
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We believe we compete favorably with our competitors on price and value based upon the technology offered by our platforms.
−Removed: We strive to provide technologically superior products that covers substantially all aspects of radiation therapy to deliver precise treatments with high‑quality clinical outcomes that meet or exceed customer expectations.
+Added: 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.
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Reimbursement
−Removed: In the United States, healthcare providers that purchase capital equipment such as the CyberKnife and TomoTherapy platforms generally rely on government and private third‑party payors for reimbursement for the healthcare treatment and services they provide.
+Added: 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.
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Commercial payor policies vary with respect to coverage for radiotherapy including many of the indications covered by Medicare, though coverage criteria may differ.
−Removed: The codes that are used to report radiosurgery treatment delivery in 2022 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.
−Removed: For freestanding centers, robotic radiosurgery is billed with robotic radiosurgery Healthcare Common Procedural Codes (HCPCs) G0339 and G0340.
+Added: The codes that are used to report radiosurgery treatment delivery in 2023 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.
+Added: 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.
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3D-CRT treatments delivered using the TomoTherapy and Radixact Systems are considered complex treatments and reported under the complex 3D‑CRT code 77412.
−Removed: 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.
−Removed: 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.
+Added: In December 2015, the Patient Access and Medicare Protection Act (PAMPA) stopped the
+Added: IMRT and 3D CRT delivery codes from being implemented and prevented reimbursement reductions in the freestanding center setting through calendar year 2019.
+Added: 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.
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Payment rates under the Medicare fee-for-service methodology are established based on cost data submitted by hospitals.
−Removed: CMS pays separately for ancillary procedures in addition to the delivery of IMRT, 3D CRT, and SRS/SBRT as well as a Comprehensive APC that bundles delivery and some ancillary services for single session cranial radiosurgery.
+Added: 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 2023, the primary treatment delivery codes for robotic radiosurgery are priced by the regional Medicare Administrative Contractors.
−Removed: In 2022, it is expected the robotic SRS/SBRT delivery codes will remain contractor priced for providers paid under the traditional fee-for-service methodology.
+Added: In 2023, the robotic SRS/SBRT delivery codes remain contractor priced for providers paid under the traditional fee-for-service methodology.
Payment rates for IMRT and 3DRT procedures are set by CMS with adjustments to account for geographic market variations.
−Removed: In July 2019, CMS released a proposed rule titled Medicare Program;
−Removed: Specialty Care Models to Improve Quality of Care and Reduce Expenditures , which includes a new, alternative payment model for radiation oncology services.
−Removed: However, due to several COVID-19 related delays and failure to gain stakeholder consensus, CMS has indefinitely delayed the implementation until future rulemaking.
−Removed: It is unclear as to when or if CMS will implement an alternative payment model for radiation oncology.
−Removed: The federal government reviews and adjust rates annually, and from time to time consider 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.
+Added: 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.
−Removed: State government reimbursement for services is determined pursuant to each state’s Medicaid plan, which is established by state law and regulations, subject to requirements of federal law and regulations.
+Added: 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
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510(k) clearance pathway.
−Removed: 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 applications (PMA).
+Added: 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 review from submission of the application.
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In June 2016, we received 510(k) clearance for the Radixact Treatment Delivery Platform.
−Removed: We also received 510(k) clearance for our new treatment planning and data management systems, Accuray Precision Treatment Planning System and iDMS Data Management System.
+Added: We also received 510(k) clearance for our new treatment planning and data management systems, Accuray Precision TPS and iDMS Data Management System.
In November 2018, we received 510(k) clearance for Synchrony Motion Synchronization and Real-Time Adaptive Radiotherapy Technology for the Radixact System.
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In October 2012, we received 510(k) clearance for the InCise MLC with clearance from the FDA on July 1, 2015.
−Removed: Pre‑market approval (PMA) pathway.
+Added: In August 2023, we received 510(k) clearance for the VitalHold TM breast package on the Radixact System.
A PMA must be submitted to the FDA if the device is not eligible for the 510(k) clearance process.
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The FDA may review our 510(k) filing decision, and can disagree with our initial determination.
−Removed: 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.
−Removed: The FDA reviewed and cleared the most recent versions of the CyberKnife System and TomoTherapy platforms, including the Radixact System, in this fiscal year.
+Added: 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.
+Added: The FDA reviewed and cleared the most recent versions of the CyberKnife System and TomoTherapy platforms, including the Radixact System, in fiscal 2021.
Pervasive and continuing regulation.
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These include:
−Removed: 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;
+Added: 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;
Labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off‑label uses;
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Various warning labels must be affixed.
−Removed: 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
−Removed: and/or therapeutic X‑ray systems they assemble meet applicable requirements.
+Added: 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.
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Our operations are subject to broad and changing federal and state anti‑kickback laws.
−Removed: 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.
+Added: 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.
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Transparency laws.
−Removed: 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.
+Added: 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.
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Prior to enactment of the final rule, physician owned entities had increasingly become involved in the acquisition of medical technologies, including the CyberKnife platform.
−Removed: 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
−Removed: physicians who referred patients to the entity for services.
+Added: 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.
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Certain entities were not able to establish viable models for CyberKnife platform operation and therefore, canceled their CyberKnife platform purchase agreements.
−Removed: 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.
+Added: Accordingly, these regulations have resulted in cancellations of CyberKnife platform purchase agreements and could also reduce the attractiveness of medical
+Added: 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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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.
−Removed: The Health Insurance Portability and Accountability Act of 1996 (HIPAA), created two new federal crimes:
+Added: The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), created two new federal crimes:
healthcare fraud and false statements relating to healthcare matters.
4 unchanged sentences
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.
−Removed: 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.
+Added: 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”
−Removed: As a business associate, we are required to implement policies, procedures and reasonable and appropriate security measures to protect individually
−Removed: identifiable health information we receive from covered entities.
+Added: 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.
9 unchanged sentences
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.
−Removed: 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.
+Added: 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 directives and the European Committee for Standardization has promulgated standards regulating the design, manufacture, clinical trials, labeling and adverse event reporting for medical devices.
−Removed: Devices that comply with the requirements of the relevant directive will be entitled to bear 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.
+Added: Devices that comply with the requirements of the relevant directive will be entitled to bear the Conformité
+Added: 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 standards and directives 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.
1 unchanged sentence
Our facilities were first awarded the ISO 13485 certification in September 2002 and has been subsequently maintained through periodic assessments, and we are currently authorized to affix the CE mark to our products, allowing us to sell our products throughout the European Economic Area.
−Removed: The Medical Device Regulation (MDR) came into effect in the European Union in May 2021.
+Added: The Medical Device Regulation (“MDR”) came into effect in the European Union in May 2021.
We are required to obtain certification against the MDR to CE mark new products or to make significant changes to existing products.
2 unchanged sentences
We are also currently subject to regulations in Japan.
−Removed: 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.
+Added: 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.
2 unchanged sentences
The China Supervision and Regulation of Medical Devices (No.
−Removed: 680) requires licensing from the National Medical Products Administration (NMPA) to market, sell,
−Removed: and import our product type.
−Removed: The NMPA licenses require testing by the Beijing Institute for Medical Devices Testing (BIMT) specifically related to China variations of global safety and performance standards.
+Added: 680) requires licensing from the National Medical Products Administration (“NMPA”) to market, sell, and import our product type.
+Added: The NMPA licenses require testing by the Beijing Institute for Medical Devices Testing (“BIMT”) specifically related to China variations of global safety and performance standards.
We received and maintain NMPA licenses for various configurations of Radixact Treatment Delivery Systems, CyberKnife Treatment Delivery Systems, TomoTherapy Treatment Delivery Systems, and associated Precision and iDMS software products.
4 unchanged sentences
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.
−Removed: 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.
+Added: Certificate of need regulations may preclude our customers from acquiring one of our systems, and from performing stereotactic radiosurgery procedures using
+Added: one of our systems.
Several of our prospective customers currently are involved in appeals of certificate of need determinations.
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Our employees are critical to the success of our business.
−Removed: As of June 30, 2022, we had 1044 full-time employees, including 388 employees employed outside of the United States.
+Added: As of June 30, 2023, we had 1024 employees, including 411 employees employed outside of the United States.
We also engage part-time employees and independent contractors to supplement our workforce.
10 unchanged sentences
All SEC filings are also available at the SEC’s website at www.sec.gov.
−Removed: We also use our investor relations website as a channel of distribution for important company information.
+Added: 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.
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Risk Factors Summary
−Removed: Our business is subject to numerous risks and uncertainties, including those highlighted in Part II, Item 1A titled “Risk Factors.”
+Added: 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:
1 unchanged sentence
We face risks related to the current global economic environment, which could adversely affect our business, financial condition and results of operations.
−Removed: The effect of the COVID-19 pandemic could continue to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
If our products do not achieve widespread market acceptance, we will not be able to generate the revenue necessary to support our business.
−Removed: Our ability to achieve profitability depends in part on maintaining or increasing our gross margins on product sales and services.
+Added: 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.
+Added: The effect of the COVID-19 pandemic, or the perception of its effects, as well as the responses of governments and private industry on our operations and the operations of our customers and suppliers, have and could continue to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
We have outstanding indebtedness and may incur other debt in the future, which may adversely affect our financial condition and future financial results.
−Removed: Our operating results, including our quarterly orders, revenues and margins fluctuate from quarter to quarter and may be unpredictable, which may result in a decline in our stock price.
−Removed: Our industry is subject to intense competition and rapid technological change.
−Removed: 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.
−Removed: International sales of our products account for a significant portion of our revenue, which exposes us to risks inherent in international operations.
−Removed: Enhanced international tariffs that affect our products or components within our products, other trade barriers or a global trade war could increase our costs and materially and adversely affect our business operations and financial condition.
−Removed: The ongoing military action between Russia and Ukraine, and the global response to it, could adversely affect our business, financial condition and results of operations.
−Removed: We face risks related to the current global economic environment, which could adversely affect our business, financial condition and results of operations.
+Added: Our operating results, including our cash flows, quarterly orders, revenues and margins fluctuate from quarter to quarter and may be unpredictable, which may result in a decline in our stock price.
+Added: Our industry is subject to intense competition and rapid technological change, which may result in new products or treatments that are superior to the CyberKnife and TomoTherapy platforms.
+Added: We may be unable to anticipate or keep pace with changes in the marketplace and the direction of technological innovation and customer demands.
+Added: We are subject to risks arising from our international operations, which may adversely affect our business, financial condition, and results of operations.
+Added: Our results may 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.
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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.
−Removed: The inflationary environment could materially adversely impact our business and results of operations.
We depend on key employees, the loss of whom would adversely affect our business.
+Added: 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 could harm our business and financial condition.
Any actual or perceived failure by us to comply with legal or regulatory requirements related to privacy, cyber security and data protection in one or multiple jurisdictions could result in proceedings, actions or penalties against us.
+Added: 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.
−Removed: 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 for components of our product or related services, or be prevented from selling our product or components of our product.
+Added: We rely on third parties to perform spare parts shipping and other logistics functions on our behalf.
+Added: A failure or disruption at our logistics providers would adversely impact our business.
+Added: 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.
+Added: We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
It is difficult and costly to protect our intellectual property and our proprietary technologies and we may not be able to ensure their protection.
−Removed: 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.
Risks related to the regulation of our products and business
−Removed: Modifications, upgrades, new indications and future products related to our products may require new FDA 510(k) clearances or premarket approvals and similar licensing or approvals in international markets.
−Removed: 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.
+Added: 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.
−Removed: Healthcare reform legislation could adversely affect demand for our products, our revenue and our financial condition.
−Removed: Regulations related to “conflict minerals”
−Removed: may force us to incur additional expenses, may result in damage to our business reputation and may adversely impact our ability to conduct 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.
+Added: Future issuances of shares of our common stock could dilute the ownership interests of our stockholders.
The conditional conversion features of the Notes, if triggered, may adversely affect our financial condition and operating results.
−Removed: Provisions in the indenture for the Notes, the credit agreement for our New Credit Facility, 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.
+Added: Provisions in the indenture for the Notes, the credit 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
−Removed: Our operations are vulnerable to interruption or loss because of natural disasters, global or regional health pandemics or epidemics, terrorist acts and other events beyond our control, which would adversely affect our business.
+Added: Our liquidity could be adversely impacted by adverse conditions in the financial markets.
We operate in a rapidly changing environment that involves significant risks, a number of which are beyond our control.
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Risks Related to Our Business and Results of Operations
−Removed: We face risks related to the current global economic environment, including risks arising in connection with the COVID-19 pandemic, inflation or recession, 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 the CyberKnife and TomoTherapy platforms and implement the required facilities to house our systems.
+Added: We face risks related to the current global economic environment, including risks arising in connection with the COVID-19 pandemic, inflation or recession, 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.
−Removed: Concerns over economic and political stability, inflation levels and related efforts to mitigate inflation, a potential recession, the level of U.S.
−Removed: national debt, currency fluctuations and volatility, the rate of growth of Japan, China and other Asian economies, unemployment, the availability and cost of credit, trade relations, including the imposition of various sanctions and tariffs, the duration and severity of the COVID-19 pandemic, energy costs and geopolitical uncertainty and conflict have contributed to increased volatility and diminished expectations for the economy and the markets in general.
+Added: Concerns over economic and political stability;
+Added: inflation levels and related efforts to mitigate inflation;
+Added: a potential recession;
+Added: the level of U.S.
+Added: national debt, the U.S.
+Added: debt credit rating and U.S.
+Added: budgetary concerns;
+Added: currency fluctuations and volatility;
+Added: the rate of growth of Japan, China and other Asian economies;
+Added: unemployment;
+Added: the availability and cost of credit;
+Added: trade relations, including the imposition of various sanctions and tariffs in other countries;
+Added: the duration and severity of the COVID-19 pandemic;
+Added: energy costs;
+Added: instability in the banking and financial services sector and geopolitical uncertainty and conflict 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.
+Added: 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.
+Added: and globally, which has led to an increase in costs and caused changes in fiscal and monetary policy, including increased interest rates.
+Added: Other adverse impacts of recent macroeconomic conditions have been and may continue to be 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: For example, in fiscal year 2023, inflationary pressures resulted in rising costs for certain materials, including increased logistics costs, that have adversely affected our gross margins, which have had a material effect on our business, financial condition or results of operations.
+Added: Continued pressure from inflationary factors could further exacerbate these effects.
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.
−Removed: For example, of the United States has imposed tariffs on certain foreign products, including from China, that have resulted in and may result in future retaliatory tariffs on U.S.
+Added: For example, the United States has imposed tariffs on certain foreign products, including from China, that have resulted in and may result in future retaliatory tariffs on U.S.
goods and products.
We cannot predict whether these policies will continue, or if new policies will be enacted, or the impact, if any, that any policy changes could have on our business.
+Added: In addition, failure of the U.S.
+Added: 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.
−Removed: Additionally, uncertain credit markets and concerns regarding the availability of credit, including concerns related to the COVID-19 pandemic, inflation or a recession, could impact consumer and customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors, including financial institutions.
−Removed: If the current situation deteriorates or does not improve, our business could be negatively affected by factors such as reduced demand for our products resulting from a slow‑down or volatility in the general economy, supplier or customer disruptions and/or temporary interruptions in our ability to conduct day‑to‑day transactions through our financial intermediaries involving the payment to or collection of funds from our customers, vendors and suppliers, and delays associated with the ongoing COVID-19 pandemic.
−Removed: For example, in
−Removed: the United States, 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.
−Removed: 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 CyberKnife or TomoTherapy platforms, the cost of which can be substantial.
+Added: Additionally, 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
+Added: banking and financial services sector or concerns related to the COVID-19 pandemic, 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.
+Added: For example, in the United States, at least one customer has declared bankruptcy causing us to increase our bad debt reserve due to the expectation that they will be unable to pay us.
+Added: 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.
+Added: 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.
−Removed: An increase in delays and order cancellations of this nature would adversely affect our product sales, backlog and revenues, and therefore harm our business and results of operations.
−Removed: In addition, the ongoing global COVID-19 pandemic and other events that affect the global economy, has caused, and may continue to cause, uncertainty in the global markets.
−Removed: The risks related to the COVID-19 pandemic are discussed in more detail in our risk factor entitled “The effect of the COVID-19 pandemic, or the perception of its effects, on our operations and the operations of our customers and suppliers, could have a material adverse effect on our business, financial condition, results of operations, or cash flows.”
−Removed: The effect of the COVID-19 pandemic, or the perception of its effects, as well as the responses of governments and private industry on our operations and the operations of our customers and suppliers, have and could continue to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
−Removed: In fiscal year 2020, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China and was subsequently declared a pandemic, which has affected, and continues to affect, the worldwide economy, global operations and global supply chains.
−Removed: In addition, new variants of COVID-19 that are more contagious have also spread throughout the world.
−Removed: The COVID-19 pandemic continues to be prevalent and related government and private sector responsive actions have impacted and will likely continue to adversely affect our business operations.
−Removed: It is impossible to predict the full extent of the effects of the COVID-19 pandemic on our business, operations, financial condition or the economy.
−Removed: Governments, public institutions, and other organizations have taken and are taking certain preventative or protective measures to combat the spread of the pandemic.
−Removed: While we are unable to predict the full impact of the pandemic, we are closely monitoring the trends in the COVID-19 pandemic and are continually assessing its current and potential effects on our business.
−Removed: As a result of timing delays caused by the COVID-19 pandemic, we have and are continuing to experience disruptions in our sales and revenue cycle as well as declines in deliveries and installations of our products, which has adversely impacted the pace at which our backlog converts to revenue.
−Removed: These timing delays have been a result of various factors driven by the COVID-19 pandemic, including disruptions in the operations of our customers that have redirected customer resources to the COVID-19 response and away from purchases of capital equipment such as our products, disruptions and restrictions on our ability to travel to customer sites, disruptions in our supply chain, and manufacturing interruptions.
−Removed: We have also experienced delays in payment and planned installations as a result of the changes to and redirection of customer resources to the response to the COVID-19 pandemic and closures of customer facilities.
−Removed: A few customers have also requested to extend payment terms or temporarily suspend service and corresponding payment obligations and while we have only received a small number of requests thus far, as the pandemic and its effects continue, more customers may ask for the same, particularly, if the effects of the COVID-19 pandemic deepen or worsen.
−Removed: In addition, the COVID-19 pandemic and other factors continue to impact the global supply chain, causing disruptions to service providers, logistics and the flow and availability of supplies and products.
−Removed: In particular, we have experienced disruptions in parts of our supply chain that have resulted in delays in the receipt of certain components for our products as well as increased pricing pressure for such parts.
−Removed: These ongoing supply chain challenges and heightened logistics costs have affected our gross margins and net income (loss), and our current expectations are that gross margins and net income (loss) will continue to be adversely affected by increased material costs and freight and logistic expenses at least through the remainder of the calendar year of 2022, if not longer.
−Removed: Furthermore, certain parts required for the manufacture and servicing of our products are scarce and becoming increasingly difficult to source even at increased prices.
−Removed: If such parts become unavailable to us, we would not be able to manufacture or service our products, which would adversely impact revenue, gross margins, and net income (loss).
−Removed: Additionally, to protect the health and well-being of our employees, suppliers, and customers, we have also made modifications to employee travel and limited non-essential work travel, implemented remote work arrangements as most employees are advised to work from home, and cancelled or shifted some of our conferences
−Removed: and other marketing events to virtual through the calendar year of 2022.
−Removed: In addition, other impacts of the COVID-19 pandemic have included and could include significant and unpredictable reductions in the demand for our products, a deepening of the changes to the operations and workflows of our customers that could result in increased customer defaults or delays in payment;
−Removed: additional delays, cancellations and redirection of planned capital expenditures and installations of our system by our customers to focus resources on COVID-19;
−Removed: disruptions in our supply chain or a reduction or interruption in any of our manufacturing processes resulting in our inability to meet demand for our products or services;
−Removed: or closures of our key facilities or the facilities of our customers or suppliers.
−Removed: For example, our cancellations of orders have increased due to the COVID-19 pandemic.
−Removed: Further, a lack of coordinated response on or compliance with risk mitigation with respect to the COVID-19 pandemic could result in significant increases to the duration and severity of the pandemic and could have a corresponding negative impact on our business.
−Removed: In addition, there has been ongoing disruption and uncertainty in the economy related to the pandemic, including supply chain disruption, labor shortages and uncertainty in the financial markets, which has adversely impacted our revenue, net income (loss) and cash flow.
−Removed: We have also incurred additional expenses required to mitigate such impacts.
−Removed: These impacts could continue to affect our business as the COVID-19 pandemic progresses.
−Removed: The impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.
−Removed: In addition, the extent to which our operations and financial condition are affected by the COVID-19 pandemic, including our ability to execute our business strategies and initiatives in the expected time frame, will largely depend on future developments that cannot be accurately predicted at this time and are uncertain, including the spread, severity and potential resurgence of COVID-19, the impact of new COVID-19 variants, vaccination deployment efforts, and how long pandemic and associated health measures will last, among others.
−Removed: The situation is developing rapidly and additional impacts may arise that we are not aware of currently, however, the COVID-19 pandemic or the perception of its effects could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
−Removed: In addition, the COVID-19 pandemic and the various responses to it, may also have the effect of heightening many of the other risks discussed in this “Risk Factors”
+Added: 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.
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Any failure to expand and protect our existing installed base could adversely affect our operating results.
−Removed: 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.
+Added: 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.
−Removed: 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.
+Added: 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.
−Removed: In addition, hospitals and other health professionals have reduced staffing and reduce or postpone meetings with potential suppliers in response to the spread of an infectious disease, such as COVID-19, effectively delaying the decision on potential purchases of new products such as ours.
+Added: In addition, hospitals and other health professionals may reduce staffing and reduce or postpone meetings with potential suppliers in response to the spread of an infectious disease, such as COVID-19, effectively delaying the decision on potential purchases of new products such as ours.
These and other factors, including the following, may affect the rate and level of market acceptance of the CyberKnife and TomoTherapy platforms:
11 unchanged sentences
As of June 30, 2023, we had an accumulated deficit of $502.1 million.
−Removed: We may incur net losses in the future, particularly as selling and marketing activities increase ahead of any expected revenue.
+Added: 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.
2 unchanged sentences
Our ability to achieve profitability also depends on our ability to maintain or increase our gross margins on product sales and services.
−Removed: A number of factors may adversely impact such gross margins, including:
+Added: 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;
−Removed: lower selling pricing, which we have recently experienced;
+Added: lower selling pricing;
our ability to sell products and services, recognize revenue from our sales and the timing of revenue recognition and revenue deferrals;
11 unchanged sentences
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.
+Added: The effect of the COVID-19 pandemic, or the perception of its effects, as well as the responses of governments and private industry on our operations and the operations of our customers and suppliers, have and could continue to have a material adverse effect on our business, financial condition, results of operations, or cash flows.
+Added: Governments, public institutions, and other organizations have taken and are taking certain preventative or protective measures to combat the spread of the COVID-19 pandemic.
+Added: While we are unable to predict the full impact of the COVID-19 pandemic, we are closely monitoring the trends in the COVID-19 pandemic and are continually assessing its current and potential effects on our business.
+Added: For example, as a result of the COVID-19 related restrictions in China, sales in China have decreased and we have experienced delays in the JV obtaining certain necessary regulatory approvals for a Class B device.
+Added: Sales in China may continue to experience declines if additional COVID-19 related restrictions are initiated in the future.
+Added: In addition, as a result of timing delays caused by the COVID-19 pandemic, we have and are continuing to experience disruptions in our sales and revenue cycle as well as declines in deliveries and installations of our products, which has adversely impacted the pace at which our backlog converts to revenue.
+Added: These timing delays have been a result of various factors driven by the COVID-19 pandemic, including disruptions in the operations of our customers that have redirected customer resources to the COVID-19 response and away from purchases of capital equipment such as our products, disruptions and restrictions on our ability to travel to customer sites, disruptions in our supply chain, and manufacturing interruptions.
+Added: We have also experienced delays in payment and planned installations as a result of the changes to and redirection of customer resources to the response to the COVID-19 pandemic and closures of customer facilities, which may continue if COVID-19 resurges in certain areas, particularly as it relates to COVID-19 related lockdowns in China.
+Added: In addition, the COVID-19 pandemic and other factors impacted the global supply chain, causing disruptions to service providers, logistics and the flow and availability of supplies and products.
+Added: In particular, we have experienced disruptions in parts of our supply chain that have resulted in delays in the receipt of certain components for our products that have also delayed shipments of our products as well as increased pricing pressure for such parts.
+Added: These ongoing supply chain challenges and heightened logistics costs have affected our gross margins and net income (loss), and our current expectations are that gross margins and net income (loss) will continue to be adversely affected by increased material costs and freight and logistic expenses at least through the remainder of fiscal year 2024, if not longer.
+Added: Furthermore, certain parts required for the manufacturing and servicing of our products are scarce and becoming increasingly difficult to source, even at increased prices.
+Added: If such parts become unavailable to us, we would not be able to manufacture or service our products, which would adversely impact revenue, gross margins, and net income (loss).
+Added: Additionally, to protect the health and well-being of our employees, suppliers, and customers, we have implemented remote work arrangements.
+Added: Other impacts of the COVID-19 pandemic have included and could include significant and unpredictable reductions in the demand for our products;
+Added: a deepening of the changes to the operations and workflows of our customers that could result in increased customer defaults or delays in payment;
+Added: additional delays, cancellations and redirection of planned capital expenditures and installations of our system by our customers to focus resources on COVID-19;
+Added: a reduction or interruption in any of our manufacturing processes resulting in our inability to meet demand for our products or services;
+Added: or closures of our key facilities or the facilities of our customers or suppliers.
+Added: For example, cancellations of orders have increased due to the COVID-19 pandemic.
+Added: Further, a lack of coordinated response on or compliance with risk mitigation with respect to the COVID-19 pandemic could result in significant increases to the duration and severity of the pandemic and could have a corresponding negative impact on our business.
+Added: Additional impacts may arise that we are not aware of currently;
+Added: however, the COVID-19 pandemic or the perception of its effects could have a material adverse effect on our business, financial condition, results of operations, or cash flows.
+Added: In addition, the COVID-19 pandemic and the various responses to it, may also have the effect of heightening many of the other risks discussed in this “Risk Factors”
We have outstanding indebtedness in the form of Convertible Senior Notes and a credit facility and may incur other debt in the future, which may adversely affect our financial condition and future financial results.
−Removed: In August 2017, we issued $85.0 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2022 (the “3.75% Convertible Notes due 2022”).
−Removed: In May 2021, we issued $100.0 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2026 (the “3.75% Convertible Notes due 2026”
−Removed: and collectively, with the 3.75% Convertible Notes due 2022, the “Notes”).
+Added: In May 2021, we issued $100.0 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2026 (the “Notes”).
As our debt matures, we anticipate having to expend significant resources to either repay or refinance the Notes.
−Removed: For example, in May 2021, in connection with the issuance of the 3.75% Convertible Notes due 2026, we (i) exchanged approximately $82.1 million aggregate principal amount of our 3.75% Convertible Notes due 2022 for approximately $97.1 million aggregate principal amount of 3.75% Convertible Notes due 2026 and (ii) sold approximately $2.9 million aggregate principal amount of 3.75% Convertible Notes due 2026 for cash.
+Added: For example, in May 2021, in connection with the issuance of the Notes, we (i) exchanged approximately $82.1 million aggregate principal amount of our previously issued 3.75% Convertible Senior Notes due 2022 for approximately $97.1 million aggregate principal amount of the Notes and (ii) sold approximately $2.9 million aggregate principal amount of the Notes for cash.
If we decide to, or are required to, refinance the Notes in the future, we may be required to do so on different or less favorable terms or we may be unable to refinance the Notes at all, both of which may adversely affect our financial condition.
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and together with the “Term Loan Facility”, the “Credit Facilities”).
−Removed: The proceeds from the Credit Facilities, plus available cash on hand, were used to repay all outstanding borrowings under our prior credit facility.
As of June 30, 2023, we had total consolidated liabilities of approximately $425.6 million;
−Removed: including $100.5 million of Notes of which $2.9 million is classified as short-term, the Revolving Credit Facility of $5.0 million and the Term Loan Facility of $75.0 million, of which $5.7 million is classified as a short-term loan.
+Added: including long-term liabilities of the Notes of $100.0 million, the Revolving Credit Facility of $10.0 million and the Term Loan Facility of 70.0 million, of which $5.7 million is classified as short-term loan.
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:
−Removed: affecting our ability to satisfy our obligations under the Notes and New Credit Facilities;
+Added: affecting our ability to satisfy our obligations under the 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;
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limiting our flexibility in planning for, or reacting to, changes in our business and industry;
−Removed: increasing our vulnerability to downturns in our business, our industry or the economy in general, including any such downturn related to the impact of the COVID-19 pandemic.
−Removed: The credit agreement governing the Credit Facilities also include certain restrictive covenants that limit, among other things, our ability and our subsidiaries’
+Added: increasing our vulnerability to downturns in our business, our industry or the economy in general.
+Added: The credit agreement governing the Credit Facilities (the “Existing Credit Agreement”) also include 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.
−Removed: In addition, such agreements require us to meet certain financial covenants, including a consolidated fixed charge coverage ratio and consolidated senior net leverage ratio, as defined in the credit agreement governing the Credit Facilities.
+Added: In addition, such agreements require us to meet certain financial covenants, including a consolidated fixed charge coverage ratio and consolidated senior net leverage ratio, as defined in the Existing Credit Agreement.
+Added: In October 2022, we entered into an amendment with respect of our Existing Credit Agreement to change the requirements of the financial maintenance covenants under the Existing Credit Agreement for the fiscal quarter ending December 31, 2022 through the end of the fiscal quarter ending June 30, 2023.
+Added: However, following June 30, 2023, our financial maintenance covenants under the Existing Credit Agreement will become more stringent and, as a result could be more difficult to comply with.
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.
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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.
−Removed: From time to time, we may not be in compliance with such covenants or other terms governing the Credit Facilities and we may be required to obtain waivers or amendments to the credit agreement from our lenders 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.
−Removed: If we are unable to obtain necessary waivers 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 favorable to us.
+Added: From time to time, we may not be in compliance with such covenants or other terms governing the Credit Facilities and we may be required to obtain waivers or amendments to the Existing Credit Agreement from our lenders 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.
+Added: If we are unable to obtain necessary waivers and the debt under such credit facility is accelerated, we would be required to obtain
+Added: replacement financing at prevailing market rates, which may not be favorable to us.
Additionally, a default on indebtedness could result in a default under the terms of the indenture governing the Notes.
There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated.
+Added: In addition, our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not limited to the Credit Facilities and Notes.
+Added: If the amount outstanding under the Credit Facilities remained at this level 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 $0.4 million.
Our operating results, including our cash flows, quarterly orders, revenues and margins fluctuate from quarter to quarter and may be unpredictable, which may result in a decline in our stock price.
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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.
−Removed: 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
−Removed: finalize the sale, which make it more difficult to predict the quarter in which the sale will occur.
+Added: 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 and are continuing to experience delays in orders and installations due to the impact of the COVID-19 pandemic at our customer sites.
−Removed: To protect the health and well-being of our employees, suppliers, and customers, we have also made modifications to employee travel and limited non-essential work travel.
The COVID-19 pandemic has impacted and may continue to impact our business operations, including our employees, customers and partners, and there is substantial uncertainty in the nature and degree of its continued effects over time.
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The COVID-19 pandemic has adversely impacted the pace at which the backlog converts to revenue.
−Removed: This is primarily the result of delays in the timing of deliveries and installations in fiscal 2020 and 2021 caused by the COVID-19 pandemic, which resulted in decreased revenue for these periods.
−Removed: We expect that such delays in deliveries and installations will continue to some degree through the remainder of calendar year of 2022, which would have a negative impact on our revenue during such period.
+Added: This is primarily the result of delays in the timing of deliveries and installations in fiscal 2020 through 2022 caused by the COVID-19 pandemic, which resulted in decreased revenue for these periods.
+Added: These delays in deliveries and installations may continue, to some degree, through the remainder of calendar year 2023, which could have a negative impact on our revenue during such period.
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:
−Removed: economic or political instability, including volatility related to the COVID-19 pandemic;
+Added: economic or political instability, including volatility related to the current global economic environment and the COVID-19 pandemic;
delays in the customer obtaining or inability of a customer to obtain funding or financing;
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Our operating results may also be affected by a number of other factors, some of which are outside of our control, including:
−Removed: delays in business operations of our customers or vendors, construction at customer sites and installation, including such delays caused by the impact of the COVID-19 pandemic or supply chain delays;
+Added: delays in business operations of our customers or vendors, construction at customer sites and installation, including delays caused by the impact of the COVID-19 pandemic or 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;
−Removed: delays in shipment due to, for example, 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;
−Removed: delays in our manufacturing processes or unexpected manufacturing difficulties, including due to COVID-19 related supply chain and logistics challenges;
+Added: 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;
+Added: 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;
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We report our orders and backlog on a quarterly and annual basis.
−Removed: Unlike revenues, orders and backlog are not defined by U.S.
−Removed: GAAP, and are not within the scope of the audit conducted by our independent registered public accounting firm.
+Added: Unlike revenues, orders and backlog are not defined by United States generally accepted accounting principles (“U.S.
+Added: 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.
−Removed: In addition, we have experienced an increase in cancellations beyond historical levels due to the uncertainties surrounding the effects of the COVID-19 pandemic.
−Removed: 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.
+Added: 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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Several of these competitors are also able to leverage their fixed sales, service and other costs over multiple products or product lines.
−Removed: In particular, we compete with a number of existing radiation therapy equipment companies, including Varian, a Siemens Healthineers company, Elekta AB (“Elekta”), ViewRay, Inc., RefleXion Medical Inc.
+Added: 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.
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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.
−Removed: In May 2017, Varian launched a radiation therapy product called Halcyon which they have positioned against our TomoTherapy platform.
−Removed: Additionally, in September 2019, Varian introduced a related device called Ethos, designed to allow on-couch adaptation and treatment monitoring.
+Added: Varian was acquired by Siemens Healthineers in 2021,which may result in Varian having greater resources and increase their ability to develop new products and technologies and provide better pricing to customers.
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, drug treatment, gene therapy (which is the treatment of disease by replacing, manipulating, or supplementing nonfunctional genes) and other approaches.
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We are subject to risks arising from our international operations, which may adversely affect our business, financial condition, and results of operations.
−Removed: We derive a majority of our revenue from our international operations, and we plan to continue expanding our business in international markets in the future.
+Added: 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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operations, we are affected by economic, business, regulatory, social, and political conditions in foreign countries, including the following:
−Removed: economic or political instability in the world or in particular regions or countries in which we do business, including the market volatility resulting from the COVID-19 pandemic and, conflicts or war, such as the war in Ukraine;
+Added: economic or political instability in the world or in particular regions or countries in which we do business, including the market volatility resulting from the COVID-19 related restrictions and conflicts or war, such as the war in Ukraine;
import delays;
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compliance with differing foreign regulatory requirements to sell and market our products;
+Added: 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;
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;
−Removed: effective compliance with privacy, data protection and information security laws, such as the European Union General Data Protection Regulation (the “GDPR”) and new regulations in China;
+Added: 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;
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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;
−Removed: relations with the governments of the foreign countries in which we operate;
the inability to obtain required export or import licenses or approvals;
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If we or our partners are impacted by any of these factors, our business, financial condition and operating results could be adversely affected.
+Added: Our results have been and may continue to be impacted by changes in foreign currency exchange rates.
+Added: Our operating results are subject to volatility due to fluctuations in foreign currency exchange rates.
+Added: Currently, the majority of our international sales are denominated in U.S.
+Added: As a result, an increase in the value of the U.S.
+Added: Dollar relative to foreign currencies could require us to reduce our sales price or make our products less competitive in international markets.
+Added: Foreign exchange continues to be a significant headwind as the U.S.
+Added: Dollar has strengthened recently, which 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.
+Added: decline as we may not be able to raise local prices to fully offset the strengthening of the U.S.
+Added: Also, if our international sales continue to increase, we may enter into a greater number of transactions denominated in non‑U.S.
+Added: Dollars, which would expose us to foreign currency risks, including changes in currency exchange rates.
+Added: 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.
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 increase our costs and materially and adversely affect our business operations and financial condition.
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Any exports or sales of our products into Russia and Belarus may be impacted by these restrictions.
−Removed: There is currently significant uncertainty about the future relationship between the U.S.
+Added: The military conflict in Ukraine has also led to an unprecedented 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.
+Added: In response to new 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.
+Added: 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.
+Added: 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.
+Added: 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”
+Added: There is also 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.
−Removed: Since the beginning of 2018, there has been increasing public threats and, in some cases, legislative or executive action, from U.S.
+Added: Since the beginning of 2018, there has been legislative or executive action, from U.S.
and foreign leaders regarding instituting tariffs against foreign imports of certain materials.
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China has responded to these tariffs with retaliatory tariffs ranging from 5% to 25% on a wide range of products from the U.S., which include certain of our products.
−Removed: Higher duties on existing tariffs and further rounds of tariffs have been announced or threatened by the U.S.
−Removed: and Chinese leaders.
Although the U.S.
−Removed: and China signed an initial trade deal in January 2020 and China announced a one year tariff exemption for medical linear accelerators in September 2019 (which was further extended through May 31, 2022 and we have submitted documentation in support of a longer-term extension), there has been a change in the U.S.
−Removed: presidential administration and, for that, and other reasons, there is no assurance that the trade deal will be signed or that the exemption on medical linear accelerators will continue beyond the extended term or that we will continue to qualify for such exemption.
+Added: and China signed an initial trade deal in January 2020 and we have thus far been able to obtain tariff exemptions for medical linear accelerators imported into the U.S.
+Added: from China, there has been a change in the U.S.
+Added: presidential administration and, for that, and other reasons, there is no assurance that the exemption on medical linear accelerators will continue or that we will continue to qualify for such exemption.
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.
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These tariffs are subject to a number of uncertainties as they are implemented, including future adjustments and changes.
−Removed: The ultimate reaction of other countries and the impact of these tariffs or other actions on the U.S., China, 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.
+Added: 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.
−Removed: could result in the adoption of additional tariffs by China and other countries, as well as further retaliatory actions by any affected country.
+Added: could result in the adoption of additional tariffs by other countries, as well as 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.
−Removed: 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 and, in particular, trade between China and the U.S.
+Added: 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.
−Removed: The ongoing military action between Russia and Ukraine, and the global response to it, could adversely affect our business, financial condition and results of operations.
−Removed: On February 24, 2022, Russian military forces commenced military operations in Ukraine, and sustained conflict and disruption in the region is likely.
−Removed: The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable and could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.
−Removed: The military conflict in Ukraine has led to an unprecedented 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.
−Removed: In response to new 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.
−Removed: 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.
−Removed: The situation is rapidly evolving, 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.
−Removed: 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”
−Removed: We are actively monitoring the situation in Ukraine and assessing its impact on our business, including our business partners and customers, although our business operations involving Russia and Ukraine do not constitute a material portion of our business.
−Removed: However, the extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.
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.
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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.
−Removed: In addition, the COVID-19 pandemic 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.
−Removed: We may also experience limitations in the availability of qualified personnel as a result of shelter-in-place rules, quarantine requirements, or illness.
+Added: In addition, the macroeconomic environment and the COVID-19 pandemic 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.
+Added: In addition, as a result of COVID-related restrictions in China, we may also experience limitations in the availability of qualified personnel.
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.
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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.
−Removed: 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.
+Added: Because our manufacturing
+Added: 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.
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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.
+Added: 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.
+Added: We had one customer that represented 10% or more of total net revenue for the years ended June 30, 2023, 2022, and 2021,
+Added: respectively.
+Added: 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:
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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.
−Removed: 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
−Removed: 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.
+Added: 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.
−Removed: 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, all of which will be more difficult to accomplish the longer that our employees must work remotely from home.
+Added: 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, all of which will be more difficult to accomplish the more employees we have that work remotely from home.
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.
−Removed: 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.
+Added: We cannot be certain that our personnel, systems, procedures and internal controls will be adequate to support our future operations and any
+Added: 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.
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Our business exposes us to potential liability risks that are inherent in the manufacturing, marketing, sale, installation, servicing, and support of medical device products.
−Removed: We may be held liable if one of our CyberKnife or TomoTherapy platforms or our Precision Treatment Planning with iDMS Data Management System software causes or contributes to injury or death or is found otherwise unsuitable during usage.
+Added: We may be held liable if one of our CyberKnife or TomoTherapy platforms or our software, including the Precision Treatment Planning 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.
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We have voluntarily initiated recalls and other product corrections in the past.
−Removed: For example, although we have not initiated any product recalls that were reportable to the FDA in fiscal year 2022, in fiscal year 2021, we voluntarily initiated one recall related to the TomoTherapy platform and one recall on the CyberKnife platform, both of which were reported to the FDA.
+Added: For example, although we did not initiate any product recalls that were reportable to the FDA in fiscal year 2023;
+Added: in fiscal year 2021, we voluntarily initiated one recall related to the TomoTherapy platform and one recall on the CyberKnife platform;
+Added: and at the beginning of fiscal year 2024, we voluntarily initiated one recall related to the Radixact platform, which were 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.
−Removed: A required notification of a correction or removal to a regulatory authority or recall could result in an investigation by regulatory authorities of
−Removed: our products, which could in turn result in required recalls, restrictions on the sale of the products or other civil or criminal penalties.
+Added: 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.
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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.
−Removed: 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.
−Removed: In addition, as a result of global supply chain disruptions, we have experienced and continue to experience disruptions in parts of our supply chain, which has caused 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 in the near term, and increasing the risk that these supply chain disruptions could materially affect our ability to meet customer demand.
−Removed: Furthermore, as a result of the effects of the COVID-19 pandemic and associated supply chain challenges, some of our suppliers have limited or reduced the sale of such components to us or increased the cost of certain components to us.
+Added: 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.
+Added: In addition, as a result of global supply chain disruptions, we have experienced and continue to experience disruptions in parts of our supply chain, which has caused 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 in the near
+Added: term, and increasing the risk that these supply chain disruptions could materially affect our ability to meet customer demand.
+Added: Furthermore, as a result of the effects of the macroeconomic conditions, including inflation, the COVID-19 pandemic and associated supply chain challenges, some of our suppliers have limited or reduced the sale of such components to us or increased the cost of certain 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.
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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.
−Removed: 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 could cause a significant increase in the costs of these components, which could affect our results of operations.
+Added: 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 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.
−Removed: Difficulties in obtaining a sufficient supply of component materials continue to increase, and we expect such difficulties to persist at least through the remainder of the calendar year of 2022, if not longer.
+Added: Difficulties in obtaining a sufficient supply of component materials continue to increase, and we expect such difficulties to persist at least through the remainder of fiscal year 2024, if not longer.
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.
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We cannot assure you that our single‑source suppliers will be able or willing to meet our future demands.
−Removed: 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, and maintaining our historical levels of inventory has been adversely impacted by the COVID-19 pandemic.
+Added: 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, and maintaining our historical levels of inventory has been adversely impacted by the COVID-19 pandemic and macroeconomic environment.
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.
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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.
−Removed: The inflationary environment could materially adversely impact our business and results of operations.
−Removed: Our operating results could be materially impacted by changes in the overall macroeconomic environment and other economic factors that impact customer confidence and spending, including capital spending.
−Removed: Changes in economic conditions, supply chain constraints, logistics challenges, the conflict between Russia and Ukraine and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation than previously experienced or expected, which has lead to an increase in costs.
−Removed: 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.
−Removed: 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.
We depend on key employees, the loss of whom would adversely affect our business.
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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.
−Removed: Further, the continuing or recurring restrictions placed on recruiting, training and retention by the ongoing COVID-19 pandemic may further exacerbate these conditions and interfere with our ability to find and retain qualified personnel.
−Removed: 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, particularly in the San Francisco Bay Area where our headquarters is located, from other medical equipment and software manufacturers, technology companies, universities and research institutions.
+Added: 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.
+Added: 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.
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 in the past conducted reductions in force in order to optimize our organizational structure and reduce costs, and certain senior personnel have also departed for various reasons.
−Removed: At the same time, we may face high turnover, requiring us to expend time and resources, including financial resources, to source, train and integrate new employees.
+Added: For example, in December 2022, we reduced the global workforce by four and half percent.
+Added: 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,
+Added: 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.
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Information technology helps us operate more efficiently, interface with customers, maintain financial accuracy and efficiency and accurately produce our financial statements.
−Removed: 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 intellectual property through a cyberattack (including ransomware and other attacks) or other security breach or incident.
+Added: 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 breach or incident.
While management is committed to identifying and improving data security risks 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.
−Removed: Any cyberattacks or other security breaches or incidents we suffer could expose us to a risk of lost or corrupted information, unavailability of information, unauthorized disclosure of information, claims, litigation and possible liability to employees, customers and others, and investigations and proceedings by regulatory authorities.
−Removed: In addition, we have moved some of our data and information to a cloud computing system, where applications and data are hosted, accessed and processed through a third party provider over a broadband internet connection.
−Removed: Consequently, we are dependent on the security measures of the provider of this cloud computing system, and we may also utilize third-party providers for other services such as human resources, electronic communications and financial functions.
−Removed: There have been and may continue to be significant attacks on certain third-party providers, and we cannot guarantee that our or our third-party providers’
−Removed: systems and networks have not been breached or that they do not
−Removed: contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or the systems and networks of third parties that support us and our platform.
−Removed: Further, we could be subject to outages, cyberattacks, and other security breaches and incidents suffered by the third party service provider.
−Removed: Currently, during the COVID-19 pandemic, more of our personnel and the personnel of our service providers are working remotely, which increases the risks of security breaches and cyberattacks.
−Removed: Additionally, cybersecurity researchers have observed increased cyberattack activity, and warned of heightened risks of cybersecurity attacks, in connection with the military conflict in Ukraine.
+Added: 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 by regulatory authorities.
+Added: Additionally, cyberattack activity may be heightened in connection with the military conflict in Ukraine.
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.
−Removed: 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, 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.
+Added: 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.
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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.
−Removed: 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 person or to the public and may compromise our security systems.
−Removed: There can be no assurance that any efforts we make to prevent against such privacy or security breaches or incidents will prevent breakdowns or breaches or incidents in our systems or those of our third-party service providers that could adversely affect our business.
+Added: 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.
+Added: 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 user names, passwords or other sensitive information, which may in turn be used to access our information technology systems.
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e-mails attempting to induce them to divulge sensitive information.
−Removed: In addition, unauthorized persons may attempt to hack into 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.
−Removed: As the techniques used to obtain unauthorized access to our systems change frequently and may be difficult to detect, we may not be able to anticipate and prevent these intrusions or mitigate them when they occur.
+Added: 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.
+Added: In addition, unauthorized persons may attempt to hack into our products or systems to obtain personal data relating to patients or employees, our confidential or proprietary
+Added: 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.
+Added: 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.
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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.
−Removed: A network security or systems security breach or 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, 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 loss of information, 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 financial results.
−Removed: To date, we have not experienced any material impact to the business or operations resulting from data, cybersecurity attacks or other security breaches;
−Removed: however, because of the 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, there is the potential that we could be adversely impacted.
−Removed: This impact could result in reputational, competitive, operational, or other business harm as well as financial costs and regulatory action.
+Added: 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 financial results.
+Added: 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.
+Added: 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.
−Removed: Any actual or perceived failure by us to comply with legal or regulatory requirements related to privacy, cyber security and data protection in one or multiple jurisdictions could result in proceedings, actions or penalties against us.
−Removed: 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 personally identifiable information and other personal, customer or other data, the scope of which is continually evolving and subject to differing interpretations.
+Added: 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.
+Added: 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, cyber security 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.
−Removed: For example, in the U.S., Health Insurance Portability and Accountability Act (“HIPAA”) privacy and security rules 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 regarding privacy and cyber security.
−Removed: In Europe, the General Data Protection Regulation (“GDPR”), which went into effect in May 2018, imposes several stringent requirements for controllers and processors of personal data that will increase our obligations and, in the event of violations, may impose significant
−Removed: fines of up to the greater of 4% of worldwide annual revenue or €20 million.
−Removed: In the UK, the Data Protection Act of 2018 and the UK GDPR, which 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.
+Added: 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 regarding privacy and cyber security.
+Added: In Europe, the GDPR imposes several stringent requirements for controllers and processors of personal data that will increase our 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.
+Added: 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.
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of personal data from our employees and European customers and users, both the EU-U.S.
−Removed: Privacy Shield and standard contractual clauses issued by the European Commission (the "EU SCCs") have been subject to legal challenge.
+Added: 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.
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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”).
−Removed: 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 the EU SCCs that address certain concerns of the CJEU.
−Removed: Existing data transfers relying on the old EU SCCs can continue to be in effect until December 27, 2022, after which the revised EU SCCs will be required for all data transfers.
−Removed: The United Kingdom also has issued new standard contractual clauses (the "UK SCCs") that became effective March 21, 2022, and which also are required to be implemented over time.
+Added: 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.
+Added: The United Kingdom also has
+Added: issued new standard contractual clauses (the “UK SCCs”) that became effective March 21, 2022, and which are required to be implemented.
+Added: In March 2022, the EU and U.S.
+Added: reached an agreement in principle on a new EU-U.S.
+Added: Data Privacy Framework (“DPF”).
+Added: In October 2022, the U.S.
+Added: issued an executive order in furtherance of this framework, on which basis the European Commission adopted an adequacy decision with respect to the DPF in July 2023, allowing for the DPF to be implemented and available for companies to use to legitimize transfers of personal data from the E.U.
+Added: It remains unclear, however, whether this new framework will be appropriate for us to rely upon, and it may be subject to legal challenge.
+Added: Additionally, the European Commission’s adequacy decision regarding the DPF provides 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.
The CJEU Decision, the revised EU SCCs and UK SCCs, regulatory guidance and opinions, 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 the EEA, Switzerland, and the United Kingdom, 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.
−Removed: For example, the People’s Republic of China 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.
−Removed: Additionally, the Personal Information Protection Law (“PIPL”) of the People’s Republic of China (“PRC”), was adopted on August 20, 2021, and went into effect on November 1, 2021.
+Added: 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.
+Added: 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.
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administration is engaged in a comprehensive 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.
−Removed: President Joseph 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.
+Added: 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.
In 2019, an executive order citing national security risks in the telecommunications sector served to block U.S.
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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.
−Removed: Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), approved by California voters in November 2020, will go into effect on January 1, 2023.
−Removed: The CPRA, which amends the CCPA, creates additional obligations relating to California consumers' personal information beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023.
−Removed: The CPRA, which significantly modifies the CCPA, could potentially result in further uncertainty and require us to incur additional
−Removed: costs and expenses in an effort to comply.
+Added: Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), approved by California voters in November 2020, became effective on January 1, 2023.
+Added: The CPRA, which significantly modifies 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.
−Removed: For example, in March 2021, Virginia enacted the Virginia Consumer Data Protection Act that will go into effect on January 1, 2023, in July 2021, Colorado enacted the Colorado Privacy Act that will take effect on July 1, 2023, in March 2022 Utah enacted the Utah Consumer Privacy Act that will take effect on December 31, 2023, and in May 2022, Connecticut enacted the Act Concerning Personal Data Privacy and Online Monitoring that will take effect on July 1, 2023.
+Added: For example, Virginia, Colorado, Utah, and Connecticut all have enacted state laws that have become, or will become, effective in 2023;
+Added: Texas, Montana, Oregon, and Florida have adopted laws that will become effective in 2024, Iowa and Tennessee have adopted laws that will become effective in 2025;
+Added: and Indiana has adopted a law that will become effective in 2026.
+Added: In addition, Delaware has passed a law that is awaiting signature by its state governor and that would go into effect in 2025.
These new state laws share similarities with the CCPA, CPRA, and legislation proposed in other states.
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federal government is contemplating privacy legislation.
−Removed: 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.
+Added: 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
+Added: our data handling practices and impose additional costs and burdens, including risks of regulatory fines, litigation and associated reputational harm.
In addition, U.S.
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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.
−Removed: Privacy, cyber security and data protection legislation around the world is comprehensive and complex and there has been a recent trend towards more stringent enforcement of requirements regarding protection and confidentiality of personal data.
+Added: Privacy, cyber security 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.
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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.
−Removed: Any inability to adequately address concerns relating to privacy, data protection or cyber security, even if unfounded, or 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.
+Added: Any inability to adequately address concerns relating to privacy, data protection or cyber security, 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.
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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.
−Removed: In addition, actions by the government, downturns in the economy and other factors outside of our control could negatively affect the number of individuals covered by health insurance.
−Removed: For example, in connection with COVID-19-related layoffs, many individuals have lost their employer-covered health insurance and there is uncertainty as to when or if such coverage will be re-established.
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.
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We also have limited clinical data directly comparing the effectiveness of the CyberKnife platform to other competing platforms.
−Removed: Future patient studies or clinical experience may indicate that treatment with the CyberKnife platform does not improve patient survival or outcomes.
−Removed: Likewise, because the TomoTherapy platform have only been on the market since 2003, we have limited complication or patient survival rate data with respect to treatment using the systems.
−Removed: In addition, while the effectiveness of radiation therapy is well understood, there is a growing but still limited number of peer‑reviewed medical journal publications regarding the efficacy of highly conformal treatment such as that delivered by the TomoTherapy platform.
+Added: 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.
+Added: 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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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.
−Removed: We rely on third parties to perform spare parts shipping and other logistics functions on our behalf.
−Removed: A failure or disruption at our logistics providers would adversely impact our business.
+Added: We rely on third parties to perform shipping and logistics functions on our behalf.
+Added: Failures or disruptions at our logistics providers has occurred and could continue to occur, which would adversely impact our business.
Customer service is a critical element of our sales strategy.
−Removed: 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
−Removed: Our logistics providers may terminate their relationship with us, suffer an interruption in their business, including as a result of COVID-19, 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.
−Removed: For example, we have experienced delays in shipment of parts to customers as well as increased freight and logistics expenses, which may intensify if the COVID-19 pandemic continues to disrupt the global supply chain.
−Removed: 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 the remainder of the calendar year of 2022, if not longer.
+Added: 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.
+Added: Our logistics providers may terminate their relationship with us, suffer an interruption in their business, including as a result of macroeconomic factors or COVID-19, 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.
+Added: For example, we have experienced and continue to experience delays in shipment of parts to customers as well as increased freight and logistics expenses, which has intensified as a result of macroeconomic factors and may intensify if such factors continues to disrupt the global supply chain.
+Added: 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 the remainder of fiscal year 2024, if not 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.
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Regardless of the merit of infringement claims, they can be time‑consuming and result in costly litigation and diversion of technical and management personnel.
−Removed: 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.
+Added: Some of our competitors may be able to sustain the costs of complex patent litigation
+Added: 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.
−Removed: Also, because we purchase major components for each of our products from outside suppliers, we face the additional risk that infringement claims may be brought against us based on patents and other 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.
−Removed: 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
−Removed: products (or components of our products) unless we obtain a license or are able to redesign the product to avoid infringement.
+Added: 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 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.
+Added: 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.
+Added: 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.
+Added: 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.
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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.
−Removed: 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.
+Added: There also may be countries in which we sell or intend to sell the CyberKnife or TomoTherapy platforms
+Added: 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.
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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.
−Removed: Damage awards resulting from successful litigation in foreign jurisdictions may not be in
−Removed: amounts commensurate with damage awards in the U.S.
+Added: 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.
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Unfavorable results of legal proceedings could materially and adversely affect our financial condition.
−Removed: We are and may become a party to legal proceedings, claims 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.
+Added: 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.
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These approval and bidding processes can be lengthy.
−Removed: Selling our systems, from first contact with a potential customer to a
−Removed: complete order, generally spans six months to two years and involves personnel with multiple skills.
+Added: Selling our systems, from first contact with a potential customer to a complete order, generally spans six months to two years and involves personnel with multiple skills.
The sales process in the U.S.
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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.
−Removed: In addition, as a result of the COVID-19 pandemic and the disruption to their operations, certain customers have experienced and may continue to experience delays in construction, shipment or installation and some have failed to timely pay their obligations when due.
+Added: In addition, disruption in operations of certain customers caused by the COVID-19 pandemic or other macroeconomic factors have resulted in delays in construction, shipment or installation and some have failed to timely pay their obligations when due.
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.
−Removed: 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.
+Added: 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.
+Added: 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.
+Added: As a result of these fluctuations, it is likely that in some future quarters, our operating results will fall below the
+Added: expectations of securities analysts or investors.
If that happens, the market price of our stock would likely decrease.
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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.
−Removed: We cannot control the efforts and resources our third‑party distributors will devote to marketing the CyberKnife or TomoTherapy platforms.
+Added: 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, including as a result of concerns regarding the COVID-19 pandemic, 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.
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If we are unable to attract additional international distributors, our international revenue may not grow.
−Removed: If our distributors experience difficulties, do not comply with regulatory or
−Removed: 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.
+Added: 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.
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We offer longer or extended payment terms for qualified customers in some circumstances.
−Removed: As of June 30, 2022, customer contracts with extended payment terms of more than one year amounted to approximately 6% of our current accounts receivable balance.
+Added: As of June 30, 2023, customer contracts with extended payment terms of more than one year amounted to approximately 6% 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.
−Removed: In addition, as a result of the COVID-19 pandemic and the resulting disruption to the operations of our customers, we have experienced and may continue to experience increased requests by our customers for extended payment terms as well as temporary suspensions of service and the corresponding payment obligations.
This may result in an increase in payment defaults, which would negatively affect our revenue.
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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.
−Removed: For example, we completed our capital contributions to the JV in the second quarter of fiscal 2020 and one system upgrade in the quarter ended September 30, 2020.
+Added: 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.
−Removed: For example, in the second quarter of fiscal 2021, revenue recognized from the JV was lower than expected due to the JV not achieving its plan for the quarter, which adversely affected our revenue and adjusted EBITDA;
+Added: 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.
−Removed: For example, any delays in the JV obtaining necessary regulatory clearances for a Class B device, in customers in China obtaining Class A or Class B user licenses or in the subsequent tender process to complete the sale could
−Removed: affect the JV’s expected ability to initiate sales, recognize revenue and achieve revenue and orders expectations in China;
+Added: For example, any delays in the JV obtaining necessary regulatory clearances for a Class B device, 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;
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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.
−Removed: As a result of these and other factors, we may not realize the
−Removed: expected benefits of any acquisition or such benefits may not be realized at expected levels or within the expected time period.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: For example, any sustained disruption in the capital markets from the global economic environment could negatively impact our ability to raise capital.
+Added: 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.
+Added: Failures at banks and other financial institutions, such as the failure at Silicon Valley Bank in March 2023, or issues in the broader U.S.
+Added: financial system, including uncertainty related to the debt ceiling, 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.
+Added: 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.
+Added: Also, our debt levels may impair our ability to obtain additional financing in the future.
+Added: The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders.
+Added: We cannot assure that additional financing, if required or desired, will be available in amounts or on terms acceptable to us, if at all.
+Added: 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 could be significantly impaired, and our business may be adversely affected.
+Added: 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.
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In addition, as of June 30, 2023, we had federal and state research and development tax credit carryforwards of approximately $27.9 million and $22.6 million, respectively.
−Removed: If not utilized, the California research credits have no expiration date, but the federal research credits and other non-California state research credits will begin to expire in 2023.
+Added: 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 2024.
The Tax Act legislation, as modified by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), among other things, includes changes to the rules governing net operating losses.
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For state income tax purposes, there may be periods during which the use of net operating losses is suspended or otherwise limited.
−Removed: On February 9, 2022, California enacted 2022 CA SB11, which shortens the previously enacted suspension on the use of net operating losses and prior limits on the use of business tax credits, including the research and development credit.
In addition, utilization of our net operating loss and credit carry-forwards is subject to annual limitation due to the application of the ownership change limitations provided by Section 382 of the Internal Revenue Code 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 Internal Revenue Code.
−Removed: We are subject to the tax laws of various foreign jurisdictions, which are subject to unanticipated changes and interpretation and could harm our future results.
−Removed: The application of tax laws of various foreign jurisdictions is subject to interpretation and depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.
+Added: 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 research and experimental expenditures and although this change did not have an impact on our current consolidated financial statements, it may have an impact on future periods as our research and experimental expenditures have been a material amount on our financial statements.
+Added: 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.
+Added: 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.
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Further, tax laws are subject to change, which could adversely impact our tax rate.
−Removed: For example, the current administration has proposed tax reform legislation to impose a global minimum tax, which could result in increased marginal corporate tax rates.
−Removed: A number of countries, as well as organizations such as the Organization for Economic Cooperation and Development, support the global minimum tax initiative.
+Added: A number of countries, as well as organizations such as the Organization for Economic Cooperation and Development, support the 15% global minimum tax initiative, and are beginning to adopt laws to implement this initiative.
Such countries and organizations are also actively considering changes to existing tax laws or have proposed or enacted new laws 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.
−Removed: Our results may be impacted by changes in foreign currency exchange rates.
−Removed: Currently, the majority of our international sales are denominated in U.S.
−Removed: As a result, an increase in the value of the U.S.
−Removed: Dollar relative to foreign currencies could require us to reduce our sales price or make our products less competitive in international markets.
−Removed: Dollar strengthens, it could cause potential delays in orders and we may see our sales decline.
−Removed: Also, if our international sales increase, we may enter into a greater number of transactions denominated in non‑U.S.
−Removed: Dollars, which would expose us to foreign currency risks, including changes in currency exchange rates.
−Removed: 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 fail to maintain an effective system of internal control over financial reporting, our ability to produce timely and accurate financial results could be impaired.
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If we cannot maintain effective controls and provide timely and reliable financial reports, our business and operating results could be harmed.
+Added: In August 2023, we began using a new enterprise resource planning system (the “ERP system”) for financial reporting.
+Added: Although we have completed this transition to a new enterprise resource planning system any disruption or difficulties in connection with our ERP system could adversely impact the effectiveness of our internal control over financial reporting.
+Added: Any 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 also adversely 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.
+Added: It is also possible that any disruption or difficulties in
+Added: connection with our ERP system could adversely impact the effectiveness of our internal control over financial reporting, which could lead to further material weaknesses or significant deficiencies in our controls, which in turn could adversely affect our business, financial condition or results of operations.
A failure to implement and maintain effective internal control over financial reporting could result in a material misstatement of our financial statements or otherwise cause us to fail to meet our financial reporting obligations.
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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.
−Removed: Our liquidity could be adversely impacted by adverse conditions in the financial markets.
−Removed: At June 30, 2022, we had $88.7 million in cash and cash equivalents.
−Removed: 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.
−Removed: To date, we have experienced no material realized losses on or lack of access to our invested cash, or cash equivalents;
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: To date, we have experienced no loss or lack of access to cash in our operating accounts.
−Removed: Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from executing our growth strategy.
−Removed: 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.
−Removed: 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.
−Removed: For example, any sustained disruption in the capital markets from the global economic environment could negatively impact our ability to raise capital.
−Removed: Our debt levels may impair our ability to obtain additional financing in the future.
−Removed: The sale of additional equity securities or convertible debt securities would result in additional dilution to our stockholders.
−Removed: We cannot assure that additional financing, if required or desired, will be available in amounts or on terms acceptable to us, if at all.
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.
−Removed: 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.
+Added: 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 with iDMS Data Management System software are medical devices that are subject to extensive regulation in the United States by local, state and the federal government, including the FDA.
−Removed: The FDA cleared the latest imaging feature for the Radixact System, ClearRT TM , under K202412 on December 18, 2020.
+Added: The FDA cleared the latest imaging feature for the Radixact System, ClearRTTM, 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.
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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.
−Removed: 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.
+Added: 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
+Added: 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.
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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.
−Removed: If the FDA disagrees, based on new finalized guidance and requires us to obtain additional premarket approvals or 510(k) clearances for any
−Removed: 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.
+Added: 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.
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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.
−Removed: 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.
+Added: 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
+Added: 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.
−Removed: In addition to such anti‑kickback laws, federal and state “false claims”
+Added: Generally, courts have taken a broad interpretation of the scope of the “anti-kickback”
+Added: laws, holding that these laws may be violated if merely one purpose of a payment arrangement is to induce referrals or purchases.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
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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.
+Added: In addition to actions initiated by the 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”.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
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Department of Health and Human Services (“HHS”) has promulgated patient privacy rules under the HIPAA.
−Removed: 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.
+Added: These privacy rules protect medical records and other personal health information of patients by
+Added: 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.
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Furthermore, on October 25, 2018, President Trump signed into law the “Substance Use-Disorder Prevention that Promoted Opioid Recovery and Treatment for Patients and Communities Act”
−Removed: 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 (with reporting requirements going into effect in 2022 for payments made in 2021).
−Removed: Such data will be made available by the government on a publicly searchable website.
+Added: 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.
+Added: 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).
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In jurisdictions where we rely on our distributors to manage the regulatory process, we are dependent on their ability to do so effectively.
−Removed: While the laws and regulations of some
−Removed: 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.
+Added: 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.
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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.
−Removed: 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.
+Added: If we or our distributors are unable to maintain our authorizations, or fail to obtain appropriate authorizations in a particular
+Added: 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
−Removed: Européene, or CE, mark on our products in order to sell the products in member countries of the EU.
+Added: 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.
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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.
−Removed: The Tax Act was signed into law in December 2017, which, among other things, removed penalties for not complying with the individual mandate to carry health insurance.
−Removed: However, with any new administration, the federal government may take further action regarding the ACA, including, but not limited to, reversing the changes implemented by prior administrations and expanding or reducing access to coverage under the ACA.
We cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.
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This model was designed to determine if a site neutral, modality agnostic, episode based payment model would reduce Medicare expenditures and preserve beneficiary quality of care.
−Removed: However, due to several COVID-19 related delays and failure to gain stakeholder consensus, CMS has indefinitely delayed implementation of the model until future rule-making.
+Added: However, due to the COVID-19 pandemic, implementation of the RO-APM has been delayed several times.
+Added: On August 29, 2022, CMS published a final rule in the Federal Register, CMS-5527-F2, that delayed the start date of the RO-APM to a date to be determined through future rulemaking.
As such, it remains unclear as to if or when CMS will introduce the RO-APM.
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Future legislative or policy initiatives directed at reducing costs could be introduced at either the federal or state level.
−Removed: We cannot predict what healthcare reform legislation or regulations, if any, including any potential repeal or
−Removed: amendment of the ACA, will be 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.
+Added: We cannot predict what healthcare reform legislation or regulations, if any, including any potential repeal or amendment of the ACA, will be 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.
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The price of our common stock is volatile and may continue to fluctuate significantly, which could lead to losses for stockholders.
−Removed: The stock market in general has recently experienced relatively large price and volume fluctuations, particularly in response to new news on the COVID-19 pandemic.
+Added: 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.
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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.
−Removed: 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.
+Added: Any negative change in the
+Added: 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:
impacts to our business, operations or financial condition caused by concerns in connection with the global economic environment, COVID-19 pandemic or supply chain disruptions;
−Removed: fiscal and monetary stimulus measures to counteract the impact of the COVID-19 pandemic;
regulatory developments related to manufacturing, marketing or sale of the CyberKnife or TomoTherapy platform;
−Removed: political or social uncertainties, including the conflict between Russia and Ukraine;
+Added: political or social uncertainties, including as a result of the conflict between Russia and Ukraine;
changes in product pricing policies;
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announcement of strategic transactions or capital raising activities;
−Removed: market conditions in our industry, the industries of our customers and the economy as a whole, including the impact of increased inflation or a recession.
+Added: 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.
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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.
−Removed: In August 2017, we issued $85.0 million aggregate principal amount of our 3.75% Convertible Notes due 2022 and in May 2021, we issued $100.0 million aggregate principal amount of our 3.75% Convertible Notes due 2026.
−Removed: $97.1 million aggregate principal amount of the 3.75% Convertible Notes due 2026 were issued to certain holders of the 3.75% Convertible Notes due 2022 in exchange for approximately $82.1 million aggregate principal amount of 3.75% Convertible Notes due 2022 and $2.9 million aggregate principal amount of the 3.75% Convertible Notes due 2026 were issued to certain other qualified new investors for cash.
+Added: In May 2021, we issued $100.0 million aggregate principal amount of the Notes.
+Added: We exchanged approximately $82.1 million aggregate principal amount of then-outstanding 3.75% Convertible Senior Notes due 2022 for approximately $97.1 million aggregate principal amount of the Notes and issued approximately $2.9 million aggregate principal amount of the Notes to certain other qualified new investors for cash.
To the extent we issue common stock upon conversion of any outstanding convertible notes, that conversion would dilute the ownership interests of our stockholders.
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In the event the conditional conversion features of the Notes are triggered, holders of the Notes, as applicable, will be entitled to convert such notes at any time during specified periods at their option.
−Removed: If one or more holders elect
−Removed: 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.
−Removed: In addition, even if holders do not elect to convert such notes, if we have irrevocably elected net share settlement upon conversion we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of such notes as a current rather than long‑term liability, which could result in a material reduction of our net working capital.
−Removed: Provisions in the indenture for the Notes, the credit agreement for our New 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.
+Added: 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.
+Added: In addition, even if holders do not elect to convert such notes, if we have irrevocably elected net share settlement upon conversion we could be required under applicable accounting rules to
+Added: reclassify all or a portion of the outstanding principal of such notes as a current rather than long‑term liability, which could result in a material reduction of our net working capital.
+Added: Provisions in the indenture for the Notes, the credit 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.
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General Risks
−Removed: Our operations are vulnerable to interruption or loss because of natural disasters, global or regional health pandemics or epidemics, terrorist acts and other events beyond our control, which would adversely affect our business.
+Added: Our liquidity could be adversely impacted by adverse conditions in the financial markets.
+Added: At June 30, 2023, we had $89.4 million in cash and cash equivalents.
+Added: 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.
+Added: To date, we have experienced no material realized losses on or lack of access to our invested cash, or
+Added: cash equivalents;
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: To date, we have experienced no loss or lack of access to cash in our operating accounts.
+Added: Our operations are vulnerable to interruption or loss because of 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.
We have facilities in countries around the world, including two manufacturing facilities, each of which is equipped to manufacture unique components of our products.
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fires or explosions;
−Removed: natural disasters, such as hurricanes, floods, tornados and earthquakes;
+Added: natural disasters, such as hurricanes, floods, tornadoes and earthquakes;
war or terrorist activities (including the conflict between Russia and Ukraine);
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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 results of operation.
−Removed: In particular, telecommunication system failures or disruptions could significantly disrupt our operations as a result of our increase remote work arrangements due to the COVID-19 pandemic.
+Added: In particular, telecommunication system failures or disruptions could significantly disrupt our operations as a result of our increase remote work arrangements.
In addition, 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.
Changes in interpretation or application of generally accepted accounting principles may adversely affect our operating results.
−Removed: We prepare our financial statements to conform to United States Generally Accepted Accounting Principles.
+Added: We prepare our financial statements to conform to U.S.
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.
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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.
−Removed: For example, upon adoption of ASC 606, we now recognize system revenue upon transfer of control, which is generally at time of delivery.
Under the previous accounting guidance, we recognized system revenue upon acceptance when and if we have installation responsibilities.
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UNRESOL VED STAFF COMMENTS
−Removed: We currently lease approximately 124,000 square feet of product development and administrative space in two buildings in Sunnyvale, California, as follows:
−Removed: A headquarters building that is approximately 74,000 square feet, which is leased to us until December 2023.
−Removed: We have the right to renew the lease term of our headquarters office building for two five‑year terms upon prior written notice and the fulfillment of certain conditions;
−Removed: A research and development facility totaling approximately 50,000 square feet, which is leased to us until December 2023.
−Removed: We also lease approximately 158,000 square feet of product development, manufacturing, administrative and warehouse space in four buildings in Madison, Wisconsin, as follows:
−Removed: An office building totaling approximately 61,000 square feet, which is leased to us until June 2025;
−Removed: A manufacturing facility totaling approximately 56,000 square feet, which is leased to us until June 2025;
−Removed: Warehouse and office space in two buildings totaling approximately 41,000 square feet, which are leased to us through various dates until April 2023.
−Removed: Our wholly owned subsidiary, Accuray International Sàrl, leases one office building that consists of approximately 21,000 square feet of administrative space in Morges, Switzerland, which are leased to Accuray International until December 2024.
−Removed: In addition, our wholly‑owned subsidiary, Accuray Accelerator Technology Company Limited, leases approximately 42,000 square feet of space in a manufacturing facility in Chengdu, China until July 2023.
−Removed: We, directly or through our subsidiaries, also maintain offices in:
−Removed: Pennsylvania;
−Removed: Durham, North Carolina;
−Removed: and the United Arab Emirates.
+Added: On July 31, 2023, we moved our corporate headquarters from Sunnyvale, California to Madison, Wisconsin.
+Added: We lease approximately 187,000 square feet in Madison, Wisconsin for product development, manufacturing, administrative and warehouse space.
+Added: We lease approximately 124,000 square feet in Sunnyvale, California for administrative and product development functions.
+Added: We lease approximately 20,000 square feet in Morges, Switzerland, for administrative functions.
+Added: We lease approximately 42,000 square feet of space in a manufacturing facility in Chengdu, China.
+Added: We also lease offices in Solon, Ohio and Chapel Hill, North Carolina for research and development functions;
+Added: and lease international offices in China;
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.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.