ACCURAY INC 10-K

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stock Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “ARAY.” We have never paid cash dividends on our common stock. Our Board of Directors intends to use any future earnings to support operations and reinvest in the growth and development of our business. There are no current plans to pay cash dividends to common stockholders in the foreseeable future. As of August 31, 2023, there were 174 stockholders of record of our common stock. Because many of our shares of common stock are held by brokers or other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders and believe the number of stockholders of record underestimates our total number of stockholders. Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between June 30, 2018 and June 30, 2023, with the cumulative total return of (i) the S&P Healthcare Index and (ii) the Nasdaq Composite Index, over the same period. This graph assumes the investment of $100 on June 30, 2018 in our common stock, the S&P 500 Health Care Index and the Nasdaq Composite Index, and assumes the reinvestment of dividends, if any. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Accuray Incorporated, the NASDAQ Composite Index and the S&P Health Care Index 6/14 6/15 6/16 6/17 6/18 6/19 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Accuray Incorporated NASDAQ Composite S&P Health Care *$100 invested on 6/30/14 in stock or index, including reinvestment of dividends. Fiscal year ending June 30. Copyright© 2019 Standard & Poor's, a division of S&P Global. All rights reserved 64 Table of Contents The comparisons shown in the graph above are based upon historical data. We caution that the stock price performance shown in the graph above is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. Item 6. [RESERVED] Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our consolidated financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this report. The following discussion contains forward‑looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward‑looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report on Form 10‑K, particularly in “Risk Factors.” See “Special Note Regarding Forward‑Looking Statements” for more information. This section generally discusses the results of our operations for the year ended June 30, 2023, compared to the year ended June 30, 2022. For a discussion of the year ended June 30, 2022 compared to the year ended June 30, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2022, as filed with the SEC on August 17, 2022. Overview Company Accuray Incorporated is a radiation therapy company that develops, manufactures, sells and supports market-changing solutions that are designed to deliver radiation treatments for even the most complex cases, while making commonly treatable cases even more straightforward, to meet the full spectrum of patient needs. We believe in comparison to conventional linear accelerators, our treatment delivery, planning, and data management solutions provide better accuracy, flexibility, and control; fewer treatments with shorter treatment times; and the technology to expand beyond cancer, making it easier for clinical teams around the world to provide treatments that help patients get back to living their lives, faster. Our innovative technologies, the CyberKnife ® and TomoTherapy ® platforms, including the Radixact ® System, our next generation TomoTherapy platform, are designed to deliver advanced treatments, including stereotactic radiosurgery (“SRS”), stereotactic body radiation therapy (“SBRT”), intensity modulated radiation therapy (IMRT), image-guided radiation therapy (“IGRT”), and adaptive radiation therapy (“ART”). The CyberKnife and TomoTherapy platforms have complementary clinical applications with the same goal: to empower our customers to deliver the most precise and accurate treatments while still minimizing dose to healthy tissue, helping to reduce the risk of side effects that may impact patients’ quality of life. Each of these systems serves patient populations treated by the same medical specialty, radiation oncology, with advanced capabilities. The CyberKnife platform is also used by neurosurgeons specializing in radiosurgery to treat patients with tumors in the brain and spine, and neurologic and/or endocrine disorders. In addition to these products, we also provide services, which include post-contract customer support (warranty period services and post-warranty services), installation services, training, and other professional services. Current Economic Conditions We are subject to risks and uncertainties caused by events with significant macroeconomic impacts, including, but not limited to, rising inflation, actions taken to counter inflation, including rising interest rates, foreign currency exchange rate fluctuations, instability in the banking sector, the COVID-19 pandemic, and geopolitical concerns, such as the Russian invasion of Ukraine and increasing tension between China and the U.S., including with respect to Taiwan. We are also continuing to navigate supply chain and inflation challenges and foreign exchange, all of which continues to have a negative impact on our results of operations. We expect that our customers’ business and our business will continue to be adversely impacted, directly or indirectly, by macroeconomic and geopolitical issues, including supply chain issues, inflation, labor, foreign currency exchange rate fluctuations, uncertainty and volatility in the banking and financial services sector, tightening credit markets, the effects of 65 Table of Contents the COVID-19 related restrictions, and other factors that may emerge. In addition, rising inflation and the ongoing supply chain challenges and attendant heightened logistics costs have materially affected our gross margins and net income (loss), and we expect that gross margins and net income (loss) will continue to be adversely affected by increased material costs and freight and logistic expenses through at least fiscal year 2024, if not longer. The extent of the ongoing impact of these macroeconomic events on our business, our markets and on global economic activity however, is uncertain and the related financial impact cannot be reasonably estimated with any certainty at this time. Our past results may not be indicative of our future performance, and historical trends including conversion of backlog to revenue, income (loss) from operations, net income (loss), net income (loss) per share and cash flows may differ materially. Accordingly, management is carefully evaluating our liquidity position, communicating with and monitoring the actions of our customers and suppliers, and reviewing our near-term financial performance as the uncertainty related to these factors continues to unfold. We also continue to evaluate our operating expenses, including our real estate needs and continue to assess our operations and how and to what extent we will continue to utilize our current real estate assets. The risks related to our business, including further discussion of the impact and possible future impacts of the current economic conditions on our business and the COVID-19 pandemic, are further described in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Sale of Our Products Generating revenue from the sale of our platforms is a lengthy process. Selling our platforms, from first contact with a potential customer to a signed sales contract that meets our backlog criteria (as discussed below) varies significantly and generally spans between six months and 30 months. The length of time between receipt of a signed contract and revenue recognition is generally governed by the time required by the customer to build, renovate or prepare the treatment room for installation of the platform. We report our customer revenues in four geographic regions: the Americas, EIMEA, Asia Pacific and Japan. The Americas region includes the United States, Canada and Latin America. The EIMEA region includes Europe, India, the Middle East and Africa. The Asia Pacific region consists of Asia, Australia and New Zealand. In the United States, we primarily market directly to customers, including hospitals and stand-alone treatment facilities, through our sales organization we also market to customers through sales agents and group purchasing organizations. Outside the United States, we market to customers directly and through use of distributors and sales agents. In addition to our offices in the United States, we have international offices in Morges, Switzerland; Hong Kong, China; Shanghai, China and Tokyo, Japan and direct sales staff in most countries in Western Europe, Japan, India and Canada. In addition, we have distributors in Eastern Europe, Russia, the Middle East, the Asia Pacific region, and Latin America. Our systems have been named in 100 out of 118 Class A user licenses awarded in the 13th five year plan by the China National Health Commission to purchase radiation therapy devices. The Chinese Ministry of Health requires a tender process following the license awards for all participating end user hospitals prior to being able to take receipt of a Class A device. This tender process defines the transactional terms and conditions related to each hospital’s equipment order and does not put us in a competitive bidding situation that would result in changes in the specific device for which the hospital has received the Class A user license. During the year ended June 30, 2023, we delivered Class A devices to China and recognized system revenue related to such devices of approximately $32.6 million in the same period. Despite the challenges and uncertainties in China and around the world, including those created by the COVID-19 pandemic, we continue to believe that China remains the world’s fastest growing market for radiation oncology systems and the pandemic does not affect the long-term demand for radiotherapy equipment in China. Joint Venture In January 2019, our wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (the “JV”), to manufacture and sell radiation oncology systems in China. The JV aims to be uniquely positioned to serve China, which we believe is the world’s largest growth market for radiation oncology systems. China represents a significantly underserved market for linacs based on the country’s population and cancer incidence rates on both an absolute and relative country basis. Accuray Asia has a 49% ownership interest in the JV and the CIRC Subsidiary has a 51% ownership interest in the JV. 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” 66 Table of Contents 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. 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. For more information on the JV, see Note 11, “Joint Venture, ” of the Notes to the Consolidated Financial Statements. Restructuring In the second quarter of fiscal year 2023, we announced a cost savings initiative designed to reduce operating costs. This cost savings initiative resulted in the reduction of our global workforce by 4.5%. We recorded $2.7 million in restructuring charges during the fiscal year 2023. These charges are cash-based charges, primarily related to severance expenses and other one-time termination benefits. At June 30, 2023, we do not have any remaining accruals related to the restructuring charges. Backlog In order for the product portion of a system sales agreement to be included in backlog, it must meet the following criteria: • The contract is properly executed by both the customer and us. A customer purchase order that incorporates the terms of our contract quote will be considered equivalent to a signed and executed contract. The contract has either cleared all its contingencies or contained no contingencies when signed; • We have received a minimum deposit or a letter of credit; or the sale is to a customer where a deposit is deemed not necessary or customary (i.e., sale to a government entity, a large hospital, group of hospitals or cancer care group that has sufficient credit, customers with trade-in of existing equipment, sales via tender awards, or indirect channel sales that have signed contracts with end-customers); • The specific end-customer site has been identified by the customer in the written contract or written amendment; and • Less than 30 months have passed since the contract met all the criteria above. Our backlog includes contractual agreements with our customers for the purchase of our CyberKnife or TomoTherapy platforms, including the Radixact Systems and related upgrades. The amount of backlog recognized into revenue is primarily impacted by three items: cancellations, age-outs and age-ins, and foreign currency fluctuations. We cannot provide assurance that we will convert backlog into recognized revenue, primarily due to factors outside of our control, such as: • Orders could be cancelled for reasons such as, changes in customers’ priorities or financial condition, changes in government or health insurance reimbursement policies, or changes to regulatory requirements. Cancellations are outside of our control and are difficult to forecast; however, we continue to work closely with our customers to minimize the impact of cancellations on our business; • Orders are considered aged-out and removed from reported backlog if we have not been able to recognize revenue on an agreement after 30 months. Agreements may age-out for many reasons, including but not limited to, the inability of the customer to pay, the inability of the customer to adapt their facilities to accommodate our products in a timely manner, or the inability to timely obtain licenses necessary for customer facilities or operation of our equipment. Age-ins represent orders that previously aged-out but have been recognized as revenue in the current period; and • Orders include amounts not denominated in U.S. Dollars and therefore, fluctuations in the U.S. Dollar as compared to other currencies will impact revenue. Generally, strengthening of the U.S. Dollar will negatively impact revenue. Backlog is stated at historical foreign currency exchange rates, and revenue is released from backlog at current exchange rates, with any difference recorded as a backlog adjustment. 67 Table of Contents A summary of gross orders, net orders, and order backlog is as follows (in thousands): Years Ended June 30, 2023 2022 2021 Gross orders $ 311,094 $ 332,268 $ 325,929 Age-ins 39,435 34,884 26,647 Age-outs (152,573 ) (183,753 ) (148,779 ) Cancellations (6,670 ) (11,348 ) (15,119 ) Currency impacts and other (8,354 ) (4,735 ) 3,203 Net orders $ 182,932 $ 167,316 $ 191,881 Order backlog at the end of the period $ 510,641 $ 563,684 $ 616,399 As of June 30, 2023, the portion of our order backlog that represented upgrades sold through service contracts, totaled $0.6 million, as compared to $0.2 million as of June 30, 2022. Gross Orders and Book to Bill Ratio Gross orders are defined as the sum of new orders recorded during the period, adjusted for any revisions to existing orders during the period. Gross orders decreased by $21.2 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to decreases in EIMEA, partially offset by an increase in Asia Pacific and China. CyberKnife platform gross orders decreased by $45.5 million and TomoTherapy platform gross orders increased by $24.3 million. Gross orders were unfavorably impacted by $12.0 million due to foreign exchange rate fluctuations during the year ended June 30, 2023, as compared to the year ended June 30, 2022. Our book to bill ratio is defined as gross orders for the period divided by product revenue for the period. Our book to bill ratio for the year ended June 30, 2023, was 1.3 as compared to 1.5 for the year ended June 30, 2022. A book-to-bill ratio greater than 1.2 indicates strong demand for our products. This metric allows management to monitor our business development efforts to ensure we grow our backlog and our business over time. Net Orders Net orders are defined as gross orders, less cancellations, age-outs net of age-ins, foreign exchange and other adjustments during the period. Net orders increased by $15.6 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, resulting from a reduction in the age-out of orders, a reduction in the cancellation of orders and an increase in the age-ins of orders, partially offset by a decrease in gross orders and unfavorable foreign exchange rate fluctuations. In recent years, the percentage of gross orders received from our distribution partners in the international markets represented 76%, 71%, and 82% of gross orders for fiscal year ended June 30, 2023, 2022 and 2021, respectively. We anticipate that distributor orders from international markets will continue to represent a significant portion of our gross orders in the foreseeable future. International orders are affected by foreign currency fluctuation as well as government programs that stimulate the purchase of healthcare products, both of which could affect the demand for our products and timing of orders from period to period. In addition, our order-to-revenue conversion cycle for international distributor orders has been generally longer, compared to that of direct channel sales and could cause fluctuations in our age-outs from period to period. 68 Table of Contents Results of Operations Fiscal 2023 results compared to fiscal 2022 Net revenue Net revenue by sales classification is as follows: Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Products (a) $ 233,192 9 % $ 214,715 22 % $ 176,647 Services (b) 214,413 (0 )% 215,194 (2 )% 219,642 Net revenue $ 447,605 4 % $ 429,909 8 % $ 396,289 Products revenue as a percentage of net revenue 52 % 50 % 45 % Service revenue as a percentage of net revenue 48 % 50 % 55 % a) Includes sales of products to the JV, an equity method investment, of $55,658 during the year ended June 30, 2023, $45,545 during the year ended June 30, 2022, and $12,033 during the year ended June 30, 2021, respectively. See Note 11. b) Includes sales of services to the JV, an equity method investment, of $10,919 during the year ended June 30, 2023, $10,332 during the year ended June 30, 2022, and $12,360 during the year ended June 30, 2021, respectively. See Note 11. Products net revenue increased by $18.5 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to an increase in Tomo Therapy platform sales, partially offset by a decrease in CyberKnife platform sales. Product revenues were unfavorably impacted by $7.0 million due to foreign exchange rate fluctuations during the year ended June 30, 2023, as compared to the year ended June 30, 2022. Services net revenue decreased by $0.8 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to a $4.9 million decrease in revenue from contract services that was largely driven by unfavorable foreign exchange rate fluctuations, partially offset by $4.1 million increase in revenue from training, spare parts, upgrades and installation activity. Service revenues were unfavorably impacted by $10.8 million due to foreign exchange rate fluctuations during the year ended June 30, 2023, as compared to the year ended June 30, 2022. Net revenue by geographic region, which is based on the shipping location of our customer, is as follows: Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Americas $ 122,335 (3 )% $ 126,005 19 % $ 105,878 EIMEA 155,879 16 % 134,640 11 % 121,568 China 75,762 (13 )% 86,935 9 % 79,782 Japan 61,962 16 % 53,376 (15 )% 62,636 Asia Pacific, excluding China 31,667 9 % 28,953 10 % 26,425 Net revenue $ 447,605 4 % $ 429,909 8 % $ 396,289 Revenue derived from sales outside of the Americas region was $325.3 million during the year ended June 30, 2023, as compared to $303.9 million during the year ended June 30, 2022. Revenue derived from sales outside the Americas region increased primarily due to an increase from system sales in EIMEA and Japan, and an increase from services in EIMEA, Asia Pacific, and China, mostly offset by a decrease from sales of systems in China, which was largely due to COVID-19-related restrictions that occurred during the first quarter of fiscal year 2023. Revenues from the Americas region decreased by $3.7 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to a decrease from service revenue, partially offset by an increase from sales of systems. Gross profit Gross profit by sales classification is as follows: 69 Table of Contents Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Products gross profit $ 79,565 (9 )% $ 87,428 17 % $ 74,547 Services gross profit 74,395 3 % 72,527 (15 )% 84,960 Gross profit $ 153,960 (4 )% $ 159,955 0 % $ 159,507 Total gross profit as a percentage of net revenue 34.4 % 37.2 % 40.3 % The overall gross profit decreased by $6.0 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, due to a decrease in products gross profit, which was largely driven by unfavorable foreign exchange rate fluctuations, inflation, and an unfavorable product mix in the sales of our systems, partially offset by an increase in service gross profit driven by lower headcount and improved parts efficiency. Operating Expenses Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Research and development $ 57,129 (1 )% $ 57,752 10 % $ 52,729 Selling and marketing 46,178 (7 )% 49,664 16 % 42,820 General and administrative 48,271 9 % 44,391 6 % 41,723 Total operating expenses $ 151,578 $ 151,807 $ 137,272 Research and development as a percentage of net revenue 13 % 13 % 13 % Selling and marketing as a percentage of net revenue 10 % 12 % 11 % General and administrative as a percentage of net revenue 11 % 10 % 11 % Total operating expenses as a percentage of net revenue 34 % 35 % 35 % Research and development expenses decreased by $0.6 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to a reduction in outside services and consulting, partially offset by an increase in employee compensation and benefits, which includes severance payments in the second quarter of fiscal year 2023, and lower research and development credits from our equity method investment. Selling and marketing expenses decreased by $3.5 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to lower employee compensation and benefits due to lower headcount as a result of our cost savings initiatives during the first half of fiscal year 2023, and a decrease in outside services. General and administrative expenses increased by $3.9 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to higher external consulting fees related to the implementation of a new enterprise resource planning system, a $2.0 million bad debt reserve in the fourth quarter of fiscal year 2023 related to the unplanned U.S. bankruptcy of one customer, and employee compensation and benefits, as a result of an increase in headcount. Income on equity method investment Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Income on equity method investment $ 2,572 967 % $ 241 (72 )% $ 872 Income on equity method investment increased by $2.3 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, due to an increase in the sales of systems by our JV. 70 Table of Contents Other expense, net Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Interest expense $ (10,632 ) 31 % $ (8,129 ) (52 )% $ (16,893 ) Foreign currency transaction loss (878 ) (66 )% (2,618 ) 34 % (1,953 ) Loss on debt extinguishment - 0 % - (100 )% (9,948 ) Other (232 ) (165 )% 356 (68 )% 1,128 Total other expense, net $ (11,742 ) $ (10,391 ) $ (27,666 ) Other expense, net, increased by $1.4 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to an increase in interest expense as a result of higher interest rates on our Credit Facility, partially offset by a decrease in foreign currency transaction losses. Provision for income taxes Years Ended June 30, (Dollars in thousands) 2023 Percent Change 2022 Percent Change 2021 Provision for income taxes $ 2,492 (26 )% $ 3,345 91 % $ 1,752 Provision for income taxes decreased by $0.9 million during the year ended June 30, 2023, as compared to the year ended June 30, 2022, primarily due to lower deferred tax liability on Switzerland withholding taxes as compared to the prior year. Liquidity and Capital Resources At June 30, 2023, we had $89.4 million in cash and cash equivalents. Cash from operations could be affected by various risks and uncertainties, including, but not limited to, the ongoing recovery from the COVID-19 pandemic, inflation, actions taken to counter inflation, foreign currency exchange rate fluctuations and instability in the banking sector and the risks included in Part I, Item 1A titled “Risk Factors.” Based on our cash and cash equivalents balance, available debt facilities, current business plan and revenue prospects, we believe we will have sufficient cash resources and anticipated cash flows to fund our operations for at least the next 12 months. We continue however, to critically review our liquidity and anticipated capital requirements in light of the significant uncertainty created by macroeconomic conditions and ongoing recovery from the COVID-19 pandemic. Our liquidity and cash flows have been and could continue to be materially impacted by current macroeconomic factors, including facility closures, supply chain disruptions, rising inflation, increased volatility in the financial markets, instability in the banking sector, tightening of credit markets which could impact debt availability, and the COVID-19 pandemic. These factors have and could continue to negatively impact our business operations and cash flows for the foreseeable future, including reductions in revenue, decreases in gross margin and delays in payments from customers, as well as declines or delays in the conversion of backlog to revenue. For example, certain of our revenue may not be collectible to the extent our customers suffer financial difficulty and, in fiscal 2023, we increased our bad debt reserve to account for potentially uncollectible revenue. Accordingly, there remain uncertainties as to how the COVID-19 pandemic and the current macroeconomic environment will impact our business, results of operations, access to sources of liquidity and financial condition in the future. As a result, we are unable to predict with certainty the impacts of these factors on our ability to maintain compliance with the financial covenants contained in the credit and security agreements related to our credit facilities. In May 2021, we issued $100.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2026 under an indenture between us and The Bank of New York Mellon Trust Company, N.A., as trustee. Concurrently, with the issuance of the notes, in May 2021, we entered into a senior secured credit agreement with Silicon Valley Bank, individually as a lender and agent, and the other lenders (the “Existing Credit Agreement”), which provides for a five-year $80 million term loan facility (the "Term Loan Facility") and a $40 million revolving credit facility (the “Revolving Credit Facility”). 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 71 Table of Contents through the end of the fiscal quarter ending June 30, 2023. As of June 30, 2023, we had an outstanding balance under the Term Loan Facility of $69.1 million and Revolving Credit Facility of $10.0 million. The weighted average effective interest rate on the outstanding balances under the Term Loan Facility was 7.26% and Revolving Credit Facility was 8.27% during the twelve months ended June 30, 2023. See Note 9, " Debt" to the Notes to the consolidated financial statements for further information regarding the Existing Credit Agreement and 3.75% Convertible Senior Notes due 2026. Also see Note 8, "Commitments and Contingencies " to the Notes to the consolidated financial statements for further information regarding our cash commitments related to our debt. We may also experience other, unexpected impacts to our business, including matters discussed in the Part I, Item 1A titled “Risk Factors.” While we were in compliance with such covenants for the period ended June 30, 2023, failure to meet the covenant requirements in the future could cause us to be in default and the maturity of the related debt could be accelerated and become immediately payable. 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. Our ability to comply with the covenants and other terms governing the Credit Facilities will depend in part on our future operating performance. If we fail to comply with such covenants and terms, we may be in default and the maturity of the related debt could be accelerated and become immediately due and payable. In addition, because substantially all of our assets are pledged as a security under the Credit Facilities, if we are not able to cure any default or repay outstanding borrowings, such assets are subject to the risk of foreclosure by our lenders. This may require us to obtain waivers or amendments to the credit and security agreement in order to maintain compliance and there can be no certainty that any such waiver or amendments will be available, or what the cost of such waiver or amendment, if obtained, would be. If we are unable to obtain necessary waivers or amendment 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. There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated. Additionally, the undistributed earnings of our foreign subsidiaries at June 30, 2023, for all countries except Japan, France, and Switzerland are considered to be indefinitely reinvested and unavailable for distribution in the form of dividends or otherwise. Future repatriation of our foreign earnings could be subject to income taxes. As of June 30, 2023, we had $8.5 million of cash and cash equivalents at our foreign subsidiaries. If such funds were repatriated, there will be additional foreign tax withholdings imposed, depending on the country from which the funds were repatriated. Cash Flows Years Ended June 30, 2023 2022 2021 Net cash provided by (used in) operating activities $ 15,539 $ (2,400 ) $ 38,512 Net cash used in investing activities (12,681 ) (4,717 ) (2,399 ) Net cash used in financing activities (2,112 ) (15,369 ) (28,805 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 302 (5,561 ) 982 Net increase (decrease) in cash, cash equivalents and restricted cash $ 1,048 $ (28,047 ) $ 8,290 Cash Flows From Operating Activities Net cash provided by operating activities was $15.5 million during the year ended 2023, resulting primarily from a $20.2 million increase in non-cash items and a $4.6 million increase from the net changes in assets and liabilities, offset by a net loss of $9.3 million. • Non-cash items primarily consisted of consisted of share-based compensation expense of $10.1 million, depreciation and amortization expense of $4.5 million, provision for inventories write-down of $4.4 million, and $2.3 million for provision for credit losses, partially offset by income from our equity method investment of $2.6 million. 72 Table of Contents • The major contributors to the increase in net changes of assets and liabilities during the year ended 2023 were as follows: an $18.5 million decrease in accounts receivable primarily due to an increase in collections; and a $2.9 million increase in accounts payable primarily due to the timing of payments; partially offset by a $6.9 million increase in inventories primarily due to increased costs for parts; a $4.7 million decrease in customer advances due to delivery of orders, and a $2.6 million decrease in deferred revenue primarily due to the timing of revenue recognition. Cash Flows From Investing Activities Net cash used in investing activities was $12.7 million during the year ended 2023, primarily due to the purchase of property and equipment, which included $5.7 million for the implementation of a new enterprise resource planning system in which the costs were capitalized. Cash Flows From Financing Activities Net cash used in financing activities during the year ended 2023 was due to the scheduled payment of $6.0 million of the principal amount outstanding on our Term Loan Facility and a $2.9 million repayment of our 3.75% Convertible Senior Notes due 2022, primarily offset by a $5.0 million drawdown on our Revolving Credit Facility and $2.2 million in proceeds from the issuance of common stock to employees from employee stock plans. Operating Capital and Capital Expenditure Requirements Our future capital requirements depend on numerous factors. These factors include but are not limited to the following: • Revenue generated by sales of our products and service plans; • Our ability to generate cash flows from operations; • Costs associated with our sales and marketing initiatives and manufacturing activities; • Facilities, equipment and IT systems required to support current and future operations; • Rate of progress and cost of our research and development activities; • Costs of obtaining and maintaining FDA and other regulatory clearances of our products; • Effects of competing technological and market developments; • Number and timing of acquisitions and other strategic transactions; • Servicing and maturity of our current future indebtedness, including interest rates; • The impact of inflation on our expenses; and • The unpredictable impact of the macroeconomic environment and the COVID-19 pandemic, including on collections, supply chain, and logistics. We believe that our current cash and cash equivalents balance will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least the next 12 months. If these sources of cash and cash equivalents are insufficient to satisfy our liquidity requirements, or we believe market conditions are favorable, we may seek to sell additional equity or debt securities or enter into additional credit facilities. The sale of additional equity or convertible debt securities could result in dilution to our stockholders. If additional funds are raised through the issuance of debt securities, these securities could have rights senior to those associated with our common stock and could contain covenants that would restrict our operations. Additional financing may not be available at all, or in amounts or on terms acceptable to us. If we are unable to obtain this additional financing, we may be required to reduce the scope of our planned product development and marketing efforts. Operating and Capital Expenditure Requirements and Contractual Obligations Our purchase commitments and obligations include all open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers, for which we have not received the 73 Table of Contents goods or services and acquisition and licensing of intellectual property. A majority of these purchase obligations are due within a year. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services. Our long-term material cash requirements include lease obligations. See Note 5, “Leases” to the Notes to the consolidated financial statements for further information. Inflation We are experiencing 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 and results of operations for fiscal year 2023. Continued pressure from inflationary factors, such as further increases in the cost of materials for our products, interest rates, overhead costs and logistics costs could further exacerbate these effects and harm our business, operating results, and financial condition. Critical Accounting Estimates The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as revenue and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. The economic uncertainty in the current environment caused by the COVID-19 pandemic however, could limit our ability to accurately make and evaluate our estimates and judgments. Actual results could therefore differ materially from those estimates if actual conditions differ from our assumptions. All of our significant accounting policies and methods used in the preparation of our consolidated financial statements are described in Note 1, The Company and its Significant Accounting Policies, to the consolidated financial statements. The methods, estimates and judgments that we use in applying our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Management believes the critical accounting policies and estimates are those related to revenue recognition and the assessment of stand-alone selling price ("SSP"), allowance for credit losses, valuation of inventories, and the valuation of equity method investments. Revenue Recognition and the Assessment of Stand-Alone Selling Price Our revenue is primarily derived from new system and upgrade sales of CyberKnife and TomoTherapy platforms and services, which include post-contract customer support (“PCS”) contracts (warranty period services and post-warranty services), installation services, training and other professional services. We record our revenue net of any value-added or sales tax. We recognize revenue for certain performance obligations at the point in time when control is transferred, such as delivery of products. We recognize revenue for certain other performance obligations over a period of time as control of the goods or services is transferred, such as PCS and construction contracts. Payments received in advance of system shipment are recorded as customer advances and are deferred until product shipment when they are recognized in revenue. We assess the probability of collection based on a number of factors, including past transaction history with the customer and creditworthiness of the customer. We generally do not request collateral from our customers but will request advance payments or letter’s of credit when deemed necessary. We frequently enter into sales arrangements that contain multiple performance obligations. For sale arrangements that contain multiple performance obligations, we account for individual products and services separately if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The SSP is determined based on observable prices at which we separately sell the products and services. If the SSP is not directly observable, then we will estimate the SSP considering market conditions, entity-specific factors, and information about the customer or class of customer that is reasonably available. 74 Table of Contents Allowance for Credit Losses We evaluate the creditworthiness of our customers prior to authorizing shipment for all major sale transactions. On a quarterly basis, we evaluate aged items in the accounts receivable aging report and provide an allowance in an amount we deem adequate for credit losses. If our evaluation of our customers’ financial conditions does not reflect our future ability to collect outstanding receivables, additional provisions may be needed and our operating results could be negatively affected. Valuation of Inventories The valuation of inventory requires us to estimate obsolete or excess inventory as well as damaged inventory. The determination of obsolete or excess inventory requires us to estimate the future demand for our products. We regularly review inventory quantities on hand and adjust for excess and obsolete inventory based primarily on historical usage rates and our estimates of product demand to support future sales and service. If our demand forecast for specific products is greater than actual demand and we fail to reduce purchasing and manufacturing output accordingly, we could be required to write off inventory beyond the current reserve, which would negatively impact our gross margin. Valuation of Equity Method Investments We have an equity method investment in CNNC Accuray (Tianjin) Medical Technologies Co. Ltd., our joint venture in China. Our equity method investment is held at cost and adjusted for impairment when it would be deemed to be impaired. We monitor this investment for events or circumstances indicative of a potential impairment, and we make appropriate reductions in carrying value if we determine that an impairment charge is required, based primarily on the financial condition or near term prospects of the investee. Item 7A. QUANTITATIVE & QUALITAT IVE DISCLOSURES ABOUT MARKET RISK We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions. C oncentration of Credit and Other Risks Our cash and cash equivalents are deposited with several major financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. We have not experienced any losses in such accounts and do not believe that we are exposed to any significant risk of loss on these balances. For the years ended June 30, 2023, and 2022, there was one customer that represented 10% or more of total net revenue. We had one customer as of June 30, 2023 and two customers as of June 30, 2022, respectively, that each accounted for more than 10% of our total accounts receivable, net. We perform ongoing credit evaluations of our customers and maintain reserves for potential credit losses. Accounts receivable are deemed past due in accordance with the contractual terms of the agreement with such customer. Accounts receivable balances are charged against the allowance for doubtful accounts once collection efforts are unsuccessful. Single-source suppliers presently provide us with several components. In most cases, if a supplier was unable to deliver these components, we believe that we would be able to find other sources for these components subject to any regulatory qualifications, if required. Foreign Currency Exchange Rate Risk A portion of our net sales are denominated in foreign currencies, most notably the Swiss Franc, Euro and the Japanese Yen. Future fluctuations in the value of the U.S. Dollar may affect the price competitiveness of our products outside the United States. For direct sales outside the United States, we sell in both U.S. Dollars and local currencies, which could expose us to additional foreign currency risks, including changes in currency exchange rates. Our operating expenses in countries outside the United States are payable in foreign currencies and therefore, expose us to currency risk. To the extent that management can predict the timing of payments under sales contracts or for operating expenses that are denominated in foreign currencies, we may engage in hedging transactions to mitigate such risks in the future. We expect the changes in the 75 Table of Contents fair value of the net foreign currency assets arising from fluctuations in foreign currency exchange rates to be materially offset by the changes in the fair value of the forward contracts. As of June 30, 2023, we had open currency forward contracts to purchase or sell foreign currencies with stated, or notional value, of approximately $61.5 million. The purpose of these forward contracts is to minimize the risk associated with foreign exchange rate fluctuations. We have developed a foreign exchange policy to govern our forward contracts. These foreign currency forward contracts do not qualify as cash flow hedges and all changes in fair value are reported in earnings as part of other expenses, net. We have not entered into any other types of derivative financial instruments for trading or speculative purpose. Our foreign currency forward contract valuation inputs are based on quoted prices and quoted pricing intervals from public data and do not involve management judgment. Interest Rate Risk Our debt obligations consist of a variety of financial instruments that expose us to interest rate risk, including, but not limited to the Credit Facilities and our 3.75% Convertible Senior Notes due 2026. The interest rates on the 3.75% Convertible Senior Notes due 2026 are fixed and the interest rate on the Credit Facilities are at variable rates, which are tied to a “prime rate” and the Secured Overnight Financing Rate (“SOFR”). As of June 30, 2023, borrowings under the Term Loan Facility totaled $69.1 million, net of issuance cost, with an annual interest rate of 3.0% plus 90-day term SOFR, and borrowings under the Revolving Credit Facility totaled $10.0 million with an annual interest rate of 3.0% plus 90-day term SOFR. If the amount outstanding under the Credit Facilities remained at this level for the next 12 months and interest rates increased or decreased by a 50 basis point change, our annual interest expense would increase or decrease, respectively, approximately $0.4 million. Refer to Note 9, Debt to our consolidated financial statements included in this Annual Report on Form 10-K for a discussion regarding our debt obligations. Equity Price Risk On May 13, 2021, we issued approximately $100.0 million aggregate principal amount of 3.75% Convertible Senior Notes due 2026. Upon conversion, we can settle the obligation by issuing our common stock, cash or a combination thereof at an initial conversion rate equal to 170.5611 shares of common stock per $1,000 principal amount of the 3.75% Convertible Senior Notes due 2026, which is equivalent to a conversion price of approximately $5.86 per share of common stock, subject to adjustment. There is no equity price risk if the share price of our common stock is below $5.86 upon conversion of the 3.75% Convertible Senior Notes due 2026. For every $1 that the share price of our common stock exceeds $5.86, we expect to issue an additional $17.1 million in cash or shares of our common stock, or a combination thereof, if all of the 3.75% Convertible Senior Notes due 2026 are converted. 76 Table of Contents Item 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA ACCURAY INCORPORATED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID 248) 78 Consolidated Balance Sheets 80 Consolidated Statements of Operations and Comprehensive Loss 81 Consolidated Statements of Stockholders’ Equity 82 Consolidated Statements of Cash Flows 83 Notes to Consolidated Financial Statements 85 77 Table of Contents REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Accuray Incorporated Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Accuray Incorporated (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated September 7, 2023 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Determination of standalone selling price As described further in note 1 to the financial statements, the Company’s contracts with customers often include multiple performance obligations. The Company applies the five steps of Financial Accounting Standards Board Topic 606, Revenue from Contracts with Customers , in the determination of revenue to be recognized, with step four related to the allocation of the transaction price to multiple performance obligations. The transaction price of each contract is allocated to individual performance obligations based upon relative stand-alone selling price (“SSP”). The SSP of performance obligations is determined based on observable prices at which the Company separately sells the products and services. If the SSP is not directly observable, the Company will estimate the SSP considering market conditions, entity specific factors, and information about the customer or class of customer that is reasonably available. We identified the determination of the SSP of performance obligations as a critical audit matter. The principal consideration for our assessment that the determination of the SSP of performance obligations represents a critical audit matter is that the estimates made in determining SSP involve significant judgments. Evaluating the appropriateness of these estimates requires a high degree of auditor judgment and an increased extent of effort. 78 Table of Contents Our audit procedures related to the determination of the SSP of performance obligations included the following, among others: • We tested the design and operating effectiveness of internal controls over the Company’s determination of the SSP of performance obligations, including controls covering the validation of the completeness and accuracy of underlying data used in the analysis. • We evaluated the appropriateness of the overall methodology used by management, including considering whether the methodology maximized the use of observable inputs available. • For products and services where the SSP is directly observable, we evaluated the completeness and accuracy of the data used by management in determining the SSP. We recalculated the pricing inputs within the analysis and agreed selected data to executed sales agreements and considered the appropriateness of sales excluded from the analysis. • We tested management’s process by evaluating key assumptions for performance obligations that do not include directly observable sales or for performance obligations that do not include sufficient directly observable sales. Specifically, we: o considered how management determined the disaggregation of distinct customer groups; o determined the appropriateness of discount rates applied to list prices based on the Company’s pricing strategy for customer groups, including comparing the discount rates to internal pricing policies; o recalculated and validated the inputs used in the calculation; o made inquiries of staff members outside of the accounting department to determine if there are factors that could have indicated a change in the Company’s go-to market strategy; o compared the SSP indicated by management’s analysis to performance obligations within bundled arrangements for a sample of items; and o compared SSP at the performance obligation level to the prior year and evaluated the reasons for significant relative fluctuations. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2006. San Jose, California September 7, 2023 79 Table of Contents Accuray Incorporated Consolidated B alance Sheets (in thousands, except share and per share amounts) June 30, 2023 June 30, 2022 ASSETS Current assets: Cash and cash equivalents $ 89,402 $ 88,737 Restricted cash 524 204 Accounts receivable, net of allowance for credit losses of $ 3,079 and $ 1,000 as of June 30, 2023 and June 30, 2022, respectively (a) 74,777 94,442 Inventories 145,150 142,254 Prepaid expenses and other current assets (b) 27,612 23,794 Deferred cost of revenue 568 1,459 Total current assets 338,033 350,890 Property and equipment, net 20,926 12,685 Investment in joint venture 15,128 13,879 Operating lease right-of-use assets, net 25,853 16,798 Goodwill 57,681 57,840 Intangible assets, net 210 250 Restricted cash 1,276 1,213 Other assets 20,107 19,294 Total assets $ 479,214 $ 472,849 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 33,739 $ 31,337 Accrued compensation 23,793 29,441 Operating lease liabilities 4,151 8,567 Other accrued liabilities 38,271 30,285 Customer advances 20,777 25,290 Deferred revenue 72,185 75,375 Short-term debt 5,721 8,563 Total current liabilities 198,637 208,858 Long-term liabilities: Operating lease liabilities 23,602 10,453 Long-term other liabilities 4,675 3,748 Deferred revenue 27,079 24,694 Long-term debt 171,562 171,907 Total liabilities 425,555 419,660 Commitments and contingencies (Note 8) Stockholders’ equity: Preferred stock, $ 0.001 par value; authorized: 5,000,000 shares; no shares issued and outstanding — — Common stock, $ 0.001 par value; authorized: 200,000,000 shares as of June 30, 2023 and June 30, 2022, respectively; issued and outstanding: 96,534,609 and 93,499,500 shares at June 30, 2023 and June 30, 2022, respectively 97 94 Additional paid-in-capital 555,276 543,211 Accumulated other comprehensive income 422 2,406 Accumulated deficit ( 502,136 ) ( 492,522 ) Total stockholders' equity 53,659 53,189 Total liabilities and stockholders’ equity $ 479,214 $ 472,849 (a) Included accounts receivable from the joint venture, an equity method investment, of $ 10,304 and $ 24,828 at June 30, 2023, and June 30, 2022 , respectively. See Note 11. (b) Included other receivable from the joint venture, an equity method investment, o f $ 100 and $ 861 at June 30, 2023, and June 30, 2022 , respectively. The accompanying notes are an integral part of these consolidated financial statements 80 Table of Contents Accuray Incorporated Consolidated Statements of Oper ations and Comprehensive Loss (in thousands, except per share amounts) Years Ended June 30, 2023 2022 2021 Net revenue: Products (a) $ 233,192 $ 214,715 $ 176,647 Services (b) 214,413 215,194 219,642 Total net revenue 447,605 429,909 396,289 Cost of revenue: Cost of products 153,627 127,287 102,100 Cost of services 140,018 142,667 134,682 Total cost of revenue (c) 293,645 269,954 236,782 Gross profit 153,960 159,955 159,507 Operating expenses: Research and development (d) 57,129 57,752 52,729 Selling and marketing 46,178 49,664 42,820 General and administrative 48,271 44,391 41,723 Total operating expenses 151,578 151,807 137,272 Income from operations 2,382 8,148 22,235 Income on equity method investment 2,572 241 872 Other expense, net ( 11,742 ) ( 10,391 ) ( 27,666 ) Loss before provision for income taxes ( 6,788 ) ( 2,002 ) ( 4,559 ) Provision for income taxes 2,492 3,345 1,752 Net loss $ ( 9,280 ) $ ( 5,347 ) $ ( 6,311 ) Net loss per share - basic $ ( 0.10 ) $ ( 0.06 ) $ ( 0.07 ) Net loss per share - diluted $ ( 0.10 ) $ ( 0.06 ) $ ( 0.07 ) Weighted average common shares used in computing net loss per share: Basic 94,884 92,095 92,031 Diluted 94,884 92,095 92,031 Net loss $ ( 9,280 ) $ ( 5,347 ) $ ( 6,311 ) Foreign currency translation adjustment ( 791 ) ( 3,998 ) 1,705 Change in defined benefit pension obligation ( 1,193 ) 4,311 872 Comprehensive loss $ ( 11,264 ) $ ( 5,034 ) $ ( 3,734 ) (a) Includes sales of products to the joint venture, an equity method investment, of $ 55,658 during the year ended June 30, 2023, $ 45,545 during the year ended June 30, 2022, and $ 12,033 during the year ended June 30, 2021 , respectively. See Note 11. (b) Includes sales of services to the joint venture, an equity method investment, of $ 10,919 during the year ended June 30, 2023, $ 10,332 during the year ended June 30, 2022, and $ 12,360 during the year ended June 30, 2021 , respectively. See Note 11. (c) Includes cost of revenue from sales to the joint venture, an equity method investment, of $ 37,772 during the year ended June 30, 2023, $ 35,237 during the year ended June 30, 2022, and $ 13,310 during the year ended June 30, 2021, respectively. See Note 11. (d) Includes charge backs to the joint venture, an equity method investment, related to research and development of $ 1,463 during the year ended June 30, 2023, $ 2,336 during the year ended June 30, 2022, and $ 430 during the year ended June 30, 2021, respectively. The accompanying notes are an integral part of these consolidated financial statements. 81 Table of Contents Accuray Incorporated Consolidated Statement o f Stockholders’ Equity (in thousands) Common Stock Additional Paid-in Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Capital Income (Loss) Deficit Equity Balance at June 30, 2020 91,178 $ 91 $ 545,741 $ ( 484 ) $ ( 481,713 ) $ 63,635 Issuance of common stock to employees 2,830 3 3,028 — — 3,031 Repurchase of common stock ( 3,108 ) ( 3 ) ( 14,078 ) — — ( 14,081 ) Share-based compensation — — 9,385 — — 9,385 Tax withholding upon vesting of restricted stock units ( 78 ) — — — — - Extinguishment of allocated cost related to convertible note exchange — — ( 14,562 ) — — ( 14,562 ) Bifurcation of conversion option upon issuance of convertible notes — — 25,166 — — 25,166 Net loss — — — — ( 6,311 ) ( 6,311 ) Foreign currency translation adjustment — — — 1,705 — 1,705 Change in defined benefit pension obligation — — — 872 — 872 Balance at June 30, 2021 90,822 91 554,680 2,093 ( 488,024 ) 68,840 Cumulative adjustment due to adoption of ASU No. 2020-06 — — ( 25,633 ) — 849 ( 24,784 ) Issuance of common stock to employees 2,726 3 3,887 — 3,890 Tax withholding upon vesting of restricted stock units ( 48 ) — ( 258 ) — — ( 258 ) Share-based compensation — — 10,535 — — 10,535 Net loss — — — — ( 5,347 ) ( 5,347 ) Cumulative translation adjustment — — — ( 3,998 ) — ( 3,998 ) Change in defined benefit pension obligation — — — 4,311 — 4,311 Balance at June 30, 2022 93,500 $ 94 $ 543,211 $ 2,406 $ ( 492,522 ) $ 53,189 Issuance of common stock to employees 3,108 3 2,197 — — 2,200 Tax withholding upon vesting of restricted stock units ( 73 ) — ( 199 ) — — ( 199 ) Share-based compensation — — 10,053 — — 10,053 Net loss — — — — ( 9,280 ) ( 9,280 ) Cumulative translation adjustment — — — ( 791 ) — ( 791 ) Change in defined benefit pension obligation — — — ( 1,193 ) — ( 1,193 ) Other — — 14 — ( 334 ) ( 320 ) Balance at June 30, 2023 96,535 $ 97 $ 555,276 $ 422 $ ( 502,136 ) $ 53,659 The accompanying notes are an integral part of these consolidated financial statements. 82 Table of Contents Accuray Incorporated Consolidated Statem ents of Cash Flows (in thousands) Years Ended June 30, 2023 2022 2021 Cash flows from operating activities Net loss $ ( 9,280 ) $ ( 5,347 ) $ ( 6,311 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 4,527 5,513 6,389 Share-based compensation 10,053 10,600 9,332 Amortization of debt issuance costs 926 817 1,356 Accretion of interest on debt — — 4,887 Provision for credit losses 2,290 266 133 Non-cash revenue transactions related to the joint venture — — ( 1,365 ) Provision for write-down of inventories 4,369 3,478 6,914 (Gain) loss on disposal of property and equipment ( 135 ) 28 106 Income on equity method investment ( 2,572 ) ( 241 ) ( 872 ) Deferral of equity method investment intra-entity profit on sales 282 3,300 310 Loss on extinguishment of debt — — 9,948 Provision (benefit) for deferred income taxes 456 1,785 ( 114 ) Changes in assets and liabilities: Accounts receivable 18,488 ( 12,519 ) 5,235 Inventories ( 6,855 ) ( 22,861 ) 1,688 Prepaid expenses and other assets ( 4,029 ) ( 6,042 ) ( 951 ) Deferred cost of revenue 891 1,549 ( 296 ) Accounts payable 2,850 11,676 ( 3,978 ) Operating lease liabilities, net of operating lease right-of-use assets ( 324 ) ( 880 ) ( 663 ) Accrued liabilities 887 6,685 8,089 Customer advances ( 4,669 ) 1,238 2,237 Deferred revenues ( 2,616 ) ( 1,445 ) ( 3,562 ) Net cash provided by (used in) operating activities 15,539 ( 2,400 ) 38,512 Cash flows from investing activities Purchases of property and equipment, net ( 12,614 ) ( 4,717 ) ( 2,320 ) Purchase of intangible assets ( 67 ) — — Additional investments in the joint venture — — ( 79 ) Net cash used in investing activities ( 12,681 ) ( 4,717 ) ( 2,399 ) Cash flows from financing activities Proceeds from the issuance of common stock to employees 2,200 3,889 3,030 Taxes paid related to net share settlement of equity awards ( 199 ) ( 258 ) ( 343 ) Convertible senior notes exchange and issued, net of issuance costs — — ( 142 ) Paydown and repayment of prior term loan and prior revolving credit facility — — ( 115,924 ) Proceeds from the issuance of the Term Loan Facility — — 80,000 Debt issuance costs ( 248 ) — ( 1,346 ) Repayment of convertible notes ( 2,865 ) — — Paydown under Term Loan Facility ( 6,000 ) ( 4,000 ) — Borrowings under the Revolving Credit Facility 5,000 — 25,000 Repayments under the Revolving Credit Facility — ( 15,000 ) ( 5,000 ) Stock repurchase — — ( 14,080 ) Net cash used in financing activities ( 2,112 ) ( 15,369 ) ( 28,805 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 302 ( 5,561 ) 982 Net increase (decrease) in cash, cash equivalents and restricted cash 1,048 ( 28,047 ) 8,290 Cash, cash equivalents and restricted cash at beginning of period 90,154 118,201 109,911 Cash, cash equivalents and restricted cash at end of period $ 91,202 $ 90,154 $ 118,201 The accompanying notes are an integral part of these consolidated financial statements. 83 Table of Contents Accuray Incorporated Consolidated Statements of Cash Flows (continued) (in thousands) Years Ended June 30, 2023 2022 2021 Supplemental Disclosure of Cash Flow Information Cash paid for income taxes $ 2,150 $ 1,398 $ 1,873 Cash paid for interest $ 9,847 $ 7,462 $ 11,892 Supplemental non-cash disclosure: Prior convertible note exchanged $ — $ — $ ( 82,135 ) New convertible note exchanged $ — $ — $ 97,148 Unpaid purchase of property and equipment at end of year $ 2,064 $ 813 $ 555 Receivable for the sale of property and equipment $ 221 $ — $ — Transfers from inventory to property and equipment $ 303 $ — $ 564 The accompanying notes are an integral part of these consolidated financial statements. 84 Table of Contents Accuray Inc orporated Notes to Consolidated Financial Statements Note 1. The Company and its Significant Accounting Policies The Company Accuray Incorporated (together with its subsidiaries, the “Company” or “Accuray”) designs, develops and sells advanced radiosurgery and radiation therapy systems for the treatment of tumors throughout the body. The Company is incorporated in Delaware and on July 31, 2023, it moved its principal place of business from Sunnyvale, California to Madison, Wisconsin. The Company has primary offices in the United States, Switzerland, China, Hong Kong, and Japan, and conducts its business worldwide. Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Reclassifications Certain amounts on the consolidated statements of cash flows and consolidated statements of stockholders equity in prior periods have been reclassified to conform to current year presentation. Risks and Uncertainties The Company is subject to risks and uncertainties caused by events with significant geopolitical and macroeconomic impacts, including, but not limited to, the COVID-19 pandemic, the Russian invasion of Ukraine, inflation, actions taken to counter inflation, foreign currency exchange rate fluctuations and instability in the banking sector. The Company is also continuing to navigate supply chain and inflation challenges and foreign exchange continues to be a significant headwind that affects the Company’s results of operations. These ongoing supply chain challenges and heightened logistics costs have adversely affected the Company's gross margins and net income or loss, and the Company’s current expectations are that gross margins and net income or loss will continue to be adversely affected by increased material costs and freight and logistic expenses through at least fiscal year 2024, if not longer. Furthermore, certain parts required for the manufacturing and servicing of the Company's products, such as electronic components, are scarce and becoming increasingly difficult to source, even at increased prices. If such parts become unavailable to the Company, it would not be able to manufacture or service our products, which would adversely impact revenue, gross margins, and net income or (loss). The Company expects that the business of its customers and its own business will continue to be adversely impacted, directly or indirectly, by macroeconomic and geopolitical issues, including supply chain issues, inflation, labor, foreign currency exchange rate fluctuations, uncertainty and volatility in the banking and financial services sector, tightening credit markets, the effects of the COVID-19 related restrictions, and other factors that may emerge. The extent of the ongoing impact of these macroeconomic events on our business, our markets and on global economic activity however, is uncertain and the related financial impact cannot be reasonably estimated with any certainty at this time. The Company continues to critically review its liquidity and anticipated capital requirements in light of the significant uncertainty created by geopolitical and macroeconomic conditions. Based on the Company’s cash and cash equivalents balance, available debt facilities, current business plan and revenue prospects, the Company believes that it will have sufficient cash resources and anticipated cash flows to fund its operations for at least the next 12 months. The Company however, is unable to predict with certainty the impact of geopolitical and macroeconomic conditions, including its effect on global supply chain and logistics, will have on its ability to maintain compliance with the debt covenants contained in the credit agreement related to its Credit Facilities (as such terms are defined in Note 9 below), including financial covenants regarding the consolidated fixed charge coverage ratio and consolidated senior net leverage ratio. The Company was in 85 Table of Contents compliance with such covenants at June 30, 2023. 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 the Company’s ability to finance its future operations or capital needs, withstand a future downturn in its business or the economy in general, engage in business activities, including future opportunities that may be in its interest, and plan for or react to market conditions or otherwise execute its business strategies. The Company’s ability to comply with the covenants and other terms governing the Credit Facilities will depend in part on its future operating performance. In addition, because substantially all of the Company’s assets are pledged as a security under the Credit Facilities, if the Company is not able to cure any default or repay outstanding borrowings, such assets are subject to the risk of foreclosure by the Company’s lenders. Failure to meet the covenant requirements in the future could cause the Company to be in default and the maturity of the related debt could be accelerated and become immediately payable. This may require the Company to obtain waivers or amendments to the credit agreement in order to maintain compliance and there can be no certainty that any such waiver or amendment will be available, or what the cost of such waiver or amendment, if obtained, would be. If the Company is unable to obtain necessary waivers or amendment and the debt under such credit facility is accelerated, the Company would be required to obtain replacement financing at prevailing market rates, which may not be favorable to the Company. There is no guarantee that the Company would be able to satisfy its obligations if any of its indebtedness is accelerated . Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company. A ctual results could differ materially from those estimates. Foreign Currency The Company’s international subsidiaries use their local currencies as their functional currencies. For those subsidiaries, assets and liabilities are translated at exchange rates in effect at the balance sheet date and income and expense accounts at the average exchange rate. Resulting translation adjustments are excluded from the determination of net income or loss and are recorded in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. Net foreign currency exchange transaction gains or losses are included as a component of other expense, net, in the Company’s consolidated statements of operations and comprehensive income (loss). Cash, Cash Equivalents and Restricted Cash The Company considers currency on hand, demand deposits, time deposits, and all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents. Cash and cash equivalents are held in various financial institutions in the United States and internationally. Restricted cash primarily consists of cash that is temporarily held in bank accounts which are under the control of the lender to the Credit Facilities, ce rtificates of deposit held as guarantees in connection with customer contracts and corporate leases as well as funds held as guarantees for Value‑Added Tax (“VAT”) obligations in a foreign jurisdiction. Fair Value Measurements The carrying values of the Company’s financial instruments including cash equivalents, restricted cash, accounts receivable, accounts payable, and the Credit Facilities, are approximately equal to their respective fair values due to the relatively short‑term nature of these instruments. See Note 7, Fair Value Measurements, of the consolidated financial statements for further information. 86 Table of Contents Concentration of Credit Risk and Other Risks and Uncertainties The Company’s cash and cash equivalents are primarily deposited with several major financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. The Company has not experienced any losses in such accounts and believes that it is not exposed to any significant risk on these balances. The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses. Accounts receivable are deemed past due in accordance with the contractual terms of the agreement. The Company maintains an allowance for doubtful accounts based upon the expected collectability of all accounts receivable. Historically, such losses have been within management’s expectations. The Company h ad one customer that represented 10 % or more of total net revenue for the years ended June 30, 2023, 2022, and 2021 , respectively. The Company had one customer a s of June 30, 2023 and two customers as of June 30, 2022 , respectively, that each accounted for more than 10 % of accounts receivable, net. Single‑source suppliers presently provide the Company with several components. In most cases, if a supplier was unable to deliver these components, the Company believes that it would be able to find other sources for these components subject to any regulatory qualifications, if required. Inventories Inventories are stated at the lower of cost (on a first‑in, first‑out basis) or net realizable value. Excess and obsolete inventories are written down based on historical sales and forecasted demand, as judged by management. Revenue Recognition The Company’s revenue consists of product revenue resulting from the sale of systems, system upgrades and service revenue. The Company accounts for a contract with a customer when there is a legally enforceable contract between the Company and its customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. The Company’s revenues are measured based on the consideration specified in the contract with each customer, net of any discounts and taxes collected from customers that are remitted to government authorities. The Company’s revenue is primarily derived from sales of CyberKnife and TomoTherapy platforms and services, which include post-contract customer support (“PCS”), installation services, training and other professional services. The majority of the Company's revenue arrangements consist of multiple performance obligations, which can include system, upgrades, installation, training, services, construction, and consumables. For bundled arrangements, the Company accounts for individual products and services separately if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The Company’s products are generally sold without a right of return, and the Company’s contracts generally provide a fixed transaction price. The Company may offer incentives in the form of discounts, including volume system discounts, which are included in the contract and used to calculate the final fixed price of the arrangement. These discounts may pertain to all performance obligations in a specific contract or may be allocated to a specific performance obligation. The Company reviews payment terms extending beyond one year. If it is determined that a material financing component exists, we recognize this as interest income over time. The Company applies the practical expedient to not adjust for a material financing component if the gap between payment and delivery was expected, at the contract inception, to be less than one year. The Company offers customers the opportunity to trade in their older systems for a discount off the purchase of a new system. The Company generally does not provide specific trade-in prices or upgrade rights at the time of purchase of the original system. Trade-in or upgrade transactions are based on the then fair value of the system and are separately negotiated, taking into consideration circumstances existing at the time of the trade-in or upgrade. Accordingly, implied trade-ins and 87 Table of Contents upgrades discounts are not considered separate performance obligations in system sales agreements. During fiscal years 2023, 2022 and 2021, no fair value has been assigned to any of the systems that were traded-in. The SSP of performance obligations is determined based on observable prices at which the Company separately sells the products and services. If the SSP is not directly observable, then the Company estimates the SSP considering market conditions, entity-specific factors, and information about the customer or class of customer that is reasonably available. The contract consideration allocation is based on the SSP at contract inception. The consideration (net of any discounts) is allocated among separate products and services in a bundle based on their relative SSPs. Contract modifications typically add additional goods or services or change pricing. For such modifications, the most recent SSP is used for reallocation to the remaining performance obligations. The Company recognizes revenue for certain performance obligations at the point in time when control is transferred, such as the delivery of products and upgrades. Service revenue is recognized over the term of the service period as the customer benefits from the services throughout the service period. Revenue related to services that are not part of a service contract and performed on a time-and-materials basis are recognized when performed. Service contracts comprise a single stand-ready performance obligation satisfied over time as our customers simultaneously receive and consume benefits from the Company's performance. This performance obligation constitutes a series of services that are substantially the same and provided over time using the same measure of progress. Revenues derived from these arrangements are recognized over time using an output method based upon the passage of time as this provides a faithful depiction of the pattern of transfer of control. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer when the Company expects to generate future economic benefits from the related revenue-generating contracts. The Company capitalizes incremental contract acquisition costs, and amortizes such costs over a five year period, the period which the Company expects to benefit, based on historical service renewal rates, and expectations of future customer renewals. Most of the Company’s contract costs are associated with its internal sales force compensation program and a portion of its employee bonus program. The Company capitalizes and amortizes the incremental costs of obtaining a contract, primarily related to certain bonuses and sales commissions. The capitalized bonuses and sales commissions are amortized over a period of five years commencing upon the initial transfer of control of the system to the customer. The pattern of amortization is commensurate with the pattern of transfer of control of the performance obligations to the customer. The amortization of these contract assets is included in cost of sales, research and development, sales and marketing, and general and administrative expenses based on department headcount allocations in the consolidated statements of operations. The Company elected to use the practical expedient and expense as incurred commissions related to service renewals and upgrades because the amortization period is one year or less. The Company invoices its customers based on the billing schedules in its sales arrangements. Payment terms vary from 30 to 90 days, or longer, from the date of invoice. Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative standalone selling price of the related performance obligations satisfied, and the contractual billing terms. Deferred revenue for periods presented primarily relates to service contracts where the service fees are billed up-front, generally quarterly or annually, prior to services being performed. The associated deferred revenue is generally recognized over the term of the service period. The Company did not have any significant impairment losses on its contract assets for any period presented. Deferred Revenue and Customer Advances Deferred revenue primarily consists of unfulfilled obligations from open contracts for which performance has already started including short-shipped items, deferred warranty, training, maintenance services and other unperformed or incomplete performance obligations. Service contracts outside of the warranty period, for maintenance services, in general, are considered month-to-month contracts. Deferred revenue includes deferred warranty expected to be recognized over the remaining warranty period for systems already installed. Customer advances represent payments made by customers in advance of product shipment. 88 Table of Contents Property and Equipment Property and equipment are stated at cost and are depreciated using the straight‑line method over the estimated useful lives of the related assets. Leasehold improvements are depreciated on a straight‑line basis over the remaining term of the lease or the estimated useful life of the asset, whichever is shorter. Machinery and equipment are depreciated over five years . Furniture and fixtures are depreciated over four years . Computer and office equipment and computer software are depreciated over three years . Repairs and maintenance costs, which are not considered improvements and do not extend the useful life of the property and equipment, are expensed as incurred. Software Capitalization Costs Costs for the development of new software products and the substantial enhancements to existing software products for internal use are capitalized when it is considered probable that the software will be fully developed and used to perform its intended function. Capitalized costs for the development of internal use software are included in property, plant and equipment, net on the consolidated balance sheets. Capitalized costs for internal use software are amortized on a straight-line basis over its estimated useful life, which is generally five years. Costs related to the preliminary project stage, post-implementation, training and maintenance are expensed as incurred. Costs for the development of software the Company plans to sell, lease or market on its own or as part of another product is capitalized once technological feasibility is achieved. The Company will capitalize costs until the product is ready to be sold, at which time, it will amortize the capitalized costs over the estimated useful life. As of June 30, 2023, the Company has $ 2.9 million in capitalized costs for software to be sold and it is included in other assets on the consolidated balances sheets. Impairment of Long‑Lived Assets The Company reviews long‑lived assets, including intangible assets, equity method investment in the JV, property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable using pretax undiscounted cash flows. Impairment, if any, is measured as the amount by which the carrying value of a long‑lived asset exceeds its fair value. Goodwill Goodwill is not amortized but is evaluated for impairment on an annual basis and when impairment indicators are present. The Company has assessed that it has one operating segment and one reporting unit, and the consolidated net assets, including existing goodwill and other intangible assets, are considered to be the carrying value of the reporting unit. The Company estimates the fair value of the reporting unit based on the Company’s closing stock price on the trading day closest to the annual review date multiplied by the outstanding shares on that date. If the carrying value of the reporting unit is in excess of its fair value, an impairment may exist, and the Company must perform the second step of the analysis, in which the estimated fair value of the goodwill is compared to its carrying value to determine the impairment charge, if any. If the estimated fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired and no further analysis is required. There was no impairment of goodwill identified in the fiscal years ended June 30, 2023, 2022 and 2021 . Shipping and Handling The Company’s billings for shipping and handling for product shipments to customers are included in cost of products. Shipping and handling costs incurred for inventory purchases are capitalized in inventory and expensed in cost of products. Research and Development Costs Costs related to research, design and development of products are charged to research and development expense as incurred. These costs include direct compensation, benefits, and other headcount related costs for research and development personnel, costs for materials used in research and development activities, costs for outside services, and allocated portions of facilities and other corporate costs. The Company has entered into research and clinical study arrangements with selected 89 Table of Contents hospitals, cancer treatment centers, academic institutions and research institutions worldwide. These agreements support the Company’s internal research and development capabilities. Share‑Based Compensation The Company issues share‑based compensation awards to employees and directors in the form of stock options, restricted stock units (“RSUs”), performance units (“PSUs”), market stock units (“MSUs”) and employee stock purchase plan (“ESPP”) awards (collectively, “awards”). The exercise price of stock options granted is equal to the market value of the Company’s common stock on the date of grant. Share‑based compensation for stock options and ESPP awards are measured on the date of grant using a Black‑Scholes option pricing model. Share‑based compensation expense for RSUs and PSUs is measured based on the value of the Company’s common stock on the date of grant. Share-based compensation expense for MSUs is based on a Monte Carlo simulation model to estimate the grant date fair value. The Company measures and recognizes compensation expense for all stock‑based awards based on the awards’ fair value. Share‑based compensation expense for stock options, RSUs, and the ESPP awards is recognized on a straight‑line basis over the service period of the award. Share-based compensation expense for PSUs is recognized on a straight-line basis over the period of time for the performance conditions to be satisfied and only for those awards expected to vest. Forfeitures are recorded as they occur. Loss Contingencies The Company is involved in various lawsuits, claims and proceedings that arise in the ordinary course of business. The Company records a provision for a liability when it believes that it is both probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. The Company reviews these provisions quarterly and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Net Income (Loss) Per Common Share Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common shares include outstanding share awards. Potentially dilutive shares of the Company’s common stock are excluded from the computation of diluted net loss per share for loss periods presented because including them would have been anti-dilutive. Dilutive earnings per share is the same as basic earnings per share for the periods in which the Company had a net loss because the inclusion of outstanding common stock would be anti-dilutive. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share attributable to stockholders is as follows (in thousands): Years Ended June 30, 2023 2022 2021 Numerator: Net loss used to compute basic and diluted loss per share $ ( 9,280 ) $ ( 5,347 ) $ ( 6,311 ) Denominator: Weighted average shares used to compute basic and diluted loss per share 94,884 92,095 92,031 Basic and dilutive net loss per share $ ( 0.10 ) $ ( 0.06 ) $ ( 0.07 ) Anti-dilutive share-based awards, excluded 12,862 12,828 10,228 Outstanding Convertible Notes—Diluted Share Impact Due to the optional cash settlement feature and management’s intent to settle the principal amount thereof, in cash, the shares of common stock issuable upon conversion of the outstanding principal amount of the 3.75 % Convertible Senior Notes 90 Table of Contents due 2026 and the 3.75 % Convertible Senior Notes due 2022 (collectively, the “Notes”) are included in the calculation of diluted net income (loss) per share only if their inclusion is dilutive for periods during which the Notes were outstanding. The shares of common stock issuable upon conversion of the outstanding principal amount of the Notes as of June 30, 2023, 2022 and 2021 were 17.1 million, 17.6 million and 17.6 million, respectively, and were not included in the basic and diluted net loss per common share as the effect of adding the shares were anti-dilutive. See Note 9, Debt, of the consolidated financial statements for more information about the Notes. Leases The Company is the lessee in a lease contract when the Company obtains the right to use the asset. Operating leases are included in the line items right-of-use assets, lease liabilities, current, and lease liabilities, long-term in the consolidated balance sheet. Right-of-use asset represents the Company’s right to use an underlying asset for the lease term and lease obligations represent the Company’s obligations to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on the consolidated balance sheet and are expensed on a straight-line basis over the lease term in the consolidated statements of operations. The Company determines the lease term by agreement with lessor, including lease renewal and extension. As the leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The Company elected a practical expedient to account for lease and non-lease components together as a single lease component. Equity Method Investment The Company has an equity investment in CNNC Accuray (Tianjin) Medical Technology Co. Ltd., the Company’s JV. The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The Company's investment in the JV is measured at cost and adjusted for the Company’s share of the JV's income or loss, for intra-entity profits and for impairment, if any. The Company recognizes its proportionate share of income or loss from the JV on a one-quarter lag due to the timing of the availability of the JV’s financial records. Profit earned by the Company from the JV is eliminated through cost of goods sold until it is realized; such profits would generally be considered realized when the inventory has been sold through to third parties . The JV's equity method goodwill is not amortized but is evaluated for impairment on an annual basis and when impairment indicators are present. Our impairment analysis considers qualitative and quantitative factors that may have a significant impact on the JV's fair value. Qualitative factors include the investee's financial condition and business outlook, industry and sector performance, operational and financing cash flow activities, and other relevant factors affecting the JV. When indicators of impairment exist, we prepare quantitative assessments of the fair value of our non-marketable equity investments, which require judgment and the use of estimates, including discount rates, investee revenue and costs, and comparable market data, among others. Income Taxes The Company is required to estimate its income taxes in each of the tax jurisdictions in which it operates prior to the completion and filing of tax returns for such periods. This process involves estimating actual current tax expense together with assessing temporary differences in the treatment of items for tax purposes versus financial accounting purposes that may create net deferred tax assets and liabilities. The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax bases of the Company’s assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses, research and development credit carryforwards and other deferred tax assets. The Company records a valuation allowance to reduce its deferred tax assets to the amount the Company believes is more likely than not to be realized. Because of the uncertainty of the realization of the deferred tax assets, the Company has recorded a full valuation allowance against its domestic and certain foreign net deferred tax assets. 91 Table of Contents The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. Management regularly assesses the Company’s tax positions in light of legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which the Company does business. The Company anticipates there will be no material changes in uncertain tax positions in the next 12 months. Accumulated Other Comprehensive Income (Loss) The components of comprehensive income (loss) consist of net income (loss), changes in foreign currency exchange rate translation and net changes related to a defined benefit pension plan. The changes in foreign currency exchange rate translation and net changes related to the defined benefit pension plan are excluded from earnings and reported as a component of stockholders’ equity. The foreign currency translation adjustment results from those subsidiaries not using the United States dollar as their functional currency since the majority of their economic activities are denominated in their applicable local currency. Accordingly, all assets and liabilities related to these operations are translated at the current exchange rates at the end of each period, whereas revenues and expenses are translated at average exchange rates in effect during the period. The resulting cumulative translation adjustments are recorded directly to the accumulated other comprehensive loss account in stockholders’ equity. Recent Accounting Pronouncements Accounting Pronouncement Recently Adopted In March 2020, the FASB issued an update (“ASU 2020-04”) establishing Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. This accounting standard update was effective upon issuance and must be applied prospectively by December 31, 2022. The Company’s Term Loan Facility (as defined below) and Revolving Credit Facility (as defined below) previously applied the Eurodollar rate London Interbank Offer Rate (“LIBOR”) to the variable component of the interest rate, but has moved away from the Eurodollar rate LIBOR in connection with reference rate reform. In October 2022, the Company began using the Secured Overnight Financing Rate (“SOFR”) to calculate the variable component of the interest rate for its Term Loan Facility and Revolving Credit Facility. The change to using SOFR did not have a material impact on the Company's financial statements. Note 2. Revenue Contract Balances The timing of revenue recognition, billings, and cash collections results in trade receivables, unbilled receivables, and deferred revenues on the consolidated balance sheets. The Company may offer longer or extended payments of more than one year for qualified customers in some circumstances. At times, revenue recognition occurs before the billing, resulting in an unbilled receivable, which represents a contract asset. The contract asset is a component of accounts receivable and other assets for the current and non-current portions, respectively. When the Company receives advances or deposits from customers before revenue is recognized, this results in a contract liability. It can take two or more years from the time of order to revenue recognition due to the Company’s long sales cycle. 92 Table of Contents Changes in the contract assets and contract liabilities are as follows (dollars in thousands): Change June 30, 2023 June 30, 2022 $ % Assets: Unbilled accounts receivable – current (1) $ 9,847 $ 13,325 ( 3,478 ) ( 26 ) Interest receivable – current (2) 379 493 ( 114 ) ( 23 ) Long-term accounts receivable (3) 4,734 5,301 ( 567 ) ( 11 ) Interest receivable – non-current (3) 673 683 ( 10 ) ( 1 ) Liabilities: Customer advances 20,777 25,290 ( 4,513 ) ( 18 ) Deferred revenue – current 72,185 75,375 ( 3,190 ) ( 4 ) Deferred revenue – non-current 27,079 24,694 2,385 10 (1) Included in accounts receivable on the consolidated balance sheets (2) Included in prepaid expenses and other current assets on the consolidated balance sheets (3) Included in other assets on the consolidated balance sheets During the year ended June 30, 2023, contract assets changed primarily due to the timing of billings that occurred after revenues were recognized, and changes in transactions with payment terms exceeding 12 months. During the year ended June 30, 2023, contract liabilities changed due to the timing of revenue recognition as a result of changes in shipping timing, transaction price, reduced customer deposits for system sales, and for which the warranty was deferred. During the years ended June 30, 2023 and June 30, 2022, the Company recognized revenues of $ 84.9 million and $ 81.2 million, respectively, which were included in the deferred revenue balances at June 30, 2022 and June 30, 2021, respectively. Remaining Performance Obligations Remaining performance obligations represent deferred revenue from open contracts, for which performance has already started and the transaction price from executed contracts, for which performance has not yet started. Service contracts in general are considered month-to-month contracts. As of June 30, 2023, total remaining performance obligations amounted to $ 1,061.7 million. Of this total amount, $ 72.2 million related to long-term warranty and non-cancellable post-warranty services, which is the estimated revenue expected to be recognized over the remaining service period and warranty period for systems that have been delivered (the time bands reflect management’s best estimate of when the Company will transfer control to the customer and may change based on timing of shipment, readiness of customers’ facilities for installation, installation requirements, and availability of products). The Company has elected the practical expedient to not disclose the unsatisfied performance obligations of contracts with an original expected duration of one year or less. The following table represents the Company's expected revenue recognition based on the remaining performance obligations related to long-term warranty and non-cancellable post-warranty services as of June 30, 2023 (in thousands): Fiscal years 2024 2025 2026 Thereafter Long-term warranty and service $ 29,796 $ 21,962 $ 13,127 $ 7,358 93 Table of Contents For the remaining $ 989.5 million of performance obligations (open systems sales, upgrades, training and other miscellaneous items), the Company estimates 27 % to 30 % will be recognized in the next 12 months, and the remaining portion will be recognized thereafter. The Company’s historical experience indicates that some of its customers will cancel or renegotiate contracts as economic conditions change or when product offerings change during the long sales cycle. The Company anticipates a portion of its open contracts may never result in revenue recognition, primarily due to the long sales cycle and factors outside of its control, including changes in customers' needs or financial condition, changes in government or health insurance reimbursement policies, or changes to regulatory requirements. Based on historical experience and management's best estimate, approximately 20 % of the Company’s $ 939.8 million open system sales contracts may never result in revenue. Capitalized Contract Costs As of June 30, 2023, and 2022, the balance of capitalized costs to obtain a contract was $ 11.0 million and $ 11.4 million, respectively. The Company has classified the capitalized costs to obtain a contract as a component of prepaid expenses and other current assets and other assets with respect to the current and non-current portions of capitalized costs, respectively, on the consolidated balance sheets. The Company recognized expenses related to the amortization of capitalized contract costs of $ 3.6 million, $ 3.3 million and $ 2.8 million, during the years ended June 30, 2023, 2022 and 2021, respectively. The Company incurred impairment losses related to capitalized contract costs of $ 0.8 million, $ 0.6 million and $ 0.6 million for the years ended June 30, 2023, 2022 and 2021 , respectively. Note 3. Supplemental Financial Information Consolidated Balance Sheets Financing receivables A financing receivable is a contractual right to receive money, on demand or on fixed or determinable dates, that is recognized as an asset on the Company’s balance sheets. The Company’s financing receivables, consisting of its accounts receivable with contractual maturities of more than one year, are included in other assets on the consolidated balance sheets. The Company evaluates the credit quality of a customer at contract inception and monitors credit quality over the term of the underlying transactions. The Company performs a credit analysis for all new orders and reviews payment history, current order backlog, financial performance of the customers and other variables that augment or mitigate the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the contract term and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits. Actual cash collections may differ from the contracted maturities due to early customer buyouts, refinancing, or defaults. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near‑term risk of non‑payment. The Company performs an assessment each quarter on the allowance for credit losses related to its financing receivables. The Company did no t have any additions to the allowance for credit losses during the years ended June 30, 2023 and 2022. A summary of the Company’s financing receivables is presented as follows (in thousands): June 30, 2023 June 30, 2022 Financing receivable $ 5,854 $ 6,137 Allowance for credit losses ( 798 ) ( 943 ) Total, net $ 5,056 $ 5,194 Reported as: Current $ 2,016 $ 2,435 Non-current 3,040 2,759 Total, net $ 5,056 $ 5,194 94 Table of Contents Inventories Inventories consisted of the following (in thousands): June 30, 2023 June 30, 2022 Raw materials $ 62,945 $ 61,871 Work-in-process 17,469 16,367 Finished goods 64,736 64,016 Total inventories $ 145,150 $ 142,254 The Company's inventories on the consolidated balance sheets are net of reserves. Prepaid and Other Current Assets Prepaid and other current assets consisted of the following (in thousands): June 30, 2023 June 30, 2022 Value added tax receivables $ 11,718 $ 7,058 Prepaid commissions 5,866 6,500 Capitalized contract costs 1,782 1,590 Other prepaid assets 5,763 5,073 Other current assets 2,483 3,573 Total prepaid and other current assets $ 27,612 $ 23,794 Property and Equipment, net Property and equipment, net consisted of the following (in thousands): June 30, 2023 June 30, 2022 Furniture and fixtures $ 1,581 $ 1,766 Computer and office equipment 7,798 8,605 Software 5,191 5,344 Leasehold improvements 26,641 26,659 Machinery and equipment 44,779 46,522 Construction in progress 13,499 2,999 99,489 91,895 Less: Accumulated depreciation ( 78,563 ) ( 79,210 ) Total property and equipment, net $ 20,926 $ 12,685 At June 30, 2023 , construction in progress includes $ 7.5 million in capitalized costs for the development of internal use software. Depreciation expense related to property and equipment was $ 4.4 million, $ 5.4 million and $ 6.2 million, during the years ended June 30, 2023, 2022 and 2021, respectively. 95 Table of Contents Other Assets Other assets consisted of the following (in thousands): June 30, 2023 June 30, 2022 Capitalized contract costs $ 9,244 $ 9,754 Long-term accounts receivable 4,734 5,301 Capitalized software costs to be sold 2,853 — Other long-term assets 3,276 4,239 Total other assets $ 20,107 $ 19,294 Other Accrued Liabilities Other accrued liabilities consisted of the following (in thousands): June 30, 2023 June 30, 2022 Value added tax liabilities $ 12,368 $ 8,222 Commissions due to third parties 10,499 6,619 Refunds due to customers 3,364 4,717 Accrued consulting 2,599 1,269 Accrued royalties 2,398 2,424 Other liabilities 7,043 7,034 Total other accrued liabilities $ 38,271 $ 30,285 Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss) by component (in thousands): Cumulative Translation Adjustment Defined Pension Benefit Obligation Total Balance at June 30, 2021 $ 2,457 $ ( 364 ) $ 2,093 Other comprehensive income (loss) ( 3,998 ) 4,311 313 Balance at June 30, 2022 $ ( 1,541 ) $ 3,947 $ 2,406 Other comprehensive loss ( 791 ) ( 1,193 ) ( 1,984 ) Balance at June 30, 2023 $ ( 2,332 ) $ 2,754 $ 422 Consolidated Statements of Operations Other expense, net consisted of the following (in thousands): Years Ended June 30, 2023 2022 2021 Interest expense $ ( 10,632 ) $ ( 8,129 ) $ ( 16,893 ) Foreign currency exchange loss ( 878 ) ( 2,618 ) ( 1,953 ) Loss on debt extinguishment - - ( 9,948 ) Other, net ( 232 ) 356 1,128 Total other expense, net $ ( 11,742 ) $ ( 10,391 ) $ ( 27,666 ) 96 Table of Contents Restructuring In the second quarter of fiscal year 2023, the Company announced a cost savings initiative designed to reduce operating costs. This cost savings initiative resulted in the reduction of the Company’s global workforce by 4.5 %. The Company recorded $ 2.7 million in restructuring charges during the fiscal year 2023. These charges are cash-based charges, primarily related to severance expenses and other one-time termination benefits. At June 30, 2023 , the Company does not have any remaining accruals related to the restructuring charges. Note 4. Leases The Company has operating leases for corporate offices and warehouse facilities worldwide. Additionally, the Company leases cars, copy machines and laptops that are considered operating leases. Some of the Company’s leases are non-cancellable operating lease agreements with various expiration dates through June 2035. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised, and therefore are not factored into the determination of lease payments. In August 2022, the Company entered into a material lease agreement to extend the lease terms at its administrative and manufacturing facilities in Madison, Wisconsin through 2035. Operating lease costs during the years ended June 30, 2023, 2022, and 2021, were $ 9.4 million, $ 9.2 million and $ 9.1 million, respectively, not including short-term operating lease costs during the years ended June 30, 2023, 2022, and 2021, of $ 0.4 million, $ 0.4 million and $ 0.2 million, respectively. Cash paid for amounts included in the measurement of operating lease liabilities during the years ended June 30, 2023, 2022, and 2021, w ere $ 9.4 million, $ 9.8 million and $ 9.7 million, respectively. Operating lease right-of-use assets and operating lease obligations are represented in the table below (in thousands): June 30, 2023 June 30, 2022 Beginning balance operating lease right-of-use assets $ 16,798 $ 22,522 Lease assets added 17,157 3,522 Amortization for the year ( 8,102 ) ( 9,246 ) Ending balance operating lease right-of-use assets $ 25,853 $ 16,798 Beginning balance operating lease obligations $ 19,020 $ 25,609 Lease liabilities added 16,834 3,209 Repayment and interest accretion ( 8,101 ) ( 9,798 ) Ending balance operating lease obligations $ 27,753 $ 19,020 Current portion of operating lease obligations $ 4,151 $ 8,567 Noncurrent portion of operating lease obligations $ 23,602 $ 10,453 Maturities of operating lease liabilities as of June 30, 2023, are presented in the table below (in thousands) : Year Ending June 30, Amount 2024 $ 4,394 2025 5,777 2026 3,798 2027 3,591 2028 3,347 Thereafter 23,308 Total operating lease payments 44,215 Less: imputed interest ( 16,462 ) Present value of operating lease liabilities $ 27,753 Weighted average remaining lease term (in years) 8.4 Weighted average discount rate 9.6 % 97 Table of Contents Note 5. Goodwill and Purchased Intangible Assets Goodwill The Company's carrying amount of its goodwill is as follows (in thousands): As of June 30, 2023 2022 Balance at the beginning of the period $ 57,840 $ 57,960 Currency translation adjustment ( 159 ) ( 120 ) Balance at the end of the period $ 57,681 $ 57,840 In the second quarter of fiscal year 2023 , the Company performed its annual goodwill impairment test and determined that there was no impairment to its goodwill. The Company monitors its recorded goodwill for indicators of impairment every fiscal quarter. Purchased Intangible Assets The Company’s carrying amount of acquired intangible assets, net, consisted of the following (in thousands): As of June 30, 2023 As of June 30, 2022 Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount Patent license $ 1,000 $ ( 893 ) $ 107 $ 1,170 $ ( 920 ) $ 250 Other intangibles 132 ( 29 ) 103 — — — Total intangible assets $ 1,132 $ ( 922 ) $ 210 $ 1,170 $ ( 920 ) $ 250 The Company did not identify any triggering events that would indicate potential impairment of its definite‑lived intangible and long‑lived assets as of June 30, 2023, and 2022. Amortization expense related to purchased intangible assets during the years ended June 30, 2023, 2022, and 2021, was $ 0.2 million, $ 0.1 million and $ 0.2 million, respectively. The estimated future amortization expense of purchased intangible assets as of June 30, 2023 is as follows (in thousands): Year Ending June 30, Amount 2024 $ 151 2025 44 2026 15 Total estimated future amortization expense $ 210 Note 6. Derivative Financial Instruments The Company utilizes foreign currency forward contracts with reputable financial institutions to manage its exposure of fluctuations in foreign currency exchange rates on certain intercompany balances and foreign currency denominated cash, customer receivables and liabilities. The Company does not use derivative financial instruments for speculative or trading purposes. These forward contracts are not designated as hedging instruments for accounting purposes. Principal hedged currencies primarily include the Japanese Yen, Swiss Franc, and Euro. The periods of these forward contracts range up to approximately three months and the notional amounts are intended to be consistent with changes in the underlying exposures. The Company intends to exchange foreign currencies for U.S. Dollars at maturity. The Company enters into forward currency exchange contracts to hedge its overseas operating expenses and other liabilities when deemed appropriate. 98 Table of Contents The notional amount of the Company's outstanding forward currency exchange contracts consisted of the following: As of June 30, 2023 2022 Swiss Franc 26,867 27,910 Chinese Yuan 249 2,524 Euro 17,885 16,307 British Pound 516 3,699 Indian Rupee 3,539 3,728 Japanese Yen 12,492 14,167 $ 61,548 $ 68,335 The Company entered into the foreign exchange forward contracts on June 30, 2023 and June 30, 2022, and therefore, there was no amount recorded on the balance sheets. Gains and losses on the Company's foreign currency forward contracts are recorded in Other expense, net, on the Company's consolidated statements of operations. The following table provides information about the gain or loss associated with the Company’s derivative financial instruments not designated as hedging instruments (in thousands): Years ended June 30, 2023 2022 2021 Foreign currency exchange gain (loss) on forward contracts $ 1,881 $ 502 $ ( 2,457 ) Note 7. Fair Value Measurements Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as follows: Level 1— Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2— Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets in non-active markets; • Inputs other than quoted prices that are observable for the asset or liability; and • Inputs that are derived principally from or corroborated by other observable market data. Level 3— Unobservable inputs that cannot be corroborated by observable market data and require the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. Assets and Liabilities That Are Measured at Fair Value At June 30, 2023, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of $ 61.5 million. The fair value of the forward contract based upon the June 30, 2023 exchange rate was $ 61.2 million, which it considers to be a Level 2 fair value measurement. 99 Table of Contents At June 30, 2022, the Company had open currency forward contracts to purchase or sell foreign currencies with a stated, or notional, value of $ 68.3 million. The fair value of the forward contract based upon the June 30, 2022 exchange rate was $ 68.3 million, which it considers to be a Level 2 fair value measurement. The Company’s debt is measured on a recurring basis using Level 2 inputs based upon observable inputs of the Company’s convertible debt. The Revolving Credit Facility (as defined below) and the Term Loan Facility (as defined below) reflects the bank quoted market, which the Company considers to be a Level 2 fair value measurement. The Company believes that the carrying value of these financial instruments approximate its estimated fair value based on the effective interest rate, compared to the current market rate, available to the Company and analyzed at quarter-end. The following table summarizes the carrying value and estimated fair value of the 3.75 % Convertible Notes due 2022, the 3.75 % Convertible Notes due 2026, the Term Loan Facility, and the Revolving Credit Facility, (in thousands): June 30, 2023 June 30, 2022 Carrying Value Fair Value Carrying Value Fair Value 3.75 % Convertible Notes Due 2022 $ — $ — $ 2,863 $ 2,729 3.75 % Convertible Notes Due 2026 98,189 98,265 97,619 78,561 Term Loan Facility 69,094 69,094 74,988 74,988 Revolving Credit Facility 10,000 10,000 5,000 5,000 Total $ 177,283 $ 177,359 $ 180,470 $ 161,278 Note 8. Commitments and Contingencies Long‑term Debt Commitments The Company is required to make semi‑annual interest payments on the 3.75 % Convertible Senior Notes due 2026, principal and interest payments on the Term Loan Facility and interest payments on the Revolving Credit Facility. See Note 9, Debt , of the consolidated financial statements for more information. Future minimum long‑term principal payments and interest on the 3.75 % Convertible Senior Notes due 2026 and Credit Facilities (as defined below), including short-term portion, as of June 30, 2023, are as follows (in thousands): Year Ending June 30, Long-Term Debt (1) 2024 $ 16,368 2025 17,786 2026 174,045 Total $ 208,199 (1) These amounts represent principal and interest cash payments over the contractual life of the debt obligations, including anticipated interest payments that are not recorded on the Company’s consolidated balance sheet. Any conversion, premium, redemption or purchase of the Notes that would impact cash payments is noted in the preceding table. Purchase Commitments The Company’s purchase commitments and obligations include all open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers, for which the Company has not received the goods or services and acquisition and licensing of intellectual property. A majority of these purchase obligations are due within a year. Although open purchase orders are considered enforceable and legally binding, the terms generally allows the Company the option to cancel, reschedule, and adjust its requirements based on the Company’s business needs prior to the delivery of goods or performance of services, and hence, these purchase orders have not been included in the table above. 100 Table of Contents Indemnities and Commitments The Company enters into standard indemnification agreements with its landlords and all superior mortgagees and their respective directors, officers’ agents, and employees in the ordinary course of business. Pursuant to these agreements, the Company will indemnify, hold harmless, and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the landlords, in connection with any loss, accident, injury, or damage by any third‑party with respect to the leased facilities. The term of these indemnification agreements is from the commencement of the lease agreements until termination of the lease agreements. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, historically, the Company has not incurred claims or costs to defend lawsuits or settle claims related to these indemnification agreements. The Company has not recorded any liability associated with its indemnification agreements as it is not aware of any pending or threatened actions that represent probable losses as of June 30, 2023. Guarantees As of June 30, 2023 and June 30, 2022, the Company had various bank guarantees totaling approximately $ 1.3 million and $ 1.2 million, respectively, primarily related to a bidding process with customers. Royalty Agreements The Company enters into software license agreements with third parties that may require royalty payments for each license used. In connection with such agreements, the Company recorded royalty costs of $ 2.3 million, $ 1.9 million and $ 1.9 million for the years ended June 30, 2023, 2022 and 2021, respectively, which were recorded in cost of revenue or deferred cost of revenue. The Company had approximately $ 2.4 million and $ 2.4 million accrued liabilities as of June 30, 2023 and 2022, respectively, related to this agreement. Software License Indemnity Under the terms of the Company’s software license agreements with its customers, the Company agrees that in the event the software sold infringes upon any patent, copyright, trademark, or any other proprietary right of a third‑party, it will indemnify its customer licensees against any loss, expense, or liability from any damages that may be awarded against its customer. The Company includes this infringement indemnification in all of its software license agreements and selected managed services arrangements. In the event the customer cannot use the software or service due to infringement and the Company cannot obtain the right to use, replace or modify the license or service in a commercially feasible manner so that it no longer infringes, then the Company may terminate the license and provide the customer a refund of the fees paid by the customer for the infringing license or service. The Company has not recorded any liability associated with this indemnification, as it is not aware of any pending or threatened actions that represent probable losses as of June 30, 2023. Litigation From time to time, the Company is involved in legal proceedings arising in the ordinary course of its business. The Company records a provision for a loss when it believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Currently, management believes the Company does not have any probable and reasonably estimable losses related to any current legal proceedings and claims. Although occasional adverse decisions or settlements may occur, management does not believe that an adverse determination with respect to any of these claims would individually, or in the aggregate, materially and adversely affect the Company’s financial condition or operating results. Litigation is inherently unpredictable and is subject to significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates and assumptions change or prove to have been incorrect, the Company could incur significant charges related to legal matters that could have a material impact on its results of operations, financial position, and cash flows. 101 Table of Contents Note 9. Debt The Company's outstanding debt as of June 30, 2023 and June 30, 2022 is as follows (in thousands): June 30, 2023 June 30, 2022 Principal Amount Unamortized Debt Costs Net Carrying Amount Principal Amount Unamortized Debt Costs Net Carrying Amount 3.75% Convertible Senior Notes due 2026 $ 100,000 $ ( 1,811 ) $ 98,189 $ 100,000 $ ( 2,381 ) $ 97,619 3.75% Convertible Senior Notes due 2022 — — — 2,865 ( 1 ) 2,864 Term Loan Facility 70,000 ( 906 ) 69,094 76,000 ( 1,013 ) 74,987 Revolving Credit Facility 10,000 — 10,000 5,000 — 5,000 Total debt $ 180,000 $ ( 2,717 ) $ 177,283 $ 183,865 $ ( 3,395 ) $ 180,470 Reported as: Short-term debt $ 5,721 $ 8,563 Long-term debt 171,562 171,907 Total debt $ 177,283 $ 180,470 3.75% Convertible Senior Notes due July 2026 In May 2021, the Company issued $ 100.0 million aggregate principal amount of its 3.75 % Convertible Senior Notes due 2026 (the “ 3.75 % Convertible Notes due 2026”) under an indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. The aggregate principal amount of the 3.75 % Convertible Notes due 2026 totaling $ 97.1 million was issued to certain holders of the Company’s outstanding 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 of 3.75 % Convertible Notes due 2026 were issued to certain other qualified new investors for cash (such transactions the “Exchange and Subscription Transactions”). Holders of the 3.75 % Convertible Notes due 2026 may convert their notes at any time on or after March 6, 2026 until the close of the business day immediately preceding the maturity date. Prior to June 6, 2026, holders of the 3.75 % Convertible Notes due 2026 may convert their notes only under certain circumstances. Upon conversion, the Company will have the right to pay cash, or deliver shares of common stock of the Company or a combination thereof, at the Company’s election. The initial conversion rate is 170.5611 shares of the Company’s common stock per $ 1,000 principal amount (which represents an initial conversion price of approximately $ 5.86 per share of the Company’s common stock). The conversion rate, and therefore, the conversion price, is subject to adjustment, as further described below. Holders of the 3.75 % Convertible Notes due 2026 who convert their notes in connection with a “make-whole fundamental change,” as defined in the indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, in the event of a “fundamental change,” as defined in the indenture, holders of the 3.75 % Convertible Notes due 2026 may require the Company to purchase all or a portion of their note at a fundamental change repurchase price equal to 100 % of the principal amount of the 3.75 % Convertible Notes due 2026, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date. As of June 30, 2023 and June 30, 2022 , the if-converted value of the 3.75 % Convertible Notes due 2026 did not exceed the outstanding principal amount. 3.75% Convertible Senior Notes due July 2022 As of June 30, 2022, the $ 2.9 million aggregate principal amount of the 3.75 % Convertible Senior Notes due July 2022 (the “ 3.75 % Convertible Notes due 2022”) remained outstanding. In July 2022, the remaining outstanding $ 2.9 million (principal and interest) of the 3.75 % Convertible Senior Notes due 2022 was repaid in cash. 102 Table of Contents Credit Facilities On May 6, 2021, the Company entered into a senior secured credit agreement (the “Credit Agreement”) with Silicon Valley Bank, individually as a lender and agent (“Agent”), and the other lenders from time to time parties thereto (together with Silicon Valley Bank as a lender, the “Lenders”), which provides for a new five-year $ 80 million term loan (the “Term Loan Facility”) and a $ 40 million revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”). In fiscal year 2023, interest on the borrowings under the Credit Facilities is payable in arrears on the applicable interest payment date, at an annual interest rate of reserve-adjusted, 90-day term SOFR ( subject to a 0.50 % floor) plus a margin between 2.50 % and 3.25 % margin, determined by the Consolidated Senior Net Leverage Ratio (as defined in the Credit Agreement). During the year ended June 30, 2023 , the weighted average effective interest rate on the Term Loan Facility was 7.26 % and Revolving Credit Facility was 8.27 %. The Credit Agreement requires the Company to pay the Lenders an unused commitment fee equal to the average unused portion of the Revolving Credit Facilit y. The Company pays a rate of 0.25 % to 0.40 % per annum of the average unused portion of the Revolving Credit Facility, determined by the Consolidated Senior Net Leverage Ratio (as defined in the Credit Agreement). If all or a portion of the loans under the Term Loan Facility are prepaid, then the Company will be required to pay a fee equal to 1 % of the aggregate amount of the loans so prepaid, subject to certain exceptions. The Credit Agreement contains restrictions and covenants applicable to the Company and its subsidiaries. Among other requirements, the Company may not permit the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) to be less than a certain specified ratio for each fiscal quarter during the term of the Credit Agreement or the consolidated senior net leverage ratio to be greater than a certain specified ratio for each fiscal quarter during the term of the Credit Agreement. In October 2022, the Company entered into an amendment with respect of the Credit Agreement to change the requirements of the financial maintenance covenants under the Credit Agreement for the fiscal quarter ending December 31, 2022 through the end of the fiscal quarter ending June 30, 2023. As of June 30, 2023, the Company was in compliance with its covenants under the Credit Agreement. The Credit Agreement also contains customary covenants that limit, among other things, the ability of the Company and its subsidiaries to (i) incur indebtedness, (ii) incur liens on their property, (iii) pay dividends or make other distributions, (iv) sell their assets, (v) make certain loans or investments, (vi) merge or consolidate, (vii) voluntarily repay or prepay certain indebtedness and (viii) enter into transactions with affiliates, in each case subject to certain exceptions. The Credit Agreement contains customary representations and warranties and events of default. A summary of interest expense on the Credit Facilities and the Notes is as follows (in thousands): Year ended June 30, 2023 2022 2021 Interest expense related to contractual interest coupon $ 9,473 $ 7,233 $ 10,590 Interest expense related to amortization of debt discount — — 4,887 Interest expense related to amortization of debt issuance costs 926 909 1,356 Interest expense related to extinguishment of debt — — 9,948 Total $ 10,399 $ 8,142 $ 26,781 Note 10. Stock Incentive Plan and Employee Stock Purchase Plan As of June 30, 2023 , the Company had two outstanding stock incentive plans: the 2016 Equity Incentive Plan ( “2016 Plan”) and the 2007 Incentive Award Plan (“2007 Plan”). The 2016 Plan permits the granting of stock options, stock appreciation rights, restricted stock awards, performance shares, performance units, and RSUs. The vesting of RSUs granted under the 2016 Plan are primarily service‑based (over the requisite service period) while the vesting of performance units granted under the 2016 Plan primarily consist of PSUs or MSUs. Only employees of the Company are eligible to receive incentive stock options. Non‑employees may be granted non‑qualified stock options. 103 Table of Contents Stock options granted under the 2016 Plan have an exercise price of at least 100 % of the fair market value of the underlying stock on the grant date. The stock options have 10 -year contractual terms and generally become exercisable for 25 % of the option shares one year from the date of grant and then ratably over the following 36 months. Service‑based RSUs granted generally vest 25 % of the share units covered by the grant on each of the first through fourth anniversaries of the date of the grant, subject to the continued service of the grantee through each such date. RSUs granted to the Board of Directors vest over one year. PSUs granted generally vest at the end of a three year performance period and the amount of shares that vest are based on the Company's actual performance relative to predefined performance conditions. The Board of Directors has the discretion to use different vesting schedules. As of June 30, 2023, the 2007 Plan continued to remain in effect; however, the Company can no longer grant equity awards under such plans. The following table summarizes the share‑based compensation charges included in the Company’s consolidated statements of operations and comprehensive income (loss) (in thousands): Years ended June 30, 2023 2022 2021 Cost of revenue $ 1,439 $ 1,584 $ 1,296 Research and development 1,396 1,371 1,348 Selling and marketing 1,586 2,213 1,457 General and administrative 5,632 5,432 5,231 Total $ 10,053 $ 10,600 $ 9,332 The following table summarizes the share‑based compensation charges for the Company’s equity awards (in thousands): Years ended June 30, 2023 2022 2021 Stock options $ 2,011 $ 2,565 $ 2,431 Restricted stock units 7,004 6,160 5,425 Performance stock units 54 571 — Employee stock purchase plan 984 1,304 1,374 Market stock units — — 102 Total $ 10,053 $ 10,600 $ 9,332 Stock Options The fair value of each option is estimated at the date of grant using the Black‑Scholes option pricing formula with the following assumptions: Years Ended June 30, 2023 2022 2021 Risk–free interest rate — % 2.71 % - 3.21 % 0.59 % - 1.27 % Dividend yield — % — % — % Expected term — 7.30 - 8.94 6.72 - 6.88 Expected volatility — % 54.1 % - 57.3 % 54.7 % - 55.6 % Determining Fair Value of Stock Options The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. The Company estimates the fair value of its stock options using the Black‑Scholes option‑pricing model. This fair value is then amortized over the requisite service periods of the awards. The Company estimates the expected term of stock option by taking the average of the vesting term and the contractual term of the option, as illustrated by the simplified method. The expected volatility is derived from the Company’s historical stock volatility over a period approximately equal to the expected term of the options. The risk‑free interest rate is based on the U.S. Treasury constant maturity rate on the date of grant. The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts. 104 Table of Contents A summary of option activity under the Company’s incentive plan is presented below (in thousands except per share and term amounts): Options Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (In Years) Aggregate Intrinsic Value (1) Balance at June 30, 2022 7,053 $ 3.73 7.05 $ — Options granted — — Options exercised — — Options forfeited/expired ( 1,573 ) $ 4.90 Balance at June 30, 2023 5,480 $ 3.40 6.53 $ 3,580 Vested or expected to vest at June 30, 2023 5,480 $ 3.40 6.53 $ 3,580 Exercisable at June 30, 2023 4,411 $ 3.51 6.15 $ 2,364 1. The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of Accuray common stock of $ 3.87 and $ 1.96 on June 30, 2023 and June 30, 2022 , respectively, The amount represents what would have been received by the option holders had all option holders exercised their options and sold the shares received upon exercise as of that date. There were no options granted during the year ended June 30, 2023. The grant date fair value of options granted during the years ended June 30, 2022 and 2021 was $ 0.9 million and $ 3.7 million, respectively. There were no options exercised during the year ended June 30, 2023. T he total intrinsic value of options exercised during the years ended June 30, 2022 and 2021 was $ 0.3 million and $ 0.2 million, respectively, and the total cash received from option exercises during the y ears ended June 30, 2022 and 2021 was $ 1.2 million and $ 2.2 million, respectively. Tax benefits from tax deductions for exercised options and disqualifying dispositions in excess of the deferred tax asset, attributable to share compensation costs for such options, are credited to additional paid‑in capital. The benefits are recognized against income taxes. Realized excess tax benefits related to stock options exercises was zero for each of the years ended June 30, 2023, 2022 and 2021. As of June 30, 2023, there wa s $ 1.6 million of unre cognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 2 .0 years. The following table summarizes information about outstanding and exercisable options at June 30, 2023 (in thousands, except years and exercise price): Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number Outstanding Weighted Average Exercise Price $ 1.96 – 2.08 756 8.94 $ 2.05 201 $ 2.05 $ 2.60 – 2.60 1,533 6.34 $ 2.60 1,405 $ 2.60 $ 2.96 – 3.71 311 6.59 $ 3.05 265 $ 3.06 $ 4.10 – 4.10 2,048 5.42 $ 4.10 2,048 $ 4.10 $ 4.46 – 5.00 832 7.41 $ 4.50 492 $ 4.52 Total outstanding 5,480 4,411 105 Table of Contents Restricted Stock, Performance Stock and Market Stock Units The following table summarizes the activity of RSUs and PSUs (in thousands, except fair value per share): Unvested Restricted Stock Restricted Stock Units Performance Stock Units Total Number of Shares Underlying Stock Awards Weighted Average Grant Date Fair Value Per Share Unvested at June 30, 2022 4,561 1,217 5,778 $ 3.74 Granted 3,349 1,171 4,520 $ 2.12 Vested ( 1,850 ) — ( 1,850 ) $ 3.79 Cancelled/forfeited ( 726 ) ( 339 ) ( 1,065 ) $ 3.47 Unvested at June 30, 2023 5,334 2,049 7,383 $ 2.77 As of June 30, 2023, there was $ 10.7 million of unrecognized compensation cost related to the RSUs, which is expected to be recognized over a weighted average period of 2. 0 years. Restricted Stock Units The grant date fair value of the RSUs granted was $ 7.2 million, $ 12.0 million and $ 7.1 million for the years ended June 30, 2023, 2022 and 2021, respectively. The aggregate fair market value of the RSUs that vested during the years ended June 30, 2023, 2022 and 2021 , was $ 4.5 million, $ 6.4 million and $ 5.8 million, respectively. Performance Stock Units The grant date fair value of PSUs granted wa s $ 2.4 million, $ 3.7 million and $ 1.3 million for the years ended June 30, 2023, 2022 and 2021 , respectively. There were no PSUs that vested during the years ended June 30, 2023, 2022 and 2021. As of June 30, 2023, there was $ 1.5 million of unrecognized compensation cost related to the PSUs, which is expected to be recognized over a weighted average period of 1.6 years. Market Stock Units The Compensation Committee approved no MSU grants during the years ended June 30, 2023, 2022 and 2021. As of June 30, 2023 , there was no unrecognized compensation cost related to MSUs. Employee Stock Purchase Plan Under the Company’s Amended and Restated 2007 Employee Stock Purchase Plan, or ESPP, qualified employees are permitted to purchase the Company’s common stock at 85 % of the lower of the fair market value of the common stock on the commencement date of each six month offering period, or the fair market value on the specified purchase date. Employees’ payroll deductions may not exceed 10 % of their salaries. Employees may purchase up to 2,500 shares per each six month offering period, provided that the value of the shares purchased in any calendar year may not exceed $ 25,000 , as calculated pursuant to the purchase plan. The Company estimates the fair value of ESPP shares at the date of grant using the Black‑Scholes option pricing model. The weighted average assumptions were as follows: Years Ended June 30, 2023 2022 2021 Risk–free interest rate 4.65 % - 5.44 % 0.10 % - 2.16 % 0.04 % - 0.10 % Dividend yield — % — % — % Expected term 0.5 - 1.0 0.5 - 1.0 0.5 - 1.0 Expected volatility 38.98 % - 61.09 % 35.49 % - 54.33 % 36.10 % - 65.58 % 106 Table of Contents The risk‑free rate for the expected term of the ESPP option was based on the U.S. Treasury constant maturity rate for each offering period; expected volatility was based on the historical volatility of the Company’s common stock; and the expected term was based upon the offering period of the ESPP. The Company issued 1.3 million, 1.1 million and 1.2 million shares under the ESPP during fiscal 2023, 2022 and 2021, respectively , at a weighted average purchase price per share of $ 1.75 , $ 2.51 and $ 1.90 , respectively. As of June 30, 2023, total unrecognized compensation cost related to th e ESPP plan was $ 0.9 million, which the Company expects to recognize over a weighted average period of 0.9 years. Common Stock Available For Issuance In November 2022, the number of shares of common stock available for issuance under the Company's 2016 Equity Incentive Plan increased by 4.0 million shares, and increased the number of authorized shares of the Company's common stock that may be issued under its Amended and Restated 2007 Employee Stock Purchase Plan by 2.5 million shares. At June 30, 2023 , the Company had 2.7 million shares of common stock reserved for issuance under the stock incentive plans and 4.9 million shares of common stock reserved for issuance under the employee stock purchase plan. Note 11. Joint Venture In January 2019, the Company’s wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (Tianjin) Medical Technology Co. Ltd. (the “JV”), to manufacture and sell radiation oncology systems in China. As of June 30, 2023 , the Company owned a 49 % interest in the JV, which is reported as an investment in joint venture on the Company’s consolidated balance sheets. The Company applies the equity method of accounting to its ownership interest in the JV as the Company has the ability to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The Company recognizes the 49 % proportionate share of the JV income or loss on a one-quarter lag due to the timing of the availability of the JV’s financial records. The Company recognizes revenue on sales to the JV in the current period of control transfer, eliminating a portion of profit to the extent goods sold have not been sold through by the JV to an end customer by the end of each reporting period. The following table shows the reconciliation between the carrying value of the Company's investment in the JV and its proportional share of the underlying equity in net assets of the JV (in thousands): June 30, 2023 June 30, 2022 Carrying value of investment in joint venture $ 15,128 $ 13,879 Deferred intra-entity profit margin 5,737 5,456 Equity method goodwill ( 4,720 ) ( 4,720 ) Proportional share of equity investment in joint venture $ 16,145 $ 14,615 As of June 30, 2023, the Company’s carrying value of the investment in the JV for the Company's proportional share of the JV's currency translation adjustment was not material. At June 30, 2022 , the Company’s carrying value of the investment in the JV was increased for the Company's proportional share of the investee's currency translation adjustment by $ 1.0 million. No i mpairment was identified as of June 30, 2023 and June 30, 2022. Summarized financial information of the JV is as follows (in thousands): Statement of Operations Data: Twelve Months Ended March 31, 2023 Twelve Months Ended March 31, 2022 Twelve Months Ended March 31, 2021 Revenue $ 109,097 $ 55,190 $ 33,054 Gross profit $ 21,522 $ 15,915 $ 10,578 Net income $ 5,280 $ 422 $ 1,785 Net income attributable to the Company $ 2,572 $ 241 $ 872 107 Table of Contents Summarized Balance Sheet Data: As of March 31, 2023 As of March 31, 2022 Assets Current assets $ 87,662 $ 71,730 Non current assets 16,504 21,754 Total assets $ 104,166 $ 93,484 Liabilities and Stockholders' Equity Current liabilities $ 70,189 $ 61,877 Non current liabilities 398 1,055 Stockholder's equity 33,579 30,552 Total liabilities and stockholders' equity $ 104,166 $ 93,484 The following table shows the activity of the Company’s deferred intra-entity profit margin from sales (in thousands): Years Ended June 30, 2023 2022 2021 Previously deferred intra-entity profit margin from sales - recognized $ ( 10,436 ) $ ( 4,007 ) $ ( 2,403 ) Intra-entity profit margin from sales - deferred 10,718 7,307 2,713 Total change in deferred intra-entity profit margin from sales $ 282 $ 3,300 $ 310 Note 12. Income Taxes Loss before provision for income taxes on the accompanying statements of operations and comprehensive loss included the following components (in thousands): Years Ended June 30, 2023 2022 2021 Domestic $ ( 17,489 ) $ ( 14,092 ) $ ( 8,448 ) Foreign 10,701 12,090 3,889 Total loss before provision for income taxes $ ( 6,788 ) $ ( 2,002 ) $ ( 4,559 ) The provision for income taxes consisted of the following (in thousands): Years Ended June 30, 2023 2022 2021 Current: Federal $ — $ — $ — State — 25 17 Foreign 2,036 1,535 1,849 Total current $ 2,036 $ 1,560 $ 1,866 Deferred: Federal — — — State — — — Foreign 456 1,785 ( 114 ) Total deferred 456 1,785 ( 114 ) Total provision for income taxes $ 2,492 $ 3,345 $ 1,752 108 Table of Contents A reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the accompanying consolidated statements of operations and comprehensive loss is as follows (in thousands): Years Ended June 30, 2023 2022 2021 U.S. federal taxes (benefit): At federal statutory rate $ ( 1,426 ) $ ( 420 ) $ ( 958 ) State tax, net of federal benefit — 25 17 Share-based compensation expense 1,189 592 879 Debt extinguishment — — 898 Research and development credits ( 1,181 ) ( 415 ) ( 1,278 ) Foreign taxes ( 164 ) ( 948 ) 918 Deferred tax on foreign earnings 408 1,730 — Global intangible low-taxed income 927 2,124 243 Change in valuation allowance 2,546 502 935 Other non-deductible permanent items 193 252 155 Other — ( 97 ) ( 57 ) Total provision for income taxes $ 2,492 $ 3,345 $ 1,752 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets (liabilities) were as follows (in thousands): June 30, 2023 2022 Deferred tax assets: Federal and state net operating losses $ 69,157 $ 75,450 Accrued expenses and reserves 7,083 7,359 Lease liability 5,401 3,037 Deferred revenue 4,275 5,505 R&D credits 26,425 25,146 Share-based compensation expense 1,367 1,406 Capitalized research and development 13,042 1,440 Unicap 587 489 Fixed assets/intangibles 946 956 Section 163(j) interest 1,702 2,350 Other 245 228 Total deferred tax assets 130,230 123,366 Deferred tax liabilities: Contract acquisition costs ( 1,602 ) ( 1,521 ) Right of use assets ( 4,941 ) ( 2,517 ) Deferred tax on foreign earnings ( 1,547 ) ( 1,730 ) Total deferred tax liabilities ( 8,090 ) ( 5,768 ) Valuation allowance ( 123,528 ) ( 119,115 ) Net deferred tax liabilities $ ( 1,388 ) $ ( 1,517 ) As of June 30, 2023, the Company h ad $ 294.1 million and $ 125.1 million in federal and state net operating loss carryforwards, respectively. The federal and state carryforwards expire in varying amounts beginning in 2025 for federal and 2024 for state purposes. 109 Table of Contents In addition, as of June 30, 2023 , the Company had federal and state research and development tax credits of $ 27.9 million and $ 22.6 million, respectively. If not utilized, the federal research credits will begin to expire in 2024, the California research credits have no expiration date and the other state research credits will begin to expire in 2024. Under the Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of our net operating loss and research tax credit carryforwards to offset taxable income may be limited based on cumulative changes in ownership. Although ownership changes have occurred in the prior years, the carryovers should be available for utilization by the Company before they expire, provided the Company generates sufficient future taxable income. An analysis of the impact of this provision through March 31, 2022 has been performed and it was determined that no ownership change has occurred after December 2009. Based on the available objective evidence and history of losses, the Company has established a 100 % valuation allowance against its combined domestic net deferred tax assets because of uncertainty surrounding the realization of such deferred tax assets. Certain income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFC’s United States shareholder. The income required to be included in gross income is referred to as global intangible low tax income (“GILTI”) and is defined under IRC Section 951A as the excess of the shareholder’s net CFC tested income over the net deemed tangible income return. The GILTI inclusion amount has been absorbed by net operating losses. The Company has made a policy decision to record GILTI tax as a current-period expense when incurred. One of the provisions under the Tax Cuts and Jobs Act that became effective in tax years beginning after December 31, 2021 required the capitalization and amortization of research and experimental expenditures. The change in this United States tax law did not have an impact on the Company's consolidated financial statements. The Company will continue to evaluate the impact of this tax law change on future periods. At June 30, 2023, t he Company has $ 1.5 million of deferred tax liability related to withholding tax expected to be paid on the remittance of unrepatriated distributable reserves in France, Japan and Switzerland. At June 30, 2023, the Company has undistributed earnings of certain foreign subsidiaries of $ 19.8 million that it has indefinitely invested, and on which it has not recognized deferred taxes. The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands): Years Ended June 30, 2023 2022 2021 Balance at beginning of year $ 19,810 $ 18,765 $ 16,996 Tax positions related to current year: Additions 1,692 1,222 1,433 Tax positions related to prior years: Additions 652 61 786 Reductions ( 589 ) ( 238 ) ( 450 ) Balance at end of year $ 21,565 $ 19,810 $ 18,765 The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of complex global tax regulations. Management regularly assesses the Company’s tax positions with respect to legislative, bilateral tax treaty, regulatory and judicial developments in the countries in which the Company does business. The reduction in prior year's tax positions primarily relates to lapses of applicable statutes of limitations. The Company anticipates there will be no material changes in uncertain tax positions in the next 12 months. As of June 30, 2023 , the amount of gross unrecognized tax benefits was $ 21.6 million, of which $ 21.2 million would not affect income tax expense before consideration of any valuation allowance. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of June 30, 2023 and 2022, the Company’s cumulative accrued interest and penalties related to uncertain tax positions, was not material. 110 Table of Contents The Company files income tax returns in the United States federal, various states, and foreign jurisdictions. Due to tax attributes being carried forward and utilized during open years, the statute of limitations remains open for the U.S. federal jurisdiction and domestic states for tax years from 2002 and forward. The statutes of limitation with respect to the foreign jurisdictions where the Company files income tax returns vary from jurisdiction to jurisdiction and range from 3 to 10 years and the material foreign jurisdictions are France, Switzerland and Japan. The Company is also subject to examination of its income tax returns by the Internal Revenue Service (“IRS”) and other foreign tax authorities, and in some cases the Company has received additional tax assessments which have not been significant. The tax audit in Japan was completed in fiscal year 2023 with a tax assessment of $ 0.1 million for the 2019 to 2021 fiscal periods. The Company is under the early stages of audit by the Indian tax authorities for the fiscal year 2021. Note 13. Retirement Plans Employee Benefit Plan The Company’s employee savings and retirement plan is qualified under Section 401(k) of the United States Internal Revenue Code. Employees may make voluntary, tax‑deferred contributions to the 401(k) Plan up to the statutorily prescribed annual limit. The Company makes discretionary matching contributions to the 401(k) Plan on behalf of employees up to the limit determined by the Board of Directors. The Company contributed $ 2.2 million, $ 2.3 million and $ 1.1 million to the 401(k) Plan during the years ended June 30, 2023, 2022 and 2021, respectively. Defined Benefit Pension Obligation The Company has established a defined benefit pension plan for its employees in its Switzerland subsidiary. The plan provides benefits to employees upon retirement, death or disability. The Company uses June 30 as the year‑end measurement date for this plan. 111 Table of Contents Obligations and Funded Status The following table presents the funded status of the defined benefit pension plan (in thousands): June 30, 2023 2022 Change in benefit obligation: Benefit obligation—beginning of fiscal year $ 17,453 $ 18,705 Service cost 1,241 1,513 Interest cost 336 75 Plan participants’ contributions 2,486 2,554 Plan amendment — ( 699 ) Actuarial (gain) loss 389 ( 3,460 ) Foreign currency changes 1,205 ( 577 ) Settlements ( 3,542 ) — Benefit and expense payments ( 180 ) ( 658 ) Benefit obligation—end of fiscal year $ 19,388 $ 17,453 Change in plan assets: Plan assets—beginning of fiscal year $ 17,350 $ 14,419 Employer contributions 1,295 1,225 Actual return on plan assets 179 374 Plan participants’ contributions 2,486 2,554 Foreign currency changes 1,173 ( 564 ) Settlements ( 3,542 ) — Benefit and expense payments ( 180 ) ( 658 ) Plan assets—end of fiscal year $ 18,761 $ 17,350 Funded status $ ( 627 ) $ ( 103 ) Amounts recognized within the consolidated balance sheets: Assets $ — $ — Long-term other liabilities ( 627 ) ( 103 ) Net amount recognized $ ( 627 ) $ ( 103 ) The following table presents the amounts recognized in accumulated other comprehensive loss (before tax) for the defined benefit pension plan (in thousands): June 30, 2023 2022 Net actuarial gain $ 2,559 $ 3,723 Prior service credit 195 224 Accumulated other comprehensive income $ 2,754 $ 3,947 The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for this defined benefit pension plan where accumulated benefit obligation exceeded the fair value of plan assets (in thousands): June 30, 2023 2022 Projected benefit obligation $ 19,388 $ 17,453 Accumulated benefit obligation $ 16,807 $ 15,546 Fair value of plan assets $ 18,761 $ 17,350 112 Table of Contents Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Loss The following table shows the components of the Company’s net periodic benefit costs and the other amounts recognized in other comprehensive loss, before tax, related to the Company’s defined benefit pension plan (in thousands): Year ended June 30, 2023 2022 2021 Net Periodic Benefit Costs: Service cost $ 1,241 $ 1,513 $ 1,766 Interest cost 336 75 38 Expected returns on assets ( 176 ) ( 144 ) ( 142 ) Amortization of prior service cost (credit) ( 23 ) 54 54 Amortization of net gain ( 207 ) — — Gain on settlement ( 518 ) — — Net periodic benefit costs 653 1,498 1,716 Other Amounts Recognized in Other Comprehensive Loss: Net (gain) loss arising during the year 406 ( 3,584 ) ( 850 ) Prior service cost (credit) 24 ( 53 ) ( 54 ) Amortization of prior service cost (credit) — ( 678 ) 24 Amortization of net gain 217 — — Effect of settlement 546 4 8 Total recognized in other comprehensive (gain) loss 1,193 ( 4,311 ) ( 872 ) Total recognized in net periodic benefit costs and other comprehensive income (loss) $ 1,846 $ ( 2,813 ) $ 844 The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during fiscal year 2024 related to the Company’s defined benefit pension plan are as follows (in thousands): 2023 Net loss $ 64 Prior service cost 23 Accumulated other comprehensive income $ 87 Assumptions The assumptions used to determine net periodic benefit cost and to compute the expected long‑term return on assets for the Company’s defined benefit pension plan were as follows: Fiscal Years 2023 2022 2021 Net Periodic Benefit Costs: Discount rate 1.95 % 1.90 % 0.40 % Rate of compensation increase 1.75 % 1.75 % 1.50 % Expected long-term return on assets 1.50 % 1.00 % 1.00 % The assumptions used to measure the benefit obligation for the Company’s defined benefit pension plan were as follows: June 30, 2023 2022 Benefit Obligation: Discount rate 1.95 % 1.90 % Rate of compensation increase 1.75 % 1.75 % 113 Table of Contents Contributions and Future Benefit Payments The Company made contributions of approxim ately $ 1.3 million, $ 1.2 million and $ 1.1 million to the defined benefit pension plan during fiscal years 2023, 2022 and 2021, respectively. The Company expects total contributions to the defined benefit pension plan for fiscal year 2024 will be approximately $ 1.2 million. Estimated future benefit payments expected to be paid by the defined benefit pension plan at June 30, 2023 are as follows (in thousands): Year Ending June 30, Future Benefits 2024 $ 1,063 2025 1,286 2026 1,112 2027 1,153 2028 1,201 Thereafter 9,152 Total estimated future benefit payments $ 14,967 Plan Assets The plan assets are invested in insurance contracts with Copré Collective Foundation based in Lausanne, Switzerland at the end of fiscal years 2023 and 2022. In fiscal 2023 and 2022, the risks of death and disability are reinsured with Zurich Life Insurance. The Copré Foundation for Occupational Benefits defines and is responsible for the asset strategy and invests the plan assets for the Company. In fiscal 2023 and 2022 , the guaranteed interest rate for mandatory retirement savings was 1.5 % and 1.0 %, respectively . The technical administration and management of the savings account are guaranteed by the Copré Foundation for Occupational Benefits. Insurance benefits due are paid directly to the entitled persons by the Copré Foundation for Occupational Benefits. Accuray International Sàrl has committed itself to pay the annual contributions and costs due under the pension fund regulations. The contract of affiliation between the Company and the Copré Collective Foundation can be terminated by either side. In the event of a termination, recipients of retirement and survivors’ benefits would remain with the collective foundation. The Company commits itself to transfer its active insured members and recipients of disability benefits to the new employee benefits institution, thus releasing the Copré Collective Foundation from all obligations. Note 14. Segment Disclosure The Company has one operating and reporting segment (oncology systems group), which develops, manufactures and markets proprietary medical devices used in radiation therapy for the treatment of cancer patients. The Company’s Chief Executive Officer, its Chief Operating Decision Maker, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company does not assess the performance of its individual product lines on measures of profit or loss, or asset based metrics. Therefore, the information below is presented only for revenues and long‑lived tangible assets by geographic areas. 114 Table of Contents Disaggregation of Revenues The Company disaggregates its revenues from contracts by geographic region, as the Company believes this best depicts how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. The Company reports its customer revenues in four geographic regions: the Americas, EIMEA, Asia Pacific and Japan. The Americas region primarily includes the United States, Canada, and Latin America. The EIMEA region includes Europe, India, the Middle East and Africa. The Asia Pacific region consists of Asia, Australia and New Zealand. Additionally, the Company typically recognizes revenue at a point in time for product revenue and recognizes revenue over time for service revenue. Revenues attributed to a country or region are based on the shipping addresses of the Company’s customers. The following summarizes revenue by geographic region (in thousands): Years ended June 30, 2023 2022 2021 Americas $ 122,335 $ 126,005 $ 105,878 EIMEA 155,879 134,640 121,568 China 75,762 86,935 79,782 Japan 61,962 53,376 62,636 Asia Pacific, excluding China 31,667 28,953 26,425 Total revenues $ 447,605 $ 429,909 $ 396,289 The following summarizes countries that represent more than ten percent of the Company’s revenues (in thousands): Years ended June 30, 2023 2022 2021 United States 24 % 26 % 25 % China 17 % 20 % 20 % Japan 14 % 12 % 16 % Rest of world 45 % 42 % 39 % Total revenues 100 % 100 % 100 % Disaggregation of Property and Equipment, Net Information regarding geographic areas in which the Company has property and equipment, net is as follows (in thousands): June 30, 2023 June 30, 2022 Americas $ 20,065 $ 11,251 EIMEA 177 228 Asia Pacific, excluding China 202 272 Japan 122 265 China 360 669 Total property and equipment, net $ 20,926 $ 12,685 Property and equipment, net in the Americas region is located in the United States. Note 15. Subsequent Events The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K and determined that there have been no events that have occurred that would require adjustments to its disclosures in the consolidated financial statements. 115 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. Item 9A. CONTROL S AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a‑15(e) of the Exchange Act) as of June 30, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by our Annual Report on Form 10‑K, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. (b) Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a‑15(f) of the Exchange Act. Under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the guidelines established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) 2013. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of June 30, 2023. The effectiveness of our internal control over financial reporting as of June 30, 2023 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report included herein. (c) Changes in Internal Control over Financial Reporting Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2023, and has concluded that there was no change during such quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Inherent Limitations of Internal Controls Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. 116 Table of Contents Item 9B. OTHE R INFORMATION Securities Trading Plans of Directors and Executive Officers During the fourth quarter of fiscal 2023, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 117 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Accuray Incorporated Opinion on internal control over financial reporting We have audited the internal control over financial reporting of Accuray Incorporated (a Delaware corporation) and subsidiaries (the “Company”) as of June 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended June 30, 2023, and our report dated September 7, 2023 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP San Jose, California September 7, 2023 118 Table of Contents PART III Item 10. DIRECTORS, EXECUTIVE O FFICERS AND CORPORATE GOVERNANCE Directors, Executive Officers and Corporate Governance The information in our 2023 Proxy Statement regarding directors and executive officers appearing under the headings “Proposal One—Election of Directors,” “Executive Officers” and “Delinquent Section 16(a) Reports” is incorporated herein by reference. In addition, the information in our 2023 Proxy Statement regarding the director nomination process, the Audit Committee financial expert and the identification of the Audit Committee members appearing under the heading “Corporate Governance and Board of Directors Matters” is incorporated herein by reference. There have been no material changes to the procedures by which stockholders may recommend nominees to our Board of Directors. Item 11. EXECUTI VE COMPENSATION The information in our 2023 Proxy Statement appearing under the headings “Executive Compensation,” “Compensation Committee Report,” “Compensation Discussion and Analysis,” “Compensation of Non‑Employee Directors” and “Corporate Governance and Board of Directors Matters—Compensation Committee Interlocks and Insider Participation” is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL O WNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information in our 2023 Proxy Statement appearing under the heading “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” is incorporated herein by reference. Item 13. CERTAIN RELATIONSHIPS AND RELATE D TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information in our 2023 Proxy Statement appearing under the headings “Certain Relationships and Related Transactions” and “Corporate Governance and Board of Directors Matters—Director Independence” is incorporated herein by reference. Item 14. PRINCIPAL ACCO UNTING FEES AND SERVICES The information in our 2023 Proxy Statement appearing under the headings “Proposal Five—Ratification of Appointment of Independent Registered Public Accounting Firm—Audit and Non‑Audit Services” and “Proposal Five—Ratification of Appointment of Independent Registered Public Accounting Firm—Audit Committee Pre‑Approval Policies and Procedures” is incorporated herein by reference. 119 Table of Contents PART IV Item 15. EXHIBITS AND FINA NCIAL STATEMENT SCHEDULES (a) We have filed the following documents as part of this report: 1. Consolidated Financial Statements (as set forth in Item 8) Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID 248 ) 78 Consolidated Balance Sheets 80 Consolidated Statements of Operations and Comprehensive Income (Loss) 81 Consolidated Statements of Stockholders’ Equity 82 Consolidated Statements of Cash Flows 83 Notes to Consolidated Financial Statements 85 2. Consolidated Financial Statement Schedules All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this Annual Report on Form 10‑K. 3. Exhibits The following exhibits are incorporated by reference or filed herewith. Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Furnished or Filed Herewith 3.1 Amended and Restated Certificate of Incorporation of Registrant. 8-K 001-33301 3.1 02/06/2013 3.2 Amended and Restated Bylaws of Registrant. 8‑K 001‑33301 3.1 03/23/2015 4.1 Indenture between Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee, dated as of August 7, 2017. 8-K 001-33301 4.1 08/08/2017 4.2 Form of Common Stock Certificate. S‑1/A 333‑138622 4.3 02/05/2007 4.3 Form of 3.75% Convertible Senior Note due 2022 (included in Exhibit 4.3). 8-K 001-33301 4.1 08/08/2017 4.4 First Supplemental Indenture, dated as of December 4, 2017, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee . 8-K 001-33301 4.1 12/04/2017 4.5 Indenture, dated as of May 13, 2021, between the Registrant and The Bank of New York Mellon Trust Company, N.A., as trustee . 8-K 001-33301 4.1 05/18/2021 4.6 Form of 3.75% Convertible Senior Note due 2026 (included in Exhibit 4.7) 8-K 001-33301 4.1 05/18/2021 4.7 Description of the Registrant’s Securities X 10.1 Office Lease between Old Sauk Trails Park Limited Partnership and TomoTherapy Incorporated, dated October 22, 2001. X 10.2 First Amendment to Lease between Old Sauk Trails Park Limited Partnership and TomoTherapy Incorporated, dated May 1, 2004. X 120 Table of Contents Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Furnished or Filed Herewith 10.3 Second Amendment to Lease between Old Sauk Trails Park Limited Partnership and Accuray, Inc FKA TomoTherapy, Inc., dated October 19, 2016. X 10.4 Third Amendment to Lease between Old Sauk Trails Park Limited Partnership and Accuray Incorporated, dated March 27, 2020. X 10.5 Fourth Amendment to Lease Deming Way Property Group LLC and Accuray Incorporated, dated August 19, 2022. X 10.6 Accuray Incorporated 1998 Equity Incentive Plan and forms of agreements relating thereto . S‑1 333‑138622 10.4 11/13/2006 10.7* Accuray Incorporated 2007 Incentive Award Plan . 10‑K 001‑33301 10.8 09/19/2011 10.8* Form of Performance Stock Unit Grant Notice and Performance Stock Unit Agreement. 8‑K 001‑33301 99.2 09/02/2014 10.9* Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement. 8‑K 001‑33301 99.1 09/02/2014 10.10* Form of Stock Option Grant Notice and Stock Option Agreement. 8‑K 001‑33301 99.3 11/23/2011 10.11* Form of 2016 Market Stock Unit Grant Notice and Award Agreement. 8‑K 001‑33301 99.1 10/02/2015 10.12* Accuray Incorporated Amended and Restated 2016 Equity Incentive Plan and forms of award agreements thereunder. 8‑K 001‑33301 10.1 11/16/2022 10.13* Amended and Restated 2007 Employee Stock Purchase Plan. 8-K 001-33301 10.2 11/16/2022 10.14* Accuray Incorporated Company Bonus Plan . 10‑Q 001‑33301 10.6 11/06/2018 10.15* Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Patrick Spine. S-8 333-224547 99.1 04/30/2018 10.16* Form of Accuray Incorporated Stand-Alone Inducement Performance Unit Agreement for Patrick Spine. S-8 333-224547 99.2 04/30/2018 10.17* Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Patrick Spine. S-8 333-224547 99.3 04/30/2018 10.18* Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Suzanne Winter. S-8 333-234412 99.1 10/31/2019 10.19* Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Suzanne Winter. S-8 333-234412 99.2 10/31/2019 10.20* Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Jim Dennison . S-8 333-251038 99.4 11/30/2021 10.21* Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Jim Dennison . S-8 333-251038 99.5 11/30/2021 10.22* Form of Accuray Incorporated Stand-Alone Inducement Restricted Stock Unit Agreement for Sandeep Chalke. S-8 333-265330 99.1 05/31/2022 121 Table of Contents Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Furnished or Filed Herewith 10.23* Form of Accuray Incorporated Stand-Alone Inducement Stock Option Agreement for Sandeep Chalke . S-8 333-265330 99.2 05/31/2022 10.24* TomoTherapy Incorporated 2000 Stock Option Plan, as amended, and forms of option agreements thereunder. S‑8 333‑174952 99.1 06/17/2011 10.25* TomoTherapy Incorporated 2002 Stock Option Plan, as amended, and forms of option agreements thereunder. S‑8 333‑174952 99.2 06/17/2011 10.26* TomoTherapy Incorporated 2007 Equity Incentive Plan, as amended, and forms of option agreements thereunder. S‑8 333‑174952 99.3 06/17/2011 10.27* Form of Indemnification Agreement by and between Registrant and each of its directors and executive officers. 10‑Q 001‑33301 10.7 05/10/2011 10.28* Executive Employment Agreement by and Between Registrant and Patrick Spine, dated January 1, 2021 . 10-Q 001-33301 10.3 02/01/2021 10.29* Executive Employment Agreement by and Between Registrant and Jesse Chew, dated January 1, 2023. 10-Q 001-33301 10.3 05/08/2023 10.30* Executive Employment Agreement by and Between Registrant and Suzanne Winter, dated January 1, 2023 10-Q 001-33301 10.1 05/08/2023 10.31* Executive Employment Agreement by and between Registrant and Michael Hoge, dated January 1, 2023. 10-Q 001-33301 10.4 05/08/2023 10.32* Executive Employment Agreement by and between Registrant and Ali Pervaiz, dated January 1, 2023. 10-Q 001-33301 10.2 05/08/2023 10.33* Executive Employment Agreement by and between Registrant and Sandeep Chalke, dated May 2, 2022. 10-K 001-33301 10.46 8/17/2023 10.34 Credit Agreement among the Registrant, as the Borrower, the several lenders from time to time party thereto, and Silicon Valley Bank, as administrative agent, lead arranger, issuing lender and swingline lender, dated as of May 6, 2021. 10-K 001-33301 10.56 08/17/2021 10.35 First Amendment to Credit Agreement among Registrant, as the Borrower, the several banks and other financial institutions or entities party hereto, and Silicon Valley Bank, as administrative agent, issuing lender and swingline lender, dated as of October 28, 2022. 10-Q 001-33301 10.1 2/2/2023 10.36 Form of Exchange Agreement, dated as of May 6, 2021, between the Registrant and each signatory thereto. 8-K 001-33301 10.1 05/12/2021 10.37 Form of Subscription Agreement, dated as of May 6, 2021, between the Registrant and each signatory thereto . 8-K 001-33301 10.2 05/12/2021 21.1 List of subsidiaries. X 23.1 Consent of Grant Thornton LLP, independent registered public accounting firm. X 122 Table of Contents Incorporated by Reference Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Furnished or Filed Herewith 24.1 Power of Attorney (incorporated by reference to the signature page of this annual report on Form 10‑K). X 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002. X 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002. X 32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002. X 101.INS Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document X 101.SCH Inline XBRL Taxonomy Extension Schema X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase X 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Management contract or compensatory plan or arrangement. ‡ Confidential treatment has been granted with respect to portions of this exhibit. † Certain portions of this exhibit have been omitted because they are both not material and would be competitively harmful if publicly disclosed. The certification attached as Exhibit 32.1 that accompanies this Annual Report on Form 10‑K is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Accuray Incorporated under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Annual Report on Form 10‑K, irrespective of any general incorporation language contained in such filing. Form 10‑K, irrespective of any general incorporation language contained in such filing. Item 16. FORM 10-K SUMMARY None. 123 Table of Contents SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, in the City of Madison, State of Wisconsin, on September 7, 2023. ACCURAY INCORPORATED By: /s/ Suzanne Winter Suzanne Winter President and Chief Executive Officer By: /s/ Ali Pervaiz Ali Pervaiz Senior Vice President and Chief Financial Officer 124 Table of Contents POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Suzanne Winter and Ali Pervaiz, and each of them, as his true and lawful attorneys‑in‑fact and agents, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10‑K, and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys‑in‑fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys‑ in‑ fact and agents, and any of them or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following and on the dates indicated. Signature Title Date /s/ Suzanne Winter Suzanne Winter President, Chief Executive Officer and Director (Principal Executive Officer) September 7, 2023 /s/ Ali Pervaiz Ali Pervaiz Chief Financial Officer (Principal Financial Officer) September 7, 2023 /s/ Gina Corradetti Gina Corradetti Chief Accounting Officer and Controller (Principal Accounting Officer) September 7, 2023 /s/ Joseph E. Whitters Joseph E. Whitters Chairperson of the Board and Director September 7, 2023 Robert C. Kill Director /s/ Byron C. Scott Byron C. Scott Director September 7, 2023 /s/ Beverly A. Huss Beverly A. Huss Director September 7, 2023 /s/ Anne B. Le Grand Director September 7, 2023 Anne B. Le Grand /s/ James M. Hindman James M. Hindman Director September 7, 2023 Mika Nishimura Director 125