vray-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

___________________________

FORM 10-Q

___________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37725

___________________________

ViewRay, Inc.

(Exact Name of Registrant as Specified in its Charter)

___________________________


Delaware			42-1777485
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
2 Thermo Fisher Way Oakwood Village, OH			44146
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (440) 703-3210

___________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01

VRAY

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2022, the registrant had 180,458,495 shares of common stock, $0.01 par value per share, outstanding.

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VIEWRAY, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page

PART I.	FINANCIAL INFORMATION

	Cautionary Note Regarding Forward-Looking Statements	3

Item 1.	Unaudited Condensed Consolidated Financial Statements	5

	Condensed Consolidated Balance Sheets	5

	Condensed Consolidated Statements of Operations and Comprehensive Loss	6

	Condensed Consolidated Statements of Stockholders’ Equity	7

	Condensed Consolidated Statements of Cash Flows	8

	Notes to the Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	31

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

	Signatures	33

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”), contains forward-looking statements, including, without limitation, in the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “will”, “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development of products, (ii) a projection of revenue, cash usage, income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation:

•delays in business operations and installation caused by the concerns in connection with the COVID-19

pandemic;

•disruptions in the supply or changes in the costs of raw materials, labor, product components, or transportation services as a result of inflation;

•the effect or impact of market consolidation;

•market acceptance of magnetic resonance imaging (“MRI”) guided radiation therapy;

•the benefits of MR Image-Guided radiation therapy;

•our ability to obtain and maintain regulatory approval in targeted markets for MRIdian;

•our ability to successfully sell and market MRIdian® in our existing and expanded geographies;

•the performance of MRIdian in clinical settings;

•competition from existing technologies or products or new technologies and products that may emerge;

•the pricing and reimbursement of MR Image-Guided radiation therapy;

•the implementation of our business model and strategic plans for our business and MRIdian;

•the scope of protection we are able to establish and maintain for intellectual property rights covering MRIdian;

•estimates of our future revenue, expenses, capital requirements and our need for additional financing;

•our financial performance;

•our expectations related to the MRIdian linear accelerator technology (“MRIdian Linac”);

•developments relating to our competitors and the healthcare industry; and

•other risks and uncertainties, including those listed under the section titled “Risk Factors.”

Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, titled “Risk Factors” and discussed elsewhere in this Report, and in Part I, Item 1A, titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Given these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise, except as required by law.

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This Report may also contain estimates, projections and other information concerning our industry, our business, and the markets for certain devices, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

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PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

VIEWRAY, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)


	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	180,061	$	218,348
Accounts receivable	28,002		21,659
Inventory, net of allowance of $1,676 and $3,071, respectively	26,080		29,617
Deposits on purchased inventory	7,153		4,778
Deferred cost of revenue	5,439		3,342
Prepaid expenses and other current assets	5,285		5,803
Total current assets	252,020		283,547
Property and equipment, net	20,357		20,242
Restricted cash	4,596		1,460
Intangible assets, net	43		44
Right-of-use assets	9,080		9,661
Other assets	11,991		6,853
TOTAL ASSETS	$	298,087	$	321,807
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,252	$	9,199
Accrued liabilities	18,427		26,555
Customer deposits	27,377		20,784
Operating lease liability, current	2,633		2,561
Current portion of long-term debt	8,056		3,222
Deferred revenue, current	13,879		13,920
Total current liabilities	79,624		76,241
Deferred revenue, net of current portion	7,507		4,232
Long-term debt	49,282		54,031
Warrant liabilities	3,965		6,795
Operating lease liability, noncurrent	7,373		8,066
Other long-term liabilities	2,831		2,647
TOTAL LIABILITIES	150,582		152,012
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, par value of $0.01 per share; 10,000,000 shares authorized at March 31, 2022 and December 31, 2021; no shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	—		—
Common stock, par value of $0.01 per share; 300,000,000 shares authorized at March 31, 2022 and December 31, 2021; 180,442,026 and 179,206,456 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	1,794		1,782
Additional paid-in capital	908,617		905,145
Accumulated deficit	(762,906)		(737,132)
TOTAL STOCKHOLDERS’ EQUITY	147,505		169,795
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	298,087	$	321,807

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VIEWRAY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Revenue:
Product	$	13,426	$	11,379
Service	5,331		4,027
Distribution rights	119		119
Total revenue	18,876		15,525
Cost of revenue:
Product	13,766		10,685
Service	5,016		4,518
Total cost of revenue	18,782		15,203
Gross profit	94		322
Operating expenses:
Research and development	7,870		6,510
Selling and marketing	6,884		2,848
General and administrative	12,814		15,639
Total operating expenses	27,568		24,997
Loss from operations	(27,474)		(24,675)
Interest income	5		2
Interest expense	(1,064)		(1,058)
Other (expense) income, net	2,759		(1,012)
Loss before provision for income taxes	$	(25,774)	$	(26,743)
Provision for income taxes	—		—
Net loss and comprehensive loss	$	(25,774)	$	(26,743)
Net loss per share, basic and diluted	$	(0.14)	$	(0.17)
Weighted-average common shares used to compute net loss per share attributable to common stockholders, basic and diluted	179,740,732		160,138,327

The accompanying notes are an integral part of these condensed consolidated financial statements

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VIEWRAY, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

(Unaudited)


	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2021	179,206,456	$	1,782	$	905,145	$	(737,132)	$	169,795
Issuance of common stock from option exercises	19,292	—		56		—		56
Stock-based compensation	—	—		5,032		—		5,032
Issuance of common stock from releases of restricted stock units	1,216,278	12		(12)		—		—
Tax withholding paid on behalf of employees for stock-based awards	—	—		(1,604)		—		(1,604)
Net loss	—	—		—		(25,774)		(25,774)
Balance at March 31, 2022	180,442,026	$	1,794	$	908,617	$	(762,906)	$	147,505


	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2020	148,615,351	$	1,476	$	755,874	$	(627,084)	$	130,266
Issuance of common stock from option exercises	6,021	—		19		—		19
Stock-based compensation	—	—		8,494		—		8,494
Issuance of common stock from releases of restricted stock units	1,209,870	12		(12)		—		—
Tax withholding paid on behalf of employees for stock-based awards	—	—		(1,473)		—		(1,473)
Issuance of common stock upon public offering (net of offering cost of $3,991)	11,856,500	119		53,394		—		53,513
Issuance of common stock from warrant exercises	42,621	—		2		—		2
Reclassification of warrant liability to additional paid-in capital upon warrant exercises	—	—		327		—		327
Net loss	—	—		—		(26,743)		(26,743)
Balance at March 31, 2021	161,730,363	$	1,607	$	816,625	$	(653,827)	$	164,405

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VIEWRAY, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(25,774)	$	(26,743)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,244		1,648
Stock-based compensation	5,032		8,494
Accretion on asset retirement obligation	23		33
Change in fair value of warrant liabilities	(2,830)		947
Amortization of debt discount and interest accrual	246		239
Product upgrade reserve	—		600
Changes in operating assets and liabilities:
Accounts receivable	(6,343)		(4,800)
Inventory	3,640		2,783
Deposits on purchased inventory	(2,375)		(466)
Deferred cost of revenue	(2,097)		(356)
Prepaid expenses and other assets	(4,739)		420
Accounts payable	8		(2,391)
Accrued expenses and other long-term liabilities	(8,247)		(6,130)
Customer deposits and deferred revenue	9,827		(585)
Net cash used in operating activities	(32,385)		(26,307)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,218)		(336)
Net cash used in investing activities	(1,218)		(336)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock public offering, gross	—		57,385
Payment of offering costs related to common stock public offering	—		(3,991)
Proceeds from the exercise of stock options	56		19
Proceeds from the exercise of warrants	—		2
Payments for taxes related to net share settlement of equity awards	(1,604)		(1,473)
Net cash (used in) provided by financing activities	(1,548)		51,942
NET (DECREASE) INCREASE CASH DURING THE PERIOD	(35,151)		25,299
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — BEGINNING OF PERIOD	219,808		158,180
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — END OF PERIOD	$	184,657	$	183,479
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	819	$	819
Cash paid for income taxes	$	—	$	—
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fair value of common stock warrants reclassified from liability to additional paid-in capital upon exercise	$	—	$	327
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	—
Transfer of property and equipment from inventory and deferred cost of revenue	$	(103)	$	—
Purchases of property and equipment in accounts payable and accrued liabilities	$	161	$	129

The accompanying notes are an integral part of these condensed consolidated financial statements.

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VIEWRAY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1. BACKGROUND AND ORGANIZATION

ViewRay, Inc. (“ViewRay” or the “Company”), and its wholly-owned subsidiary ViewRay Technologies, Inc., designs, manufactures and markets MRIdian, an MR Image-Guided radiation therapy system to simultaneously image and treat cancer patients.

Since inception, ViewRay Technologies, Inc. has devoted substantially all of its efforts towards research and development, initial selling and marketing activities, raising capital and the manufacturing, shipment and installation of MRIdian systems. In May 2012, ViewRay Technologies, Inc. was granted clearance from the U.S. Food and Drug Administration (“FDA”), to sell MRIdian with Cobalt-60. In November 2013, ViewRay Technologies, Inc. received its first clinical acceptance of a MRIdian with Cobalt-60 at a customer site, and the first patient was treated with that system in January 2014. ViewRay Technologies, Inc. has had the right to affix the CE mark to MRIdian with Cobalt-60 in the European Economic Area ("EEA") since November 2014. In September 2016, the Company received the rights to affix the CE mark to MRIdian Linac, and in February 2017, the Company received 510(k) clearance from the FDA to market MRIdian Linac. In February 2019, the Company received 510(k) clearance from the FDA for advancements in MRI, 8 frames per second cine, and Functional imaging (T1/T2/DWI) and High-Speed MLC. In December 2019, we received the CE mark for these advancements in the EEA. In December 2021, the Company received 510(k) clearance from the FDA on its recent submission for new MRIdian features (MRIdian A3i) focused on enhancing on-table adaptive workflow efficiency and expanding clinical utility.

The Company’s condensed consolidated financial statements have been prepared on the basis of the Company continuing as a going concern for a reasonable period of time. The Company’s principal sources of liquidity are cash flows from public and private offerings and available borrowings under its term loan agreement, as well as cash receipts from its sales of MRIdian systems. These have historically been sufficient to meet working capital needs, capital expenditures, operating expenses, and debt service obligations. During the three months ended March 31, 2022, the Company incurred a net loss from operations of $27.5 million and net cash used in operations of $32.4 million. The Company believes that its existing cash balance of $180.1 million as of March 31, 2022, together with anticipated cash proceeds from sales of MRIdian systems, will be sufficient to provide liquidity to fund its obligations for at least the next 12 months.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of ViewRay, Inc. and its wholly-owned subsidiary, ViewRay Technologies, Inc. All inter-company accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any future period. These unaudited condensed consolidated financial statements and their notes should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 25, 2022, and have not changed significantly since that filing.

SEC Form 10-Q filed by ViewRay Inc.