SALT LAKE CITY--(BUSINESS WIRE)--Varex Imaging Corporation (Nasdaq: VREX) today announced that it will report unaudited financial results for the first quarter of fiscal year 2026, following the close of regular trading on Tuesday, February 10, 2026. The earnings news release will be followed by a conference call at 3:00 pm Mountain Time that day. This call will be webcast live and can be accessed at the company's website at www.vareximaging.com/investor-relations/. Investors can also access this conference ...

Varex Imaging FY Conference Summary Company Overview - **Company**: Varex Imaging (NasdaqGS: VREX) - **Industry**: X-ray imaging systems for medical and industrial applications - **Headquarters**: Salt Lake City - **Revenue Breakdown**: 70% medical segment, 30% industrial segment [4][5] - **Workforce**: Approximately 2,300 employees [4] Key Financial Highlights - **Revenue Growth**: Expected double-digit sales growth in the industrial segment, driven by new security screening systems [2] - **Market Size**: Medical X-ray market is approximately $3 billion, growing at 2%-3% annually; industrial segment is between $1-$1.5 billion, growing at 5%-7% [6][7] - **Customer Base**: Major customers include GE, Siemens, Canon, and Philips [5] Market Dynamics - **Medical Segment**: - Dominated by CT imaging, accounting for 40% of medical sales [5] - Growth driven by population increases, aging demographics, and new applications [6] - **Industrial Segment**: - Security business constitutes about 40% of industrial revenue, approximately $100 million in FY 2025 [9] - Non-destructive testing (NDT) also represents 40% of industrial revenue [9] Investment Highlights - **Market Leadership**: Varex is a market leader with a comprehensive product portfolio and high barriers to entry due to intellectual property and regulatory requirements [10][13] - **Customer Relationships**: Long-standing relationships with high switching costs; Canon accounts for 15%-17% of revenues [15] - **R&D Investment**: Significant investments in R&D, with 660 patents and 210 pending [11] Challenges and Strategic Initiatives - **Sales Flatness**: Revenue has been flat since fiscal 2022 due to supply chain issues and competition in the RAD detector market [23][26] - **New Factories**: Two factories in India are being established to produce lower-cost products to regain market share in the RAD segment [26][28] - **Photon Counting Technology**: Targeting $100 million in incremental business by fiscal 2029 through photon counting technology in CT detectors [34] Future Outlook - **Cargo Systems**: Targeting $100 million in revenue from cargo inspection systems within three to four years [31] - **RAD Segment Recovery**: Anticipating a recovery in the RAD segment with new low-cost products [35] - **AI Utilization**: Currently using AI for manufacturing and quality control, but not a primary focus for product development [22] Financial Management - **Debt Management**: Net leverage is around 2.5 times EBITDA; focus on refinancing high-yield bonds due in October 2026 [44] - **M&A Opportunities**: Potential for small acquisitions in the fragmented industrial segment, but current focus is on deleveraging [46] Conclusion - **Positive Outlook**: Management expresses optimism about future growth opportunities and the strategic initiatives in place to address current challenges [48]

Company Overview - Varex Imaging Corporation is a leading innovator, designer, and manufacturer of X-ray imaging components, including X-ray tubes, digital detectors, and image processing solutions [2] - The company has over 70 years of successful innovation in the field of X-ray imaging [2] - Varex's products are utilized in medical imaging as well as industrial and security imaging applications [2] - The company is headquartered in Salt Lake City, Utah, and employs approximately 2,400 people across North America, Europe, and Asia [2] Upcoming Event - Management of Varex Imaging Corporation is scheduled to present at the CJS Securities 26th Annual New Ideas for the New Year Virtual Conference [1] - The presentation is set for Wednesday, January 14, 2026, at 3:50 PM ET [1] - The webcast of the presentation can be accessed through Varex's website [1]

Core Viewpoint - VAREX IMAGING (VREX) shares have increased by 3.2% recently, with analysts suggesting a potential upside of 29.9% based on a mean price target of $15.33 [1][11]. Price Targets and Analyst Estimates - The mean price target consists of three short-term estimates with a standard deviation of $3.06, indicating variability among analysts [2]. - The lowest estimate is $12.00, suggesting a 1.7% increase, while the highest estimate is $18.00, indicating a potential surge of 52.5% [2]. - Analysts' price targets can be misleading, as they may not accurately reflect the stock's future price movements [7][10]. Earnings Estimates and Analyst Agreement - Strong agreement among analysts regarding VREX's earnings prospects supports the expectation of an upside, as indicated by positive revisions in earnings estimates [4][11]. - The Zacks Consensus Estimate for the current year has risen by 1% over the past month, with one estimate increasing and no negative revisions [12]. - VREX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors [13]. Conclusion on Price Movement - While the consensus price target may not be a reliable indicator of the extent of VREX's potential gains, it does provide a useful guide for the direction of price movement [14].

Core Insights - Varex Imaging Corporation reported strong financial results, with an earnings per share (EPS) of $0.37, significantly exceeding the estimated $0.18, marking an earnings surprise of over 105% [2] - The company achieved revenue of approximately $228.9 million, surpassing the estimated $205.8 million, representing a 3.83% increase over the Zacks Consensus Estimate [2] Financial Performance - Varex has consistently outperformed consensus EPS estimates over the past four quarters, with a notable EPS of $0.18 in the previous quarter against an anticipated $0.04, resulting in a remarkable 350% surprise [3] - The company's financial health is indicated by a low debt-to-equity ratio of 0.06, suggesting a low level of debt compared to its equity [4] - Varex's current ratio of 3.43 indicates strong liquidity, with more than three times the current assets to cover its current liabilities [4] Valuation Metrics - The price-to-sales ratio of 0.58 suggests that the stock is valued at approximately 58 cents for every dollar of sales, indicating potential investment opportunities [5] - The enterprise value to sales ratio of 0.45 implies that the company's total valuation is less than its annual sales, further highlighting investment potential [5]

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Core Insights - VAREX IMAGING reported revenue of $228.9 million for the quarter ended September 2025, reflecting an 11.3% increase year-over-year and surpassing the Zacks Consensus Estimate of $220.45 million by 3.83% [1] - The company's EPS for the quarter was $0.37, significantly higher than the $0.19 reported in the same quarter last year, and exceeded the consensus EPS estimate of $0.18 by 105.56% [1] Revenue Breakdown - Industrial revenue reached $76.8 million, exceeding the average estimate of $65.39 million by analysts, marking a 25.3% increase compared to the previous year [4] - Medical revenue was reported at $152.1 million, slightly below the average estimate of $155.08 million, but still showing a year-over-year increase of 5.3% [4] Profit Metrics - Gross profit from Industrial operations was $29.8 million, surpassing the average estimate of $22.05 million [4] - Gross profit from Medical operations was $48 million, which was below the average estimate of $49.24 million [4] Stock Performance - Over the past month, VAREX IMAGING shares have returned -1.7%, contrasting with a +0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Company Performance - VAREX IMAGING reported quarterly earnings of $0.37 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and up from $0.19 per share a year ago, representing an earnings surprise of +105.56% [1] - The company posted revenues of $228.9 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.83%, compared to year-ago revenues of $205.7 million [2] - Over the last four quarters, VAREX IMAGING has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - VAREX IMAGING shares have declined approximately 21.7% since the beginning of the year, while the S&P 500 has gained 13.4% [3] - The current Zacks Rank for VAREX IMAGING is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.21 on revenues of $207.65 million, and for the current fiscal year, it is $0.97 on revenues of $861.55 million [7] - The outlook for the Medical - Products industry, to which VAREX IMAGING belongs, is currently in the bottom 30% of Zacks industries, which may impact the stock's performance [8]

Financial Data and Key Metrics Changes - Fourth Quarter revenue was $229 million, up 11% year over year, at the high end of guidance [5][6] - Non-GAAP gross margin for the Fourth Quarter was 34%, 130 basis points higher than the same quarter last year [6][14] - Non-GAAP earnings per share in the Fourth Quarter was $0.37, up $0.21 compared to last year [6] - Total revenue for Fiscal Year 2025 was $845 million, a 4% increase compared to Fiscal Year 2024 [6] - Non-GAAP EBITDA for the year was $122 million, up $33 million from $89 million last year [6][15] Business Line Data and Key Metrics Changes - Medical segment revenue increased by 5% year over year, totaling $152 million in the Fourth Quarter [11][12] - Industrial segment revenue grew by 25% year over year, reaching $77 million in the Fourth Quarter, marking the highest quarterly contribution of industrial revenue in Varex's history [11][12] - For the full fiscal year, medical revenue was $593 million, a 2% increase year over year, while industrial revenue was $252 million, a 10% increase [6][11] Market Data and Key Metrics Changes - Revenue from the Americas grew by 9%, EMEA rose by 16%, and APAC increased by 8% year over year [13] - Sales volume to China remained steady, contributing 14% of total revenues, reflecting resilience in the healthcare market despite tariff challenges [13][21] Company Strategy and Development Direction - The company plans to invest in R&D to strengthen its competitive edge and focus on growth markets such as India, South Asia, the Middle East, and Latin America [22][23] - Varex is advancing its photon counting CT technology and expanding its manufacturing capabilities in India to support cost-effective product designs [22][23][25] - The company aims to lead with innovation while maintaining cost-effectiveness in the value and mid-tier segments [22] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging start to Fiscal Year 2025 due to global tariff situations, but customer ordering patterns have normalized [21] - Customers in China are projecting stronger orders for 2026 compared to 2024 and 2025, driven by demand for value tier and mid-tier CT systems [21] - The company is intensifying efforts to strengthen geopolitical resiliency through supply chain and manufacturing regionalization [21][22] Other Important Information - The company ended the year with $155 million in cash, cash equivalents, and marketable securities, down from $213 million last year due to debt retirement [6][18] - Gross debt outstanding at the end of the quarter was $370 million, with a net debt leverage ratio of approximately 1.8 times adjusted EBITDA [18][19] Q&A Session Summary Question: Can you split the top 10 customers' contribution between medical and industrial? - Management stated that the top 10 customers generally account for 50%-55% of sales, primarily from the medical segment, but they do not disclose the split for commercial reasons [30][31] Question: Is there a structural shift in the medical and industrial segments? - Management indicated that industrial sales are growing and expected to reach mid-30s as a percentage of overall sales, while medical segment volatility is influenced by geopolitical factors [32][33] Question: What are the implications of GE and Siemens Healthineers divesting their China business? - Management noted that most business in China comes through Chinese OEMs, so these announcements do not have significant implications for Varex [36][37] Question: Can you provide a high-level outlook for the full year? - Management expects solid demand and growth in both medical and industrial segments, with medical business ex-China anticipated to grow [40][41] Question: What is the impact of tariffs on gross margin? - Management indicated that tariffs impact gross margin by 100 to 150 basis points, and they are working to mitigate this through supply chain adjustments [82][83]

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $229 million, an increase of 11% year-over-year, and at the high end of guidance [5][6] - Non-GAAP gross margin for the fourth quarter was 34%, up 130 basis points from the same quarter last year [6][14] - Non-GAAP earnings per share in the fourth quarter was $0.37, up $0.21 compared to last year [6] - For the full fiscal year, total revenue was $845 million, a 4% increase compared to fiscal 2024 [6] - Non-GAAP EBITDA for the year was $122 million, up $33 million from $89 million last year [6] Business Line Data and Key Metrics Changes - Medical segment revenue increased by 5% year-over-year to $152 million in the fourth quarter, while Industrial segment revenue surged by 25% to $77 million [11][12] - For the full year, Medical revenue was $593 million, a 2% increase, and Industrial revenue was $252 million, a 10% increase [6][11] - The Industrial segment achieved its highest revenue quarter ever at $77 million, driven by strong demand for security inspection systems [5][7] Market Data and Key Metrics Changes - Revenue from the Americas grew by 9%, EMEA rose by 16%, and APAC increased by 8% year-over-year [13] - Sales volume to China remained steady, contributing 14% of total revenues, reflecting resilience in the healthcare market despite tariff challenges [13][21] Company Strategy and Development Direction - The company plans to focus on innovation and cost-effectiveness in the value tier and mid-tier segments, particularly in emerging markets like India, South Asia, and Latin America [22][23] - Investments in supply chain and manufacturing regionalization are aimed at strengthening geopolitical resiliency [21][22] - The company is advancing its Photon Counting CT project and expanding production capabilities in India [23][25] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging start to fiscal 2025 due to global tariff situations, but customer ordering patterns have normalized [21] - Expectations for stronger orders and sales in China for 2026 compared to previous years were expressed [21] - The company anticipates gradual growth throughout fiscal 2026, with Medical business expected to grow and Industrial business also projected to increase [41][42] Other Important Information - The company ended the year with $155 million in cash, down from $213 million the previous year, primarily due to debt reduction efforts [6][18] - The company reported a non-cash goodwill impairment charge of $94 million taken in Q3, impacting operating income [14] Q&A Session Summary Question: Can you split the top 10 customers' contribution between Medical and Industrial? - Management indicated that the top 10 customers generally contribute 50%-55% of sales, primarily from the Medical segment, but did not provide a specific breakdown for commercial reasons [30][31] Question: Is there a structural shift in Medical and Industrial segments? - Management noted that Industrial sales are growing and approaching 30% of overall sales, while Medical segment volatility is influenced by geopolitical factors [32][33] Question: Any implications from GE or Siemens Healthineers divesting their China business? - Management stated that the majority of business in China comes from Chinese OEMs, and they do not anticipate significant impacts from these potential divestitures [36][37] Question: Can you provide a high-level outlook for the full year? - Management expects solid demand and growth in both Medical and Industrial segments, with China modeled to be stable [40][41] Question: What is the impact of tariffs on gross margin? - Management indicated that tariffs are impacting gross margin by 100 to 150 basis points, but efforts to reroute supply chains and increase production in India may help mitigate this [81][82]