Core Insights - The article emphasizes the importance of value investing, which focuses on identifying undervalued companies in the market [2] - VAREX IMAGING (VREX) is highlighted as a strong value stock, currently holding a Zacks Rank 2 (Buy) and an A grade for Value [4][6] Company Metrics - VREX has a Forward P/E ratio of 16.98, significantly lower than the industry average of 21.37 [4] - The stock's Forward P/E has fluctuated between a high of 26.48 and a low of 12.16 over the past 52 weeks, with a median of 19.11 [4] - The P/S ratio for VREX is 0.53, compared to the industry average of 1.5, indicating potential undervaluation [5] Investment Outlook - The combination of VREX's favorable metrics and strong earnings outlook positions it as one of the market's strongest value stocks [6]

Core Viewpoint - VAREX IMAGING (VREX) is positioned as a strong investment opportunity due to significant revisions in earnings estimates, indicating an improving earnings outlook [1][2]. Earnings Estimate Revisions - Analysts have shown growing optimism regarding VAREX IMAGING's earnings prospects, leading to a rising trend in estimate revisions, which is expected to positively impact the stock price [2]. - The current-quarter earnings estimate is projected at $0.14 per share, reflecting a year-over-year decline of 26.3%. However, the Zacks Consensus Estimate has increased by 75% over the last 30 days, with one estimate rising and no negative revisions [5]. - For the full year, the earnings estimate stands at $0.55 per share, with a year-over-year change of 0.0%. The consensus estimate has increased by 30.95% due to one upward revision and no negative changes [6][7]. Zacks Rank and Performance - VAREX IMAGING has achieved a Zacks Rank of 2 (Buy), indicating favorable estimate revisions that suggest strong potential for outperformance compared to the S&P 500 [8]. - Historically, stocks with a Zacks Rank of 1 (Strong Buy) and 2 (Buy) have significantly outperformed the S&P 500, with Zacks 1 stocks generating an average annual return of +25% since 2008 [3][8]. Recent Stock Performance - VAREX IMAGING shares have increased by 23.2% over the past four weeks, reflecting investor confidence in the company's earnings growth prospects [9].

Group 1 - Varex Imaging (VREX) shares have increased by 23.2% in the past four weeks, closing at $9.77, with a mean price target of $16.75 indicating a potential upside of 71.4% [1] - The average price targets range from a low of $10.00 to a high of $23.00, with a standard deviation of $5.38, suggesting variability in analyst estimates [2] - Analysts are optimistic about VREX's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which historically correlates with stock price movements [4][11] Group 2 - The Zacks Consensus Estimate for VREX's current year earnings has increased by 31% over the past month, with 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 estimates [13] - While consensus price targets may not be reliable for predicting the extent of gains, they can provide guidance on the direction of price movement [14]

Core Insights - VAREX IMAGING reported revenue of $203 million for the quarter ended June 2025, a decrease of 2.9% year-over-year, but exceeded the Zacks Consensus Estimate of $190.2 million by 6.73% [1] - The company's EPS was $0.18, up from $0.14 in the same quarter last year, resulting in a significant EPS surprise of 350% compared to the consensus estimate of $0.04 [1] Revenue Breakdown - Industrial revenue was $60.9 million, surpassing the average estimate of $57.09 million by two analysts, reflecting a year-over-year increase of 0.7% [4] - Medical revenue totaled $142.1 million, which was above the average estimate of $133.17 million, but represented a decline of 4.4% year-over-year [4] Profitability Metrics - Gross profit for the Industrial segment was $20.8 million, exceeding the average estimate of $18.11 million [4] - Gross profit for the Medical segment was $46.7 million, also above the estimated $42.27 million by two analysts [4] Stock Performance - VAREX IMAGING shares have declined by 16.5% over the past month, contrasting with a 1.2% increase 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 in the near term [3]

Core Viewpoint - VAREX IMAGING reported quarterly earnings of $0.18 per share, significantly exceeding the Zacks Consensus Estimate of $0.04 per share, marking an earnings surprise of +350.00% [1][2] Financial Performance - The company achieved revenues of $203 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.73%, although this represents a decline from year-ago revenues of $209.1 million [2] - Over the last four quarters, VAREX IMAGING has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - VAREX IMAGING shares have declined approximately 51.8% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [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] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $199.03 million, while the estimate for the current fiscal year is $0.42 on revenues of $801.93 million [7] - The trend of estimate revisions for VAREX IMAGING was mixed prior to the earnings release, which may change following the recent results [6] Industry Context - The Medical - Products industry, to which VAREX IMAGING belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $203 million, a decrease of 3% year over year, with the Medical segment down 4% and the Industrial segment up 1% [8][22] - Non-GAAP gross margin was 34%, which is 100 basis points higher than the same quarter last year [8][25] - Non-GAAP earnings per share increased to $0.18, up from $0.14 in the previous year [8][27] - Operating expenses were unusually high at $148 million, primarily due to a non-cash goodwill impairment charge of $94 million [25][28] Business Line Data and Key Metrics Changes - Medical revenues were $142 million, accounting for 70% of total revenues, while Industrial revenues were $61 million, making up 30% [22] - Sales in oncology and mammography modalities were above their respective sales trends, while sales in fluoroscopy were below trend [10][11] - Demand in the Industrial segment remained strong, particularly in cargo inspection systems and security screening components [11][20] Market Data and Key Metrics Changes - Americas saw a 1% increase in revenues year over year, while EMEA revenues were down 2% and APAC decreased by 8% [23] - Sales volume to China contributed 15% of total revenues, with a 4% increase year over year [23][24] - The company was able to accommodate shipment needs in China after tariffs dropped from 145% to 55% [6][7] Company Strategy and Development Direction - The company is expanding its manufacturing capabilities in India to establish low-cost production for radiographic components [12][13] - The focus on photon counting technology is expected to contribute significantly to revenue, with anticipated contributions of $150 million from medical and $50 million from industrial applications [54][58] - The company is ramping up system production in the UK and investing in its Las Vegas facility to support the growing demand in the cargo systems business [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability and health of demand in China, expecting it to remain normal barring external events [33][34] - The overall demand environment for capital spending in the medical sector appears healthy, with expectations for growth entering fiscal year 2026 [48][49] - Management indicated that the company is in a comfortable cash position and plans to target gross debt in the range of $300 million to $350 million [36][37] Other Important Information - The company paid off $200 million in convertible notes, reducing its overall debt burden [8][28] - The company expects fourth-quarter revenues to be between $210 million and $230 million, with non-GAAP earnings per diluted share expected between $0.10 and $0.30 [29][30] Q&A Session Summary Question: Did fulfilling orders to China result in higher than expected expenses? - Management confirmed that there were no higher than normal expenses related to fulfilling orders to China [32] Question: What are the expectations for China sales in Q4? - Management stated that demand in China is stable and healthy, expecting it to remain normal [33] Question: Are there any medical OEMs testing the photon counting technology? - Management confirmed ongoing activity with medical OEMs focusing on photon counting technology [34] Question: What is the plan for using operating cash to pay down debt? - Management indicated a comfortable cash situation and plans to continue building cash reserves before refinancing in the next 12-18 months [36] Question: Can you characterize the capital spending environment? - Management noted that the demand pattern is good, and the overall investment perspective in imaging seems decent [48] Question: What is the outlook for gross margin in Q4? - Management explained that the expected decrease in gross margin is due to tariff impacts and a shift in product mix [80][83] Question: What is the status of the tariff mitigation strategy? - Management reported good progress in redirecting supply chains and increasing local manufacturing to mitigate tariff impacts [96][100]

Q3 FY25 Financial Performance - Revenue reached $203 million, a decrease of 3% year-over-year[7, 9] - Non-GAAP gross margin improved to 34%, a 100 bps increase year-over-year[7, 9] - Non-GAAP EPS increased to $0.18, a 29% increase year-over-year[7, 10] - Adjusted EBITDA increased to $29 million, a 27% increase year-over-year[13] - The company paid off $200 million in convertible notes on June 2[7] Balance Sheet and Cash Flow - Cash, cash equivalents, and marketable securities totaled $153 million[7, 8] - Adjusted EBITDA for the trailing twelve months (TTM) was $110 million[31] - Net debt leverage (TTM) was 20x[31] Segment and Geographic Revenue Mix - Medical segment revenue was $142 million[19, 21] - Industrial segment revenue was $61 million[19, 21] - Revenue from the Americas was $71 million[20, 22] Q4 FY25 Guidance - Revenue is projected to be between $210 million and $230 million[34] - Non-GAAP EPS is expected to be between $010 and $030[34]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Unaudited Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) The unaudited financial statements for July 4, 2025, reflect a net loss driven by a $93.9 million goodwill impairment, decreased assets and equity, but positive operating cash flow [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements show a Q3 2025 net loss of **$89.1 million** due to a **$93.9 million** goodwill impairment, despite a slight revenue increase for the nine-month period Condensed Consolidated Statements of Operations | Indicator | Three Months Ended July 4, 2025 | Three Months Ended June 28, 2024 | Nine Months Ended July 4, 2025 | Nine Months Ended June 28, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues, net** | $203.0M | $209.1M | $615.7M | $605.3M | | **Gross Profit** | $67.5M | $66.9M | $212.7M | $189.8M | | **Impairment of goodwill** | $93.9M | $0M | $93.9M | $0M | | **Operating (loss) income** | ($80.7M) | $9.3M | ($47.4M) | $21.2M | | **Net (loss) income attributable to Varex** | ($89.1M) | $1.4M | ($82.5M) | $2.3M | | **Diluted Net (loss) income per share** | ($2.15) | $0.03 | ($2.00) | $0.06 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets as of July 4, 2025, indicate a decrease in total assets and stockholders' equity, primarily due to a reduction in goodwill and lower long-term debt Condensed Consolidated Balance Sheets | Account | July 4, 2025 | September 27, 2024 | | :--- | :--- | :--- | | **Total current assets** | $619.5M | $649.9M | | **Goodwill** | $198.5M | $291.0M | | **Total assets** | $1,073.4M | $1,213.6M | | **Total current liabilities** | $176.7M | $195.9M | | **Long-term debt, net** | $366.0M | $397.1M | | **Total liabilities** | $603.9M | $670.4M | | **Total stockholders' equity** | $469.5M | $543.2M | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended July 4, 2025, operating cash flow increased to **$33.8 million**, investing activities provided **$11.0 million**, while financing activities used **$77.0 million** primarily for debt repayment Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Nine Months Ended July 4, 2025 | Nine Months Ended June 28, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $33.8M | $21.4M | | **Net cash provided by (used in) investing activities** | $11.0M | ($13.5M) | | **Net cash used in financing activities** | ($77.0M) | ($4.1M) | | **Net (decrease) increase in cash** | ($31.9M) | $3.8M | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, a prior period financial statement revision, a **$93.9 million** goodwill impairment, debt structure changes, and significant customer concentration - The company identified and corrected an accounting error related to deferred tax assets and liabilities in prior periods, necessitating a revision of prior period balance sheets and statements of stockholders' equity due to the cumulative effect being material to the current year[27](index=27&type=chunk) - A goodwill impairment charge of **$93.9 million** was recorded for the Medical reporting unit during the third quarter of fiscal 2025, triggered by a sustained decline in market capitalization, stock price, and downward revisions to the long-term forecast, including impacts from tariffs and MOFCOM investigations in China[47](index=47&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - On June 1, 2025, the company's **$200.0 million** 4.00% Convertible Senior Unsecured Notes matured and were settled in cash, facilitated by the issuance of an additional **$125.0 million** of Senior Secured Notes in December 2024[121](index=121&type=chunk)[125](index=125&type=chunk) - Canon Medical Systems Corporation was a significant customer, accounting for **17.8%** of revenues for the nine months ended July 4, 2025, and **13.5%** of accounts receivable as of that date[39](index=39&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the impact of trade challenges, including a **$93.9 million** goodwill impairment, Q3 2025 revenue decline, nine-month revenue growth driven by the Industrial segment, improved gross margins, and sufficient liquidity - The company recorded a goodwill impairment charge of **$93.9 million** related to the Medical reporting unit due to macroeconomic challenges, including tariffs, MOFCOM investigations in China, a sustained decline in stock price, and a downward revision of its long-term forecast[178](index=178&type=chunk) - Management highlights ongoing risks from the trade environment, including US-China tariffs and two investigations initiated by China's Ministry of Commerce (MOFCOM) related to medical X-ray products imported into China, with sales of such products representing about **10%** of total revenue in fiscal 2024[163](index=163&type=chunk)[165](index=165&type=chunk) Segment Revenues (in millions) - Three Months Ended | Segment Revenues (in millions) | Three Months Ended July 4, 2025 | Three Months Ended June 28, 2024 | % Change | | :--- | :--- | :--- | :--- | | Medical | $142.1 | $148.6 | (4.4)% | | Industrial | $60.9 | $60.5 | 0.7% | | **Total** | **$203.0** | **$209.1** | **(2.9)%** | Segment Revenues (in millions) - Nine Months Ended | Segment Revenues (in millions) | Nine Months Ended July 4, 2025 | Nine Months Ended June 28, 2024 | % Change | | :--- | :--- | :--- | :--- | | Medical | $440.5 | $437.3 | 0.7% | | Industrial | $175.2 | $168.0 | 4.3% | | **Total** | **$615.7** | **$605.3** | **1.7%** | [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies market risks including foreign currency, credit, interest rate, and commodity price volatility, with a 10% foreign exchange rate decrease potentially impacting annual earnings by **$14.1 million** - Primary market risks identified are foreign currency exchange rate risk, credit and counterparty risk, interest rate risk, and commodity price risk[222](index=222&type=chunk) Estimated Annual Impact of Market Risk (in millions) | Market Risk Category | Hypothetical Change | Estimated Annual Impact (in millions) | | :--- | :--- | :--- | | Foreign Currency - Revenue | 10% decrease in foreign exchange rates | $14.1 | | Interest Rate - Marketable Securities | 100 basis point decrease in interest rate | $1.0 | | Commodity Price | 10% increase in commodity prices | $3.1 | [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of July 4, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[232](index=232&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[233](index=233&type=chunk) [Part II. Other Information](index=50&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal actions but anticipates no material adverse effect on its operations or financial position from current or pending litigation - The company states that it does not currently have any pending litigation for which the outcome is expected to have a material adverse effect on its financial position or operations[234](index=234&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant risks including customer concentration, geopolitical and trade challenges (tariffs, MOFCOM investigations), supply chain disruptions, and potential future goodwill impairment - A single customer accounted for approximately **18%** of revenue in the first nine months of fiscal 2025, highlighting significant customer concentration risk[236](index=236&type=chunk) - The company's business is negatively impacted by tariffs, trade wars, and national policies, especially the bilateral U.S.-China tariffs and the MOFCOM investigations into medical products imported into China[238](index=238&type=chunk)[241](index=241&type=chunk) - The company faces risks from supply chain disruptions and reliance on a limited group of or sole-source suppliers for key components like transistor arrays and specialized integrated circuits[270](index=270&type=chunk)[272](index=272&type=chunk) - The company warns that its financial condition could suffer from future goodwill impairments, following the **$93.9 million** charge recorded in Q3 2025, if key assumptions in its analysis are not realized[322](index=322&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - The company reported no unregistered sales of equity securities or use of proceeds from such sales[327](index=327&type=chunk) [Other Information](index=70&type=section&id=Item%205.%20Other%20Information) The Chief Human Resources Officer adopted a Rule 10b5-1 trading plan on June 17, 2025, for the sale of vested and soon-to-vest common stock shares - On June 17, 2025, Chief Human Resources Officer Karen Aranki adopted a Rule 10b5-1 trading plan for the sale of **3,174** vested shares and **6,665** shares scheduled to vest in December 2025[331](index=331&type=chunk) [Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, CEO/CFO certifications, and XBRL data files - The report includes standard exhibits such as the Certificate of Incorporation, Bylaws, CEO and CFO certifications (Rule 13a-14(a) and Section 906), and Inline XBRL documents[332](index=332&type=chunk)

[VAREX Q3 FY2025 Earnings Release](index=1&type=section&id=VAREX%20Q3%20FY2025%20Earnings%20Release) Varex reports its third-quarter fiscal year 2025 financial results, highlighting key performance metrics and future outlook [Financial Highlights and Business Overview](index=1&type=section&id=Financial%20Highlights%20and%20Business%20Overview) Varex reported Q3 FY2025 revenue of $203 million, a 3% year-over-year decrease, with improved non-GAAP gross margin and EPS Q3 FY2025 Key Financial Metrics | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $203M | $209.1M | -3% | | Medical Revenue | $142M | $148.6M | -4% | | Industrial Revenue | $61M | $60.5M | +1% | | Non-GAAP Gross Margin | 34% | 32% | +2 p.p. | | GAAP Net Loss per Share | $(2.15) | $0.03 | N/A | | Non-GAAP EPS | $0.18 | $0.14 | +28.6% | - CEO Sunny Sanyal noted that revenue was above guidance, driven by a **strong Industrial segment** and **better-than-expected Medical revenue in China**. The company is encouraged by the adoption of its systems in cargo inspection applications[3](index=3&type=chunk) - Cash flow from operations was **$8 million**. The cash and marketable securities balance decreased from **$226 million** in the prior quarter to **$153 million**, primarily due to using cash to pay down the principal of Convertible Notes[4](index=4&type=chunk) [Financial Outlook](index=1&type=section&id=Financial%20Outlook) Varex projects Q4 FY2025 revenues between $210 million and $230 million, with non-GAAP EPS of $0.10 to $0.30, and 3% full-year sales growth Q4 FY2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Revenues | $210M - $230M | | Non-GAAP Net EPS | $0.10 - $0.30 | - The company expects a healthy demand environment to drive sales growth of approximately **3%** for the full fiscal year 2025[3](index=3&type=chunk) - Guidance for net earnings per diluted share is provided on a non-GAAP basis only, as the company is unable to provide a reconciliation to GAAP forecasts without unreasonable effort[5](index=5&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents Varex's unaudited condensed consolidated financial statements, including Statements of Operations and Balance Sheets, for detailed financial performance and position [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 FY2025, Varex reported total revenues of $203.0 million, an operating loss of $(80.7) million, and a net loss of $(89.1) million due to a significant goodwill impairment charge Q3 Statement of Operations Highlights (in millions) | Line Item | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | Total Revenues | $203.0 | $209.1 | | Total Gross Profit | $67.5 | $66.9 | | Impairment of goodwill | $93.9 | $0 | | Operating (Loss) Income | $(80.7) | $9.3 | | Net (Loss) Income Attributable to Varex | $(89.1) | $1.4 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of July 4, 2025, Varex's total assets decreased to $1,073.4 million, primarily due to reduced goodwill and cash, with total liabilities also decreasing to $603.9 million Balance Sheet Highlights (in millions) | Account | July 4, 2025 | September 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $136.4 | $168.7 | | Goodwill | $198.5 | $291.0 | | Total Assets | $1,073.4 | $1,213.6 | | Long-term debt, net | $366.0 | $397.1 | | Total Liabilities | $603.9 | $670.4 | | Total Stockholders' Equity | $469.5 | $543.2 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details adjustments from GAAP to non-GAAP measures for Q3 FY2025, including a $93.9 million goodwill impairment, transforming GAAP operating loss to non-GAAP operating income Q3 FY2025 GAAP to Non-GAAP Operating Income Reconciliation (in millions) | Description | Amount | | :--- | :--- | | **GAAP Operating Loss** | **$(80.7)** | | Amortization of intangible assets | $1.0 | | Restructuring charges | $0.4 | | Impairment of goodwill | $93.9 | | Non-ordinary course litigation | $1.7 | | Other non-operational costs | $0.3 | | **Non-GAAP Operating Income** | **$16.6** | Q3 FY2025 GAAP to Non-GAAP Net Income Reconciliation (in millions) | Description | Amount | | :--- | :--- | | **Net Loss Attributable to Varex (GAAP)** | **$(89.1)** | | Total income before tax adjustments | $96.6 | | Tax effect on non-GAAP adjustments | $0.1 | | **Diluted Non-GAAP Net Income** | **$7.6** | [Discussion of Non-GAAP Financial Measures](index=11&type=section&id=Discussion%20of%20Non-GAAP%20Financial%20Measures) Varex explains its use of non-GAAP financial measures to provide transparency and assess ongoing business performance by excluding unusual or one-time costs for investors - The company uses non-GAAP measures to assess ongoing business performance by excluding unusual and one-time costs, believing it provides greater transparency for investors[22](index=22&type=chunk) - Specific items excluded from GAAP results to arrive at non-GAAP measures include[23](index=23&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - Amortization of intangible assets - Restructuring charges - Impairment of goodwill - Non-ordinary course litigation - Acquisition and integration related costs - Other non-operational costs [Company and Event Information](index=3&type=section&id=Company%20and%20Event%20Information) Varex Imaging Corporation, a leading X-ray imaging component manufacturer, will host a conference call on August 7, 2025, to discuss its Q3 FY2025 financial results - Varex is a leading innovator and manufacturer of X-ray imaging components, including tubes and digital detectors, used in medical, industrial, and security imaging applications[10](index=10&type=chunk) - The company will host an earnings conference call with a live webcast on August 7, 2025, to discuss the quarterly results. A replay will be available through August 21st[9](index=9&type=chunk)

Summary of Varex Imaging (VREX) Conference Call Company Overview - Varex Imaging is a market leader in imaging components for x-ray based imaging systems, primarily in the medical sector, which constitutes approximately 78-80% of its business [2][3][4]. Core Value Proposition - Varex's competitive advantage lies in its significant investment in innovation, having invested over $1 billion in foundational technologies over the past 20 years, which most OEMs lack [3][4]. - The company employs around 500 people in x-ray product development and holds approximately 600 patents, allowing it to provide bespoke components that help OEMs bring products to market faster [4][5]. Market Trends - The trend in the industry is shifting towards outsourcing rather than insourcing, with Varex working with a wide range of OEMs, including emerging players in markets like India and China [6][7][8]. - The company identifies future winners among OEMs and partners with them, which has been a successful strategy over the years [6][7]. Recent Financial Performance - Varex reported strong fiscal 2Q results, exceeding consensus on revenue, gross margin, and EPS, with a recovery in demand following a period of channel inventory adjustments [10][12]. - The company noted that the audit situation in Chinese hospitals and destocking issues had improved, leading to solid order coverage [12][13]. Tariff Impact and Mitigation Strategies - The tariff situation has been turbulent but is moving in a positive direction, with current tariffs at about 55% for input materials [16][17]. - Varex is implementing several mitigation strategies, including passing on input costs to customers, diversifying its supply chain, and regionalizing manufacturing to enhance resilience [20][21][36]. Manufacturing Developments - Varex is progressing with two factories in India: one for detectors expected to start shipping in 3-4 months, and another for tubes, which is 12-15 months away from production [31][32]. Customer Relationships - Canon remains Varex's top customer, contributing 17-18% of annual revenues, with a stable relationship focused on ongoing R&D projects [51][53]. - The company has observed a healthy demand for its products, with a significant installed base ensuring continued orders for replacement components [25][54]. End Market Dynamics - The medical segment has shown stability, with channel inventory returning to normal operating conditions [47][49]. - In the industrial segment, Varex has seen faster growth compared to medical, driven by demand in global security and cargo inspection markets [60][61]. Direct-to-Customer Opportunities - Varex's direct-to-customer industrial inspection business has shown promising growth, with significant orders in the cargo inspection systems space, which is a billion-dollar addressable market [62][63]. Competitive Landscape - Varex differentiates itself through vertical integration, being one of only two companies globally with this capability, which enhances its innovation and product tailoring [63][64]. Conclusion - Varex Imaging is well-positioned in the imaging components market, leveraging its innovation, strong customer relationships, and strategic responses to market dynamics and challenges, including tariffs and supply chain issues. The company is optimistic about future growth in both medical and industrial sectors.