Varex Imaging(VREX) - 2025 Q3 - Quarterly Results

VAREX Q3 FY2025 Earnings Release Varex reports its third-quarter fiscal year 2025 financial results, highlighting key performance metrics and future outlook Financial Highlights and Business Overview 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] - 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] Financial Outlook 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] - 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] Financial Statements 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 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 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 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 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] - Specific items excluded from GAAP results to arrive at non-GAAP measures include[23][25][27] - 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 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] - 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]