VREX

SALT LAKE CITY, August 10, 2026--(BUSINESS WIRE)--Varex Imaging Corporation (Nasdaq: VREX) today announced its unaudited financial results for the third quarter fiscal year 2026. Q3FY26 Summary Revenues $211 million GAAP gross margin 36% | Non-GAAP gross margin* 37% GAAP operating margin 11% | Non-GAAP operating margin* 12% GAAP net income $0.37 per diluted share | Non-GAAP net income* $0.31 per diluted share Cash flow from operations of $21 million "Third-quarter product sales before the IEEPA-related customer reimbursement adjustment were approximately $217 million, reflecting strong growth in Industrial and continued expansion in cargo and vehicle inspection systems," said Sunny Sanyal, Chief Executive Officer. "The quarter also included the recovery of tariffs that had increased our product costs in prior periods. We generated $21 million of operating cash flow and enter the fourth quarter with continued momentum." During the quarter, Varex received refunds totaling $17 million from U.S. Customs related to previously paid IEEPA tariffs. The Company recorded a corresponding $7 million reduction to revenues reflecting an accrual for expected customer reimbursements of previously billed IEEPA tariffs. Together, these items resulted in higher third-quarter gross profit by approximately $10 million. Third quarter revenues were up 4% year-over-year. Third quarter Medical revenue was $134 million and Industrial revenue was $77 million. Non-GAAP gross margin increased to 37% from 34% in the prior-year quarter, and non-GAAP EPS was $0.31 compared to $0.13 in the third quarter of fiscal year 2025. Balance Sheet & Cash Flow Cash, cash equivalents, and marketable securities were $99 million as of the end of the third quarter, compared to $155 million at the end of fiscal year 2025. The change in cash primarily reflects the Company's debt redemption and refinancing completed in March, as well as increased working capital associated with inventory. Non-GAAP Financial Measures *Please refer to "Reconciliation between GAAP and non-GAAP Financial Measures" below for a reconciliation of non-GAAP items to the comparable GAAP measures. Cancellation of Earnings Conference Call In light of the announced transaction with Teledyne Technologies Incorporated, and as is customary during the pendency of such a transaction, Varex has cancelled its earnings conference call for the third quarter of fiscal year 2026 previously scheduled for 3:00 p.m. Mountain Time on August 10, 2026, and will not be providing financial guidance in conjunction with its third quarter fiscal year 2026 earnings release. About Varex Varex Imaging Corporation is a leading innovator, designer, and manufacturer of X-ray imaging components, which include X-ray tubes, digital detectors, and other image processing solutions that are key components of X-ray imaging systems, as well as X-ray imaging systems for industrial applications. With a 70+ year history of successful innovation, Varex’s products are used in medical imaging as well as in industrial and security imaging applications. Global OEM manufacturers incorporate the company’s X-ray sources, digital detectors, connecting devices, and imaging software in their systems to detect, diagnose, protect, and inspect. Headquartered in Salt Lake City, Utah, Varex employs approximately 2,500 people located in North America, Europe, and Asia. For more information visit www.vareximaging.com. Forward Looking Statements This news release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning unaudited financial results; industry or business outlook; product demand environment; and any statements using the terms "believe," "expect," "anticipate," "can," "should," "would," "could," "estimate," "may," "intend," and "potential," or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company's actual results and the outcome and timing of certain events to differ materially from those projected or management’s current expectations. While forward-looking statements are based on assumptions and analyses made by management of Varex that it believes to be reasonable under the circumstances, actual results and developments will depend on a number of risks and uncertainties which could cause actual results, performance, and financial condition to differ materially from such expectations. Such risks and uncertainties include: the ability of the parties to consummate the proposed transaction with Teledyne on anticipated terms and timing or at all, including obtaining stockholder and regulatory approvals and other conditions to the completion of the transaction; changes in import/export regulatory regimes, tariffs, trade wars, and national policies, including exemptions thereto; reduction in or loss of business of one or more of the company's limited original equipment manufacturing customers; global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, tariffs, trade wars, and other risks associated with international manufacturing, operations and sales; loss of business to, and an inability to effectively compete with, competitors; pricing pressures and other factors that could result in market erosion or loss of customers; failure to meet customers’ needs and demands; supply chain disruptions resulting in delayed product delivery, and increased costs as a result of reliance on a limited number of suppliers for certain key components; disruption of critical information systems or material breaches in the security of such systems; inability to maintain or defend intellectual property rights, and cost associated with protecting the company's intellectual property and defending such rights and defending against infringement claims; non-compliance with regulations applicable to marketing, manufacturing, labeling, and distributing the company's products and delays in obtaining regulatory clearances or approvals; limitations imposed by operating and financial restrictions of the company's debt financing agreements; the financial results of the company's equity method investments and joint ventures, and the other risks listed from time to time in the company's filings with the U.S. Securities and Exchange Commission. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause the company's actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Varex assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise. Varex has not filed its Form 10-Q for the third quarter of fiscal year 2026. All financial results described here should be considered preliminary and are subject to change to reflect any necessary adjustments or changes in accounting estimates that are identified prior to the time Varex files its Form 10-Q. Reconciliation of 2025 Non-GAAP Financial Information As Previously Reported to 2025 Non-GAAP Financial Results as per Updated Policy - Excluding gains and losses from equity-method investments(Unaudited) We annually review our non-GAAP policy to determine whether any changes to the policy should be made. As part of our review, we considered a strategic shift at one of our equity method investees. Because of this, and because we do not control operations of either of our equity method investments, we believe that the results of these businesses no longer provide investors with information helpful to evaluate our ongoing operations. As such, we have modified our non-GAAP policy to exclude the gains and losses from our equity method investments. The gains and losses on the company's equity-method investments in privately-held companies are recorded to other (expense) income, net, in the company’s Condensed Consolidated Statements of Operations. This updated non-GAAP policy will become the basis for the company’s comparisons going forward in fiscal year 2026 and is reflected in its 2026 guidance. The reconciliations below reflect the application of the new policy as if it had been adopted at the beginning of fiscal year 2025. Please refer to "Reconciliation between GAAP and non-GAAP Financial Measures" below for a reconciliation of non-GAAP items to the most comparable GAAP measures. Discussion of Non-GAAP Financial Measures This press release includes non-GAAP financial measures derived from the company's Condensed Consolidated Statements of Operations. These measures are not presented in accordance with, nor are they a substitute for U.S. generally accepted accounting principles, or GAAP. These measures include: non-GAAP gross profit; non-GAAP gross margin; non-GAAP operating expense; non-GAAP operating earnings; non-GAAP operating earnings margin; non-GAAP earnings before taxes; non-GAAP net earnings; non-GAAP net earnings per diluted share, non-GAAP dilutive shares; and non-GAAP EBITDA. The company is providing a reconciliation above of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. The company utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of its business, in making operating decisions, and forecasting and planning for future periods. The company considers the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of its business by excluding unusual and one-time costs. The company believes that disclosing non-GAAP financial measures provides useful supplemental data that allows for greater transparency in the review of its financial and operational performance. The company also believes that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating its operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Non-GAAP measures include the following items: Amortization of intangible assets: The company does not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to intangible assets and the term of amortization can vary significantly and are unique to each acquisition or asset purchase. The company believes that excluding amortization of intangible assets allows the users of its financial statements to better review and understand the historic and current results of its operations, and also facilitates comparisons to peer companies. Purchase price accounting charges to cost of revenues: The company may incur charges to cost of revenues as a result of acquisitions. The company believes that excluding these charges allows the users of its financial statements to better understand the historic and current cost of its products, its gross margin, and also facilitates comparisons to peer companies. Restructuring charges: The company incurs restructuring charges that result from events which arise from unforeseen circumstances and/or often occur outside of the ordinary course of its on-going business. Although these events are reflected in its GAAP financials, these unique transactions may limit the comparability of its on-going operations with prior and future periods. Acquisition and integration related costs: The company incurs expenses or benefits with respect to certain items associated with its acquisitions, such as transaction costs, changes in fair value of acquisition related hedges, changes in the fair value of contingent consideration liabilities, gain or expense on settlement of pre-existing relationships, etc. The company excludes such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of its on-going business. The company also incurs expenses or benefits with respect to certain items associated with its acquisitions, such as integration costs relating to acquisition costs incurred prior to closing and up to 12 months after the closing date of the acquisition. Impairment of goodwill: The company may incur impairment charges that result from events which arise from unforeseen circumstances and/or often occur outside of the ordinary course of its on-going business and such charges may limit the comparability of its on-going operations with prior and future periods. Non-ordinary course litigation: The company may incur charges that result from non-ordinary course litigation matters such as certain intellectual property disputes and joint venture litigation. Litigation matters that are part of the ordinary course of the company’s business, such as product liability claims, employment related matters and commercial contract disputes, are not excluded. Other non-operational costs: Certain items may be non-recurring, unusual, infrequent and directly related to an event that is distinct and non-reflective of the company’s ongoing business operations. These may include such items as legal settlements, inventory write-downs for discontinued products, cost of facilities no longer in use, extinguishment of debt and hedge costs, environmental settlements, governmental settlements including tax settlements, and other items of similar nature. Non-operational tax adjustments: Certain tax items may be non-recurring, unusual, infrequent and directly related to an event that is distinct and non-reflective of the company’s normal business operations. These may include such items as the retroactive impact of significant changes in tax laws, including changes to statutory tax rates and one-time tax charges. Tax effects of operating earnings adjustments: The company applies its non-GAAP adjustments to the GAAP pretax income to calculate the non-GAAP effective tax rate. This application of its non-GAAP effective tax rate excludes any discrete items, as defined in the guidance for accounting for income taxes in interim periods, or any other non-operational tax adjustments. Dilution offset from convertible notes hedge transaction: In connection with the issuance of the company’s Convertible Senior Unsecured Notes (the Convertible Notes) in June 2020, the company entered into convertible note hedge transactions (the Hedge Transactions) to reduce the potential dilutive effect on common shares upon the potential conversion of the Convertible Notes. GAAP diluted shares outstanding includes the incremental dilutive shares from the company’s Convertible Notes. Under GAAP, the anti-dilutive impact of the Convertible Note Hedge Transactions is not reflected in GAAP diluted shares outstanding. In periods in which the average stock price per share exceeds $20.81 and the company has GAAP net income, the non-GAAP diluted share count includes the anti-dilutive impact of the company’s Hedge Transactions, which reduces the potential dilution that otherwise would occur upon conversion of the company’s Convertible Notes. The company believes non-GAAP diluted shares is a useful non-GAAP metric because it provides insight into the offsetting economic effect of the Hedge Transactions against potential conversion of the Convertible Notes. Gains and losses on equity-method investments: The company's net income (loss) is impacted by gains and losses associated with its equity-method investments in privately-held companies included in other (expense) income, net on the Condensed Consolidated Statements of Operations. These gains and losses may arise from unforeseen circumstances and/or often occur outside of the ordinary course of the company's on-going business. By excluding these gains and losses, investors can better evaluate its operating performance period-over-period. View source version on businesswire.com: https://www.businesswire.com/news/home/20260810997101/en/ Contacts For Information Contact:Sam MaheshwariChief Financial OfficerVarex Imaging Corporation801.973.1574 | [email protected]

VAREX IMAGING (VREX) came out with quarterly earnings of $0.31 per share, beating the Zacks Consensus Estimate of $0.22 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +40.91%. A quarter ago, it was expected that this company would post earnings of $0.22 per share when it actually produced earnings of $0.21, delivering a surprise of -4.55%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. VAREX IMAGING, which belongs to the Zacks Medical - Products industry, posted revenues of $210.5 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.8%. This compares to year-ago revenues of $203 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. VAREX IMAGING shares have added about 6.5% since the beginning of the year versus the S&P 500's gain of 13.3%. While VAREX IMAGING has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for VAREX IMAGING was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.32 on $230.9 million in revenues for the coming quarter and $0.93 on $873.07 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Medtronic (MDT), has yet to report results for the quarter ended July 2026. The results are expected to be released on September 1. This medical device company is expected to post quarterly earnings of $1.39 per share in its upcoming report, which represents a year-over-year change of +10.3%. The consensus EPS estimate for the quarter has been revised 0.1% higher over the last 30 days to the current level. Medtronic's revenues are expected to be $9.48 billion, up 10.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report VAREX IMAGING (VREX) : Free Stock Analysis Report Medtronic PLC (MDT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Varex Imaging reported higher revenue, stronger non-GAAP margins and improved earnings, although tariff refunds and related customer reimbursements provided a roughly $10 million benefit to quarterly gross profit. Varex Imaging (NASDAQ:VREX) reported Q3 FY2026 revenue of $211 million, up 4% year over year, with Industrial revenue reaching $77 million and Medical revenue at $134 million. Non-GAAP gross margin expanded to 37% from 34%, while non-GAAP EPS increased to $0.31 from $0.13 a year earlier. IEEPA tariff refunds and expected customer reimbursements increased quarterly gross profit by approximately $10 million, making the underlying margin picture important for investors to assess. Operating cash flow reached $21 million, although cash, cash equivalents and marketable securities declined to $99 million from $155 million at fiscal 2025 year-end. The pending transaction with Teledyne Technologies is now a central consideration for VREX investors, with Varex cancelling its earnings call and declining to issue financial guidance. Varex Imaging (NASDAQ:VREX) reported Q3 FY2026 revenue growth alongside substantial improvement in margins and earnings, supported by continued strength in its Industrial business. Revenue increased 4% year over year to $211 million. Before a $7 million adjustment for expected customer reimbursements related to previously billed IEEPA tariffs, management said product sales were approximately $217 million. Industrial revenue was $77 million, with Varex citing strong growth and continued expansion in cargo and vehicle inspection systems. Medical revenue accounted for $134 million. Non-GAAP gross margin rose to 37% from 34% in the prior-year quarter, while non-GAAP operating margin reached 12%. Non-GAAP diluted EPS more than doubled to $0.31 from $0.13. Investors should note the tariff-related impact on profitability. Varex received $17 million in refunds from U.S. Customs for previously paid IEEPA tariffs and recorded the $7 million revenue reduction for expected customer reimbursements. Combined, those items increased Q3 gross profit by approximately $10 million. The results indicate improving operating performance, particularly through Industrial sales and stronger reported margins. The increase in non-GAAP EPS also shows substantially higher quarterly earnings compared with the prior year. However, the tariff recovery means part of the gross profit improvement came from a specific reimbursement event rather than solely from underlying operations. That could make future margin performance without the approximately $10 million benefit an important indicator of the company’s operating trajectory. Cash generation was positive, with $21 million of operating cash flow during the quarter. At the same time, cash, cash equivalents and marketable securities declined to $99 million from $155 million at the end of fiscal 2025. Varex attributed the decline primarily to its March debt redemption and refinancing and increased working capital associated with inventory. The investment narrative is also being reshaped by the announced transaction with Teledyne Technologies. Varex cancelled its scheduled Q3 earnings conference call and will not provide financial guidance while the transaction is pending. Investors may focus on developments surrounding the Teledyne transaction and any information provided about its progression. For the underlying business, Industrial growth, cargo and vehicle inspection demand, operating cash generation and margins excluding the Q3 tariff-related benefit could provide useful indications of operating momentum. Varex Imaging Corporation stock price

In its upcoming report, VAREX IMAGING (VREX) is predicted by Wall Street analysts to post quarterly earnings of $0.22 per share, reflecting an increase of 22.2% compared to the same period last year. Revenues are forecasted to be $216.57 million, representing a year-over-year increase of 6.7%. Over the past 30 days, the consensus EPS estimate for the quarter has remained unchanged. This demonstrates the covering analysts' collective reassessment of their initial projections during this period. Prior to a company's earnings announcement, it is crucial to consider revisions to earnings estimates. This serves as a significant indicator for predicting potential investor actions regarding the stock. Empirical research has consistently demonstrated a robust correlation between trends in earnings estimate revision and the short-term price performance of a stock. While it's common for investors to rely on consensus earnings and revenue estimates for assessing how the business may have performed during the quarter, exploring analysts' forecasts for key metrics can yield valuable insights. With that in mind, let's delve into the average projections of some VAREX IMAGING metrics that are commonly tracked and projected by analysts on Wall Street. It is projected by analysts that the 'Revenues- Industrial' will reach $63.39 million. The estimate indicates a year-over-year change of +4.1%. The collective assessment of analysts points to an estimated 'Revenues- Medical' of $153.02 million. The estimate indicates a change of +7.7% from the prior-year quarter. Based on the collective assessment of analysts, 'Gross profit- Industrial' should arrive at $22.78 million. The estimate compares to the year-ago value of $20.80 million. The consensus among analysts is that 'Gross profit- Medical' will reach $49.56 million. The estimate is in contrast to the year-ago figure of $46.70 million. View all Key Company Metrics for VAREX IMAGING here>>> Shares of VAREX IMAGING have experienced a change of +15.2% in the past month compared to the +3.3% move of the Zacks S&P 500 composite. With a Zacks Rank #3 (Hold), VREX is expected to mirror the overall market performance in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> . Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report VAREX IMAGING (VREX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

LeMaitre Vascular (LMAT) came out with quarterly earnings of $0.74 per share, missing the Zacks Consensus Estimate of $0.81 per share. This compares to earnings of $0.6 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -8.64%. A quarter ago, it was expected that this medical device maker would post earnings of $0.66 per share when it actually produced earnings of $0.68, delivering a surprise of +3.03%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. LeMaitre, which belongs to the Zacks Medical - Products industry, posted revenues of $70.38 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.91%. This compares to year-ago revenues of $64.23 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. LeMaitre shares have added about 27.8% since the beginning of the year versus the S&P 500's gain of 11%. While LeMaitre has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for LeMaitre was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.72 on $68.5 million in revenues for the coming quarter and $3.00 on $279.81 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, VAREX IMAGING (VREX), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This company is expected to post quarterly earnings of $0.22 per share in its upcoming report, which represents a year-over-year change of +22.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. VAREX IMAGING's revenues are expected to be $216.57 million, up 6.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report VAREX IMAGING (VREX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

It's been a mediocre week for Varex Imaging Corporation (NASDAQ:VREX) shareholders, with the stock dropping 15% to US$9.83 in the week since its latest second-quarter results. Things were not great overall, with a surprise (statutory) loss of US$0.19 per share on revenues of US$216m, even though the analysts had been expecting a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Varex Imaging after the latest results. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. Taking into account the latest results, Varex Imaging's five analysts currently expect revenues in 2026 to be US$872.5m, approximately in line with the last 12 months. Earnings are expected to improve, with Varex Imaging forecast to report a statutory profit of US$0.48 per share. In the lead-up to this report, the analysts had been modelling revenues of US$872.4m and earnings per share (EPS) of US$0.61 in 2026. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates. View our latest analysis for Varex Imaging It might be a surprise to learn that the consensus price target was broadly unchanged at US$18.40, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Varex Imaging at US$22.00 per share, while the most bearish prices it at US$16.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Varex Imaging shareholders. Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Varex Imaging's growth to accelerate, with the forecast 3.5% annualised growth to the end of 2026 ranking favourably alongside historical growth of 1.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 7.9% per year. So it's clear that despite the acceleration in growth, Varex Imaging is expected to grow meaningfully slower than the industry average. The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Varex Imaging's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$18.40, with the latest estimates not enough to have an impact on their price targets. Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Varex Imaging going out to 2027, and you can see them free on our platform here.. You should always think about risks though. Case in point, we've spotted 1 warning sign for Varex Imaging you should be aware of. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Image source: The Motley Fool. Thursday, May 7, 2026 at 5:00 p.m. ET President and Chief Executive Officer — Sunny Sanyal Chief Financial Officer — Shubham Maheshwari Director, Investor Relations — Christopher Belfiore Christopher Belfiore: Good afternoon, and welcome to Varex Imaging's Earnings Conference Call for the Second Quarter fiscal year 2026. With me today are Sunny Sanyal, our President and CEO; and Sam Maheshwari, our CFO. Please note that the live webcast of this conference call includes a supplemental slide presentation that can be accessed at Varex's website at vareximaging.com. The webcast and supplemental slide presentation will be archived on Varex's website. To simplify our discussion, unless otherwise stated, all references to the quarter are for the second quarter of fiscal year 2026 and to the year are for the fiscal year 2026. In addition, unless otherwise stated, quarterly comparisons are made year-over-year from the second quarter of fiscal year 2026 to the second quarter of fiscal year 2025. Finally, all references to the year are to the fiscal year and not the calendar year, unless otherwise stated. Please be advised that during this call, we will be making forward-looking statements, which are predictions or projections about future events. These statements are based on current information, expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks relating to our business are described in our quarterly earnings release and our filings with the SEC. Additional information concerning factors that could cause actual results to materially differ from those anticipated is contained in our SEC filings, including Item 1A, Risk Factors of our quarterly reports on Form 10-Q and our annual report on Form 10-K. The information in this discussion speaks as of today's date, and we assume no obligation to update or revise the forward-looking statements in this discussion. On today's call, we will discuss certain non-GAAP financial measures. Our non-GAAP measures are not presented in accordance with, nor are they a substitute for GAAP financial measures. We provided a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure in our earnings press release, which is posted on our website. I will now turn the call over to Sunny. Sunny Sanyal: Thank you, Chris. Good afternoon, everyone, and thank you for joining us for our second quarter earnings call. I'm pleased to say that we delivered a solid second quarter in both Medical and Industrial while strengthening our capital structure and continuing to shift our business towards advanced imaging technologies and higher-growth industrial applications. Revenue for the quarter came in within the guidance range at $216 million. Non-GAAP gross margin was 34% and non-GAAP EPS was $0.21. I'd also like to highlight that during the quarter, we completed our debt refinancing activities, which resulted in the reduction of outstanding debt and a decrease in our annual interest expense. The resulting capital structure and reduced leverage will give us more financial flexibility to continue to invest in the business. Let me give you some insights into sales detail by modality in the quarter compared to a 5-quarter average, which we refer to as the sales trend. We saw solid performance in our Medical segment, led by continued momentum in CT and other mid-tier X-ray sources. Sales in the CT and radiography modalities exceeded their sales trend in the quarter. Oncology and mammography modalities were in line with their respective sales trend, while fluoroscopy and dental modalities were below their respective sales trend. I'm also happy to say that in the Medical segment, our investments in new products are resulting in increased growth in the pipeline of potential new OEM projects. Over the past 12 months, we have continued to see a steady increase in design-in discussions where our new X-ray sources and detectors products can help OEMs and systems integrators accelerate bringing new applications to market. As these project decisions move through the process, they will contribute to our future recurring sales growth. Our Industrial segment delivered another solid quarter, driven by demand for our tubes, linear accelerators and detectors for nondestructive inspection applications and continued progress with implementation of our cargo security inspection systems. Our Industrial Services also posted another robust quarter with meaningful contribution to gross margin expansion, offsetting some of the inflationary cost increases that we have seen recently with certain input materials. Sales momentum in photon counting technology remained strong in the quarter, primarily driven by robust demand in food inspection services. We also saw good sales results of industrial flat panel detectors for general nondestructive inspection. Looking ahead, we anticipate that we will see new types of inspection opportunities in different industrial verticals as adoption of our flat panel detectors and photon counting detector technologies continue to demonstrate benefits of speed and high resolution in nondestructive inspection. We had a busy quarter with implementation of various previously booked orders of cargo inspection systems projects. We also booked multiple new deals in multiple countries, which included mobile inspection systems as well as car scanners, and we are continuing to develop our sales pipeline. We expect the Industrial segment to be an increasingly significant driver of growth and margin expansion for Varex. Our technologies are unlocking capabilities in nondestructive inspection and metrology applications that were previously difficult or impossible to achieve. In early March, we attended ECR, which is the European Congress of Radiology Trade Show in Vienna, Austria. ECR is one of the largest medical meetings in Europe and the second largest radiology meeting in the world. The week-long event reinforced our view of the direction the imaging industry is headed as well as the strategic role that Varex plays within it. Not surprisingly, AI was a major focus area at ECR. Numerous presentations and demonstrations highlighted how AI was being used to advance productivity and improve clinical outcomes. Varex's technologies remain critical to enable these advances. In radiology, AI is becoming increasingly embedded within imaging systems, driving both clinical and operational workflows. We believe that the quality, consistency and richness of imaging data is critical for AI to realizing its full potential. What we have seen in adjacent markets such as digital cameras and industrial automation is that as imaging technology matures, image processing moves closer to where the images are generated, which, in our case, would be closer to the image acquisition workstation or even the detector. Varex's tube and smart detectors can enable OEMs to design systems which can produce images that are preprocessed with AI to better enable the Agentic AI applications to direct the diagnostic steps and optimize the enterprise radiology department workflow. Varex is well positioned to support this shift by combining advanced imaging components with connectivity-enabled solutions that improve productivity while helping address the shortage of radiologists in many emerging markets. For example, in general radiography and certain fluoroscopy applications, Varex's software solutions such as Nexus DR and Nexus DRF integrate our X-ray tubes, detectors and software to enable efficient image acquisition and seamless connectivity to cloud-based platforms for AI-driven analysis. We believe this model can help accelerate adoption of digital imaging systems in emerging markets such as India, South Asia, Africa and Latin America, where there is a significant shortage of radiology professionals. We're also seeing increasing interest from OEMs in the data capabilities that currently exist in our high-end CT tubes. Operating information captured during imaging by our CT tubes can be used to correlate imaging parameters with image quality, predict life of the X-ray tube and related components and enable service applications to predict downtime and proactively schedule maintenance to increase system availability. In summary, Varex's X-ray tubes and detectors continue to be well positioned to meet next generation of imaging performance and reduce cost of ownership. Interest in photon counting continues to grow. In addition to the 2 CT customers, we're actively engaged with 8 different medical imaging OEMs developing systems using our photon counting detectors. We are seeing growing adoption across several modalities with strong OEM engagement. Some of them already have systems in the market, while others are working towards it, supporting both near-term and long-term potential sales growth for Varex. Full-body photon counting CT remains our largest long-term market opportunity with our OEM partners making steady progress towards commercialization. At RSNA and ECR, we showcased the value of our integrated solutions, combining tubes, detectors, power generators and image processing software designed to work seamlessly together to enhance performance while lowering total cost of ownership. Overall, the trends that we saw at RSNA and ECR reinforce our view that the future of imaging will demand technologies that deliver higher performance, enable deeper clinical value and reduce cost of ownership. With the foundation of a stronger capital structure, growing pipeline of OEM engagements and increasing adoption of our advanced imaging technologies, Varex is well positioned to deliver a more consistent and higher quality growth over time. With that, let me hand over the call to Sam. Shubham Maheshwari: Thanks, Sunny, and hello, everyone. Turning to results for the second quarter. Stepping back, demand across both the Medical and Industrial segments was solid, reflecting continued customer investment in our technology. Revenues of $216 million were within our guidance range. Non-GAAP gross margin of 34% was at the high end of the guidance and non-GAAP EPS of $0.21 was in line with expectations. Now turning to revenue details. Compared to the same period in fiscal 2025, total revenues increased 1%, driven by a 2% increase in medical revenue as CT sales remained strong in the quarter. Industrial revenue increased 1% with solid performance in cargo security systems and continued momentum in photon counting. Medical revenues were $156 million and Industrial revenues were $60 million, representing 72% and 28% of total revenues, respectively. Now analyzing regional performance. Americas grew 13%, driven by the strength in CT and our Industrial segment. EMEA declined 16% and APAC increased 8% year-over-year. Sales volume to China held steady, contributing 15% of total revenues, underscoring the continued resilience of our health care market position there. Let me now cover our results on a GAAP basis. Second quarter gross margin was 34%, down 240 basis points year-over-year. Operating expenses were $58 million, up $4 million year-over-year. We reported operating income of $14 million, net loss of $8 million and GAAP EPS loss of $0.19 per diluted share based on fully diluted 42 million shares. Now moving on to non-GAAP results for the quarter. Gross margin in Q2 was 34% at the high end of our expectations, driven by favorable product sales mix. Gross margins were down 240 basis points year-over-year, primarily driven by higher costs incurred during the quarter compared to last year. R&D spending was $22 million, in line with Q2 '25 and representing 10% of revenues. SG&A expense was $32 million, up $2 million from Q2 of 2025 and representing 15% of revenues. The primary driver of the increase in SG&A was related to continued investments in our growth initiatives. Operating expenses totaled $54 million, an increase of $3 million year-over-year and represented 25% of total revenue. Operating income was $19 million, a decrease of $7 million year-over-year, and operating margin was 9% of revenue compared to 12% in Q2 '25. In our other income and expense line, we recorded a noncash charge of $1.8 million due to a drop in share price related to our equity investment in publicly traded Micro-X shares. Tax expense was $419,000, down $2 million year-over-year. Q2 tax rate of 5% was low due to discrete items as well as reduced tax rate expectations of 20% for the full fiscal year 2026. Net earnings were $9 million or $0.21 per diluted share compared to $0.31 in the year ago quarter. Average diluted shares for the quarter on a non-GAAP basis were $42 million. Now turning to the balance sheet. Accounts receivable increased by $2 million and days sales outstanding decreased by 2 days to 62 days. Inventory increased $19 million to $347 million and days of inventory increased by 6 days to 220 days. Accounts payable increased by $18 million due to timing of payments and days payable increased 10 days to 61 days. Now moving to debt and cash flow information. Net cash outflow from operations was $2 million in the quarter. We ended the quarter with cash, cash equivalents and marketable securities of $88 million, down $37 million compared to the first quarter of 2026. The decrease in cash was primarily the result of our debt refinancing in March. As Sunny noted earlier, we are excited to have successfully closed the new credit agreement and redeemed our senior secured notes during the quarter, strengthening our balance sheet and improving our cost of capital. The reduced debt and lower interest rates will improve financial flexibility, support improved free cash flow generation and enable continued investment in our core business while prioritizing long-term shareholder value creation. Gross debt outstanding at the end of the quarter was $351 million and debt net of $88 million of cash, cash equivalents and marketable securities was $263 million. Adjusted EBITDA for the quarter was $27 million or 12% of sales. Our trailing 12-month adjusted EBITDA was $118 million, and our net debt leverage ratio was approximately 2.2x adjusted EBITDA on a trailing 12-month basis. Now moving on to the business outlook. Before providing guidance for the third quarter, I want to highlight that we are modifying our guidance practice to start providing an annual view. Also, please note that our current guidance excludes the effects from the IEEPA tariff refund. For the second half of fiscal 2026, we expect revenue to be up approximately 3% compared to the same period of fiscal 2025. We expect revenue to benefit from continued strength in CT, momentum in industrial photon counting and progress in implementation of cargo systems. As a result, we expect full fiscal year 2026 revenue to be in the range of $860 million to $880 million and non-GAAP EPS to be in the range of $0.80 to $1. Going forward, our intention is to provide full year guidance. The other assumptions for the annual guidance are shown in the slide here. Guidance for the third quarter is as follows: revenues are expected between $210 million and $225 million. Non-GAAP earnings per diluted share are expected between $0.15 and $0.30. Our expectations are based on non-GAAP gross margin of 33% to 34%, non-GAAP operating expenses of approximately $54 million, interest and other expense on a net basis in a range of $6 million to $7 million, tax rate of about 23% for the third quarter and non-GAAP diluted share count of about 42 million shares. I would now like to hand the call back to Sunny for some closing thoughts before beginning our Q&A session. Sunny Sanyal: Thank you, Sam. Overall, we're very pleased with the solid first half of fiscal 2026. Looking ahead, we're encouraged by the depth and quality of engagement with our medical customers, particularly around innovation and integration of our technologies into their next-generation imaging systems. On the industrial side, our close collaboration with customers continues to drive new applications across a diverse set of end markets, including oil and gas, food inspection and security screening. Across both business segments, this level of engagement reinforces our confidence in the durability of our customer relationships and the long-term opportunities ahead. None of this progress would be possible without the dedication of our employees and partners around the world, and I want to sincerely thank them for their continued commitment. Your efforts are critical to advancing our strategy and strengthening the future of Varex. With that, we will now open up the call for your questions. Operator: And the first question comes from the line of [ Jacob Malajnik ] with Oppenheimer. Unknown Analyst: Jacob on for Suraj here. Maybe just to start off with a question on the effect of the current macro environment. Given the Middle East conflict and its subsequent impact on regional logistics and energy costs, combined with the tightening memory supply, I guess, how are you insulating your costs and lead times? And specifically, are you seeing any pricing pressure or constraints for your memory-intensive components? Sunny Sanyal: Jacob, so first on the -- let me address the cost of certain components like memory chips. The only part of our business where we depend on certain memory chips is in our detectors business, and we have been able to procure them, although the costs have gone up. But our consumption of memory chips isn't extraordinarily large. We've been able to procure what we need for now and have a good buffer stock. It has cost us some money, and we've been able to offset that with other areas of business where we've had some favorability, good mix. So that's why we've been able to hold on to gross margins. But it has cost us, and we're just paying attention to it. Secondly, in terms of other effects of logistics, et cetera, very little of our products flow through the Strait of Hormuz, right? So there hasn't been a direct impact of logistics challenges or issues to us that we've seen. Now our customers may be facing challenges, but so far, it has not directly impacted our ability to ship or our ability to fulfill business for our customers. There are some other parts and products components that are byproducts of petroleum where we've seen cost increases. But then our consumption of those parts and pieces of materials is not that high, such as plastics, epoxy and certain polymers. But the war in the Gulf by itself hasn't done a whole -- I mean, it hasn't been much of a significant impact for us. We've been through the -- over the last 18 months, we've done -- on 24 months, we've done a lot to diversify our supply chain to regionalize our suppliers. We have a lot of redundancies. So all that is -- those are big investments we made over the last several years. All that's in a way, helping us. Unknown Analyst: Got it. Very helpful. And then maybe just one more from my end. On the India manufacturing ramp, could you quantify, I guess, the current capacity utilization at the India facility in terms of detectors? And as shipments begin to scale, how should we think about the margin tailwinds associated with this? And do you expect the facility to reach full production capacity by the end of this fiscal year? Or how do you see that going? Shubham Maheshwari: Yes. Thanks, Jacob. This is Sam. Yes, you're right that our detector factory in India has been completed, and we are slowly ramping up production there. Now keep in mind that given the -- given we are producing medical products over there, we need to go through regulatory procedures and get approvals, et cetera, product by product. So the ramp-up is slow, but it is definitely ramping up. At this point, I would say the utilization levels are low, but we are expecting it to pick up. And by the year-end, we are thinking that it should be materially utilized. So currently, the P&L is facing gross margin as well as an OpEx tailwind because of this situation. But I'm hoping that this tailwind becomes -- this headwind becomes a tailwind as we crossover, call it, 60%, 70% utilization by the year-end. So that's the situation there on one factory in India. And then the other factory, which is related to tubes, we are still into the facilitization, equipment move-in and initial validation runs, et cetera. So that factory would still require some more time. It would begin to ramp towards the beginning of the next year for us. Operator: The next question comes from the line of James Sidoti with Sidoti & Company. James Sidoti: Can you just talk a little bit about what's going on with inventory levels and why they were up in the quarter? Shubham Maheshwari: Yes. Hi Jim, this is Sam again. So yes, inventory was up in the quarter. As you know, we are investing in cargo inspection business. So we have a number of units out there at the customer site, and we are working through the acceptance procedures and stuff like that. So that is causing some increase in our inventory. At the same time, we are slowly moving raw materials, et cetera, to India to enable the ramp-up in India, particularly for detectors. So those are 2 reasons. And then on top of that, there has been tariffs and then a little bit of memory chips. So they are also causing some inflation in inventory. At this time, as we forecast for the remaining 6 months of this fiscal year, we are expecting inventory to come down, and we are targeting about $20 million to $25 million reduction in inventory. This increase in inventory is all -- is there to support the existing customers as well as ramp up in the new business area. So from our perspective, it is a temporary buildup and then bring it down in the next couple of quarters. James Sidoti: And it looks like the business in China was up a couple of million in the quarter. So are we past most of the headwinds there? And should we expect revenue from China to remain about this level for the rest of the year? Sunny Sanyal: Yes. So Jim, the [ meds ] we had a couple of years ago with all the audits and then followed by the confusion around their stimulus programs and then all the supply chain issues as we -- those have, as you know, worked themselves out the way we had forecasted. And what we're seeing now in China that there -- the demand side has returned to, I'd say, more normal secular type of demand as we would expect in most parts of the world. And so we had -- our sales were up 8% year-over-year in Q2, and then we also had in the first half, about 3% in China. So it was along the lines of what we had expected would happen this year. James Sidoti: And with regards to photon counting for the medical business, I think I heard you say that you have 2 OEMs where you relatively fall along with and you're talking to 8 others. Is that correct? Sunny Sanyal: Yes. So let me clarify. So over the last several calls, we've talked about CT, photon counting for CT. Those were the 2 OEMs that I was mentioning. But I wanted to give a color beyond those 2 CT OEMs. By the way, we're seeking out -- as we've said, we need -- we'd love to get a couple of more, and we're working on that. But beyond that, in other modalities, so beyond CT, we're seeing -- there's activity with customers, active who are active, there's 8 customers who are actively engaged with us in various other modalities for different kinds of applications in CBCT applications in DR and breast imaging in a variety of areas. So the applicability of this technology is expanding beyond CT into other areas as well. And we have OEMs that have now brought some -- brought products to market, and there are others that are working actively on it. James Sidoti: Okay. And for the 2 that are working with CT, when do you think we'd start to see those in the field? Sunny Sanyal: Yes. Those customers have not announced their launch plans yet publicly. So I really can't disclose that. All I'll say is at this point, they're still on track in a way that would still put us in line with our goals for 2029 as we had committed. But we still need -- I would love to see a couple more OEMs as well. Let me say it's -- both our OEMs are making very good, solid, steady progress. And they're trying to bring products to market that are not just a me-too of what has been done so far, but where they can position themselves strongly in the market. James Sidoti: And then last one from me, just kind of a general question. When issues like the increased price or cost for chips occur, do you have pricing power? Are you able to pass any of that along to your customer? Sunny Sanyal: We do have pricing power in certain cases, especially what we've observed through previous situations like this, remember when we had the problem with FPGAs a few years ago, the whole industry struggled with it. We did pass on some of those costs to our customers. In this case, we ended up reacting, responding very quickly. There's different kinds of memory chips. We were able to do a couple of things where we bought ahead very quickly a certain type of memory chips that are going out. We also have products that are on the older version that wasn't impacted as severely. So this effect at this time wasn't severe enough. But answer to your question, if it's unusual and if it's too unusual, it's going to end up costing a lot, we will pass these on. Yes. Shubham Maheshwari: I would like to add, Jim, that generally, our pricing and our contracts are running annual. So for the same year, it is a little bit difficult. But when the contract comes for renewal, that will definitely be taken into consideration, and we would be able to pass price increase at that time. And it is not that customer contracts get renewed on a rolling basis. So as and when they come up for renewal, we would have an ability to pass down these cost increases. Operator: The next question comes from the line of Young Li with Jefferies. Young Li: I guess to start, last quarter, I think the results as well as the tone on the call was particularly strong, both on end markets and business trends. It seems like this quarter, it's more solid and in line. I appreciate the guidance for the rest of the year. It seems like fiscal 3Q is a little bit above consensus at the midpoint, 4Q a little bit below. Just kind of curious what's changed in the quarter that's making you sounding a bit more cautious? Sunny Sanyal: Yes. I'll get it started, Young. First of all, last quarter, if you remember, before the last quarter, we were carrying -- we were coming off of some pretty messy market dynamics. So from that perspective, we saw the transition, and I was very happy. We were optimistic. And we have not lost that optimism in that sense that the market is -- the demand side is playing out just the way we had anticipated. So that's -- let me just put it that way. So this quarter as well, the same type of buying patterns continued. There was no -- nothing odd about the buying patterns in a way that would have concerned us. So if there's any cautiousness, it's about just the general environment, but as you might have noticed, the general environment and the political environment has not impacted the demand side to the extent that -- I mean, we're not seeing that impact. So I still remain optimistic. I think we're just generally cautious about the environment, but we're not -- and the effect of the environment is largely on costs and material availability, lead times, logistics and not on the demand side of our products. Young Li: I guess maybe on industrials as well as EMEA. Those 2 segments kind of came in a little bit below expectations. Industrial, it does still sound like the inspection systems are doing pretty well. Does that sort of imply the base business is slowing a little bit? And then for EMEA, I think it's 28% of revs, probably the lowest in multiple years now. Maybe if you can expand on what's going on in that market a little bit more. Sunny Sanyal: Sure. So Young, when it comes to EMEA, the reported numbers for EMEA as well as what you're saying about industrial, they are somewhat connected. One of our large customers for our linear accelerators, they had got a fairly large order last year, and we were supplying linear accelerators for that customer, and this customer is based out of Europe. And so last year, in 2025, we shipped pretty significantly. And we talked about that last year, if you would remember, and we said that we are looking forward to these linear accelerators getting out there in the field installed and then also post-installation service to resume in 18 months or so. So from that perspective, I would say that the industrial revenue for linear accelerators was fairly strong in '25. This year, the security inspection business or we've been -- we are selling security inspection full systems in that market, and we are doing very well there. We are getting adoption. We are getting customer traction. And so that is that transition. Overall, this business is somewhat lumpy. It just goes into -- it comes and goes in steps. And as I said, last year was fairly strong for that. So that's what you are seeing, and they are somewhat connected. Now overall industrial, I would say that this year also -- in this quarter also, it grew. Overall, industrial business grew, although not high single digits, but it did grow a couple of percentage points year-over-year. I'm saying Q2 over Q2. But overall, once you aggregate it over multiple quarters or look at it from an annual to annual perspective, that business for us is growing pretty nicely in high single digits, I would say, and we expect it to continue to do so. Young Li: Okay. Got it. Very helpful. I guess maybe one more just on the annual guidance that you guys are going to be providing going forward. I think back in fiscal '24, you guys did that for a year, and then you stopped. Now you're resuming again. What's sort of driving this decision? Do you have a different process or a lot more visibility on an annual basis? If you can expand upon that decision, that would be really helpful. Sunny Sanyal: Yes. So Young, it's been always our intention to provide annual guidance. And if you go back early on when Varex became public, we were providing annual guidance. And then COVID hit and then supply chain crisis and then you would remember in the health care sector, there were situations in the China market. So all of those factors were causing quite a bit of volatility in the business and inability to forecast. So that was one of the reasons that we had suspended providing annual guidance a couple of years ago, as you remember -- as you rightly recalled. So since then, we've been working on improving our forecasting procedures. For example, we've been asking our customers to provide us longer duration forecast, et cetera. So we've strengthened some of our procedures, and we are coming back to start to provide the annual guidance going forward. Shubham Maheshwari: Young, the demand side is what our forecast is driven by the demand side. And the demand side is with the supply chain crisis out of the way and all the stuff that we experienced in China out of the way, that side is -- demand side is more stable than it has been in the last few years. I would say macro is somewhat challenging right now. But within that, health care seems to be in a little bit better place. And as we look at the overall macro vis-a-vis the health care positioning and the demand for our products, particularly in X-Ray, we kind of feel the demand is stable and solid. And so we feel that we are in a position where we can go ahead and provide the guidance. Operator: The next question comes from the line of Larry Solow with CJS Securities. Lawrence Solow: Great. I guess just a couple of follow-ups to the previous questions. I know the growth you're assuming 3%, it was essentially the same as in the first half. And it looks like it was a little -- low single digits, basically 1% medical, high single digits industrial. Obviously, a little bit of volatility quarterly. But roughly, is that kind of what you expect in the back half? It's about the same 3%. But do you expect that kind of that split low single, high single medical versus industrial and similar growth year-over-year. So I'm just curious, has your concern on -- have you become a little bit more concerned on top line? Obviously, we're all a little more concerned on just the world in general, but your macro specifically, has that changed at all? Sunny Sanyal: No. I think, Larry, what you mentioned is correct in the sense that our expectation of second half versus first half and the split between medical and industrial is similar. So there is -- we are not choreographing any message that the split or the rates in the second half versus the first half between the medical and industrial will be very different from each other. So it's pretty much going to follow. We expect to follow a similar pattern. Lawrence Solow: Okay. And you haven't lost your confidence. Maybe last quarter, you did sound a little more pumped up. So I know you spoke about some of your products, but it doesn't sound like -- okay, that's fair. A couple of questions on the quarter. The noncash charge for the Micro-X shares movement, that's adjusted out in adjusted EPS, correct? Sunny Sanyal: No, it is not adjusted out because part of our policy, we do not adjust that charge out. Lawrence Solow: Okay. So that's actually -- and that's in the EBITDA number, too then? Sunny Sanyal: Correct. It's in EPS, EBITDA, EBIT, everything. Lawrence Solow: And how much was that? Sunny Sanyal: $1.8 million, Larry, for this last quarter. Lawrence Solow: Okay. So that's basically like a mark-to-market essentially on the price, right, is that what you're doing? Sunny Sanyal: That is correct. Lawrence Solow: Okay. So you don't adjust that -- so that was a couple of cents EPS then, I imagine. It was almost $2 million EBITDA. It was more than a couple of cents, right? Sunny Sanyal: Actually, $0.04. Lawrence Solow: Okay. That's a big deal. Okay. All right. That's interesting. And then the OpEx was a little bit higher than you expected. It was $54 million, you had guided to $52 million. Anything in there in particular? Sunny Sanyal: Nothing in particular. Larry, we've talked about in the past that we are fully funding a number of our growth initiatives. And so sometimes in R&D and channel -- R&D for medical and then the channel development activities and initiatives that we have for the Industrial segment, sometimes they don't come in exactly as one planned. So there's a little bit of a movement there. But we are investing there. So they came in a little bit sooner. So that's the reason for that, yes. Lawrence Solow: Okay. So you don't -- I know you didn't give -- you normally were giving margin guidance too, but you're not giving, I guess, anymore. Is that right? Or you didn't give it this quarter at least? Sunny Sanyal: Which margin guidance, Larry? Lawrence Solow: The Q3 guidance. Did you give OpEx guidance? Did I miss that? Sunny Sanyal: Ye. It is there on the slide, Larry. We did provide. Lawrence Solow: I'm sorry, I just didn't have the slides. That's my issue. Okay. So you're expecting -- this is a little bit of an aberration, but you don't -- as revenue grows even over the next quarter over the next several years, your OpEx, you have some -- you showed some pretty good leverage there, right, on the SG&A line. Is that? Sunny Sanyal: Yes. So as we are funding these initiatives, we are spending through OpEx. But as these initiatives turn into revenue, we are expecting very good operating leverage to drop through, so the headwind should become a tailwind. Lawrence Solow: Can you just give us any update just on the cargo screening? I think you mentioned it briefly in your prepared remarks, and I don't think you're going to provide bookings anymore on a quarterly basis, but can you just give us an anecdotal update, that would be great. Sunny Sanyal: Yes. So we've been booking deals consistently. And what I'm happy about is that these are well distributed from new prospects, new customers, new geographies, new products. And so we're seeing good traction with closing deals. The pipeline is pretty hefty and it's big. We're getting -- continuing to see deals very, very -- I'd say we feel very good about our visibility to deals. We had called into it. And this is a lumpy business and tender-driven. So it's hard to give any kind of visibility to that in forward-looking. So we're not doing that. But I'm very happy with the progress we're making there. I'm very happy with the way the installations are going. I'm very glad to see our ability to put out many of our new products. I mentioned the Car scanner. We're very happy to see some new Car scanner deals sales in Q2. So it's ramping up the way we had anticipated, and we're ramping up our production implementation delivery the same way as well. So part of the OpEx and part of the inventory is in the fact that we're making these investments in growth. Operator: Ladies and gentlemen, this concludes the question-and-answer session, and I'll hand the floor back over to Chris Belfiore for closing remarks. Christopher Belfiore: Thank you for your questions and participating in our earnings conference call today. The webcast and supplemental slide presentation will be archived on our website. A replay of the quarterly conference call will be available through May 21. Thank you, and goodbye. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation. 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Interested in Varex Imaging? Here are five stocks we like better. Varex Imaging said fiscal Q2 revenue came in within guidance at $216 million, with solid demand in both medical and industrial segments. Management also noted completed debt refinancing and continued investment in advanced imaging technologies. The medical business was supported by strength in CT and mid-tier X-ray sources, while the industrial segment benefited from inspection applications, cargo security systems, and growing photon-counting demand. The company also highlighted a healthy pipeline of OEM design-in opportunities that could support future recurring sales. Varex raised its outlook, now providing full-year fiscal 2026 guidance of $860 million to $880 million in revenue and $0.80 to $1.00 in non-GAAP EPS. Management said inventory should decline over the next six months, and its India manufacturing ramp could eventually improve margins as utilization increases. Varex Imaging (NASDAQ:VREX) reported fiscal second-quarter revenue within its guidance range and said demand remained solid across its medical and industrial businesses, while management highlighted a completed debt refinancing and continued investment in advanced imaging technologies. President and CEO Sunny Sanyal said the company delivered “a solid second quarter in both medical and industrial” as it works to shift more of its business toward advanced imaging and higher-growth industrial applications. Revenue for the quarter was $216 million, non-GAAP gross margin was 34%, and non-GAAP earnings per share were $0.21. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% Chief Financial Officer Sam Maheshwari said total revenue rose 1% from the prior-year quarter. Medical revenue increased 2% to $156 million, representing 72% of total revenue, while industrial revenue rose 1% to $60 million, or 28% of total revenue. Sanyal said the medical segment benefited from continued momentum in CT and other mid-tier X-ray sources. Sales in CT and radiography exceeded the company’s five-quarter average sales trend, while oncology and mammography were in line with their respective trends. Fluoroscopy and dental were below trend. → Light Speed Returns: Corning Cashes In on NVIDIA Growth Management also pointed to a growing pipeline of potential OEM projects tied to newer X-ray source and detector products. Sanyal said Varex has seen a steady increase in design-in discussions over the past 12 months, adding that project decisions moving through customer processes could contribute to future recurring sales growth. Maheshwari said regional performance varied. Revenue in the Americas grew 13%, driven by CT and industrial strength, while EMEA declined 16% and APAC increased 8%. Sales volume to China held steady and accounted for 15% of total revenue. In response to an analyst question, Sanyal said China demand has returned to “more normal, secular type of demand” after prior disruptions tied to audits, stimulus uncertainty and supply chain issues. → Years in the Making, AMD’s Upside Movement Has Just Begun In industrial, Sanyal said demand was solid for tubes, linear accelerators and detectors used in non-destructive inspection applications, as well as for cargo security inspection systems. He said industrial services also delivered a strong quarter and contributed meaningfully to gross margin expansion, helping offset inflationary cost pressure in some input materials. Sales momentum in photon counting technology remained strong, primarily driven by demand in food inspection services, Sanyal said. The company also reported good sales of industrial flat panel detectors for general non-destructive inspection and expects broader adoption across industrial verticals as customers seek speed and high resolution in inspection applications. Varex was also active in cargo inspection systems during the quarter, implementing previously booked orders and booking new deals across multiple countries. Sanyal said the new orders included mobile inspection systems and car scanners. During the question-and-answer session, he described the cargo pipeline as “pretty hefty,” though he noted the business can be lumpy and tender-driven. On a GAAP basis, Varex reported gross margin of 34%, down 240 basis points year over year. Operating expenses were $58 million, up $4 million from the prior-year period. The company reported operating income of $14 million, a net loss of $8 million and a GAAP loss of $0.19 per diluted share. On a non-GAAP basis, gross margin of 34% was at the high end of management’s expectations, helped by favorable product mix. Maheshwari said the year-over-year gross margin decline was primarily due to higher costs. Non-GAAP operating income was $19 million, down $7 million year over year, and operating margin was 9%, compared with 12% in the prior-year quarter. Non-GAAP net earnings were $9 million, or $0.21 per diluted share, compared with $0.31 in the year-ago quarter. The quarter included a $1.8 million non-cash charge tied to a decline in the share price of Varex’s equity investment in publicly traded Micro-X. Maheshwari said the company does not adjust that charge out of non-GAAP EPS or EBITDA under its policy. Varex ended the quarter with $88 million in cash equivalents and marketable securities, down $37 million from the first quarter, primarily due to debt refinancing in March. Gross debt at quarter-end was $351 million, while net debt was $263 million. Adjusted EBITDA for the quarter was $27 million, or 12% of sales, and trailing 12-month adjusted EBITDA was $180 million. Net debt leverage was approximately 2.2 times trailing 12-month adjusted EBITDA. Maheshwari said the refinancing reduced outstanding debt and lowered interest expense, improving the company’s financial flexibility and supporting investment in the business. Inventory increased $19 million to $347 million, and days of inventory rose six days to 220. Maheshwari attributed the increase partly to cargo inspection units at customer sites undergoing acceptance procedures and to raw materials being moved to India to support the ramp-up of detector production. He also cited tariffs and some inflation related to memory chips. Sanyal said Varex expects inventory to decline over the remaining six months of fiscal 2026 and is targeting a $20 million to $25 million reduction. He described the increase as a temporary build to support existing customers and new business areas. Asked about the company’s India manufacturing ramp, Maheshwari said the detector factory has been completed and production is slowly increasing as product-by-product regulatory approvals proceed. Utilization remains low, but he said Varex expects the facility to be “materially utilized” by year-end and that the current gross margin and operating expense headwind could become a tailwind as utilization reaches roughly 60% to 70%. Sanyal said a separate tube-related facility in India is still undergoing equipment moves and validation and is expected to begin ramping around the start of the next fiscal year. Varex said it now intends to provide full-year guidance. For fiscal 2026, the company expects revenue of $860 million to $880 million and non-GAAP EPS of $0.80 to $1.00. For the second half of fiscal 2026, revenue is expected to rise approximately 3% from the comparable period in fiscal 2025. Maheshwari said the guidance excludes effects from IEEPA tariff refunds. For the fiscal third quarter, Varex expects revenue of $210 million to $225 million and non-GAAP EPS of $0.15 to $0.30. The outlook assumes non-GAAP gross margin of 33% to 34%, non-GAAP operating expenses of about $54 million, net interest and other expense of $6 million to $7 million, a tax rate of about 23% and a diluted share count of about 42 million. Sanyal also discussed the company’s technology positioning, citing interest in AI-enabled imaging workflows, smart detectors, photon counting detectors and integrated imaging solutions. He said Varex is engaged with two CT customers on photon counting CT and with eight other medical imaging OEMs developing systems using photon counting detectors across other modalities. He said the two CT OEMs are making steady progress, though their launch plans have not been publicly announced. Management said macroeconomic pressures have primarily affected costs, material availability, lead times and logistics rather than customer demand. Sanyal said Varex has been able to procure needed memory chips for its detector business, though costs have risen, and that supply chain diversification efforts over the past 18 to 24 months have helped mitigate disruptions. Varex Imaging Corporation is a global provider of X-ray imaging components and solutions for the medical, security and industrial markets. The company designs, develops and manufactures a broad range of products that convert X-ray energy into high-resolution digital images. Its portfolio includes X-ray tubes, flat panel detectors, digital sensors, specialty radiographic tubes and related software, all engineered to meet the demanding requirements of original equipment manufacturers (OEMs) in diagnostic imaging, computed tomography (CT), fluoroscopy, mammography, dental radiography and non-destructive testing applications. The company's medical imaging offerings support a wide spectrum of clinical modalities, from portable radiography systems to advanced CT scanners, enhancing image quality and dose efficiency for healthcare providers. The article "Varex Imaging Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

VAREX IMAGING (VREX) came out with quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.22 per share. This compares to earnings of $0.26 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -4.55%. A quarter ago, it was expected that this company would post earnings of $0.14 per share when it actually produced earnings of $0.19, delivering a surprise of +35.71%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. VAREX IMAGING, which belongs to the Zacks Medical - Products industry, posted revenues of $216 million for the quarter ended March 2026, missing the Zacks Consensus Estimate by 0.55%. This compares to year-ago revenues of $212.9 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. VAREX IMAGING shares have added about 4.5% since the beginning of the year versus the S&P 500's gain of 7.6%. While VAREX IMAGING has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for VAREX IMAGING was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #1 (Strong Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $216.6 million in revenues for the coming quarter and $0.93 on $873.8 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the bottom 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, TriSalus Life Sciences, Inc. (TLSI), is yet to report results for the quarter ended March 2026. The results are expected to be released on May 12. This company is expected to post quarterly loss of $0.16 per share in its upcoming report, which represents a year-over-year change of +51.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. TriSalus Life Sciences, Inc.'s revenues are expected to be $10.5 million, up 14.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report VAREX IMAGING (VREX) : Free Stock Analysis Report TriSalus Life Sciences, Inc. (TLSI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research