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1. Company Snapshot

1.a. Company Description

Varex Imaging Corporation designs and manufactures X-ray imaging components.The company operates in two segments, Medical and Industrial.The Medical segment designs, manufactures, sells, and services X-ray imaging components comprising X-ray tubes, digital detectors, high voltage connectors, image-processing software and workstations, 3D reconstruction and computer-aided diagnostic software, collimators, automatic exposure control devices, generators, heat exchangers, ionization chambers, and buckys.


This segment's products are used in a range of applications, including radiographic and fluoroscopic imaging, mammography, computed tomography, radiation therapy, oncology, CT, cardiac, surgery, dental, computer-aided detection, and other diagnostic radiography uses.The Industrial segment designs, manufactures, sells, and services Linatron X-ray accelerators, X-ray tubes, digital detectors, and high voltage connectors for use in security and industrial inspection applications, such as airport security, cargo screening at ports and borders, and nondestructive testing and examination in various applications.Varex Imaging Corporation sells its products through imaging system original equipment manufacturers, independent service companies, and distributors, as well as directly to end-users.


The company has operations in North America, South America, Europe, Russia, the Middle East, India, Africa, Asia, and Australia.Varex Imaging Corporation was founded in 2016 and is based in Salt Lake City, Utah.

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1.b. Last Insights on VREX

Varex Imaging Corporation's recent performance was negatively impacted by a lack of visibility in earnings estimate revisions, despite beating Q1 2025 earnings estimates. The company's share price surge in April 2025 may be short-lived, as the latest trend in earnings estimate revisions suggests limited further strength. Additionally, the absence of any notable product launches or acquisitions in the recent quarter may have contributed to the company's lackluster performance.

1.c. Company Highlights

2. Varex Imaging Corporation's Strong Fiscal 2025 Performance and Outlook

Varex Imaging Corporation reported a robust finish to fiscal year 2025, with fourth-quarter revenue reaching $229 million, an 11% year-over-year increase, and aligning with the high end of guidance. The industrial segment achieved its highest revenue quarter ever, at $77 million. Non-GAAP gross margin stood at 34%, while non-GAAP earnings per share were $0.37, a significant increase of $0.21 compared to the previous year. For the full fiscal year, total revenue was $845 million, a 4% increase from fiscal 2024, with medical revenue at $593 million (up 2%) and industrial revenue at $252 million (up 10%). Non-GAAP gross margin for the year was 35%, and non-GAAP EBITDA reached $122 million, a $33 million increase from the previous year. Non-GAAP earnings per share for the year were $0.90, up $0.35. The company ended the year with $155 million in cash, cash equivalents, and marketable securities. The actual EPS for the quarter was $0.2919, beating estimates of $0.18.

Publication Date: Nov -23

📋 Highlights
  • Q4 Revenue Growth:: Fiscal 2025 ended with $229 million in revenue, a 11% year-over-year increase, reaching the high end of guidance.
  • Industrial Segment Record:: Industrial revenue hit a quarterly high of $77 million, contributing 34% of total Q4 revenue and up 10% YoY.
  • Non-GAAP Performance:: Non-GAAP gross margin stood at 34%, with earnings per share (EPS) of $0.37, up $0.21 compared to fiscal 2024.
  • Full-Year Financials:: Total revenue reached $845 million (+4% YoY), with EBITDA rising to $122 million (+33 million YoY) and EPS at $0.90 (+$0.35 YoY).
  • India Factory Expansion:: Shipment began from the Indian factory, expected to boost gross margins slightly by fiscal 2026, while the tube factory remains under construction for 12–15 months.

Segment Performance and Outlook

The company's industrial revenue growth is noteworthy, reaching its highest quarter ever and indicating a positive trend. Medical revenue is expected to grow, albeit with volatility between modalities and geographies. The company is also seeing some OEMs requesting products to be shipped from its Chinese facilities, potentially impacting its medical revenue. Industrial revenue is anticipated to continue growing, expected to reach mid-30% of total sales. The company's diversification across medical and industrial segments is a positive factor, with the industrial segment's strong performance helping to offset any medical segment volatility.

Operational Updates and R&D Investments

Varex is investing in its Indian operations, having started shipments from its detector factory, with the tube factory expected to commence operations in 12-15 months. The Indian operations are expected to have a small positive impact on gross margin. R&D expenses were up $3 million in Q4, driven by the nature of the business and material expenses. The company plans to maintain OpEx around $52-53 million per quarter, indicating a controlled approach to its operational expenditures. This investment in R&D is crucial for strengthening its competitive edge, particularly in growth markets such as India, South Asia, the Middle East, and Latin America.

Valuation and Tariff Impact

The company's valuation metrics indicate a mixed picture, with a P/E Ratio of -6.31 and an EV/EBITDA of -65.33, suggesting potential undervaluation but also reflecting the challenges faced by the company. The P/S Ratio stands at 0.52, and the P/B Ratio is 0.94. Tariffs continue to impact the company's gross margin, by 100 to 150 basis points. If tariffs were not in place, the gross margin would be around 35%. The company's efforts to reroute supply chains and establish a new factory in India are expected to mitigate this impact over time.

Guidance and Future Prospects

The company has provided guidance for the first quarter of fiscal 2026, expecting revenues between $200 million and $215 million, and non-GAAP earnings per share between $0.05 and $0.25. While full-year guidance is not provided, the company anticipates revenue growth in fiscal 2026. Analysts estimate revenue growth at 3.8% for the next year. The company's focus on growth markets and new products, such as VXM6, cargo, and rail scanners, is expected to drive future growth. The anti-dumping investigations in China have been paused indefinitely, removing a potential headwind. Overall, Varex Imaging Corporation's strong fiscal 2025 performance and its strategic investments position it for solid progress in fiscal 2026.

3. NewsRoom

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Varex Imaging Corporation (VREX) Q4 2025 Earnings Call Transcript

Nov -19

Source: seekingalpha.com

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Compared to Estimates, VAREX IMAGING (VREX) Q4 Earnings: A Look at Key Metrics

Nov -18

Source: zacks.com

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VAREX IMAGING (VREX) Q4 Earnings and Revenues Surpass Estimates

Nov -18

Source: zacks.com

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Varex Announces Financial Results for Fourth Quarter and Fiscal Year 2025

Nov -18

Source: businesswire.com

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Varex Schedules Fourth Quarter and Fiscal Year 2025 Earnings Release and Conference Call

Oct -28

Source: businesswire.com

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Critical Comparison: VAREX IMAGING (NASDAQ:VREX) vs. Haemonetics (NYSE:HAE)

Oct -26

Source: defenseworld.net

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Varex to Present at the Sidoti Small Cap Virtual Conference

Sep -09

Source: businesswire.com

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Wall Street Analysts Believe VAREX IMAGING (VREX) Could Rally 46.29%: Here's is How to Trade

Aug -28

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.63%)

6. Segments

Medical

Expected Growth: 4.0%

The 4.0% growth in Medical segment of Varex Imaging Corporation is driven by increasing demand for digital detectors and X-ray imaging components, expansion in emerging markets, and growing adoption of AI-based imaging solutions. Additionally, strategic partnerships and investments in R&D are expected to fuel innovation and drive revenue growth.

Industrial

Expected Growth: 2.5%

Varex Imaging Corporation's Industrial segment growth of 2.5% is driven by increasing demand for digital X-ray detectors and imaging components in non-medical applications, such as security screening and industrial inspection. Additionally, growing adoption of automation and robotics in manufacturing is fueling demand for Varex's imaging solutions.

7. Detailed Products

Digital Detectors

Varex Imaging Corporation offers a range of digital detectors for medical imaging applications, including digital radiography, mammography, and fluoroscopy.

Analogic X-ray Tubes

Varex Imaging Corporation designs and manufactures analogic X-ray tubes for medical imaging applications, including radiography, fluoroscopy, and CT scanners.

Linear Accelerator Components

Varex Imaging Corporation provides linear accelerator components, including klystrons, modulators, and magnet assemblies, for radiation therapy and cancer treatment.

Mammography Tubes

Varex Imaging Corporation designs and manufactures specialized X-ray tubes for mammography applications, providing high-quality images for breast cancer screening and diagnosis.

CT Tubes

Varex Imaging Corporation offers a range of CT tubes for computed tomography scanners, providing high-quality images for diagnostic imaging.

Radiation Therapy Components

Varex Imaging Corporation provides radiation therapy components, including electron accelerators and beam delivery systems, for cancer treatment.

8. Varex Imaging Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Varex Imaging Corporation is medium due to the presence of alternative medical imaging technologies such as MRI and CT scans.

Bargaining Power Of Customers

The bargaining power of customers for Varex Imaging Corporation is low due to the specialized nature of medical imaging equipment and the lack of price sensitivity among healthcare providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Varex Imaging Corporation is medium due to the presence of multiple suppliers of components and materials, but the company's dependence on a few key suppliers.

Threat Of New Entrants

The threat of new entrants for Varex Imaging Corporation is low due to the high barriers to entry in the medical imaging industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Varex Imaging Corporation is high due to the presence of established competitors such as GE Healthcare and Siemens Healthineers, and the ongoing competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 45.27%
Debt Cost 4.01%
Equity Weight 54.73%
Equity Cost 7.54%
WACC 5.94%
Leverage 82.70%

11. Quality Control: Varex Imaging Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
iCAD

A-Score: 4.7/10

Value: 7.0

Growth: 3.1

Quality: 4.5

Yield: 0.0

Momentum: 10.0

Volatility: 3.7

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TriSalus Life Sciences

A-Score: 4.4/10

Value: 8.4

Growth: 4.2

Quality: 6.0

Yield: 0.0

Momentum: 6.0

Volatility: 2.0

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OrthoPediatrics

A-Score: 3.8/10

Value: 8.4

Growth: 4.0

Quality: 5.2

Yield: 0.0

Momentum: 1.5

Volatility: 4.0

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Varex Imaging

A-Score: 3.6/10

Value: 8.1

Growth: 1.3

Quality: 2.8

Yield: 0.0

Momentum: 6.5

Volatility: 3.0

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Anika Therapeutics

A-Score: 2.8/10

Value: 8.8

Growth: 1.3

Quality: 3.4

Yield: 0.0

Momentum: 0.0

Volatility: 3.3

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Iridex

A-Score: 2.6/10

Value: 8.4

Growth: 1.8

Quality: 3.6

Yield: 0.0

Momentum: 0.5

Volatility: 1.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.55$

Current Price

11.55$

Potential

-0.00%

Expected Cash-Flows