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.
VAREX IMAGING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(In millions, except for per share amounts) | July 3, 2026 | July 4, 2025 | July 3, 2026 | July 4, 2025 | |||||||||||
Revenues, net | |||||||||||||||
Medical | $ | 134.0 | $ | 142.1 | $ | 435.0 | $ | 440.5 | |||||||
Industrial | 76.5 | 60.9 | 201.1 | 175.2 | |||||||||||
Total revenues | 210.5 | 203.0 | 636.1 | 615.7 | |||||||||||
Cost of revenues | |||||||||||||||
Medical | 85.7 | 95.4 | 290.1 | 288.4 | |||||||||||
Industrial | 48.1 | 40.1 | 126.9 | 114.6 | |||||||||||
Total cost of revenues | 133.8 | 135.5 | 417.0 | 403.0 | |||||||||||
Gross profit | |||||||||||||||
Medical | 48.3 | 46.7 | 144.9 | 152.1 | |||||||||||
Industrial | 28.4 | 20.8 | 74.2 | 60.6 | |||||||||||
Total gross profit | 76.7 | 67.5 | 219.1 | 212.7 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 23.3 | 21.4 | 67.2 | 66.9 | |||||||||||
Selling, general, and administrative | 30.6 | 32.9 | 99.3 | 99.3 | |||||||||||
Impairment of goodwill | — | 93.9 | — | 93.9 | |||||||||||
Total operating expenses | 53.9 | 148.2 | 166.5 | 260.1 | |||||||||||
Operating income (loss) | 22.8 | (80.7 | ) | 52.6 | (47.4 | ) | |||||||||
Interest income | 0.9 | 2.5 | 1.9 | 7.5 | |||||||||||
Interest expense | (5.8 | ) | (9.4 | ) | (30.9 | ) | (27.6 | ) | |||||||
Other (expense) income, net | (1.7 | ) | 1.0 | (10.0 | ) | (5.8 | ) | ||||||||
Interest and other expense, net | (6.6 | ) | (5.9 | ) | (39.0 | ) | (25.9 | ) | |||||||
Income (loss) before taxes | 16.2 | (86.6 | ) | 13.6 | (73.3 | ) | |||||||||
Income tax expense | 0.3 | 2.5 | 3.3 | 8.8 | |||||||||||
Net income (loss) | 15.9 | (89.1 | ) | 10.3 | (82.1 | ) | |||||||||
Less: Net income attributable to noncontrolling interests | 0.2 | — | 0.4 | 0.4 | |||||||||||
Net income (loss) attributable to Varex | $ | 15.7 | $ | (89.1 | ) | $ | 9.9 | $ | (82.5 | ) | |||||
Net income (loss) per common share attributable to Varex | |||||||||||||||
Basic | $ | 0.37 | $ | (2.15 | ) | $ | 0.24 | $ | (2.00 | ) | |||||
Diluted | $ | 0.37 | $ | (2.15 | ) | $ | 0.23 | $ | (2.00 | ) | |||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 42.1 | 41.5 | 42.0 | 41.3 | |||||||||||
Diluted | 42.6 | 41.5 | 42.5 | 41.3 |
VAREX IMAGING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||
(In millions, except share and per share amounts) | July 3, 2026 | October 3, 2025 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 99.2 | $ | 145.0 | |||
Marketable securities | 0.0 | 10.1 | |||||
Accounts receivable, net of allowance for credit losses of $1.9 million and $2.1 million at July 3, 2026 and October 3, 2025, respectively | 144.7 | 156.6 | |||||
Inventories, net | 347.1 | 299.4 | |||||
Prepaid expenses and other current assets | 42.1 | 30.7 | |||||
Total current assets | 633.1 | 641.8 | |||||
Property, plant, and equipment, net | 169.3 | 157.8 | |||||
Goodwill | 197.6 | 198.4 | |||||
Intangible assets, net | 12.4 | 14.0 | |||||
Investments in privately-held companies | 20.2 | 24.5 | |||||
Deferred tax assets | 2.0 | 2.9 | |||||
Operating lease assets | 27.7 | 29.4 | |||||
Other assets | 37.7 | 38.6 | |||||
Total assets | $ | 1,100.0 | $ | 1,107.4 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 83.5 | $ | 69.9 | |||
Accrued liabilities and other current liabilities | 72.6 | 98.4 | |||||
Current operating lease liabilities | 4.5 | 4.4 | |||||
Current maturities of long-term debt, net | 18.2 | 1.5 | |||||
Deferred revenues | 8.6 | 13.0 | |||||
Total current liabilities | 187.4 | 187.2 | |||||
Long-term debt, net | 328.9 | 366.0 | |||||
Deferred tax liabilities | 4.5 | 5.5 | |||||
Operating lease liabilities | 22.0 | 24.0 | |||||
Other long-term liabilities | 46.7 | 38.1 | |||||
Total liabilities | 589.5 | 620.8 | |||||
Stockholders' equity: | |||||||
Preferred stock, $0.01 par value: 20,000,000 shares authorized, none issued | — | — | |||||
Common stock, $0.01 par value: 150,000,000 shares authorized | |||||||
Shares issued and outstanding: 42,147,925 and 41,689,672 at July 3, 2026 and October 3, 2025, respectively. | 0.4 | 0.4 | |||||
Additional paid-in capital | 495.1 | 483.3 | |||||
Accumulated other comprehensive loss | (2.9 | ) | (5.2 | ) | |||
Retained earnings (accumulated deficit) | 4.0 | (5.9 | ) | ||||
Total Varex stockholders' equity | 496.6 | 472.6 | |||||
Noncontrolling interests | 13.9 | 14.0 | |||||
Total stockholders' equity | 510.5 | 486.6 | |||||
Total liabilities and stockholders' equity | $ | 1,100.0 | $ | 1,107.4 |
VAREX IMAGING CORPORATION RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(In millions, except per share amounts) | July 3, 2026 | July 4, 2025 | July 3, 2026 | July 4, 2025 | |||||||||||
GROSS PROFIT RECONCILIATION | |||||||||||||||
Revenues, net | $ | 210.5 | $ | 203.0 | $ | 636.1 | $ | 615.7 | |||||||
Gross profit | 76.7 | 67.5 | 219.1 | 212.7 | |||||||||||
Amortization of intangible assets | 0.5 | 0.5 | 1.7 | 1.6 | |||||||||||
Non-GAAP gross profit | $ | 77.2 | $ | 68.0 | $ | 220.8 | $ | 214.3 | |||||||
Gross margin % | 36.4 | % | 33.3 | % | 34.4 | % | 34.5 | % | |||||||
Non-GAAP gross margin % | 36.7 | % | 33.5 | % | 34.7 | % | 34.8 | % | |||||||
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE RECONCILIATION | |||||||||||||||
Selling, general, and administrative | $ | 30.6 | $ | 32.9 | $ | 99.3 | $ | 99.3 | |||||||
Amortization of intangible assets | 0.5 | 0.5 | 1.4 | 1.3 | |||||||||||
Restructuring charges | — | 0.4 | 0.2 | 2.1 | |||||||||||
Non-ordinary course litigation | 0.6 | 1.7 | 6.7 | 5.1 | |||||||||||
Other non-operational costs | 0.1 | 0.3 | 0.1 | 0.3 | |||||||||||
Non-GAAP selling, general, and administrative expense | $ | 29.4 | $ | 30.0 | $ | 90.9 | $ | 90.5 | |||||||
OPERATING EXPENSE RECONCILIATION | |||||||||||||||
Total operating expenses | $ | 53.9 | $ | 148.2 | $ | 166.5 | $ | 260.1 | |||||||
Amortization of intangible assets | 0.5 | 0.5 | 1.4 | 1.3 | |||||||||||
Restructuring charges | — | 0.4 | 0.2 | 2.1 | |||||||||||
Impairment of goodwill | — | 93.9 | — | 93.9 | |||||||||||
Non-ordinary course litigation | 0.6 | 1.7 | 6.7 | 5.1 | |||||||||||
Other non-operational costs | 0.1 | 0.3 | 0.1 | 0.3 | |||||||||||
Non-GAAP operating expense | $ | 52.7 | $ | 51.4 | $ | 158.1 | $ | 157.4 | |||||||
VAREX IMAGING CORPORATION RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL MEASURES (Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(In millions, except per share amounts) | July 3, 2026 | July 4, 2025 | July 3, 2026 | July 4, 2025 | |||||||||||
OPERATING INCOME (LOSS) RECONCILIATION | |||||||||||||||
Operating income (loss) | $ | 22.8 | $ | (80.7 | ) | $ | 52.6 | $ | (47.4 | ) | |||||
Amortization of intangible assets (includes amortization impacts to cost of revenues) | 1.0 | 1.0 | 3.1 | 2.9 | |||||||||||
Restructuring charges (includes restructuring impact to cost of revenues) | — | ... |