Varex Imaging Corp (VREX)

Business Description

Varex Imaging Corporation is a global leader in the design, manufacture, and innovation of X-ray imaging components and solutions. The company provides critical products for medical diagnostics, industrial inspection, and security applications, serving a diverse customer base that includes original equipment manufacturers (OEMs), independent service companies, and end-users. Varex's offerings include X-ray tubes, digital detectors, software, and other imaging accessories used in a wide range of industries.

Medical Segment - Develops and manufactures X-ray imaging components such as X-ray tubes, digital detectors, ionization chambers, high voltage connectors, collimators, and image-processing software. These products are used in medical imaging applications, including CT, mammography, oncology, cardiac imaging, surgery, dental imaging, and diagnostic radiography.
Industrial Segment - Produces X-ray imaging products like Linatron® X-ray linear accelerators, X-ray tubes, digital detectors, and proprietary image-processing software. These are utilized in security applications such as cargo and baggage screening, as well as in nondestructive testing, irradiation, and inspection processes.

Key Metrics

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Leadership

Name	Position	External Roles	Short Bio
Sunny S. Sanyal ExecutiveBoard	President, CEO, and Director	None	CEO since 2017; previously held leadership roles at Varian Medical Systems, T-System Inc., and McKesson Provider Technologies.	View Report →
Andrew J. Hartmann Executive	SVP and General Manager - Detectors	None	Joined VREX in 2018; previously held leadership roles at Carestream Health and Siemens Medical Solutions.
Karen L. Aranki Executive	Chief Human Resources Officer	None	CHRO since 2023; previously Global VP of HR at Honeywell Aerospace; Six Sigma Green Belt certified.
Kimberley E. Honeysett Executive	Chief Legal Officer, General Counsel, and Corporate Secretary	None	Chief Legal Officer since 2022; joined VREX in 2017; previously VP and Assistant General Counsel at Varian.
Mark S. Jonaitis Executive	SVP and General Manager - X-Ray Sources	None	Joined VREX in 2017; previously held senior roles at Varian Medical Systems since 1983.
Shubham Maheshwari Executive	Chief Financial Officer (CFO)	None	CFO since 2020; previously CFO at SiFive, Inc. and Veeco Instruments Inc.; MBA from Wharton.
Christine A. Tsingos Board	Director	Board Member at Onto Innovation Inc. and Envista Holdings Corporation	Director since 2017; former CFO of Bio-Rad Laboratories; extensive expertise in finance and operations; Bay Area CFO of the Year in 2010.
Jay K. Kunkel Board	Director	None	Director since 2017; former President Asia at Tenneco Inc. and Lear Corporation; extensive experience in automotive and manufacturing.
Jocelyn D. Chertoff, M.D. Board	Director	Chair of Diagnostic Radiology at Dartmouth Hitchcock Medical Center	Director since 2017; practicing radiologist since 1991; provides end-user perspective for VREX's imaging technology.
Kathleen L. Bardwell Board	Director	None	Director since 2022; former SVP of Regulatory Affairs & Compliance at STERIS; CPA and CRMA certified.
Timothy E. Guertin Board	Director	Board Member at Teradyne, Inc.; Trustee at Radiation Oncology Institute	Director since 2020; former CEO of Varian Medical Systems; extensive experience in healthcare and technology.
Walter M. Rosebrough, Jr. Board	Chair of the Board	CEO Emeritus and Senior Advisor at STERIS plc; Board Member at Magna International	Chair since 2023; former CEO of STERIS plc; extensive leadership experience in healthcare and industrial markets.

Questions to Ask Management

Given the unscheduled absences in your U.S. facilities during the holidays that impacted your Q1 revenues by approximately $4-5 million , what specific measures are you implementing to prevent such labor-related disruptions in the future, and how confident are you that you can fulfill demand without similar issues in upcoming quarters?
You mentioned that the destocking phenomenon among your Medical customers is largely behind you , yet you also noted that the benefit from improved order rates will mostly be realized outside of Q2 due to lead times. Can you elaborate on the timing of this demand recovery and how it will impact your revenue growth in the second half of the fiscal year?
With China contributing 18% of your Q1 revenues and acknowledging that the market has not yet fully recovered , how are you adjusting your strategies to mitigate risks associated with potential tariffs or trade policy changes , and what steps are you taking to capitalize on any future stimulus initiatives in China?
In your cargo inspection business, you indicated that the margin profile for equipment sales is currently below corporate gross margin levels , and it becomes accretive only when reaching a run rate of $10-15 million per quarter. Given the investments needed and current revenue levels, when do you expect this segment to break even, and what are the key challenges you foresee in scaling this business?
Your operating expenses increased in Q1 due to investments in a joint venture and costs associated with your India expansion , impacting your overall financial performance without significant revenue contribution yet. How are you balancing these upfront costs with the need to improve profitability, and when do you anticipate these investments to start yielding meaningful returns?

Competitors

Competitors mentioned in the company's latest 10K filing.

Company	Description
Canon	Competes in the X-ray tube market by selling to smaller OEMs and other manufacturers, despite having in-house X-ray tube production capabilities.
Philips Healthcare	Competes in the X-ray tube market by selling to smaller OEMs and other manufacturers, despite having in-house X-ray tube production capabilities.
Trixell S.A.S.	Primarily competes in the digital flat panel detector business.
Vieworks Co., Ltd.	Primarily competes in the digital flat panel detector business.
Hamamatsu Corporation	Primarily competes in the digital flat panel detector business.
iRay Technology (Shanghai) Limited	Primarily competes in the digital flat panel detector business.
Jiangsu CareRay Medical Systems Co., Ltd.	Primarily competes in the digital flat panel detector business.
Teledyne Technologies Inc	Competes in the low-energy sector of the industrial segment, providing low-energy X-ray tubes and digital detectors for specialized and niche industrial applications.
Comet AG	Competes in the low-energy sector of the industrial segment, providing low-energy X-ray tubes and digital detectors for specialized and niche industrial applications.
Nuctech Company Limited	Competes in the high-energy sector of the industrial segment, providing X-ray sources for applications such as cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections.
Siemens AG	Competes in the high-energy sector of the industrial segment, providing X-ray sources for applications such as cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections.
ETM Electromatic Inc.	Competes in the high-energy sector of the industrial segment, providing X-ray sources for applications such as cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections.
PMB Alcen	Competes in the high-energy sector of the industrial segment, providing X-ray sources for applications such as cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections.
Rapiscan	Competes in the high-energy sector of the industrial segment and also competes for cargo system sales.
Smiths	Competes in the high-energy sector of the industrial segment and also competes for cargo system sales.
Leidos Holdings Inc	Competes in the high-energy sector of the industrial segment and also competes for cargo system sales.
Astrophysics	Competes in the high-energy sector of the industrial segment and also competes for cargo system sales.

Customer Concentration

Customer	Relationship	Segment	Details
Canon Medical Systems Corporation	Supplies X-ray imaging components for Canon's medical imaging systems	Medical	Contributed 18% of total revenue in FY2024 , 17% in FY2023 , 17% in FY2022 , and accounted for 9.5% of accounts receivable as of September 27, 2024.

Recent Mergers & Acquisitions

Notable M&A activity and strategic investments in the past 3 years.

Company	Year	Details
MeVis Breastcare	2024	In 2024, the company increased its ownership in MeVis Breastcare from 37.6% to 87.1% by acquiring additional shares for $0.9 million in cash, which was recorded as a step acquisition under ASC 805. The deal resulted in a remeasurement gain of $0.9 million, a bargain purchase gain of $1.2 million, and featured key assets (cash, accounts receivable, intangible assets) and a noncontrolling interest of $0.7 million, with a total consideration of $2.9 million**.