Varex Imaging (VREX) AI Stock Analysis

• Market Cap: $583.94M
• Dividend Yield: N/A
• Average Volume (3M): 297.70K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.18
• Revenue Growth: 4.14%
• EPS Growth: -45.29%
• Country: US
• Employees: 2,300
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Devices
• EPS (TTM): 0.37
• Shares Outstanding: 41,919,434
• 10 Day Avg. Volume: 224,850
• 30 Day Avg. Volume: 297,697
• PEG Ratio: -0.16
• Price to Book (P/B): 1.05
• Price to Sales (P/S): 0.59
• P/FCF Ratio: 26.29
• Enterprise Value/Market Cap: 1.43
• Enterprise Value/Revenue: 0.99
• Enterprise Value/Gross Profit: 2.87
• Enterprise Value/Ebitda: 260.80
• 1Y Price Target: $18.67
• Price Target Upside: 34.03% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 50 Neutral
• Price Target: $14.00 ▲(0.50% Upside)

Varex Imaging's overall stock score reflects a company in transition. Financial performance is mixed, with revenue growth but ongoing profitability challenges. Technical analysis suggests a neutral market sentiment, while valuation metrics are weak due to negative earnings. The earnings call provided some positive insights, but these were not enough to significantly boost the overall score.

Positive Factors

Industrial segment growth

A record industrial quarter and 25% YoY growth indicate durable demand diversification beyond medical imaging. A larger industrial revenue share reduces reliance on one end market, stabilizes cyclical swings, and gives Varex recurring OEM and replacement revenue streams to support steady cash generation over time.

Improving non-GAAP gross margins

A sustained gross margin improvement of +130 bps reflects better mix, pricing or cost control. Higher gross margins, if maintained, bolster the company's ability to fund R&D and capacity builds, improve free cash flow resilience, and support investments that reinforce competitive position in imaging components.

Technology and capacity expansion

Advancing photon-counting CT and expanding manufacturing in India represent structural investments in differentiated technology and lower-cost capacity. These moves can create product leadership, shorten time-to-market for OEMs, and improve unit economics long-term, strengthening Varex's competitive moat.

Negative Factors

Goodwill impairment

A $94M goodwill impairment signals that prior expected cash flows from acquisitions fell short, reducing book equity and highlighting integration or demand shortfalls. Such charges reflect longer-term challenges in realizing synergies and can constrain management credibility and capital allocation flexibility.

Declining cash reserves

A material drop in cash reduces the liquidity buffer available for capex, R&D, or opportunistic M&A. While debt retirement improves leverage, the smaller cash cushion can limit runway for execution risk during product ramps or cyclical slowdowns, pressuring funding options for strategic initiatives.

Persistent negative profitability

Negative net and operating margins indicate the company remains loss-making on GAAP terms despite revenue growth. Sustained profitability shortfalls can impede internal funding for growth, raise refinancing risk, and mean management must deliver durable margin expansion to achieve self-sustaining cash generation.

Varex Imaging Business Overview & Revenue Model

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.

How the Company Makes Money

Varex Imaging generates revenue primarily through the sale of its imaging components and systems, which include X-ray tubes and digital detectors. The company operates on a B2B model, supplying its products to original equipment manufacturers (OEMs) and end-users in various sectors. Key revenue streams come from the sale of both new imaging systems and replacement parts, as well as service and maintenance contracts for existing equipment. Varex also benefits from strategic partnerships with major healthcare providers and technology firms, which help expand its market reach and enhance product offerings. Additionally, the company invests in research and development to innovate new products, ensuring it remains competitive and can tap into emerging markets.

Varex Imaging Financial Statement Overview

Summary

Varex Imaging is experiencing mixed financial performance. Revenue growth is evident, but profitability remains a concern with negative margins. The balance sheet shows improved leverage, yet the company struggles with generating positive returns. Cash flow generation is positive, but declining free cash flow growth is a concern. Overall, the company is in a transitional phase, working to stabilize and improve its financial health.

Income Statement

Varex Imaging has shown some improvement in revenue growth, with a 2.82% increase in the latest year. However, the company is struggling with profitability, as indicated by a negative net profit margin of -8.32% and a negative EBIT margin. The gross profit margin is relatively stable at 34.39%, but the negative EBITDA margin highlights ongoing operational challenges.

Balance Sheet

The company's debt-to-equity ratio has improved significantly to 0.06, indicating reduced leverage. However, the return on equity is negative at -14.88%, reflecting ongoing losses. The equity ratio stands at 42.68%, suggesting a moderate level of financial stability.

Cash Flow

Operating cash flow remains positive, but the free cash flow has decreased by 48.35%. The operating cash flow to net income ratio is 0.22, indicating some cash flow generation relative to net losses. The free cash flow to net income ratio is 0.45, showing some ability to generate cash despite negative earnings.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	844.60M	811.00M	893.40M	859.40M	818.10M
Gross Profit	290.50M	256.90M	290.30M	283.50M	271.50M
EBITDA	3.50M	62.90M	94.70M	114.50M	104.50M
Net Income	-69.90M	-47.70M	48.20M	30.30M	17.40M
Balance Sheet
Total Assets	1.11B	1.22B	1.25B	1.18B	1.15B
Cash, Cash Equivalents and Short-Term Investments	155.10M	200.50M	193.90M	89.40M	144.60M
Total Debt	401.90M	470.40M	469.80M	436.40M	459.40M
Total Liabilities	620.80M	667.80M	668.60M	637.70M	651.00M
Stockholders Equity	472.60M	535.10M	567.70M	533.40M	483.30M
Cash Flow
Free Cash Flow	18.80M	20.40M	87.70M	-4.40M	77.50M
Operating Cash Flow	41.70M	47.30M	108.40M	16.90M	92.60M
Investing Cash Flow	10.30M	-27.50M	-44.90M	-48.40M	-16.20M
Financing Cash Flow	-75.90M	-3.30M	-200.00K	-23.80M	-32.30M

Varex Imaging Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 13.93
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VREX, the sentiment is Positive. The current price of 13.93 is above the 20-day moving average (MA) of 13.76, above the 50-day MA of 12.55, and above the 200-day MA of 10.45, indicating a bullish trend. The MACD of 0.43 indicates Positive momentum. The RSI at 60.76 is Neutral, neither overbought nor oversold. The STOCH value of 34.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VREX.

Varex Imaging Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BVS	64 Neutral	$670.38M	73.11	4.97%	―	1.58%	―
DCTH	61 Neutral	$342.54M	1,039.53	1.94%	―	251.54%	―
SIBN	57 Neutral	$686.88M	-30.76	-12.91%	―	23.27%	43.90%
BFLY	54 Neutral	$927.05M	-9.65	-41.42%	―	16.04%	28.91%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
VREX	50 Neutral	$583.94M	-7.98	-13.95%	―	4.14%	-45.29%
NNOX	47 Neutral	$154.30M	-2.58	-34.75%	―	15.19%	-3.32%