Varex Imaging (VREX) AI Stock Analysis

• Market Cap: $573.46M
• Dividend Yield: N/A
• Average Volume (3M): 297.70K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.17
• 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: 1.09
• Enterprise Value/Revenue: 0.76
• Enterprise Value/Gross Profit: 2.23
• Enterprise Value/Ebitda: -72.52
• 1Y Price Target: $18.67
• Price Target Upside: 36.48% 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: $13.50 ▼(-1.32% Downside)

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

Revenue and Industrial Segment Strength

Sustained top-line growth, including an 11% Q4 rise and full-year revenue up 4% to $845M, indicates durable OEM & end-market demand. The record industrial quarter diversifies revenue mix, reducing reliance on any single end market and supporting steadier long-term cash flows.

Improving Non-GAAP Margins and EBITDA

Significant non-GAAP EBITDA expansion and a fourth-quarter gross margin improvement to ~34% reflect operational leverage and mix improvement. These durable margin gains increase the chance of converting revenue growth into sustainable operating cash generation if cost discipline and higher-value product mix persist.

Low Leverage and Balance Sheet Flexibility

Very low leverage and a moderate equity ratio (≈42.7%) provide financial flexibility to fund R&D, expand manufacturing (e.g., India ramp), and absorb cyclical demand. Strong balance-sheet headroom supports multi-quarter investments without immediate refinancing risk.

Negative Factors

Goodwill Impairment Indicates Asset Strain

A large goodwill write-down signals prior acquisitions or asset valuations are impaired, shrinking equity and complicating recovery to GAAP profitability. This structural hit can limit acquisition optionality, pressure reported returns, and necessitate sustained operational improvement to rebuild book value.

Ongoing Negative Profitability and Returns

Persistent negative margins and returns (ROE reported negative) indicate the business still struggles to convert revenue into consistent GAAP profits. Even with revenue growth, failing to restore positive operating margins over multiple quarters hampers reinvestment capacity and long-run shareholder returns.

Declining Free Cash Flow and Cash Reserves

A near‑50% drop in free cash flow and a material reduction in cash balances over the year restricts flexibility to fund manufacturing scale-up or R&D without using reserves or raising capital. Lower FCF durability elevates execution risk on multi-quarter strategic investments.

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 shows mixed financial performance. Revenue growth is positive, but profitability is a concern with negative margins. The balance sheet indicates improved leverage, yet challenges persist in generating positive returns. Cash flow is positive, but declining free cash flow growth is worrisome.

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	TTM	Dec 2025	Dec 2025	Dec 2024	Dec 2023	Dec 2022
Income Statement
Total Revenue	821.40M	―	844.60M	811.00M	893.40M	859.40M
Gross Profit	279.80M	―	290.50M	256.90M	290.30M	283.50M
EBITDA	-8.60M	―	3.50M	62.90M	94.70M	114.50M
Net Income	-132.50M	―	-69.90M	-47.70M	48.20M	30.30M
Balance Sheet
Total Assets	1.07B	―	1.11B	1.22B	1.25B	1.18B
Cash, Cash Equivalents and Short-Term Investments	152.60M	―	155.10M	200.50M	193.90M	89.40M
Total Debt	396.90M	―	401.90M	470.40M	469.80M	436.40M
Total Liabilities	603.90M	―	620.80M	667.80M	668.60M	637.70M
Stockholders Equity	455.30M	―	472.60M	535.10M	567.70M	533.40M
Cash Flow
Free Cash Flow	36.40M	―	18.80M	20.40M	87.70M	-4.40M
Operating Cash Flow	59.70M	―	41.70M	47.30M	108.40M	16.90M
Investing Cash Flow	-3.00M	―	10.30M	-27.50M	-44.90M	-48.40M
Financing Cash Flow	-76.20M	―	-75.90M	-3.30M	-200.00K	-23.80M

Varex Imaging Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 13.68
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 13.68 is above the 20-day moving average (MA) of 12.33, above the 50-day MA of 11.88, and above the 200-day MA of 10.08, indicating a bullish trend. The MACD of 0.41 indicates Negative momentum. The RSI at 71.24 is Negative, neither overbought nor oversold. The STOCH value of 84.58 is Negative, 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	$640.59M	68.92	4.97%	―	1.58%	―
DCTH	61 Neutral	$366.56M	1,206.98	1.94%	―	251.54%	―
BFLY	58 Neutral	$1.25B	-14.79	-41.42%	―	16.04%	28.91%
SIBN	57 Neutral	$756.74M	-34.12	-12.91%	―	23.27%	43.90%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
VREX	50 Neutral	$573.46M	-7.92	-13.95%	―	4.14%	-45.29%
NNOX	47 Neutral	$192.56M	-3.42	-34.75%	―	15.19%	-3.32%