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Varex Imaging Corporation (VREX)
NASDAQ:VREX
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Varex Imaging (VREX) AI Stock Analysis

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VREX

Varex Imaging

(NASDAQ:VREX)

Rating:58Neutral
Price Target:
$11.00
▼(-5.66% Downside)
Varex Imaging's overall stock score reflects significant financial challenges, with declining revenues and profitability being the most impactful factors. Despite strong technical indicators suggesting short-term bullish momentum, the negative valuation metrics and mixed earnings call results highlight ongoing risks. The company's ability to address these financial and operational challenges will be crucial for future performance.

Varex Imaging (VREX) vs. SPDR S&P 500 ETF (SPY)

Varex Imaging Business Overview & Revenue Model

Company DescriptionVarex Imaging Corporation (VREX) is a leading provider of imaging components and solutions for medical and industrial applications. The company specializes in the design and manufacture of X-ray imaging systems, including digital detectors, high-voltage X-ray tubes, and image processing software. Varex operates primarily in the healthcare sector, supplying hospitals and medical facilities with advanced imaging technology, while also serving the industrial sector with X-ray solutions for materials testing and inspection.
How the Company Makes MoneyVarex Imaging generates revenue primarily through the sale of its imaging products and systems. Key revenue streams include the sale of X-ray tubes, flat panel detectors, and related imaging components, which are utilized in medical imaging equipment and industrial applications. Additionally, the company benefits from ongoing service and support contracts, which provide a steady income stream. Varex has established significant partnerships with major medical equipment manufacturers, allowing them to integrate their components into larger systems, which enhances their market reach and contributes to revenue growth. The company also invests in research and development to innovate and expand its product offerings, further driving revenue through new technology introductions.

Varex Imaging Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q3-2025)
|
% Change Since: |
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in the Industrial segment, significant debt reduction, and better-than-expected revenue and gross margins. However, these positives were offset by a year-over-year decline in total revenue, high operating expenses due to a goodwill impairment charge, and a decrease in cash position. The progress in photon counting technology and strong demand in cargo systems are promising, but the challenges in the Medical segment and APAC region weigh on the overall outlook.
Q3-2025 Updates
Positive Updates
Revenue and Guidance Exceed Expectations
Third quarter revenue of $203 million was above the high end of guidance, with continued strength in the Industrial segment and better-than-expected performance in China.
Debt Reduction
Paid off $200 million convertible notes, reducing overall debt burden and simplifying capital structure.
Gross Margin Improvement
Non-GAAP gross margin of 34%, up 100 basis points year-over-year, benefited from higher volume and favorable product sales mix.
Photon Counting Progress
Progress with OEMs integrating photon counting technology into their systems, with ongoing projects expected to contribute significantly by 2029.
Strong Performance in Industrial Segment
Demand for security screening and cargo inspection components drove growth; secured new orders worth $17 million for cargo inspection systems.
Negative Updates
Year-over-Year Revenue Decline
Total revenue down 3% year-over-year with Medical segment down 4%.
High Operating Expenses
Operating expenses increased by $90 million compared to the third quarter of fiscal '24, primarily due to a $94 million non-cash goodwill impairment charge.
Decline in Cash Position
Ending third quarter with $153 million in cash and equivalents, down $73 million from the previous quarter due to debt repayment.
APAC Revenue Decline
APAC revenues decreased 8% year-over-year.
Company Guidance
During Varex Imaging Corporation's third quarter fiscal year 2025 earnings call, the company reported a revenue of $203 million, surpassing the high end of their guidance. The Industrial segment saw a 1% year-over-year increase, while the Medical segment experienced a 4% decrease. Non-GAAP gross margin was reported at 34%, which was 100 basis points higher than the previous year. Non-GAAP earnings per share rose by $0.04 to $0.18. The company also paid off $200 million in convertible notes, reducing its debt burden. Cash, cash equivalents, and marketable securities totaled $153 million at the end of the quarter, down by $73 million from the prior quarter. Varex's revenue guidance for the fourth quarter anticipates a range of $210 million to $230 million, with a non-GAAP gross margin expected between 32% and 33%. The company highlighted strong demand in China, where sales increased by 4% year-over-year, and noted that the reduction in tariffs has facilitated continued shipment fulfillment to Chinese customers.

Varex Imaging Financial Statement Overview

Summary
Varex Imaging is facing significant financial challenges, with declining revenues and profitability impacting its overall financial health. The income statement shows a concerning trend of revenue contraction and operational inefficiencies. The balance sheet reflects a reduction in leverage, but profitability remains a key issue. Cash flow improvements are noted, but free cash flow generation is still weak. The company needs to address these challenges to stabilize and improve its financial performance.
Income Statement
45
Neutral
Varex Imaging's income statement reveals significant challenges. The company has experienced a sharp decline in revenue growth, with a TTM revenue growth rate of -73.7%, indicating a substantial contraction in sales. The net profit margin has also deteriorated to -16.13%, reflecting significant losses. While the gross profit margin remains relatively stable at 34.06%, the negative EBIT and EBITDA margins highlight operational inefficiencies and cost management issues. Overall, the income statement suggests a need for strategic improvements to reverse the declining trend.
Balance Sheet
60
Neutral
The balance sheet shows a mixed picture. The debt-to-equity ratio has improved to 0.054, indicating a reduction in leverage, which is a positive development. However, the return on equity is negative at -25.48%, reflecting the company's inability to generate profits from its equity base. The equity ratio stands at a healthy level, suggesting a strong capital structure. Despite the improvements in leverage, the negative ROE indicates ongoing profitability challenges.
Cash Flow
55
Neutral
The cash flow statement highlights some positive aspects, such as an increase in operating cash flow to $59.6 million, providing a better coverage ratio of 0.34. However, free cash flow growth is negative, and the free cash flow to net income ratio is 0.61, indicating that the company is not effectively converting its earnings into free cash flow. While there are improvements in cash flow from operations, the overall cash flow position remains under pressure due to declining free cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue821.40M811.00M893.40M859.40M818.10M738.30M
Gross Profit279.80M256.90M290.30M283.50M271.50M190.20M
EBITDA-18.20M62.90M94.70M119.10M109.30M-1.70M
Net Income-132.50M-47.70M48.20M30.30M17.40M-57.90M
Balance Sheet
Total Assets1.07B1.22B1.25B1.18B1.15B1.14B
Cash, Cash Equivalents and Short-Term Investments152.60M200.50M193.90M89.40M144.60M100.60M
Total Debt24.80M470.40M469.50M436.40M459.40M484.50M
Total Liabilities603.90M667.80M668.60M637.70M651.00M673.70M
Stockholders Equity455.30M535.10M567.70M533.40M483.30M451.70M
Cash Flow
Free Cash Flow36.40M20.40M87.70M-4.40M77.50M-10.30M
Operating Cash Flow59.60M47.30M108.40M16.90M92.60M13.20M
Investing Cash Flow-3.00M-27.50M-44.90M-48.40M-16.20M-26.90M
Financing Cash Flow-76.10M-3.30M-200.00K-23.80M-32.30M83.60M

Varex Imaging Technical Analysis

Technical Analysis Sentiment
Positive
Last Price11.66
Price Trends
50DMA
9.10
Positive
100DMA
8.54
Positive
200DMA
11.05
Positive
Market Momentum
MACD
0.79
Positive
RSI
69.38
Neutral
STOCH
53.28
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 11.66 is above the 20-day moving average (MA) of 10.89, above the 50-day MA of 9.10, and above the 200-day MA of 11.05, indicating a bullish trend. The MACD of 0.79 indicates Positive momentum. The RSI at 69.38 is Neutral, neither overbought nor oversold. The STOCH value of 53.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VREX.

Varex Imaging Risk Analysis

Varex Imaging disclosed 30 risk factors in its most recent earnings report. Varex Imaging reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Varex Imaging Peers Comparison

Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$264.13M20.0610.79%17.11%45.34%
58
Neutral
$483.89M-25.57%-1.36%-479.49%
51
Neutral
$7.91B-0.36-41.71%2.23%23.45%-1.86%
47
Neutral
$257.32M271.41%45.50%53.07%
46
Neutral
$369.05M-102.61%5.94%25.16%
43
Neutral
$490.98M-15.36%-0.02%-1196.44%
40
Underperform
$237.19M-32.87%17.36%9.38%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VREX
Varex Imaging
11.66
-0.31
-2.59%
SRDX
SurModics
33.39
-5.61
-14.38%
SENS
Senseonics Holdings
0.45
0.09
25.00%
VMD
Viemed Healthcare
6.82
-0.77
-10.14%
NNOX
Nano-X Imaging
3.72
-2.26
-37.79%
TLSI
TriSalus Life Sciences
5.15
-0.07
-1.34%

Varex Imaging Corporate Events

Legal ProceedingsBusiness Operations and StrategyRegulatory Filings and Compliance
Varex Imaging Faces Anti-Dumping Investigation in China
Negative
Apr 4, 2025

Varex Imaging Corporation is aware of an anti-dumping investigation initiated by China’s Ministry of Commerce concerning imports of certain medical CT X-ray tubes from the United States and India. Although the company has not received formal notice, it plans to cooperate if notified and believes it complies with competition laws, highlighting potential impacts on its operations and market positioning.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 14, 2025