Slides
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Making the Invisible Visible 8/7/2025 1Q3 FY25 Earnings PresentationAugust 7, 2025
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Forward Looking Statements / Non-GAAP Measures 2 Forward Looking StatementsThis supplement contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning financial results; earnings guidance; tariffs and trade wars and their impact on our customers; industry or business outlook, including for our business in China; product demand; payoff of our convertible debt; expected future financial results or performance; supply chain and logistics challenges; cost increases and expense management; changes in U.S. and worldwide economic conditions, such as the impact of inflation, and fluctuations in foreign currency exchange rates; geopolitical tensions; customer acceptance of or transition to new products or technologies such as advanced X-ray tube and digital flat panel detector products; growth drivers; future orders, revenues, market share, backlog, earnings or other financial results; and any statements using the terms “assume,” “believe,” “expect,” “anticipate,” “can,” “will,” “should,” “would,” “could,” “estimate,” “expand,” “drive,” “may,” “intend,” “potential,” and “possible” or similar statements are forward-looking statements that involve risks and uncertainties that could cause our actual results and the outcome and timing of certain events to differ materially from those anticipated.While forward-looking statements are based on assumptions and analyses made by the management of Varex that it believes to be reasonable under the circumstances, whether actual results and developments will meet such expectations depends on a number of risk and uncertainties which could cause actual results, performance, and financial condition to differ materially from such expectations. Such risks and uncertainties include: reduction in or loss of business of one or more of our limited OEM customers; changes in import/export regulatory regimes, tariffs, trade wars, and national policies; 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; global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, reactionary import/export regulatory, tariff and trade policy regimes, and other risks associated with international manufacturing, operations and sales;; supply chain disruptions; inability to maintain or defend our intellectual property rights, and the high cost of protecting such rights and defending against infringement claims; disruption of critical information systems or material breaches in the security of such systems; noncompliance with regulations applicable to marketing, manufacturing, labeling, and distributing our products and delays in obtaining regulatory clearances or approvals; limitations imposed by operating and financial restrictions of our debt financing agreements; and the other risks listed from time to time in our filings with the U.S. Securities and Exchange Commission, which by this reference are incorporated herein. Any forward-looking statement made in this presentation speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We assume no obligation to update or revise the forward-looking statements in this presentation because of new information, future events, or otherwise. Non-GAAP MeasuresCertain information provided in this presentation includes financial measurements that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (GAAP). These non-GAAP measures, such as non-GAAP gross margin, non-GAAP operating expense, non-GAAP operating margin, and non-GAAP net earnings per diluted share, should not be considered as alternatives to GAAP measures and may be calculated differently from, and therefore may not be comparable to, similarly titled measures used at other companies. For a reconciliation to the most directly comparable GAAP financial measures, please refer to our Q3FY25 earnings release at www.vareximaging.com and the reconciliation contained at the end of this presentation.
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8/7/2025 3 Q3 FY25 Results Revenue$203M Revenue$203M Non-GAAP Gross Margin134% Non-GAAP Gross Margin134% Non-GAAP EPS1$0.18 Non-GAAP EPS1$0.18 Cash, Cash Equiv., & Mkt. Sec.2$153M Cash, Cash Equiv., & Mkt. Sec.2$153MIndustrial segment strength continuedStrong gross margin despite tariff headwindsPaid off $200M convertible notes on June 21 Non-GAAP. For a reconciliation to the most directly comparable GAAP financial measure please refer to the reconciliation at the end of this supplement.2 Q3 FY25 Cash & cash equivalents ($136M) + Marketable securities ($16M).
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8/7/2025 Q3 FY25 Performance 4 $209$203Q3FY24 Q3FY25Revenue (Y/Y)-3%32%34%Q3FY24 Q3FY25Gross Margin (Non-GAAP; Y/Y)+100bps1$23$29Q3FY24 Q3FY25Adjusted EBITDA (Y/Y)+27%$0.14$0.18Q3FY24 Q3FY25Diluted EPS (Non-GAAP; Y/Y)+29% $226$153Q2FY25 Q3FY25Cash, Cash Equiv. & Mkt. Sec.2(Q/Q)-32%Note: $millions except for per share data1 Gross margin improved ~100bps year-over-year, rounding in the chart makes the change appear greater.2Comparing cash, cash equivalents & marketable securities sequentially vs. Q2FY25Cash used to pay down convertible debt on June 1, 2025
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8/7/2025 Q3 FY25 Sales Performance1 5 CTFluoroscopyOncologyDental MammographyRadiography & OthersIndustrial1Sales performance is Q3FY25 sales compared to five quarter average trend
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Vertically Integrated Cargo Security Systems Provider 8/7/2025 6 Linear Accelerator ACTIS 6 Software Suite Linear Detector ArraysLeveraging Competency as Core Component Supplier to Deliver Cargo Security Systems Direct to End Customer
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8/7/2025 7 Q3 FY25 Revenue DetailsSegment MixGeographic MixQ3 24Q4 24Q1 25Q2 25Q3 25Revenue, $M7066656971Americas7172607270EMEA6868757262APACQ3 24Q4 24Q1 25Q2 25Q3 25Revenue, $M149144145154142Medical6061555961Industrial ($ in millions)($ in millions) $142$61 Medical Industrial $71$70$62 Americas EMEA APAC
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8/7/2025 8 Quarterly Results - GAAP Q3 FY24Q2 FY25Q3 FY25$ in Millions, except per share data$209$213$203Revenue32%36%33%Gross Margin$5828%$5526%$14873%Operating Expenses$94%$2210%($81)(40%)Operating Income$1$7($89)Net Earnings$0.0341.2$0.1751.2($2.15)41.5EPS, dilutedAvg. shares, diluted
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8/7/2025 9 Quarterly Results – Non-GAAP1 Q3 FY24Q2 FY25Q3 FY25$ in Millions, except per share data$209$213$203Revenue32%36%34%Gross Margin (Non-GAAP)$5325%$5124%$5125%Operating Expenses (Non-GAAP)$157%$2612%$178%Operating Income (Non-GAAP)$6$12$8Net Earnings (Non-GAAP)$0.1441.2$0.2651.2$0.1841.5EPS, diluted (Non-GAAP)Avg. shares, diluted1Please see slide 15-19 for a reconciliation of Q3FY25 non-GAAP financials. Prior quarters can be found on our website at www.vareximaging.com/financial-reports
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8/7/2025 10 Select Balance Sheet Data Q3 FY24Q2 FY25Q3 FY25$ in MillionsAssets$192$226$153Cash, Cash Equiv., Mkt. Sec. & CDs1 $152$146$137Accounts Receivable, net$282$285$299Inventories, net$1,253$1,358$1,073Total AssetsLiabilities$68$71$71Accounts Payable$443$567$368Total Debt, net$1,253$1,358$1,073Total Liabilities & Equity Q3 FY24Q2 FY25Q3 FY25Working Capital Performance666261DSO (in days)180190201DOI 454747DPO1Q3 FY24 included $0.5M of certificates of deposit.
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8/7/2025 11 Q3 FY24Q2 FY25Q3 FY25$ in MillionsDebt$447$570$370Gross Debt1(Ratings: Moody’s B2 / S&P BB-)$255$219$217Net Debt2Adjusted EBITDA3 $23$34$29Adjusted EBITDA$105$103$110Adjusted EBITDA (TTM)2.4x2.1x2.0xNet debt leverage (TTM)Cash Flow Statement Summary$8$17$8Cash Flow from Operations($5)($7)($6)Capital Expenditures($14)-($17)Cash Interest($4)($8)($3)Cash Taxes1Gross Debt includes Total Debt, net of $368m + unamortized debt issuance cost of $3m in Q3FY25, $3m in Q2FY25, & $4m in Q3FY24. 2Net Debt is defined as gross debt less cash & cash equivalents, and marketable securities.3Adjusted EBITDA is defined as non-GAAP net earnings plus non-GAAP interest expense, non-GAAP taxes, non-GAAP depreciation, non-GAAP amortization and share-based compensation Select Debt and Cash Flow Statement Data
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Guidance Q4 FY25 8/7/2025 12 Non-GAAP EPS, diluted Revenue$0.10 - $0.30$210 - $230MGross Margin:32% – 33% Operating Expense:~$51MInterest & Other Expense, net:($9M) – ($10M) Tax rate:~25%Share count, diluted:~42M sharesAssumptions
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Making the Invisible Visible 8/7/2025 13Q & A
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Making the Invisible Visible 8/7/2025 14Non – GAAP Reconciliation
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8/7/2025 15 Reconciliation between GAAP and Non-GAAP Financial Measures (Unaudited)Nine Months EndedThree Months EndedJune 28, 2024July 4, 2025June 28, 2024July 4, 2025(In millions)GROSS PROFIT RECONCILIATION$ 605.3$ 615.7$ 209.1$ 203.0Revenues, net189.8212.766.967.5Gross profit4.71.61.00.5Amortization of intangible assets $ 194.5$ 214.3$ 67.9$ 68.0Non-GAAP gross profit31.4 %34.5 %32.0 %33.3 %Gross margin %32.1 %34.8 %32.5 %33.5 %Non-GAAP gross margin %
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8/7/2025 16 Reconciliation between GAAP and Non-GAAP Financial Measures (Unaudited)Nine Months EndedThree Months EndedJune 28, 2024July 4, 2025June 28, 2024July 4, 2025(In millions)SELLING, GENERAL AND ADMINISTRATIVE EXPENSE RECONCILIATION$ 103.5$ 99.3$ 35.6$ 32.9Selling, general, and administrative4.21.30.70.5Amortization of intangible assets1.72.10.10.4Restructuring charges3.85.11.61.7Non-ordinary course litigation2.20.32.10.3Other non-operational costs$ 91.6$ 90.5$ 31.1$ 30.0Non-GAAP selling, general, and administrative expenseOPERATING EXPENSE RECONCILIATION$ 168.6$ 260.1$ 57.6$ 148.2Total operating expenses4.21.30.70.5Amortization of intangible assets1.72.10.10.4Restructuring charges—93.9—93.9Impairment of goodwill3.85.11.61.7Non-ordinary course litigation2.20.32.10.3Other non-operational costs$ 156.7$ 157.4$ 53.1$ 51.4Non-GAAP operating expense
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8/7/2025 17 Reconciliation between GAAP and Non-GAAP Financial Measures (Unaudited)Nine Months EndedThree Months EndedJune 28, 2024July 4, 2025June 28, 2024July 4, 2025(In millions)OPERATING (LOSS) INCOME RECONCILIATION$ 21.2$ (47.4)$ 9.3$ (80.7)Operating (loss) income8.92.91.71.0Amortization of intangible assets (includes amortization impacts to cost of revenues)1.72.10.10.4Restructuring charges (includes restructuring impacts to cost of revenues)—93.9—93.9Impairment of goodwill3.85.11.61.7Non-ordinary course litigation2.20.32.10.3Other non-operational costs (includes other non-operational impacts to cost of revenues)16.6104.35.597.3Total operating income adjustments$ 37.8$ 56.9$ 14.8$ 16.6Non-GAAP operating income3.5 %(7.7)%4.4 %(39.8)%Operating margin %6.2 %9.2 %7.1 %8.2 %Non-GAAP operating margin %
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8/7/2025 18 Reconciliation between GAAP and Non-GAAP Financial Measures (Unaudited)Nine Months EndedThree Months EndedJune 28, 2024July 4, 2025June 28, 2024July 4, 2025(In millions, except per share amounts)(LOSS) INCOME BEFORE TAXES RECONCILIATION$ 2.5$ (73.3)$ 0.8$ (86.6)(Loss) income before taxes16.6104.35.597.3Total operating earnings adjustments—(0.6)—(0.6)Restructuring charges(2.1)———Gain on purchase of business0.60.3—(0.1)Other non-operational costs15.1104.05.596.6Total income before tax adjustments$ 17.6$ 30.7$ 6.3$ 10.0Non-GAAP income before taxesINCOME TAX EXPENSE (BENEFIT) RECONCILIATION$ (0.2)$ 8.8$ (0.7)$ 2.5Income tax expense (benefit)(2.7)0.5(1.1)0.1Tax effect on non-GAAP adjustments$ 2.5$ 8.3$ 0.4$ 2.4Non-GAAP income tax expenseNET (LOSS) INCOME AND DILUTED NET INCOME PER SHARE RECONCILIATION$ 2.3$ (82.5)$ 1.4$ (89.1)Net (loss) income attributable to Varex15.1104.05.596.6Total earnings before taxes adjustments17.9 %(0.5)%20.0 %(0.1)%Effective tax rate on non-GAAP adjustments %(2.7)0.5(1.1)0.1Tax effect on non-GAAP adjustments14.722.05.87.6Diluted non-GAAP net income0.06(2.00)0.03(2.15)Diluted net (loss) income per share $ 0.36$ 0.53$ 0.14$ 0.18Non-GAAP diluted net income per share
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8/7/2025 19 Reconciliation between GAAP and Non-GAAP Financial Measures (Unaudited)Nine Months EndedThree Months EndedJune 28, 2024July 4, 2025June 28, 2024July 4, 2025(In millions)ADJUSTED EBITDA RECONCILIATION$ 2.3$ (82.5)$ 1.4$ (89.1)Net (loss) income attributable to Varex22.027.57.49.4Interest expense(0.2)8.8(0.7)2.5Income tax expense (benefit)15.617.65.35.8Depreciation8.92.91.71.0Amortization of intangible assets11.811.63.93.7Share-based compensation1.71.50.1(0.2)Restructuring charges(2.1)———Gain on purchase of business—93.9—93.9Impairment of goodwill3.85.11.61.7Non-ordinary course litigation2.80.62.10.2Other non-operational costs$ 66.6$ 87.0$ 22.8$ 28.9Adjusted EBITDA
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8/7/2025 20 This press release includes non-GAAP financial measures derived from our Condensed Consolidated Statements of Operations. These measures are not presented in accordance with, nor are they a substitute for U.S. generally accepted accounting principles, or GAAP. These measures include: non-GAAP gross profit; non-GAAP gross margin; non-GAAP operating expense; non-GAAP operating earnings; non-GAAP operating earnings margin; non-GAAP earnings before taxes; non-GAAP net earnings; non-GAAP net earnings per diluted share, non-GAAP dilutive shares; and non-GAAP EBITDA. We are providing a reconciliation above of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. We are unable to provide without unreasonable effort a reconciliation of non-GAAP guidance measures to the corresponding GAAP measures on a forward-looking basis due to the potential significant variability and limited visibility of the excluded items discussed.We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, and forecasting and planning for future periods. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business by excluding unusual and one-time costs. We believe that disclosing non-GAAP financial measures provides useful supplemental data that allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.Non-GAAP measures include the following items:Amortization of intangible assets: We do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.Purchase price accounting charges to cost of revenues: We may incur charges to cost of revenues as a result of acquisitions. We believe that excluding these charges allows the users of our financial statements to better understand the historic and current cost of our products, our gross margin, and also facilitates comparisons to peer companies.Restructuring charges: We incur restructuring charges that result from events, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.Acquisition and integration related costs: We incur expenses or benefits with respect to certain items associated with our acquisitions, such as transaction costs, changes in fair value of acquisition related hedges, changes in the fair value of contingent consideration liabilities, gain or expense on settlement of pre-existing relationships, etc. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business. We also incur expenses or benefits with respect to certain items associated with our acquisitions, such as integration costs relating to acquisition costs incurred prior to closing and up to 12 months after the closing date of the acquisition.Impairment of goodwill: We may incur impairment charges that result from events, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business and such charges may limit the comparability of our on-going operations with prior and future periodsNon-ordinary course litigation: We may incur charges that result from non-ordinary course litigation matters such as certain intellectual property disputes and joint venture litigation. Litigation matters that are part of the ordinary course of the Company’s business, such as product liability claims, employment related matters and commercial contract disputes, are not excluded.Other non-operational costs: Certain items may be non-recurring, unusual, infrequent and directly related to an event that is distinct and non-reflective of the company’s ongoing business operations. These may include such items as legal settlements, inventory write-downs for discontinued products, cost of facilities no longer in use, extinguishment of debt and hedge costs, environmental settlements, governmental settlements including tax settlements, and other items of similar nature.Non-operational tax adjustments: Certain tax items may be non-recurring, unusual, infrequent and directly related to an event that is distinct and non-reflective of the company’s normal business operations. These may include such items as the retroactive impact of significant changes in tax laws, including changes to statutory tax rates and one-time tax charges.Tax effects of operating earnings adjustments: We apply our non-GAAP adjustments to the GAAP pretax income to calculate the non-GAAP effective tax rate. This application of our non-GAAP effective tax rate excludes any discrete items, as defined in the guidance for accounting for income taxes in interim periods, or any other non-operational tax adjustments.Dilution offset from convertible notes hedge transaction: In connection with the issuance of the company’s Convertible Senior Unsecured Notes (the Convertible Notes) in June 2020, the company entered into convertible note hedge transactions (the Hedge Transactions) to reduce the potential dilutive effect on common shares upon the potential conversion of the Convertible Notes. GAAP diluted shares outstanding includes the incremental dilutive shares from the company’s Convertible Notes. Under GAAP, the anti-dilutive impact of the Convertible Note Hedge Transactions is not reflected in GAAP diluted shares outstanding. In periods in which the average stock price per share exceeds $20.81 and the company has GAAP net income, the non-GAAP diluted share count includes the anti-dilutive impact of the company’s Hedge Transactions, which reduces the potential dilution that otherwise would occur upon conversion of the company’s Convertible Notes. We believe non-GAAP diluted shares is a useful non-GAAP metric because it provides insight into the offsetting economic effect of the Hedge Transactions against potential conversion of the Convertible Notes. Discussion of Non–GAAP Financial Measures
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Making the Invisible Visible