Varex announces financial results for third quarter of fiscal year 2020

Varex Imaging Corporation announced its unaudited financial results for the third quarter of fiscal year 2020.

3QFY20 Summary

• Revenues were $171 million
• GAAP gross margin was 15% | non-GAAP gross margin was 26%
• GAAP operating earnings margin was (15.7)% | non-GAAP operating earnings margin was (0.7)%
• GAAP net loss was ($0.73) per diluted share | non-GAAP net loss was ($0.20) per diluted share

“During the third quarter of fiscal year 2020, the impact of COVID-19 resulted in declining sales and a sizeable unfavorable shift in product mix that reduced our revenues, margins and profitability. While sales of CT tubes and other radiographic products used in COVID-19 related diagnostic imaging applications increased significantly, total revenues declined 13% from the year ago quarter due to sales declines in other products, such as those for oncology, dental and industrial applications,” said Sunny Sanyal, Chief Executive Officer of Varex.

In response to the decline in revenues and gross margin, Varex has taken a number of actions that are expected to reduce annual operating costs by more than $25 million, including:

• Accelerating the previously announced closure of its Santa Clara facility, with most assembly operations shut down in June.
• Discontinuing certain low margin, low demand products resulting in a $16 million pretax non-cash charge during the third quarter of fiscal year 2020 for the write-down of associated inventory and restructuring activity.
• Downsizing the workforce by eliminating 94 positions at the end of July, which when combined with other actions, is expected to result in an overall workforce reduction of about 10% in calendar year 2020.
• Closely managing discretionary spending and capital expenditures.

“We believe that these and other actions, as well as a continued focus on pursuing productivity gains, will better position Varex when the imaging markets recover from the downturn caused by COVID-19,” said Sanyal.

Additional financial information is provided in the unaudited financial statements attached to this press release.

Convertible Notes Offering
During the third quarter of fiscal year 2020, Varex restructured its debt with an issuance of $200 million of 4.00% Convertible Senior Notes due 2025. Varex used the net proceeds to improve its liquidity position by increasing its cash balance and reducing Varex’s debt under its current credit facility.

Fourth Quarter Outlook
Due to the uncertainty associated with the COVID-19 pandemic, Varex previously withdrew its annual revenue and EPS guidance for the full fiscal year 2020. While management re-evaluates what guidance will be provided on an ongoing basis, for the fourth quarter of fiscal year 2020 Varex expects revenues to be in the range of $155 million to $170 million. –BusinessWire