Varian Medical Systems Q3 profit tops estimates

Varian Medical Systems Inc. (VAR) reported that its third-quarter net earnings attributable to the company increased to $61.2 million or $0.67 per share from $29.4 million or $0.32 per share in the prior year.

The latest-quarter results included a $21 million gain on an equity investment that went public, a $14 million workforce restructuring charge and a $9 million impairment of its available-for-sale investments.

The prior year results included a $51 million goodwill impairment charge related to its Proton Solutions business and a $21 million charge associated with the write-off of in-process research and development acquired in the CyberHeart acquisition.

Non-GAAP net earnings per share were $0.78 compared to $1.32 in the previous year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.52 per share for the quarter. Analysts’ estimates typically exclude special items.

Total company revenues declined 16% in dollars and 15% in constant currency, to $694.3 million. Organic revenues were down 19%. Analysts expected revenue of $664.38 million for the quarter.

Earlier today, Varian Medical Systems said that it reached a deal to merge with German health group Siemens Healthineers AG (SMMNY.PK) in an all-cash transaction valued at $16.4 billion.

As per the terms of the agreement, Siemens Healthineers will acquire all outstanding shares of Varian for $177.50 per share in cash, representing a premium of about 24% to the closing price of Varian’s common stock on July 31, 2020.

Oncology Systems Segment
Oncology Systems revenues totaled $654 million, down 17%.  Gross orders were $665 million, down 14%.  Gross orders in the Americas were down 8%, including North America, which was down 6%.  In EMEA, gross orders fell 32%.  In Asia-Pacific, gross orders were up 4%.

Proton Solutions Segment
Proton Solutions revenues totaled $33 million, up 6%, primarily driven by continued growth in services revenues.

Other Segment
Revenues for the Other segment were $7 million.  The Other segment is comprised of the Interventional Solutions business, including cryoablation, embolic microspheres, and microwave ablation.  Additionally, it includes investments in cardiac radioablation.

Non-GAAP Adjustments
This quarter, our GAAP operating earnings and GAAP EPS included a $21 million gain on an equity investment that went public, a $14 million workforce restructuring charge and a $9 million impairment of our available-for-sale investments.  As a reminder, in the third quarter of fiscal year 2019, GAAP net earnings and GAAP EPS included a $51 million goodwill impairment charge related to our Proton Solutions business and a $21 million charge associated with the write-off of in-process research and development acquired in the CyberHeart acquisition.

It expected that the transaction will close in the first half of calendar year 2021.

– MB Bureau