Varex Imaging Posts Mixed Quarter, Beats on Profit as Industrial Segment Shines
Varex Imaging Corp (NASDAQ:VREX) reported financial results for the first quarter of its fiscal year 2026, delivering a performance that surpassed analyst expectations on the bottom line while revenue came in slightly below consensus. The market's initial reaction appears cautiously positive, with shares trading higher in after-hours activity.
Earnings and Revenue Versus Estimates
The company's results presented a split picture relative to Wall Street forecasts. Varex reported non-GAAP earnings per share (EPS) of $0.19, a significant increase from $0.10 in the prior-year period. This result comfortably exceeded the analyst consensus estimate of $0.14.
On the top line, the company reported revenue of $209.6 million, representing a 5% year-over-year increase. However, this figure fell just short of the estimated $211.8 million.
Key financial highlights from the quarter include:
- Revenue: $209.6 million (Actual) vs. $211.8 million (Estimate)
- Non-GAAP EPS: $0.19 (Actual) vs. $0.14 (Estimate)
- GAAP EPS: $0.05 per diluted share
- Segment Performance: Medical segment revenue was essentially flat at $145 million, while Industrial segment revenue grew 17% year-over-year to $65 million.
Market Reaction and Outlook
Following the earnings release, Varex shares moved approximately 1.9% higher in after-market trading. This suggests investors are focusing on the substantial earnings beat and the strong growth narrative in the Industrial segment, potentially overlooking the slight revenue miss.
Management provided guidance for the second quarter of fiscal 2026, projecting revenue between $210 million and $225 million and non-GAAP EPS in a range of $0.15 to $0.25. This outlook brackets the current analyst consensus estimates for Q2, which stand at revenue of $218.8 million and EPS of $0.20. The wide EPS range indicates some uncertainty but centers around market expectations.
Press Release Summary
CEO Sunny Sanyal characterized the quarter as a "solid start to fiscal 2026," with results toward the high end of the company's internal guidance. He highlighted strength in the cargo security systems business as the primary driver of the double-digit Industrial segment growth and expressed optimism for sustained demand in computed tomography (CT) products.
Beyond the headline numbers, the report revealed several important financial details:
- The company's non-GAAP gross margin was 34%, down from 35% in the year-ago quarter.
- Operating cash flow was an outflow of $16 million, primarily driven by an increase in working capital, notably inventory, which rose to $328 million from $299.4 million at the end of the previous fiscal year.
- Cash and equivalents decreased to $126 million from $155 million at the end of fiscal 2025.
- The company also announced an update to its non-GAAP financial policy, now excluding gains and losses from its equity-method investments to better reflect ongoing operations.
For a detailed breakdown of future earnings estimates and historical performance, review the VREX earnings and estimates page.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, an endorsement, or a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
