Varex Imaging Reports $15.9M Net Income Recovery and Announces Teledyne Acquisition

Varex Imaging Corporation reported a net income of $15.9 million for the third quarter of fiscal year 2026, a significant recovery from a net loss of $89.1 million in the same period last year. The company’s total revenues increased by 3.7% to $210.5 million, driven by a 25.6% rise in its Industrial segment, which generated $76.5 million, while Medical segment revenues decreased by 5.7% to $134.0 million. The decline in Medical revenues was attributed to reduced sales in several modalities, including radiography and mammography, partially offset by gains in fluoroscopic and veterinary sales. The overall financial performance was positively impacted by the recovery of IEEPA tariffs, which reduced costs and contributed to gross profit.

Compared to the previous fiscal period, Varex experienced notable changes in its financial metrics. The gross profit for the quarter rose to $76.7 million, up 13.6% from $67.5 million a year earlier, with total gross margin improving to 36.4% from 33.3%. The increase in gross profit was primarily due to decreased material costs and the favorable impact of IEEPA tariff refunds. However, the Medical segment's gross margin was affected by a shift in product sales mix and reduced productivity, despite benefiting from tariff refunds that lowered costs.

Strategically, Varex announced a proposed acquisition by Teledyne Technologies Incorporated, with a merger agreement signed on August 10, 2026. Under the terms of the agreement, Varex shareholders will receive $18.90 in cash per share. The merger is expected to close in early 2027, pending regulatory approvals and other customary conditions. This acquisition aligns with Varex's strategy to enhance its market position and operational capabilities in the imaging sector.

Operationally, Varex reported a total employee headcount of approximately 2,500, with a focus on innovation and product development. The company continues to invest in research and development, which accounted for 11.1% of revenues in the latest quarter. The company’s backlog stood at approximately $246 million, indicating a solid pipeline of future revenue opportunities. Additionally, Varex's geographic revenue distribution showed growth in the Americas and APAC regions, while EMEA revenues declined slightly.

Looking ahead, Varex's management expressed optimism about future growth, driven by ongoing investments in product innovation and strategic partnerships. However, they acknowledged potential challenges, including the impact of tariffs and market conditions on customer purchasing decisions. The company remains focused on leveraging its position as a leading supplier of X-ray imaging components while navigating the complexities of the current economic landscape.