10-Q · May 7, 2026
Varex Imaging Corporation reported Q2 FY2026 revenues of $216 million, a slight decline from analyst expectations. The company's diluted EPS came in at $0.21, in line with expectations, but its gross margin decreased…
Earnings analysis · 10-Q
VREX earnings analysis
Filed August 10, 2026 · Our reading of the company's report
The latest report
Varex delivered a strong profitability recovery in the quarter: revenue of $210.5 million declined approximately 2.5% sequentially but increased approximately 3.7% year over year, while gross margin rose to 36.4%,…
Read full summary
Varex delivered a strong profitability recovery in the quarter: revenue of $210.5 million declined approximately 2.5% sequentially but increased approximately 3.7% year over year, while gross margin rose to 36.4%, operating margin to 10.8%, and diluted EPS to $0.31. The principal forward-looking development is the proposed Teledyne acquisition, which led to withdrawal of FY2026 guidance and introduces material closing, regulatory and execution uncertainty. High leverage, international exposure and tariff-related cost pressure remain important risks.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.31
What stood out
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Margins rebounded despite softer sequential sales
Revenue was $210.5 million, down from $216 million in the prior quarter but up from $203 million a year earlier. Gross margin increased to 36.4% from 33.6% and 33.3%, respectively, while operating margin improved to 10.8% from 6.7% and negative 39.8%.
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EPS turned sharply positive
Diluted EPS was $0.31 versus negative $0.19 in the prior quarter and negative $2.15 a year earlier, reflecting the substantial operating-margin recovery.
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Teledyne transaction establishes potential exit
The proposed Teledyne transaction is expected to close in early calendar year 2027, subject to stockholder, antitrust and other regulatory approvals. The merger agreement provides for a customary $25.3 million termination fee in certain circumstances.
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International revenue remains significant
Foreign customers represented approximately 71% of revenue for the three months ended July 3, 2026, versus 69% a year earlier, underscoring Varex’s international reach.
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No reported control deficiencies
Management concluded that disclosure controls and procedures were effective as of July 3, 2026, and reported no changes in internal control over financial reporting that materially affected or were reasonably likely to materially affect controls.
What to watch
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Merger closing and regulatory uncertainty
The merger is subject to stockholder approval, U.S. Hart-Scott-Rodino clearance and foreign regulatory approvals, among other conditions, and may terminate if conditions are not satisfied by May 10, 2027, extendable to August 27, 2027. The filing states there is no assurance the transaction will close on the proposed terms or at all.
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Leverage and covenant pressure
As of July 3, 2026, total indebtedness was approximately $350.7 million, including $8.7 million outstanding on the revolving facility, while $350 million was subject to floating interest rates. The filing identifies a minimum fixed-charge coverage ratio of 1.20 to 1.00 and a maximum CTNL ratio of 4.25:1.00 through September 2027.
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Tariff, commodity and FX exposure
Tariffs and trade restrictions have increased costs and may lower gross margins and demand; the filing specifically notes that 2025 tariff changes affected fiscal 2025 and the first half of fiscal 2026. A hypothetical 10% increase in commodity prices would have an estimated annual earnings impact of $3.5 million, while a 10% decrease in foreign-exchange rates would have a $15.7 million revenue impact.
Management's outlook
FY2026 guidance was withdrawn in connection with the proposed Teledyne acquisition. The prior outlook was revenue of $860 million to $880 million and EPS of $0.80 to $1.00; no replacement quantitative guidance was provided.
Earlier filings 4
10-Q · August 7, 2025
Varex Imaging Corporation's Q3 2025 results showed a decline in revenue and a substantial loss driven by a $93.9 million impairment charge. Although the company exceeded EPS expectations with a reported loss of $2.15…
10-Q · May 8, 2025
Varex reported improving operating results in Q2: revenues rose to $212.9M (up $6.7M YoY) with gross profit of $76.7M (36.0% margin) and operating income of $22.1M (10.4% margin). Diluted EPS improved to $0.17 from…
10-Q · February 6, 2025
Varex reported Q1 revenue of $199.8M, up from $190.0M in the prior-year quarter, with gross profit rising to $68.5M and operating income improving to $11.2M. The company generated positive operating cash flow of $9.5M…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.