Varex Imaging Corp (VREX) Q1 2026 Earnings Call Highlights: Strong Industrial Growth and …

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Wed, February 11, 2026 at 2:00 PM GMT+9 4 min read

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**Revenue:** $210 million, up 5% year over year.

**Industrial Segment Revenue:** Increased by 17% year over year.

**Medical Segment Revenue:** Stable year over year.

**Non-GAAP Gross Margin:** 34%, at the high end of guidance.

**Non-GAAP Operating Income:** $19 million, up $5 million year over year.

**Non-GAAP EPS:** $0.19, up from $0.10 last year.

**GAAP Gross Margin:** 33%, down 100 basis points year over year.

**Operating Expenses:** $54 million, down $3 million year over year.

**Net Income:** $2 million.

**GAAP EPS:** $0.05 per diluted share.

**Net Cash Outflow from Operations:** $16 million.

**Cash Equivalents and Marketable Securities:** $126 million, down $30 million from the previous quarter.

**Gross Debt Outstanding:** $370 million.

**Adjusted EBITDA:** $29 million or 14% of sales.

**Net Debt Leverage Ratio:** Approximately 1.9 times adjusted EBITDA on a trailing 12-month basis.

**Q2 Revenue Guidance:** Expected between $210 and $225 million.

**Q2 Non-GAAP EPS Guidance:** Expected between $0.15 and $0.25.

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Release Date: February 10, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Varex Imaging Corp (NASDAQ:VREX) reported a strong start to fiscal year 2026 with first-quarter revenue of $210 million, up 5% year over year.

The industrial segment saw a significant 17% year-over-year increase in revenue, driven by strong performance in the cargo systems business.

Non-GAAP gross margin was 34%, at the high end of guidance, benefiting from a favorable product sales mix.

The company experienced solid demand for X-ray sources, particularly in high-end CT, and growing engagement around next-generation system designs.

Varex Imaging Corp (NASDAQ:VREX) is seeing positive momentum in its non-destructive testing and inspection business, supported by strength in high energy linear accelerators and X-ray tube products.

Negative Points

The medical segment revenue was stable year over year, indicating no significant growth in this area.

Dental and oncology modalities were below their respective sales trends, suggesting potential challenges in these areas.

The company is facing a burden on the P&L due to ramping up inventory and costs associated with the new India operations.

Gross margin on a GAAP basis was down 100 basis points year over year, indicating some pressure on profitability.

The increase in inventory, primarily to support anticipated demand, has led to a net cash outflow from operations of $16 million in the quarter.

 






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Q & A Highlights

Q: Sonny, you sound optimistic about the pipeline. Can you provide more color on the current environment and your outlook for the rest of the year? A: Sunny Sanyal, President and CEO: In the medical segment, the headwinds from 2024 are behind us, and we see strong order activity, particularly in CT. The industrial segment also shows strong customer engagement, especially in photon counting for food inspection and non-destructive testing. Security orders are growing, and customer interactions have shifted from problem-solving to R&D discussions, indicating a positive outlook for fiscal '26.

Q: Can you elaborate on the progress and opportunities in India? A: Sunny Sanyal, President and CEO: Our India factory for detectors is operational, and we are shipping globally. The tubes factory is under construction and will take time to come online. Customers are interested in our India operations as it aligns with their expansion plans and local content requirements. Shubham Maheshwari, CFO, adds that while India operations currently burden the P&L, they are a strategic investment for future growth.

Q: Can you provide more details on the industrial segment, specifically cargo orders, and the potential for double-digit growth? A: Shubham Maheshwari, CFO: We booked over $55 million in cargo business last year and continue to see strong traction. While we won’t announce every order, the business is tender-driven and episodic. Double-digit growth potential exists, but it depends on winning significant orders and customer demand timing.

Q: How do you plan for China given the macroeconomic uncertainties, and what’s the status of photon counting technology? A: Sunny Sanyal, President and CEO: We focus on end-user demand and OEM relationships in China, treating Chinese OEMs as global players. Despite geopolitical tensions, our customer relationships remain stable. For photon counting, we are engaged with OEMs in product commercialization, aiming to democratize the technology for broader CT market applications.

Q: Can you explain the increase in inventory and your plans for refinancing debt? A: Shubham Maheshwari, CFO: Inventory increased due to cargo system ramp-up and India operations. We aim to normalize inventory levels in the coming quarters. Regarding debt, we plan to refinance our high-yield debt, due in 2027, before it becomes current, targeting a lower interest rate than the current 7.875%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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