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What changed in Varex Imaging Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Varex Imaging Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+304 added−281 removedSource: 10-K (2025-11-18) vs 10-K (2024-11-19)

Top changes in Varex Imaging Corp's 2025 10-K

304 paragraphs added · 281 removed · 224 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

61 edited+10 added−8 removed104 unchanged
Biggest changeOur Industrial business benefits from the research and development investment and manufacturing economies of scale on the Medical side of our business, as we continue to find new applications for our technology. Along with more favorable pricing dynamics, this allows us to generally achieve higher gross profit for Industrial products relative to our Medical business.
Biggest changeAlong with more favorable pricing dynamics, this allows us to generally achieve higher gross profit for Industrial products relative to our Medical business. In addition, our Industrial business benefits from our long-term service agreements for our Linatron® products.
In recent years, our business, particularly in China, has been impacted by the United States-China trade war in the following ways, among others: (1) importing raw materials from China to the United States has become more expensive, (2) importing raw materials and sub-assemblies from the United States to China has become more expensive, and (3) importing finished United States manufactured products into China has become more difficult and expensive and (4) increasing competitive pressures domestically and globally versus our Asian- and European-based competitors who may not have been as impacted by the trade war.
In recent years, our business, particularly in China, has been impacted by the United States-China trade war in the following ways, among others: (1) importing raw materials from China to the United States has become more expensive, (2) importing raw materials and sub-assemblies from the United States to China has become more expensive, (3) importing finished United States manufactured products into China has become more difficult and expensive, and (4) increasing competitive pressures domestically and globally versus our Asian- and European-based competitors who may not have been as impacted by the trade war.
“Risk Factors - Risks Relating to our Intellectual Property and Information Systems .” In conjunction with the January 2017 separation from Varian Medical Systems, Inc. ("Varian"), we entered into an Intellectual Property Matters Agreement with Varian, pursuant to which, among other things, we each granted the other licenses to use certain intellectual property.
“Risk Factors - Risks Relating to our Information Systems and Intellectual Property .” In conjunction with the January 2017 separation from Varian Medical Systems, Inc. ("Varian"), we entered into an Intellectual Property Matters Agreement with Varian, pursuant to which, among other things, we each granted the other licenses to use certain intellectual property.
Varian was subsequently acquired by Siemens in April of 2021. Environmental Matters Our operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances.
Varian was subsequently acquired by Siemens in April 2021. Environmental Matters Our operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances.
Medical In our Medical segment, we design, manufacture, sell and service X-ray imaging components, including X-ray tubes, flat panel and photon counting detectors and accessories, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and coolers.
Medical In our Medical segment, we design, manufacture, sell and service X-ray imaging components, including X-ray tubes, flat panel and photon counting detectors and accessories, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, automatic exposure control devices, generators, and coolers.
In the high-energy sector, we compete against technologies from Nuctech Company Limited, Siemens AG, ETM Electromatic Inc., and PMB Alcen, whose X-ray sources are used in applications that include cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections.
In the high-energy sector, we compete against technologies from Nuctech Company Limited, Siemens, ETM Electromatic Inc., and PMB Alcen, whose X-ray sources are used in applications that include cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections.
In 2023, China launched a national anti-corruption campaign directed at the healthcare industry, designed to rectify unethical practices related to services and procurement in the Chinese healthcare industry. The anti-corruption campaign has had a broad-based impact on the healthcare industry in China and contributed to lower sales in our Medical business during fiscal year 2024.
In 2023, China launched a national anti-corruption campaign directed at the healthcare industry, designed to rectify unethical practices related to services and procurement in the Chinese healthcare industry. The anti-corruption campaign had a broad-based impact on the healthcare industry in China and contributed to lower sales in our Medical business during fiscal year 2024.
Furthermore, tender awards in this business may be subject to challenge by third parties, as we have previously encountered, which can make the conversion of orders to revenues unpredictable for some security and inspection products. We experienced strong sales of our Linatron® X-ray accelerators for border protection applications in fiscal year 2024.
Furthermore, tender awards in this business may be subject to challenge by third parties, as we have previously encountered, which can make the conversion of orders to revenues unpredictable for some security and inspection products. We experienced strong sales of our Linatron® X-ray accelerators for border protection applications in fiscal year 2025.
The product warranty obligations contained in our standard terms and conditions typically range from 12 to 24 months, depending on the product. Human Capital Resources Talent Management To remain a leading innovator, designer, and manufacturer of critical components of X-ray based diagnostic equipment, it is crucial that we continue to attract and retain exceptional talent.
The product warranty obligations contained in our standard terms and conditions typically range from 12 to 27 months, depending on the product. Human Capital Resources Talent Management To remain a leading innovator, designer, and manufacturer of critical components of X-ray based diagnostic equipment, it is crucial that we continue to attract and retain exceptional talent.
In addition to sales to OEM customers, we sell our products to independent service companies and distributors as well as directly to end-users for replacement purposes. We are one of the largest independent global manufacturers of X-ray imaging components, and each year, we produce approximately 27,000 X-ray tubes and 20,000 X-ray detectors.
In addition to sales to OEM customers, we sell our products to independent service companies and distributors as well as directly to end-users for replacement purposes. We are one of the largest independent global manufacturers of X-ray imaging components, and each year, we produce over 27,000 X-ray tubes and 20,000 X-ray detectors.
Approximately 91% of our eligible employees participate in our 401(k) plan. In addition, in an effort to further align the interests of eligible employees with our stockholders, we have an equity-based incentive plan that provides for the grant of nonqualified stock options, restricted stock units, performance units and other equity-based awards to directors, officers and other eligible employees.
Approximately 90% of our eligible employees participate in our 401(k) plan. In addition, in an effort to further align the interests of eligible employees with our stockholders, we have an equity-based incentive plan that provides for the grant of nonqualified stock options, restricted stock units, performance units and other equity-based awards to directors, officers and other eligible employees.
Karen Aranki , 50, has served as Chief Human Resources Officer since March 2023. Prior to joining the Company, Karen was the Global VP of HR and Communications at Honeywell Aerospace, where she worked for 16 years, including 8 years in senior human resources positions.
Karen Aranki , 51 , has served as Chief Human Resources Officer since March 2023. Prior to joining the Company, Karen was the Global VP of HR and Communications at Honeywell Aerospace, where she worked for 16 years, including 8 years in senior human resources positions.
We generally rely on a combination of patents, copyrights, trademarks, trade secret and other laws, and contractual restrictions on disclosure, copying and transferring title, including confidentiality agreements with vendors, strategic partners, co- 9 Table of Contents developers, employees, consultants and other third parties, to protect our proprietary rights in the developments, improvements and inventions that we have originated and which are incorporated in our products or that fall within our fields of interest.
We generally rely on a combination of patents, copyrights, trademarks, trade secret and other laws, and contractual restrictions on disclosure, copying and transferring title, including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants and other third parties, to protect our proprietary rights in the developments, improvements and inventions that we have originated and which are incorporated in our products or that fall within our fields of interest.
We continually invest in research and development and employ approximately 350 individuals in product development related activities. Our focus on innovation and product performance along with strong and long-term customer relationships allows us to collaborate with our customers to deliver industry-leading X-ray imaging products.
We continually invest in research and development and employ approximately 400 individuals in product development related activities. Our focus on innovation and product performance along with strong and long-term customer relationships allows us to collaborate with our customers to deliver industry-leading X-ray imaging products.
Our largest customer, Canon, accounted for approximately 18%, 17% and 17% of our total revenue for fiscal years 2024, 2023, and 2022, respectively, while our ten largest customers as a group accounted for approximately 53%, 51% and 52% of our revenue for fiscal years 2024, 2023 and 2022, respectively. Competition The imaging components business is highly competitive.
Our largest customer, Canon, accounted for approximately 18%, 18%, and 17% of our total revenue for fiscal years 2025, 2024, and 2023, respectively, while our ten largest customers as a group accounted for approximately 52%, 53%, and 51% of our revenue for fiscal years 2025, 2024, and 2023, respectively. Competition The imaging components business is highly competitive.
Like medical, we sell our high energy products to OEMs and may also compete with those OEMs for cargo system sales. The companies we both sell to and compete with are Rapiscan, Smiths, Leidos, and Astrophysics. Customer Services and Support We generally warrant our products for 12 to 24 months.
Like medical, we sell our high energy products to OEMs and may also compete with those OEMs for cargo system sales. The companies we both sell to and compete with are Rapiscan, Smiths, Leidos, and Astrophysics. Customer Services and Support We generally warrant our products for 12 to 27 months.
Failure to respond timely to FDA inspection observations, a warning letter, or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing enforcement action against us, which could include the total 6 Table of Contents shutdown of our production facilities, denial of importation rights to the United States for products manufactured in overseas locations, and denial of export rights for U.S. products and criminal and civil fines.
Failure to respond timely to FDA inspection observations, a warning letter, or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing enforcement action against us, which could include the total shutdown of our production facilities, denial of importation rights to the United States for products manufactured in overseas locations, and denial of export rights for U.S. products and criminal and civil fines.
As soon as reasonably practicable after filing with or furnishing to the SEC, we also make the following reports and information available free of charge on the Investors page of our website www.vareximaging.com: • our annual reports on Form 10-K; • quarterly reports on Form 10-Q; • current reports on Form 8-K (including any amendments to those reports); • proxy statements; and • Section 16 ownership reports.
As soon as reasonably practicable after filing with or furnishing to the SEC, we also make the following reports and information available free of charge on the Investors page of our website www.vareximaging.com: • our annual reports on Form 10-K; • quarterly reports on Form 10-Q; • current reports on Form 8-K (including any amendments to those reports); • proxy statements; and 11 Table of Contents • Section 16 ownership reports.
X-ray imaging software is a relatively small part of our business and includes maintenance revenue for software licenses. In China, the government has continued its efforts to broaden the availability of healthcare services. In the past 20 years, the number of medical institutions and diagnostic radiology equipment per million population in China has increased substantially.
X-ray imaging software is a relatively small part of our business and includes maintenance revenue for software licenses. 3 Table of Contents In China, the government has continued its efforts to broaden the availability of healthcare services. In the past 20 years, the number of medical institutions and diagnostic radiology equipment per million of population in China has increased substantially.
Our business results depend on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent. Factors that may affect our ability to attract and retain qualified employees include employee morale, our reputation, competition from other employers, wage inflation, and availability of qualified individuals.
Our business results depend on our ability to successfully manage our human capital resources, including attracting, identifying, and retaining key talent. Factors that may affect our ability to attract and 10 Table of Contents retain qualified employees include employee morale, our reputation, competition from other employers, wage inflation, and availability of qualified individuals.
Total Rewards 10 Table of Contents We invest in our workforce by offering a competitive total rewards package that includes a combination of salaries and wages, health and wellness benefits, equity incentives, retirement benefits, and educational benefits. We strive to offer a total rewards package that is responsive to local markets.
Total Rewards We invest in our workforce by offering a competitive total rewards package that includes a combination of salaries and wages, health and wellness benefits, equity incentives, retirement benefits, and educational benefits. We strive to offer a total rewards package that is responsive to local markets.
(Nasdaq: VECO), a manufacturer of semiconductor process equipment. Previous notable positions include Senior Vice President, Finance for semiconductor company Spansion, Inc., where he helped lead the company through its restructuring and IPO in 2010, and more than 10 years in various senior positions, including Vice President of M&A and Corporate Controller, at KLA-Tencor Corp., a global semiconductor equipment company.
Previous notable positions include Senior Vice President, Finance for semiconductor company Spansion, Inc., where he helped lead the company through its restructuring and IPO in 2010, and more than 10 years in various senior positions, including Vice President of M&A and Corporate Controller, at KLA-Tencor Corp., a global semiconductor equipment company.
Andrew Hartmann, 62, has served as Senior Vice President and General Manager - Detectors since April 2023 and previously as Senior Vice President, Medical Sales & Marketing since July 2018.
Andrew Hartmann, 63 , has served as Senior Vice President and General Manager - Detectors since April 2023 and previously as Senior Vice President, Medical Sales & Marketing since July 2018.
Transparency International’s 2023 Corruption Perceptions Index measured the degree to which public sector corruption is perceived to exist in 180 countries/territories around the world and found that over two-thirds of the countries in the index, including many that we consider to be high-growth areas for our products, such as China and India, scored below 50, which strongly indicates 8 Table of Contents they have significant corruption issues.
Transparency International’s 2024 Corruption Perceptions Index measured the degree to which public sector corruption is perceived to exist in 180 countries/territories around the world and found that over two-thirds of the countries in the index, including many that we consider to be high-growth areas for our products, such as China and India, scored below 50, which strongly indicates they have significant corruption issues.
In order to mitigate the impact of tariffs on materials imported from China, we have implemented changes to secure more non-China sources of materials used to manufacture our X-ray imaging products.
In order to mitigate the impact of tariffs on materials 9 Table of Contents imported from China, we have implemented changes to secure more non-China sources of materials used to manufacture our X-ray imaging products.
While the governments of both the United States and China have granted tariff exclusions that temporarily eliminate the additional duties payable for specific commodities, providing partial relief, these exclusions are temporary and/or must be solicited and approved on a shipment-by-shipment basis.
While the governments of both the United States and China have, in the past, granted tariff exclusions that temporarily eliminate certain duties payable for specific commodities, providing partial relief, these exclusions are temporary and/or must be solicited and approved on a shipment-by-shipment basis.
In general, our products are regulated outside the United States as medical devices by foreign governmental agencies similar to the FDA. 7 Table of Contents Marketing a medical device internationally . For us to market our products internationally, we must obtain clearances or approvals for products and product modifications.
In general, our products are regulated outside the United States as medical devices by foreign governmental agencies similar to the FDA. Marketing a medical device internationally . For us to market our products internationally, we must obtain clearances or approvals for products and product modifications.
Varex has approximately 2,300 full-time equivalent employees, located at engineering, manufacturing, and service center sites in North America, Europe, and Asia. 2 Table of Contents Our products are sold in three geographic regions: the Americas, EMEA, and APAC. The Americas includes North America (primarily the United States) and Latin America. EMEA includes Europe, the Middle East, India, and Africa.
Varex has approximately 2,400 full-time equivalent employees, located at engineering, manufacturing, and service center sites in North America, Europe, and Asia. Our products are sold in three geographic regions: the Americas, EMEA, and APAC. The Americas includes North America (primarily the United States) and Latin America. EMEA includes Europe, the Middle East, India, and Africa.
We have policies that forbid discrimination and harassment, and we expect our teams to conduct themselves ethically at all times in accordance with Varex’s Code of Conduct. Information Available to Investors The SEC maintains an internet site, www.sec.gov, that contains reports, proxy and information statements, and other information regarding the Company and other issuers that file electronically with the SEC.
We expect our teams to conduct themselves ethically at all times in accordance with Varex’s Code of Conduct. Information Available to Investors The SEC maintains an internet site, www.sec.gov, that contains reports, proxy and information statements, and other information regarding the Company and other issuers that file electronically with the SEC.
Andrew received a Master of Business Administration (“EMBA”) from Ashridge Business School in London, United Kingdom, and received a diploma in electronics from Sydney Technical College in Australia. Mark S. Jonaitis, 63 , has served as Senior Vice President and General Manager - X-Ray Sources since January 2017.
Andrew received a Master of Business Administration (“EMBA”) from Ashridge Business School in London, United Kingdom, and received a diploma in electronics from Sydney Technical College in Australia. 12 Table of Contents Mark S. Jonaitis, 64, has served as Senior Vice President and General Manager - X-Ray Sources since January 2017.
The segments align our products and service offerings with customer use in medical and industrial imaging.
The segments align our products and services offerings with customer use in medical and industrial imaging.
Our top five customers, measured by revenue, are Canon Medical Systems Corporation (“Canon”), United Imaging Healthcare, General Electric Company, Rapiscan Systems, Inc., and Siemens Healthineers AG, which collectively accounted for approximately 41% of total revenue in fiscal year 2024.
Our top five customers, measured by revenue, are Canon Medical Systems Corporation ("Canon"), United Imaging Healthcare, General Electric Company, Siemens Healthineers AG ("Siemens"), and Rapiscan Systems, Inc., which collectively accounted for approximately 40% of total revenue in fiscal year 2025.
While we anticipate some contraction, we expect demand to remain solid in fiscal year 2025.
While we anticipate some contraction, we expect demand to remain solid in fiscal year 2026.
We anticipate that we will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these CERCLA sites (after adjusting for any insurance proceeds). As of September 27, 2024, we had an existing environmental liability of approximately $3.9 million, net of expected insurance proceeds, related to the CERCLA sites.
We anticipate that we will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these CERCLA sites (after adjusting for any insurance proceeds). As of October 3, 2025, we had an existing environmental liability of approximately $3.2 million, net of expected insurance proceeds, related to the CERCLA sites.
As of September 27, 2024, we had approximately 2,300 full-time equivalent employees worldwide. None of our employees based in the United States are unionized or subject to collective bargaining agreements. Employees based in some foreign countries may, from time to time, be represented by works councils or unions or subject to collective bargaining agreements.
As of October 3, 2025, we had approximately 2,400 full-time equivalent employees worldwide. None of our employees based in the United States are unionized or subject to collective bargaining agreements. Employees based in some foreign countries may, from time to time, be represented by works councils or unions or subject to collective bargaining agreements.
There is no guarantee that such exclusions will be granted or extended by either government, and the U.S. tariff exclusions are set to expire on May 31, 2025, unless extended.
There is no guarantee that such exclusions will be granted or extended by either government, and the U.S. tariff exclusions are set to expire on November 10, 2026, unless extended.
Shubham Maheshwari, 53, has served as Chief Financial Officer ("CFO") since July 2020. Shubham (Sam) joined Varex from SiFive, Inc., a leading provider of hardware and software solutions for developing RISC-V based processors and semiconductor chips, where he served as CFO. Before SiFive, Sam served for six years as CFO, and later as CFO and COO, of Veeco Instruments Inc.
Shubham Maheshwari, 54 , has served as Chief Financial Officer ("CFO") since July 2020. Shubham (Sam) joined Varex from SiFive, Inc., a leading provider of hardware and software solutions for developing RISC-V based processors and semiconductor chips, where he served as CFO.
We also must comply with numerous international laws of more general applicability relating to such matters as environmental protection, safe working conditions, manufacturing practices, fire hazard control and other matters. Anti-Corruption Laws and Regulations We are subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, and similar laws in foreign countries, such as the U.K.
We also must comply with numerous international laws of more general applicability relating to such matters as environmental protection, safe working conditions, manufacturing practices, fire hazard control and other matters. 8 Table of Contents Anti-Corruption Laws and Regulations We are subject to the U.S.
Please note that information on, or that can be accessed through, our website is not deemed “filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 11 Table of Contents Information about our Executive Officers The biographical summaries of our executive officers are as follows: Sunny S.
Please note that information on, or that can be accessed through, our website is not deemed “filed” with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Bribery Act of 2010 and the law “On the Fundamentals of Health Protection in the Russian Federation”. In general, there is a worldwide trend to strengthen anti-corruption laws and their enforcement, and the healthcare industry and medical equipment manufacturers have been particular targets of these investigation and enforcement efforts.
In general, there is a worldwide trend to strengthen anti-corruption laws and their enforcement, and the healthcare industry and medical equipment manufacturers have been particular targets of these investigation and enforcement efforts.
Our research and development activities are primarily focused on developing and improving imaging component technology. Current X-ray source development areas include smaller footprint linear accelerators, improvements to tube life and tube stability, reductions of tube noise, and tube designs that will enable OEMs to continue to reduce dose delivered and improve image resolution, cost effectively.
Current X-ray source development areas include smaller footprint linear accelerators, improvements to tube life and tube stability, reductions of tube noise, and tube designs that will enable OEMs to continue to reduce dose delivered and improve image resolution, cost effectively.
Sanyal, 60 , has served as President, Chief Executive Officer, and Director since January 2017. Prior to the separation of Varex from Varian, Sunny served as senior vice president and president of Varian’s Imaging Components business for Varian since February 2014.
Information about our Executive Officers The biographical summaries of our executive officers are as follows: Sunny S. Sanyal, 61 , has served as President, Chief Executive Officer, and Director since January 2017. Prior to the separation of Varex from Varian, Sunny served as senior vice president and president of Varian’s Imaging Components business for Varian since February 2014.
Industrial In the low-energy sector of our Industrial segment, we compete with other OEM suppliers, such as iRay, Teledyne, and Comet AG. While there are other manufacturers of low-energy X-ray tubes and digital detectors for specialized and niche industrial applications, our products are designed for a broad range of applications in inspection, analysis, and non-destructive testing.
While there are other manufacturers of low-energy X-ray tubes and digital detectors for specialized and niche industrial applications, our products are designed for a broad range of applications in inspection, analysis, and non-destructive testing.
As of September 27, 2024, we own approximately 230 patents issued in the United States, approximately 410 patents issued throughout the rest of the world and have approximately 160 patent applications pending with various patent agencies worldwide. The patents issued expire between 2024 and 2042. We intend to file additional patent applications as appropriate.
As of October 3, 2025, we own approximately 240 patents issued in the United States, approximately 420 patents issued throughout the rest of the world and have approximately 210 patent applications pending with various patent agencies worldwide. The patents issued expire between 2025 and 2044. We intend to file additional patent applications as appropriate.
We require certain raw materials, such as copper, nickel, silver, gold, lead, tungsten, iridium, rhenium, molybdenum, rhodium, niobium, zirconium, beryllium, and various high grades of steel alloy for X-ray tubes and industrial products. Worldwide demand, availability and pricing of these raw materials have been volatile, and we expect that availability and pricing will continue to fluctuate in the future.
We require certain raw materials, such as copper, nickel, silver, gold, lead, tungsten, iridium, rhenium, molybdenum, rhodium, niobium, zirconium, beryllium, and various high grades of steel alloy for X-ray tubes and industrial products.
The 510(k) clearance process can be time consuming, costly, and uncertain, and in the case of modification to an existing device, may require the manufacturer to cease marketing and recall the product until 510(k) clearance is obtained. Most of our products are non-classified or Class I medical devices, which do not require 510(k) clearance. Quality systems .
The 510(k) clearance process can be time consuming, costly, and uncertain, and in the case of modification to an existing device, may require the manufacturer to cease marketing and recall the product until 510(k) clearance is obtained.
The digital detectors business is highly competitive. We sell our digital detectors to a number of OEM customers that incorporate our detectors into their medical diagnostic, oncology, 3D dental and veterinary imaging systems.
High capital costs and mastery of complex manufacturing processes that drive production yield and product life are significant characteristics of the X-ray tube business. The digital detectors business is highly competitive. We sell our digital detectors to a number of OEM customers that incorporate our detectors into their medical diagnostic, oncology, 3D dental and veterinary imaging systems.
We believe that our products provide a competitive advantage due to product quality and performance and lower total cost of ownership over the product lifecycle. In our digital flat panel detector business, we primarily compete against Trixell S.A.S., Canon, Vieworks Co., Ltd., Hamamatsu Corporation, iRay Technology (Shanghai) Limited, and Jiangsu CareRay Medical Systems Co., Ltd.
In our digital flat panel detector business, we primarily compete against Trixell S.A.S., Canon, Vieworks Co., Ltd., Hamamatsu Corporation, iRay Technology (Shanghai) Limited, and Jiangsu CareRay Medical Systems Co., Ltd.
Research in digital detector imaging technology is aimed at developing new panel technologies (such as photon counting) with better dose utilization, improved image quality and materials discrimination, lower product costs, and new image processing tools for advanced applications. 5 Table of Contents One of our competitive advantages is that some of the foundational technologies and software components developed for medical applications may also be applicable in industrial components, and vice versa.
Research in digital detector imaging technology is aimed at developing new panel technologies (such as photon counting) with better dose utilization, improved image quality and materials discrimination, lower product costs, and new image processing tools for advanced applications.
Research and Development Innovation and developing products, systems, and services based on advanced technology is essential to our ability to compete effectively in the marketplace. We maintain a research and development and engineering staff responsible for product design and engineering. Research and development are primarily conducted at our facilities in the United States and Europe.
We maintain a research and development and engineering staff responsible for product design and engineering. Research and development are primarily conducted at our facilities in the United States and Europe. Our research and development activities are primarily focused on developing and improving imaging component technology.
In addition, our Industrial business benefits from our long-term service agreements for our Linatron® products. Security applications primarily consists of cargo security for the screening of trucks, trains, and cargo containers at ports and borders as well as airport security for checked baggage and palletized cargo.
Security applications primarily consist of cargo security for the screening of trucks, trains, and cargo containers at ports and borders as well as airport security for checked baggage and palletized cargo.
Over the long-term, our objective is to become the partner of choice both for new systems and for replacement components in existing systems as CT systems continue to be more widely adopted throughout China. In March 2024, China introduced a new stimulus program that includes the healthcare industry.
We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China. Over the long term, our objective is to become the partner of choice both for new systems and for replacement components in existing systems as CT systems continue to be more widely adopted throughout China.
In addition, we compete with some OEM customers, such as Canon, Philips Healthcare and other companies who sell X-ray tubes to smaller OEMs and other manufacturers, as well as emerging X-ray tube manufacturers in China. High capital costs and mastery of complex manufacturing processes that drive production yield and product life are significant characteristics of the X-ray tube business.
In addition, we compete with some OEM customers, such as Canon, Philips Healthcare and other companies who sell X-ray tubes to smaller OEMs and other manufacturers, as well as emerging X-ray tube 4 Table of Contents manufacturers.
In the past, we have seen demand for our customers’ systems (in which our products are incorporated) negatively impacted by the uncertainties surrounding reimbursement rates in the United States. State government reimbursement for services is determined pursuant to each state’s Medicaid plan, which is established by state law and regulations, subject to requirements of federal law and regulations.
In the past, we have seen demand for our customers’ systems (in which our products are incorporated) negatively impacted by the uncertainties surrounding reimbursement rates in the United States.
Various healthcare reform proposals have also emerged at the state level, and we are unable to predict which, if any, of these proposals will be enacted.
State government reimbursement for services is determined pursuant to each state’s Medicaid plan, which is established by state law and regulations, subject to requirements of federal law and regulations. 7 Table of Contents Various healthcare reform proposals have also emerged at the state level, and we are unable to predict which, if any, of these proposals will be enacted.
Some of our initiatives include establishing a global employee resource group to drive advocacy and inclusion; providing internships with a focus on building science, technology, engineering, and mathematics ("STEM") programs, regularly analyzing pay equity, and engaging in on-campus events that increase our exposure to diverse populations to promote diversity in our hiring.
Equity and Inclusion As one of our values states, “we embrace equality,” and we are committed to an inclusive workplace that is respectful to all. Some of our initiatives include establishing a global employee resource group to drive advocacy and inclusion; providing internships with a focus on building science, technology, engineering, and mathematics ("STEM") programs; and regularly analyzing pay equity.
Our amorphous silicon based digital detector technology, our photon counting technology, and our complementary metal-oxide-semiconductor technology compete with other detector technologies, such as amorphous selenium, charge-coupled devices, and variations of amorphous silicon 4 Table of Contents scintillators.
Our amorphous silicon based digital detector technology, our photon counting technology, and our complementary metal-oxide-semiconductor technology compete with other detector technologies, such as amorphous selenium, charge-coupled devices, and variations of amorphous silicon scintillators. We believe that our products provide a competitive advantage due to product quality and performance and lower total cost of ownership over the product lifecycle.
Based on the results of the recent U.S. elections, there is significant concern that trade relations between the United States and China could worsen in the future, which could materially negatively impact our business moving forward. 3 Table of Contents Industrial In our Industrial segment, we design, develop, manufacture, sell, and service X-ray imaging products for use in a number of applications, including security applications for cargo screening at ports and borders, baggage screening at airports, and nondestructive testing, irradiation, and inspection applications used in a number of other verticals.
Industrial In our Industrial segment, we design, develop, manufacture, sell, and service X-ray imaging products for use in a number of applications, including security applications for cargo screening at ports and borders, baggage screening at airports, and nondestructive testing, irradiation, and inspection applications used in a number of other verticals.
Sam holds an MBA in Finance from Wharton, and a bachelor’s degree in chemical engineering from the Indian Institute of Technology, Delhi. Kimberley E. Honeysett, 53, has served as Chief Legal Officer since February 2022 and as Senior Vice President, General Counsel, and Corporate Secretary since January 2017.
Sam holds an MBA in Finance from Wharton, and a bachelor’s degree in chemical engineering from the Indian Institute of Technology, Delhi. Matthew Martinez, 44 , has served as Chief Legal Officer and Corporate Secretary since October 2025. Prior to rejoining Varex, Matt served as general counsel of Energy Exemplar, a global provider of energy market simulation software.
In addition to these product development synergies, we are also able to realize sourcing, production, service center, and logistics synergies across the different products and business lines.
One of our competitive advantages is that some of the foundational technologies and software components developed for medical applications may also be applicable in industrial components, and vice versa. In addition to these product development synergies, we are also able to realize sourcing, production, service center, and logistics synergies across the different products and business lines.
Our Industrial products include Linatron® X-ray linear accelerators, X-ray tubes, flat panel and photon counting detectors, computed radiography scanners, high voltage connectors, and coolers. In addition, we license proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to our Industrial customers.
We also manufacture and sell our own X-ray imaging systems for industrial applications. Our Industrial products include Linatron® X-ray linear accelerators, non-intrusive cargo inspection systems, X-ray tubes, flat panel and photon counting detectors, computed radiography scanners, high voltage connectors, and coolers.
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Dental radiology equipment increased nine-fold, and mammography and CT scanners showed a nearly five-fold increase. We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China.
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In addition, we license proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to our Industrial customers. Our Industrial business benefits from the research and development investment and manufacturing economies of scale on the Medical side of our business, as we continue to find new applications for our technology.
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We believe the stimulus program has led to customers delaying purchasing decisions in the short-term as they wait to understand the details of the program before making significant purchasing decisions, but are optimistic that it will result in increased opportunities for our business in the longer-term.
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Industrial In the low-energy sector of our Industrial segment, we compete with other OEM suppliers, such as iRay, Teledyne, and Comet AG, as well as those described above for Medical digital detectors.
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As described in more detail under the heading “ Competition and Trade Compliance Laws ” of this Item 1, our business in China has been, is currently being, and may in the future be, impacted by trade wars between the United States and China.
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Worldwide demand, availability and pricing of these raw materials have been volatile, and we expect that availability and pricing will continue to fluctuate in the future. 5 Table of Contents Research and Development Innovation and developing products, systems, and services based on advanced technology is essential to our ability to compete effectively in the marketplace.
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While the anti-corruption campaign negatively impacted Medical sales during fiscal year 2024, we remain optimistic about China in the longer-term and support efforts to eradicate corruption.
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Most of our products are non-classified or Class I medical devices, which do not require 510(k) clearance. 6 Table of Contents Quality systems .
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Our mitigation efforts could prove less effective than anticipated if, as a result of the recent U.S. elections, the United States or China impose higher tariffs on one another or other events, such as increasing tensions between China and Taiwan, lead to worsening trade relations between China and the United States.
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Foreign Corrupt Practices Act and anti-corruption laws, and similar laws in foreign countries, such as the U.K. Bribery Act of 2010 and the law “On the Fundamentals of Health Protection in the Russian Federation”.
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Diversity and Inclusion As one of our values states, “we embrace equality,” and we are committed to a diverse and inclusive workplace that is respectful to all.
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During fiscal year 2025, we had stronger sales in our Medical business in China.
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Prior to the separation of Varex from Varian, Kim served as vice president and assistant general counsel and assistant corporate secretary for Varian, where she advised Varian’s Board of Directors, executive management and corporate functions, including business development, investor relations, human resources, information technology and was responsible for corporate governance, general compliance matters, litigation and global subsidiary governance.
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In addition, while we have been working to implement other tariff mitigation measures, such as free trade zones, bonded mechanisms, and drawback programs, we cannot provide any guarantee that we will be able to effectively implement such measures.
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Prior to joining Varian in 2005, Kim served as group director, legal affairs at Siebel Systems, Inc., an enterprise software company, and as an associate with the law firm Brobeck, Phleger & Harrison LLP. Kim holds a juris doctor degree from Cornell Law School and a bachelor’s degree in communications from the University of California, Los Angeles.
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Before SiFive, Sam served for six years as CFO, and later as CFO and COO, of Veeco Instruments Inc. (Nasdaq: VECO), a manufacturer of semiconductor process equipment.
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He originally joined Varex in September 2017 as senior corporate counsel and served as assistant general counsel and assistant corporate secretary from October 2020 until his departure for Energy Exemplar in April 2022. Matt has significant international experience, having previously served as senior legal counsel for Apache Corporation in Argentina and Canada.
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In addition to his in-house experience, Matt practiced at the law firms of Akin Gump Strauss Hauer and Feld LLP and Stoel Rives LLP where he focused on securities compliance, mergers and acquisitions, and other transactional matters. Matt holds a juris doctor from Vanderbilt University of Law School and a bachelor's degree in political science from Brigham Young University.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

91 edited+40 added−28 removed139 unchanged
Biggest changeThe Credit Agreement, Equipment Credit Agreement, and the indenture governing our Senior Secured Notes impose significant operational and financial restrictions on us that include, but are not limited to our ability to: • incur, assume, or permit to exist additional indebtedness (including guarantees thereof); • pay dividends or certain other distributions on our capital stock or repurchase our capital stock or prepay subordinated indebtedness; • prepay, redeem, or repurchase certain debt; • issue certain preferred stock or similar equity securities; • incur liens on assets; • make certain loans, investments, or other restricted payments; • allow to exist certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us; • engage in transactions with affiliates; • alter the business that we conduct; and • sell certain assets or merge or consolidate with or into other companies. 24 Table of Contents As a result of these restrictions, we may be: • limited in how we conduct our business; • unable to raise additional debt or equity financing to operate during general economic or business downturns; • limited in our ability to borrow additional funds as needed or increasing the cost of such borrowing; • challenged in satisfying our obligations, including our debt obligations; • vulnerable to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest; • required to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures, or other general corporate purposes; • disadvantaged compared to competitors that may have proportionately less debt; or • unable to compete effectively or to take advantage of new business opportunities.
Biggest changeAs a result of these restrictions, we may be: • limited in how we conduct our business; • unable to raise additional debt or equity financing on acceptable terms or at all, to operate during general economic or business downturns; • limited in our ability to borrow additional funds as needed or increasing the cost of such borrowing; • challenged in satisfying our obligations, including our debt obligations; • vulnerable to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest; • required to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures, or other general corporate purposes; • disadvantaged compared to competitors that may have proportionately less debt; or • unable to compete effectively or to take advantage of new business opportunities.
The sufficiency and availability of credit may be adversely affected by a variety of factors, including, without limitation, the tightening of the credit markets, including lending by financial institutions who are sources of credit for our borrowing and liquidity; an increase in the cost of capital; the reduced availability of credit; our ability to execute our strategy; the level of our cash flows, which will be impacted by customer demand for our products; compliance with a fixed charge coverage ratio that is included in our Revolving Credit Facility and our Equipment Credit Facility; and interest rate fluctuations.
The sufficiency and availability of credit may be adversely affected by a variety of factors, including, without limitation, the tightening of the credit markets, including lending by financial institutions who are sources of credit for our borrowing and liquidity; an increase in the cost of capital; the reduced availability of credit; our ability to execute our strategy; the level of our cash flows, which will be impacted by customer demand for our products; compliance with a fixed charge coverage ratio that is included in our Revolving Credit Facility; and interest rate fluctuations.
A product liability action determined against us could result in adverse publicity or significant damages, including the possibility of punitive damages, and our combined financial position, results of operations, or cash flows could be materially and adversely affected. We maintain limited product liability insurance coverage. Our product liability insurance policies are expensive and have high deductible amounts and self-insured retentions.
A product liability action determined against us could result in adverse publicity or significant damages, including the possibility of punitive damages, and our financial position, results of operations, or cash flows could be materially and adversely affected. We maintain limited product liability insurance coverage. Our product liability insurance policies are expensive and have high deductible amounts and self-insured retentions.
Because the manufacture of our products requires some lead-time, changes in customer purchasing forecasts have previously resulted in excess inventory and slowdowns in sales, which are likely to occur again in the future. Changes to customer forecasts can occur on short notice, as our customers face inherent competitive issues, new product introduction delays, and our business and regulatory risks.
Because the manufacture of our products requires some lead-time, changes in customer purchasing forecasts have previously resulted in excess inventory and slowdowns in sales, which are likely to occur again in the future. Changes to customer forecasts can occur on short notice, as our customers face inherent competitive issues, new product introduction delays, and regulatory risks.
In addition, in June 2024, Varex Germany filed an action in Germany for a (negative) declaratory judgment and an injunction against business damaging statements made by certain third parties, and in August 2024 and October 2024 Varex Germany and Varex Imaging Corporation filed additional lawsuits in Germany and the United States relating to intellectual property matters, breach of contracts and other matters.
In addition, in June 2024, Varex Germany filed an action in Germany for a negative declaratory judgment and an injunction against business damaging statements made by certain third parties, and in August 2024, October 2024 and subsequently, Varex Germany and Varex Imaging Corporation filed additional lawsuits in Germany and the United States relating to intellectual property matters, breach of contracts and other matters.
Even if we succeed in introducing new products, enhancements, or technologies as soon as expected, if at all, potential customers may not accept or purchase these new products, enhancements, or technologies, and we may not be able to recover all or a meaningful part of our investment.
Even if we succeed in introducing new products, enhancements, or technologies as soon as expected, potential customers may not accept or purchase these new products, enhancements, or technologies, and we may not be able to recover all or a meaningful part of our investment.
If we or any of our suppliers, distributors, agents, or customers fail to comply with FDA, Federal Trade Commission, or other applicable United States regulatory requirements or are perceived to have failed to comply with regulations, we may face: 20 Table of Contents • adverse publicity affecting both us and our customers; • increased pressures from competitors; • investigations by governmental authorities; • fines, injunctions, civil penalties, and criminal prosecution; • partial suspension or total shutdown of production facilities or the imposition of operating restrictions; • increased difficulty in obtaining required clearances or approvals or losses of clearances or approvals already granted; • seizures or recalls of our products or those of our customers; • delays in purchasing decisions by customers or cancellation of existing orders; • the inability to sell our products; and • difficulty in obtaining product liability or operating insurance at a reasonable cost, or at all.
If we or any of our suppliers, distributors, agents, or customers fail to comply with FDA, Federal Trade Commission, or other applicable United States regulatory requirements or are perceived to have failed to comply with regulations, we may face: • adverse publicity affecting both us and our customers; • increased pressures from competitors; • investigations by governmental authorities; • fines, injunctions, civil penalties, and criminal prosecution; • partial suspension or total shutdown of production facilities or the imposition of operating restrictions; • increased difficulty in obtaining required clearances or approvals or losses of clearances or approvals already granted; • seizures or recalls of our products or those of our customers; • delays in purchasing decisions by customers or cancellation of existing orders; • the inability to sell our products; and • difficulty in obtaining product liability or operating insurance at a reasonable cost, or at all.
Our operations are vulnerable to interruption or loss due to natural or other disasters, the effects of climate change, power loss, strikes, and other events beyond our control.
Our operations are vulnerable to interruption or loss due to natural or other disasters, the adverse effects of climate change, power loss, strikes, and other events beyond our control.
Risks Relating to Our Business We sell our products and services to a limited number of OEM customers, many of which are also our competitors, and a delay in an order to a future period, as well as a reduction in or loss of business of one or more of these customers has in the past and may in the future materially reduce our sales.
We sell our products and services to a limited number of OEM customers, many of which are also our competitors, and a delay in an order to a future period, as well as a reduction in or loss of business of one or more of these customers has in the past and may in the future materially reduce our sales.
We cannot predict the future level of interest rates or the effect of any increase in interest rates on the availability or aggregate cost of our borrowings. We cannot be certain that any additional required financing, whether debt or equity, will be available in amounts needed or on terms acceptable to us, if at all.
We cannot predict the future level of interest rates or the effect of any change in interest rates on the availability or aggregate cost of our borrowings. We cannot be certain that any additional required financing, whether debt or equity, will be available in amounts needed or on terms acceptable to us, if at all.
We may also experience lower margins due to increased commodities prices, and inadequate transfer pricing favoring sales to third parties over internal sales. If we are unable to lower these costs over time, our operating results could be materially and adversely affected.
We may also experience lower margins due to increased commodities prices, higher tariffs, and inadequate transfer pricing favoring sales to third parties over internal sales. If we are unable to lower these costs over time, our operating results could be materially and adversely affected.
A new medical device or a new indication for use of, or other significant change in, any such products, or the development of a new Class II device would require us to obtain a new 501(k) clearance before we could market or sell those products in the United States.
A new medical device or a new indication for use of, or other significant change in, any such products, or the development of a new Class II device would require us to obtain a new 510(k) clearance before we could market or sell those products in the United States.
Any changes that lower reimbursements for us or our customers’ products and/or procedures using these products, including, for example, existing reimbursement incentives to convert from analog to digital X-ray systems, or changes that reduce medical procedure volumes or increase cost containment pressures on us or others in the healthcare sector could materially and adversely affect our business and results of operations.
Any changes that lower reimbursements for us or our customers’ products and/or procedures using these products, including, for example, existing reimbursement incentives to convert 23 Table of Contents from analog to digital X-ray systems, or changes that reduce medical procedure volumes or increase cost containment pressures on us or others in the healthcare sector could materially and adversely affect our business and results of operations.
Competition and trade compliance laws . We are subject to various competition and trade compliance laws in the jurisdictions where we operate throughout the world. Regulatory authorities in those jurisdictions may have the power to subject us to sanctions and impose changes or conditions in the way we conduct our business.
Competition and trade compliance laws . We are subject to various competition and trade compliance laws in the jurisdictions where we operate throughout the world. Regulatory authorities in those jurisdictions may have the power to subject us to sanctions, tariffs, and duties and may impose changes or conditions in the way we conduct our business.
In addition, certain costs, including installation and warranty costs, associated with new products have been, currently are, and may in the future be proportionately greater than the costs associated with existing products and have or may therefore disproportionately, materially, and adversely affect our gross and operating margins.
In addition, certain costs, including installation and warranty costs, associated with new products have been, and may in the future be proportionately greater than the costs associated with existing products and have or may therefore disproportionately, materially, and adversely affect our gross and operating margins.
Any 13 Table of Contents inability to develop, gain regulatory approval for, and supply commercial quantities of competitive products to existing and potential customers as quickly and effectively as our competitors could limit acceptance of our products and negatively and materially affect our pricing, sales, revenues, market share, and gross margins and our ability to maintain or increase our operating margins.
Any inability to develop, gain regulatory approval for, and supply commercial quantities of competitive products to existing and potential customers as quickly and effectively as our competitors could limit acceptance of our products and negatively and materially affect our pricing, sales, revenues, market share, and gross margins and our ability to maintain or increase our operating margins.
The expense and costs of any corrective actions that we may take, which may include product recalls, product correction, removal of products from customer sites, or changes to our product manufacturing and quality systems, could materially and adversely impact our financial results and may also divert management resources, attention, and time.
The expense and costs of any corrective actions that we may take, which may include product recalls, product correction, removal of products from customer sites, or changes to our product manufacturing and quality systems, could materially and adversely impact our financial results and may also divert management resources, attention, and 20 Table of Contents time.
More than half of our revenue is currently generated from customers located outside the United States, and is subject to global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, and other risks associated with international manufacturing, operations, and sales.
More than half of our revenue is currently generated from customers located outside the United States, and is subject to global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, tariffs, trade wars and other risks associated with international manufacturing, operations, and sales.
Revenues generated from customers located outside the United States accounted for approximately 68%, 69%, and 69% of our total revenues during fiscal years 2024, 2023, and 2022, respectively. We intend to continue to expand our presence internationally and expect to expend significant resources in doing so.
Revenues generated from customers located outside the United States accounted for approximately 70%, 68%, and 69% of our total revenues during fiscal years 2025, 2024, and 2023, respectively. We intend to continue to expand our presence internationally and expect to expend significant resources in doing so.
Furthermore, competition laws may prohibit or increase the cost of future acquisitions that we may desire to undertake. 22 Table of Contents Laws and ethical rules governing interactions with healthcare providers . We may occasionally sell our products to healthcare providers through distributors or otherwise engage healthcare providers to provide services. The U.S.
Furthermore, competition laws may prohibit or increase the cost of future acquisitions that we may desire to undertake. Laws and ethical rules governing interactions with healthcare providers . We may occasionally sell our products to healthcare providers through distributors or otherwise engage healthcare providers to provide services. The U.S.
Additionally, several recently enacted state and federal laws, including laws in Massachusetts and Vermont, and the federal Physician Payment Sunshine Act, now require, among other things, extensive tracking and maintenance of databases regarding the disclosure of equity ownership and payments to physicians, healthcare providers, and hospitals.
Additionally, several recently-enacted state and federal laws, including laws in Massachusetts and Vermont, and the federal Physician Payment Sunshine Act, now require, among other things, extensive tracking and maintenance 22 Table of Contents of databases regarding the disclosure of equity ownership and payments to physicians, healthcare providers, and hospitals.
We cannot provide assurance, however, that patents will be issued from any of our pending or future patent applications or that our current patents, the claims allowed under our current patents, or patents for technologies licensed to us will be sufficiently broad to protect our technology position against competitors.
We cannot provide assurance, however, that patents will be issued from any of our pending or future patent applications or that our current patents, the claims allowed under our current patents, or patents for technologies licensed to us will be sufficiently broad to protect our technology 19 Table of Contents position against competitors.
Risk Factors Investing in Varex Imaging Corporation common stock involves risks and the following risk factors and other information included in this Annual Report on Form 10-K under Item 1 "Business", Item 7 "Management’s Discussion and Analysis of Financial 12 Table of Contents Condition and Results of Operations" and Item 7A "Quantitative and Qualitative Disclosures about Market Risk" should be carefully considered.
Item 1A. Risk Factors Investing in Varex Imaging Corporation common stock involves risks and the following risk factors and other information included in this Annual Report on Form 10-K under Item 1 "Business", Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Item 7A "Quantitative and Qualitative Disclosures about Market Risk" should be carefully considered.
These types of investments are inherently risky, in some instances because customer demand and sales for the technologies or products under development may never materialize, may develop more slowly than expected, or may underperform relative to our expectations.
These types of investments are 16 Table of Contents inherently risky, in some instances because customer demand and sales for the technologies or products under development may never materialize, may develop more slowly than expected, or may underperform relative to our expectations.
Pursuant to the Separation and Distribution Agreement we entered into with Varian Medical Systems, Inc. ("Varian") when we spun off from Varian, we are obligated to indemnify Varian for 20% of the cleanup liabilities related to prior corporate restructuring activities undertaken while we were a division of Varian.
Pursuant to the Separation and Distribution Agreement we entered into with Varian when we spun off from Varian, we are obligated to indemnify Varian for 20% of the cleanup liabilities related to prior corporate restructuring activities undertaken while we were a division of Varian.
Risks Relating to Our Indebtedness The Revolving Credit Facility, Equipment Credit Facility, and the indenture governing our Senior Secured Notes impose significant operating and financial restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests and may limit our ability to make payments on the notes.
Risks Relating to Our Indebtedness The Credit Agreement and the indenture governing our Senior Secured Notes impose significant operating and financial restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests and may limit our ability to make payments on the notes.
Such a default, if not cured or waived, may allow the creditors to accelerate the related debt, may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision, and would permit the respective lenders under the Revolving Credit Facility and the Equipment Credit Facility to terminate all commitments to extend further credit under those credit facilities.
Such a default, if not cured or waived, may allow the creditors to accelerate the related debt, may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision, and would permit the lenders under the Revolving Credit Facility to terminate all commitments to extend further credit under the credit facility.
If a product we design or manufacture were defective, we may be required to correct or recall the product and notify regulatory authorities. We may choose to settle product liability claims against us regardless of their actual merit.
If a product we design or manufacture were defective, we may be required to correct or recall the product and notify regulatory authorities. 17 Table of Contents We may choose to settle product liability claims against us regardless of their actual merit.
Risks Relating to our Intellectual Property and Information Systems Our competitive position would be harmed if we are not able to maintain or defend our intellectual property rights, and protecting our intellectual property and defending against infringement claims can be costly. We file applications as appropriate for patents covering new products and manufacturing processes.
Our competitive position would be harmed if we are not able to maintain or defend our intellectual property rights, and protecting our intellectual property and defending against infringement claims can be costly. We file applications as appropriate for patents covering new products and manufacturing processes.
Some of our competitors outside of the United States may have resources and support from their governments that we do not, such as preferences for local manufacturers, and may not be subject to the same trade compliance regulations as us.
Some of our competitors outside of the United States may have resources and support from their governments that we do not, such as preferences for local manufacturers, and may not be subject to the same tariffs, trade policies, trade compliance regulations and government investigations as us.
Because our products, through incorporation into OEMs’ systems, are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation, the possibility for significant personal injury or loss of life exists.
Because our products are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation, the possibility for significant personal injury or loss of life exists.
Disruption of critical information systems or material breaches in the security of our systems may materially and adversely affect our business and customer relations. Information technology (including technology from third-party providers) helps us operate efficiently, interface with and support our customers, maintain financial accuracy and efficiency, and produce our financial statements.
Risks Relating to our Information Systems and Intellectual Property Disruption of critical information systems or material breaches in the security of our systems may materially and adversely affect our business and customer relations. Information technology (including technology from third-party providers) helps us operate efficiently, interface with and support our customers, maintain financial accuracy and efficiency, and produce our financial statements.
Failure to complete these processes timely and efficiently could result in delays that could affect our ability to attract and retain customers or cause customers to delay or cancel orders, which would materially and adversely affect our revenues and operating results.
Failure to complete these processes timely and efficiently 15 Table of Contents could result in delays that could affect our ability to attract and retain customers or cause customers to delay or cancel orders, which would materially and adversely affect our revenues and operating results.
Compliance with United States laws and regulations applicable to the marketing, manufacturing, and distribution of our products may be costly, and failure or delays in obtaining regulatory clearances or approvals, or failure to comply with applicable laws and regulations could harm our business.
Risks Relating to Our Legal and Regulatory Environment Compliance with United States laws and regulations applicable to the marketing, manufacturing, and distribution of our products may be costly, and failure or delays in obtaining regulatory clearances or approvals, or failure to comply with applicable laws and regulations could harm our business.
If either party is successful, the prevailing party would be required to purchase the non-prevailing party’s interest in the joint venture for an amount equal to 75% of the fair market value thereof, which amount is in dispute.
If either party were to successfully appeal, the prevailing party would be required to purchase the non-prevailing party’s interest in the joint venture for an amount equal to 75% of the fair market value thereof, which amount is in dispute.
Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, borrowings through our previous credit facility, and debt offerings.
Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, borrowings through credit facilities, and debt offerings.
If our suppliers cease producing these or other components, prioritize other customers, fail to provide products on our delivery timelines, or become unable to continue operations, we may be unable to obtain the components from other suppliers on reasonable terms or at all, and this could materially and adversely affect our business and financial results.
If our suppliers cease producing these or other components, prioritize other customers, fail to provide products on our delivery timelines, are in countries subject to significant tariffs, or become unable to continue operations, we may be unable to obtain the components from other suppliers on reasonable terms or at all, and this could materially and adversely affect our business and financial results.
In the past such actions both in China and Russia, have caused, and could in the future cause, significant disruptions in the regions and industries we serve and in our supply chain, as well as decrease demand from customers for the ultimate products using our solutions and materially harm our business, financial condition, and result of operation.
In the past, such actions both in China and Russia, have caused, are causing, and could in the future cause, significant disruptions in the regions and industries we serve and in our supply chain, as well as decrease demand from customers for the ultimate products using our solutions and materially harm our business, financial condition, and results of operations.
Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently, have become increasingly sophisticated, and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures, which could result in data leaks or otherwise compromise our confidential or proprietary information and materially disrupt our operations.
Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently, have become increasingly sophisticated, and generally are not recognized until launched against a target, we may be unable to anticipate or immediately detect these techniques, or the vulnerabilities they have caused or other potential vulnerabilities or security defects, or to implement adequate preventative measures, which could result in data leaks or otherwise compromise our confidential or proprietary information and materially disrupt our operations.
If we are unable to obtain the materials necessary to make certain products without unreasonable delay, our customers may seek alternative suppliers or decide to in-source certain products or if we must pay more for certain materials, it could reduce our profit margin or otherwise have a material adverse effect on our business and financial results.
If we are unable to obtain the materials necessary to make certain products without unreasonable cost or delay, our customers may seek alternative suppliers who are less impacted by the current tariff environment, or decide to in-source certain products or if we must pay more for certain materials, it could reduce our profit margin or otherwise have a material adverse effect on our business and financial results.
A breach of the covenants under the indenture governing our Senior Secured Notes, the Revolving Credit Facility, or Equipment Credit Facility could result in an event of default under the applicable indebtedness.
A breach of the covenants under the indenture governing our Senior Secured Notes or the Credit Agreement could result in an event of default under the applicable indebtedness.
Similarly, if we fail to adequately invest in leadership training and career development resources this could limit employee growth, lead to shortages of skilled personnel, hinder effective management and decision making, and hamper overall organizational success. Item 1B. Unresolved Staff Comments None.
Similarly, if we fail to adequately invest in leadership training and career development resources this could limit employee growth, lead to shortages of skilled personnel, hinder effective management and decision making, and hamper overall organizational success.
Increasing tensions between countries, such as China and Taiwan, as well as local conflicts including the Ukraine-Russia war and the ongoing conflict in Israel and Gaza may lead the United States and/or other countries to impose new tariffs and sanctions or strengthen existing tariffs and sanctions, enact boycotts and embargoes, and otherwise seek to limit or stop the flow of goods to or from involved countries.
Increasing tensions between countries, such as China and Taiwan, as well as local conflicts including the Ukraine-Russia war and Middle East conflicts, may lead the United States and/or other countries to impose new tariffs and sanctions or expand existing tariffs and sanctions, enact boycotts and embargoes, and otherwise seek to limit or stop the flow of goods to or from involved countries.
We had one customer during fiscal year 2024 that accounted for 18% of our revenue. Our ten largest customers as a group accounted for approximately 53%, 51% and 52% of our revenue for fiscal years 2024, 2023 and 2022, respectively.
We had one customer during fiscal year 2025 that accounted for 18.0% of our revenue, all of which was in our Medical segment. Our ten largest customers as a group accounted for approximately 52%, 53% and 51% of our revenue for fiscal years 2025, 2024 and 2023, respectively.
We also jointly develop intellectual property with third parties and seek to protect our rights to such intellectual property through licenses and other contractual arrangements. 17 Table of Contents We also rely on a combination of copyright, trade secret, and other laws, and contractual restrictions on disclosure, copying and transferring title (including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants, and other third parties), to protect our proprietary, and other confidential rights.
We also rely on a combination of copyright, trade secret, and other laws, and contractual restrictions on disclosure, copying and transferring title (including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants, and other third parties), to protect our proprietary, and other confidential rights.
If a legal proceeding were to be ultimately resolved against us, we may be required to pay damages or fines, some of which may be in excess of our insurance coverage, or may require us to change our business practices, which could materially and adversely impact our business, results of operations, or cash flows. 15 Table of Contents Our subsidiary Varex Imaging Deutschland AG ("Varex Germany") holds a 50% interest in VEC.
If a legal proceeding were to be ultimately resolved against us, we may be required to pay damages or fines, some of which may be in excess of our insurance coverage, or may require us to change our business practices, which could materially and adversely impact our business, results of operations, or cash flows.
Our ability to continue to have the necessary liquidity to operate our business may be adversely impacted by a number of factors, and a deterioration of our results of operations and cash flow resulting from decreases in customer spending, could, among other things, impact our ability to comply with the consolidated fixed charge coverage ratio and the consolidated total net leverage ratio contained in our Revolving Credit Facility and Equipment Credit Facility.
As a result, the indenture may prevent us from using the proceeds from such dispositions to satisfy our debt service obligations. 25 Table of Contents Our ability to continue to have the necessary liquidity to operate our business may be adversely impacted by a number of factors, and a deterioration of our results of operations and cash flow resulting from decreases in customer spending, could, among other things, impact our ability to comply with the consolidated fixed charge coverage ratio and the consolidated total net leverage ratio contained in our Revolving Credit Facility.
The Revolving Credit Facility and Equipment Credit Facility each contain a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00 and a maximum consolidated total net leverage ratio (the “CTNL Ratio”).
The Credit Agreement providing for our Revolving Credit Facility contains a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00 and a maximum consolidated total net leverage ratio (the “CTNL Ratio”).
These tariffs have increased our customers’ costs for products imported into China, which has caused us to make, and may in the future require us to make, price concessions on some products and has caused, and may in the future cause, some customers to stop purchasing our products.
Retaliatory tariffs have increased our customers’ costs for products exported from the United States, which has caused us to make, and may in the future require us to make, price and other concessions on some products and has caused, and may in the future cause, some customers to stop purchasing our products.
Consequently, we do not have insurance that would cover this type of liability. 21 Table of Contents We sell certain X-ray tube products as replacements which are subject to medical device certification and product registration laws and regulations that vary by country and are subject to change, and we may be unable to receive registration approval or renewal of existing registrations.
We sell certain X-ray tube products as replacements which are subject to medical device certification and product registration laws and regulations that vary by country and are subject to change, and we may be unable to receive registration approval or renewal of existing registrations.
In August 2023, February 2024, and August 2024, the partners to the VEC joint venture filed judicial proceedings in Germany against one another disputing the validity of shareholder resolutions passed in January 2023, January 2024, and August 2024, respectively.
Our subsidiary Varex Imaging Deutschland AG ("Varex Germany") holds a 50% interest in VEC. In August 2023, February 2024, and August 2024, the partners to the VEC joint venture filed judicial proceedings in Germany against one another disputing the validity of shareholder resolutions passed in January 2023, January 2024, and August 2024, respectively.
Both the governments of the United States and China have granted tariff exclusions that temporarily eliminate duties payable for specific commodities, providing partial relief from such tariffs, but with certain exceptions, they must be solicited and approved.
In the past, both the governments of the United States and China have granted tariff exclusions that temporarily eliminate certain duties payable for specific commodities, providing partial relief from such tariffs, but with certain exceptions, they must be solicited and approved. There is no guarantee that exclusions will be granted or that existing exclusions will be extended by either government.
The variation from forecasted purchasing volume may be due, in part, to the increasing life of X-ray tubes, which can result in reduced demand for replacement X-ray tubes in ways we may not be able to accurately forecast. Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results.
The variation from forecasted purchasing volume may be due, in part, to the increasing life of X-ray tubes, which can result in reduced demand for replacement X-ray tubes in ways we may not be able to accurately forecast.
We have experienced this both in China and Russia. 19 Table of Contents A change in the percentage of our total earnings from international sales or additional changes in tax laws could increase our effective tax rate. Earnings from our international subsidiaries are generally taxed at rates that differ from United States rates.
A change in the percentage of our total earnings from international sales, changes in our international activities, or additional changes in tax laws could increase our effective tax rate. Earnings from our international subsidiaries are generally taxed at rates that differ from United States rates.
A change in the percentage of our total earnings from our international subsidiaries, a change in the mix of particular tax jurisdictions between our international subsidiaries, or a change in currency exchange rates could cause our effective tax rate to increase.
A change in the percentage of our total earnings from our international subsidiaries, a change in the mix of particular tax jurisdictions between our international subsidiaries, a change in currency exchange rates, or a shift in where we perform manufacturing, research and development, and other activities internally could cause our effective tax rate to increase.
Furthermore, we generate significant accounts receivables from the sale of our products and the provision of services directly to these customers. One customer accounted for 9.5% of our accounts receivables as of September 27, 2024.
Furthermore, we generate significant accounts receivables from the sale of our products and the provision of services directly to these customers. One customer accounted for 14.0% of our accounts receivables as of October 3, 2025.
We often compete with companies that have greater financial, marketing and other resources than us. Some of the major diagnostic imaging systems companies, which are the primary OEM customers for our X-ray imaging components, also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own imaging systems products.
Some of the major diagnostic imaging systems companies, which are the primary OEM customers for our X-ray imaging components, also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own imaging systems products.
A major disaster (such as a major fire, hurricane, earthquake, flood, tsunami, volcanic eruption, or terrorist attack) or a climate change-related event affecting our facilities, or those of our suppliers, could significantly disrupt our operations and delay or prevent product manufacture and shipment during the time required to repair, rebuild, or replace our or our suppliers’ damaged manufacturing facilities.
Natural disasters (such as a major fire, hurricane, earthquake, flood, tsunami, or volcanic eruption), severe weather conditions, adverse climate change-related events, war or terrorism, and disruption in utilities and other services affecting our facilities, or those of our suppliers, could significantly disrupt our operations and delay or prevent product manufacture and shipment during the time required to repair, rebuild, or replace our or our suppliers’ damaged manufacturing facilities.
In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, or an outbreak of epidemic diseases have in the past had, and could in the future have, a negative effect on our business operations, those of our suppliers and customers, and the ability to travel, resulting in adverse consequences on our revenues and financial performance.
In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, or an outbreak of epidemic diseases have in the past had, and could in the future have, a negative effect on our business operations, those of our suppliers and customers, and the ability to travel, resulting in adverse consequences on our revenues and financial performance. 18 Table of Contents If we are not able to match our manufacturing capacity with demand for our products, our financial results may suffer.
We participate in joint ventures and other investments in privately held and publicly traded companies. For example, we hold a 40% ownership interest in dpiX LLC, our major supplier of our amorphous silicon-based thin film transistor arrays for flat panels used in our digital image detectors, a 50% interest in VEC Imaging GmbH & Co.
For example, we hold a 40% ownership interest in dpiX Holding Company LLC, the parent company of the major supplier of our amorphous silicon-based thin film transistor arrays for flat panels used in our digital image detectors, a 50% interest in VEC Imaging GmbH & Co.
If we are not able to match our manufacturing capacity with demand for our products, our financial results may suffer. Many of our products have a long production cycle, and we must anticipate demand for our products to ensure adequate manufacturing and testing capacity.
Many of our products have a long production cycle, and we must anticipate demand for our products to ensure adequate manufacturing and testing capacity.
Such an event could have serious negative consequences, including possible patient injury, regulatory action, fines, penalties and damages, reduced demand for our solutions, an unwillingness of our customers to use our solutions, harm to our reputation and brand, and time-consuming and expensive litigation, any of which could have a material and adverse effect on our financial results. 18 Table of Contents Risks Relating to Our Legal and Regulatory Environment Changes in import/export regulatory regimes, tariffs, and national policies have in the past and could continue to negatively impact our business.
Such an event could have serious negative consequences, including possible patient injury, regulatory action, fines, penalties and damages, reduced demand for our solutions, an unwillingness of our customers to use our solutions, harm to our reputation and brand, and time-consuming and expensive litigation, any of which could have a material and adverse effect on our financial results.
In addition, our customers have adopted, and may continue to adopt, procurement policies that require us to comply with social and environmental provisions. An increasing number of investors have adopted, and may continue to adopt, ESG policies for their portfolio companies, and various voluntary sustainability initiatives and organizations have promulgated different social and environmental and sustainability guidelines.
An increasing number of investors have adopted, and may continue to adopt, environmental, social, and governance policies for their portfolio companies, and various voluntary sustainability initiatives and organizations have promulgated different social and environmental and sustainability guidelines.
Adverse developments in the economy in the past have led, and in the future could lead to reduced spending by our customers and end-users which could adversely impact our net sales and cash flow, which could affect our ability to comply with one or both of these ratios. 25 Table of Contents We entered into certain hedging positions that may affect the value of the Convertible Notes and the volatility and value of our common stock.
Adverse developments in the economy in the past have led and in the future could lead to reduced spending by our customers and end-users which could adversely impact our net sales and cash flow and our ability to comply with one or both of these ratios.
Dollar, which is our functional and reporting currency; • political and economic instability, including the possibility of civil unrest, terrorism, mass violence, armed conflict, or pandemic diseases, which may among other things, impact our operations and business access; • difficulties in staffing and managing employee relations in foreign operations, including in foreign joint ventures, particularly in attracting and retaining personnel qualified to design, test, sell and support our products; • difficulties in coordinating our operations globally and in maintaining uniform standards, controls, procedures, and policies across our operations; • the longer payment cycles associated with many customers located outside the United States; • difficulties in interpreting or enforcing agreements and collecting receivables through many foreign countries’ legal systems; 14 Table of Contents • imposition of burdensome governmental regulations, including changing laws and regulations with respect to collecting and maintaining personally identifiable data; • governmental imposition of additional taxes, tariffs, global economic sanctions programs, or other restrictions on foreign trade; and • compliance with export laws and requirements.
Dollar, which is our functional and reporting currency; • difficulties in staffing and managing employee relations in foreign operations, including in foreign joint ventures, particularly in attracting and retaining personnel qualified to design, test, sell and support our products; • difficulties in coordinating our operations globally and in maintaining uniform standards, controls, procedures, and policies across our operations; • the longer payment cycles associated with many customers located outside the United States; • difficulties in interpreting or enforcing agreements and collecting receivables through many foreign countries’ legal systems; • imposition of burdensome governmental regulations, including changing data privacy laws and regulations ; and • compliance with import/export laws and requirements.
Environmental laws regulate many aspects of our operations, including our handling, storage, transport, and disposal of hazardous substances, such as the chemicals and materials that we use in the course of our manufacturing operations. They can also impose cleanup liabilities, including with respect to discontinued operations.
Environmental laws impose compliance costs on our business and may also result in liability. Environmental laws regulate many aspects of our operations, including our handling, storage, transport, and disposal of hazardous substances, such as the chemicals and materials that we use in the course of our manufacturing operations.
Disposal sites for the lawful disposal of materials generated by the manufacture, use, or decommissioning of our products may no longer accept these substances in the future or may accept them on unfavorable terms. 23 Table of Contents Environmental laws impose compliance costs on our business and may also result in liability.
The handling and disposal of radioactive materials resulting from the manufacture, use, or disposal of our products may impose significant costs and requirements. Disposal sites for the lawful disposal of materials generated by the manufacture, use, or decommissioning of our products may no longer accept these substances in the future or may accept them on unfavorable terms.
We currently have an ongoing dispute with our joint venture partner relative to the operation of the joint venture. This dispute could divert management's time, attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.
Our subsidiary Varex Imaging International AG holds a 75% interest in Varex Imaging Arabia LLC. We currently have ongoing disputes with our joint venture partner relative to the operation of the joint venture. These disputes could divert management's time and attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.
An adverse outcome under any such investigation or audit could subject us to fines and criminal or other penalties, which could materially and adversely affect our business and financial results.
An adverse outcome under any such investigation or audit could subject us to fines and criminal or other penalties, which could materially and adversely affect our business and financial results. The currently indefinitely suspended MOFCOM Investigations are an example of the type of investigations or audits we are currently, and could in the future, face.
For the period from March 26, 2024 to the fiscal quarter ending June 27, 2025, the CTNL Ratio may not exceed 4.25:1.00, for the period from the fiscal quarter ending September 26, 2025 to June 26, 2026, the CTNL Ratio may not exceed 3.75:1.00, and for the period from the fiscal quarter ending September 25, 2026 and thereafter, the CTNL Ratio may not exceed 3.50:1.00.
For the period from September 26, 2025 to June 26, 2026, the CTNL Ratio for any fiscal quarter may not exceed 3.75:1.00, and thereafter, the CTNL Ratio for any fiscal quarter may not exceed 3.50:1.00. Each ratio is tested on the last day of each fiscal quarter.
Further, our competitors with greater financial resources may be better able to restructure their manufacturing and supply chains in response to geopolitical and economic trends and thereby have a competitive advantage over us. 16 Table of Contents We obtain some of the components included in our products, such as transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets and windows, housings, glass frames, high-voltage cable, bearings, and various other components, from a limited group of suppliers or from sole-source suppliers.
We obtain some of the components included in our products, such as transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets and windows, housings, glass frames, high-voltage cable, bearings, and various other components, from a limited group of suppliers or from sole-source suppliers.
These disputes, including any determinations not in Varex Germany’s favor, have diverted, are diverting, and could in the future divert management’s attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows. Our subsidiary Varex Imaging International AG holds a 75% interest in Varex Imaging Arabia LLC.
The October 2024 lawsuit was subsequently voluntarily dismissed while the parties try to negotiate a settlement. These disputes, including any determinations not in Varex Germany’s favor, have diverted, are diverting, and could in the future divert management’s attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.
End-user product demand, economic uncertainties, the impact of pandemic diseases, natural disasters, armed conflict, geopolitical tensions, possible legislative, tariffs, and policy reforms as a result of the recent U.S. elections, including reactionary responses to such changes from other nations, particularly China, potential social unrest and uncertainty resulting therefrom, government actions (for example, the Chinese government initiated anti-corruption investigations related to its healthcare industry), and other matters beyond our control, make it difficult for our customers to accurately forecast and plan future business activities, which makes it difficult for us to accurately predict demand or delivery schedules for our products.
End-user product demand, economic uncertainties, the impact of pandemic diseases, natural disasters, armed conflicts, geopolitical tensions, a prolonged United States government shutdown, legislative, tariff, and trade policy reforms, including, for example, the tariffs announced by the United States during the calendar year 2025 and the retaliatory actions announced by a number of countries in response, potential social unrest and uncertainty resulting therefrom, government investigations, including, for example, the MOFCOM Investigations that have been suspended indefinitely, and before that, the Chinese government initiated anti-corruption investigations related to China's healthcare industry, and other matters beyond our control, make it difficult for our customers to accurately forecast and plan future business activities, which makes it difficult for us to accurately predict demand or delivery schedules for our products.
For us to market our products internationally, we must obtain clearances or approvals for products and product modifications, which can be time consuming, expensive, uncertain, and which can delay our ability to market products.
Outside the United States, some of our products are regulated as medical devices by foreign governmental agencies similar to the FDA. For us to market our products internationally, we must obtain clearances or approvals for products and product modifications, which can be time consuming, expensive, uncertain, and which can delay our ability to market products.
In the event our lenders or holders of the notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.
Furthermore, if we were unable to repay the amounts due and payable under the Revolving Credit Facility, the lenders could proceed against the collateral securing such indebtedness. In the event our lenders or holders of the notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.
These practices, policies, provisions, and initiatives are under active development, subject to change, can be unpredictable and conflicting, and may prove difficult and expensive for us to comply with and could negatively affect our reputation, business, or financial condition. 26 Table of Contents If we are unable to retain, attract, expand, integrate, and train our management team and other key personnel, we may not be able to maintain or expand our business.
These practices, policies, provisions, and initiatives are under active development, subject to change, can be unpredictable and conflicting, and may prove difficult and expensive for us to comply with and could negatively affect our reputation, business, or financial condition. Item 1B. Unresolved Staff Comments None.
We compete in highly competitive industries, and we are subject to pricing pressures and other factors that have in the past and may in the future result in margin erosion and loss of customers. We compete in industries characterized by rapidly evolving technology, intense competition and pricing pressure.
Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results. 14 Table of Contents We compete in highly competitive industries, and we are subject to pricing pressures and other factors that have in the past and may in the future result in margin erosion and loss of customers.
Product defects or misuse may result in material product or other liability or professional errors and omissions claims, litigation, investigation by regulatory authorities, or product recalls.
If recommenced, the outcome of these investigations has the potential to negatively impact our business, results of operations and financial condition. Product defects or misuse may result in material product or other liability or professional errors and omissions claims, litigation, investigation by regulatory authorities, or product recalls.
Compliance with foreign laws and regulations applicable to the marketing, manufacturing, and distribution of our products may be costly, and failure to comply may result in unfavorable legal proceedings, in significant penalties and other harm to our business. Outside the United States, some of our products are regulated as medical devices by foreign governmental agencies similar to the FDA.
Consequently, we do not have insurance that would cover this type of liability. Compliance with foreign laws and regulations applicable to the marketing, manufacturing, and distribution of our products may be costly, and failure to comply may result in unfavorable legal proceedings, in significant penalties and other harm to our business.
General Risks Failure to maintain effective internal controls and procedures could negatively impact us. In the past, we have not always been successful in maintaining effective internal controls and procedures. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business or changes in applicable accounting rules.
General Risks Failure to maintain effective internal controls and procedures and changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters, could negatively impact us. In the past, we have not always been successful in maintaining effective internal controls and procedures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis includes processes for assessing such incidents for materiality, making required notifications, disclosures or communications and determining, among other things, whether any prohibition on the trading of our common stock by insiders should be imposed prior to the disclosure of information about a material cybersecurity event. 27 We describe whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under Item 1A, “Risk Factors” in this Annual Report, which disclosures are incorporated by reference herein.
Biggest changeWe describe whether and how risks from identified cybersecurity threats have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under Item 1A, “Risk Factors” in this Annual Report, which disclosures are incorporated by reference herein.
We have a risk-based cybersecurity program and a dedicated team of cybersecurity professionals focused on protecting our data and information systems. These cybersecurity threats and related risks make it necessary for us to stay apprised of developments in the information security field, and dedicate resources on cybersecurity.
We have a risk-based cybersecurity program and a dedicated team of cybersecurity professionals focused on protecting our data and information systems. These cybersecurity threats and related risks make it necessary for us to stay apprised of developments in the information security field, and dedicate resources to cybersecurity.
The head of our Information Technology department, along with our cybersecurity program manager, are principally responsible for overseeing the risks related to cybersecurity. They are responsible for cybersecurity incident preparedness, approving cybersecurity processes, reviewing security assessments and other security-related reports, and providing the senior leadership with regular updates on cybersecurity-related matters.
The head of our Information Technology department, along with our cybersecurity program manager, are principally responsible for overseeing the risks related to cybersecurity. They are responsible for cybersecurity incident preparedness, approving cybersecurity processes, reviewing security assessments and other security-related reports, and providing senior leadership with regular updates on cybersecurity-related matters.
Our cybersecurity risk management and strategy processes are managed by the head of our Information Technology department, and our IT team is responsible for enterprise-wide informational technology, coordinating with various functions and business groups to ensure they are following best practices.
Our cybersecurity risk management and strategy processes are managed by the head of our Information Technology department, and our Information Technology team is responsible for enterprise-wide informational technology, coordinating with various functions and business groups to ensure they are following best practices.
These team members combined have more than 39 years of experience in technology and information security risk management across a number of organizations, have multiple relevant technical and governance certifications, and are active in a number of cybersecurity related boards and organizations.
These team members combined have more than 40 years of experience in technology and information security risk management across a number of organizations, have multiple relevant technical and governance certifications, and are active in a number of cybersecurity related boards and organizations.
Our cybersecurity program includes a variety of processes to assess, identify and manage risks from cybersecurity threats arising from our own and third-party provided systems, including information security policies and procedures, simulation exercises, network and endpoint monitoring and detection tools, vulnerability management processes, risk assessments, third-party penetration testing and security requirements for our suppliers, vendors, and service providers.
Our cybersecurity risk assessment program provides the underlying basis for the activities of our team to identify and mitigate risks from, as well as develop risk management and response strategies for, evolving and emerging cybersecurity threats. 27 Table of Contents Our cybersecurity program includes a variety of processes to assess, identify and manage risks from cybersecurity threats arising from our own and third-party provided systems, including information security policies and procedures, simulation exercises, network and endpoint monitoring and detection tools, vulnerability management processes, risk assessments, third-party penetration testing and security requirements for our suppliers, vendors, and service providers.
Removed
Our cybersecurity risk assessment program provides the underlying basis for the activities of our team to identify and mitigate risks from, as well as develop risk management and response strategies for, evolving and emerging cybersecurity threats.
Added
This includes processes for assessing such incidents for materiality, making required notifications, disclosures or communications and determining, among other things, whether any prohibition on the trading of our common stock by insiders should be imposed prior to the disclosure of information about a material cybersecurity event.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our location in Salt Lake City, Utah, our other primary owned facilities are located in Las Vegas, Nevada; Franklin Park, Illinois; and Doetinchem, the Netherlands. Our Las Vegas, Nevada facility has approximately 5 acres of land and 94,000 square feet of space used for manufacturing, administrative functions, and research and development for our Industrial segment.
Biggest changeIn addition to our location in Salt Lake City, Utah, our other primary owned facilities are located in Nevada, Illinois, the Netherlands, and India. Our primary leased facilities in the Philippines, China, Germany, India, and California, are used for manufacturing, research and development, or administrative functions for our Medical and Industrial segments.
We believe our current facilities are well-maintained and adequate to meet our current and reasonably anticipated future needs. We believe we will be able to renew leases, as needed, on acceptable terms or that we will be able to find suitable alternatives.
We believe our current facilities are well-maintained and adequate to meet our current and reasonably anticipated future needs. We believe we will be able to renew leases, as needed, on acceptable terms or that we will be able to find suitable alternatives. 28 Table of Contents
We also own or lease 30 other facilities throughout North America, Europe, Asia, and India that comprise over 864,000 square feet of manufacturing facilities, warehouses, sales and service, research and development, and office space, which are used for our Medical and/or Industrial segments, depending on the location.
We also own or lease 30 other facilities throughout North America, Europe, Asia, and India that comprise manufacturing facilities, warehouses, sales and service, research and development, and office space, which are used for our Medical and/or Industrial segments, depending on the location.
Item 2. Properties Our corporate headquarters is located in Salt Lake City, Utah, where we own approximately 37 acres of land and approximately 495,000 square feet of space used for manufacturing, administrative functions, and research and development for both our Medical and Industrial segments.
Item 2. Properties Our corporate headquarters is located in Salt Lake City, Utah, at an owned site used for manufacturing, administrative functions, and research and development for both our Medical and Industrial segments.
Removed
Our Franklin Park, Illinois facility has approximately 6 acres of land and approximately 61,000 square feet of space used for manufacturing, administrative functions, and research and development for both our Medical and Industrial segments.
Removed
Our Doetinchem, Netherlands facility is approximately 3 acres and has approximately 100,000 square feet of space used for manufacturing, engineering, administrative functions, and research and development for our Medical and Industrial segments.
Removed
Primary leased facilities include approximately 288,000 square feet in Laguna, Philippines, approximately 46,000 square feet in Wuxi, China, approximately 34,000 square feet in Bremen, Germany, approximately 34,000 of square feet in Walluf, Germany, and approximately 26,000 square feet in San Jose, California, all of which are used for manufacturing, research and development, or administrative functions for our Medical and Industrial segments.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt the present time, we do not believe we have any current or pending litigation for which the outcome could have a material adverse effect on our operations or financial position. 28 Item 4. Mine Safety Disclosures Not applicable. 29 Table of Contents PART II
Biggest changeAt the present time, we do not believe we have any current or pending litigation for which the outcome could have a material adverse effect on our operations or financial position. See, also, Note 16, Commitments and Contingencies , included in the accompanying Notes to the Consolidated Financial Statements. Item 4.
Added
Mine Safety Disclosures Not applicable. 29 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThis graph shows the total return on VREX common stock for the five years ended September 27, 2024, with comparative total returns for the Russell 2000 Index (“RUT”) and the Dow Jones Medical Equipment Index (“DJUSAM”).
Biggest changeThe following graph shows the total return on VREX common stock for the five years ended October 3, 2025, with comparative total returns for the Russell 2000 Index (“RUT”) and the Dow Jones Medical Equipment Index (“DJUSAM”).
The graph below assumes that $100.00 was invested on September 27, 2019 in our common stock and the companies listed in the RUT and the DJUSAM, as well as a reinvestment of dividends paid on such investments throughout the period. Item 6. [Reserved]
The graph below assumes that $100.00 was invested on October 2, 2020 in our common stock and the companies listed in the RUT and the DJUSAM, as well as a reinvestment of dividends paid on such investments throughout the period. Item 6. [Reserved]
As of November 14, 2024, there were approximately 1,234 holders of record of Varex common stock. This number does not include beneficial owners holding shares in "nominee" or "street" name.
As of November 11, 2025, there were approximately 1,178 holders of record of Varex common stock. This number does not include beneficial owners holding shares in "nominee" or "street" name.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAt September 27, 2024 we had total debt of $443.4 million, net of discounts and deferred issuance costs of $3.2 million. 33 Table of Contents Cash and Cash Equivalents, Certificates of Deposit, and Marketable Debt Securities The following table summarizes our cash and cash equivalents, certificates of deposit, and marketable debt securities: (In millions) September 27, 2024 September 29, 2023 $ Change % Change Cash and cash equivalents $ 168.7 $ 152.6 $ 16.1 10.6 % Certificates of deposit not included in cash and cash equivalents 3.4 1.0 2.4 240.0 % Marketable debt securities not included in cash and cash equivalents 40.8 41.3 (0.5) (1.2) % Total $ 212.9 $ 194.9 $ 18.0 9.2 % Borrowings The following table summarizes the changes in our debt outstanding: (In millions, except for percentages) September 27, 2024 September 29, 2023 $ Change % Change Current maturities of long-term debt Current portion of Convertible Senior Unsecured Notes $ 45.0 $ — $ 45.0 — % Other debt 1.5 1.5 — — % Total current maturities of long-term debt: $ 46.5 $ 1.5 $ 45.0 3,000.0 % Non-current maturities of long-term debt: Convertible Senior Unsecured Notes $ 155.0 $ 200.0 $ (45.0) (22.5) % Senior Secured Notes 243.0 243.0 — — % Other debt 2.1 3.5 (1.4) (40.0) % Total non-current maturities of long-term debt: $ 400.1 $ 446.5 $ (46.4) (10.4) % Unamortized issuance costs and debt discounts Unamortized issuance costs - Convertible Notes $ (1.0) $ (2.5) $ 1.5 (60.0) % Debt issuance costs - Senior Secured Notes (2.2) (2.9) 0.7 (24.1) % Total (3.2) (5.4) 2.2 (40.7) % Total debt outstanding, net $ 443.4 $ 442.6 $ 0.8 0.2 % Cash Flows Fiscal Years (In millions) 2024 2023 2022 Net cash flow provided by (used in): Operating activities $ 47.3 $ 108.4 $ 16.9 Investing activities (27.5) (44.9) (48.4) Financing activities (3.3) (0.2) (23.8) Effects of exchange rate changes on cash and cash equivalents and restricted cash (0.1) 0.1 (0.2) Net increase (decrease) in cash and cash equivalents and restricted cash $ 16.4 $ 63.4 $ (55.5) Net cash provided by operating activities.
Biggest changeCash and Cash Equivalents, Certificates of Deposit, and Marketable Debt Securities The following table summarizes our cash and cash equivalents, certificates of deposit, and marketable debt securities: (In millions) October 3, 2025 September 27, 2024 $ Change Cash and cash equivalents $ 145.0 $ 168.7 $ (23.7) Certificates of deposit not included in cash and cash equivalents — 3.4 (3.4) Marketable debt securities not included in cash and cash equivalents 10.1 40.8 (30.7) Total $ 155.1 $ 212.9 $ (57.8) 34 Table of Contents Borrowings The following table summarizes the changes in our debt outstanding: October 3, 2025 September 27, 2024 (In millions, except for percentages) Amount Amount $ Change Current maturities of long-term debt: Convertible Senior Unsecured Notes $ — $ 45.0 $ (45.0) Other debt 1.5 1.5 — Total current maturities of long-term debt $ 1.5 $ 46.5 $ (45.0) Non-current maturities of long-term debt: Convertible Senior Unsecured Notes (1) $ — $ 155.0 $ (155.0) Senior Secured Notes 368.0 243.0 125.0 Other debt 0.4 2.1 (1.7) Total non-current maturities of long-term debt $ 368.4 $ 400.1 $ (31.7) Unamortized issuance costs and debt discounts: Unamortized issuance costs - Convertible Notes $ — $ (1.0) $ 1.0 Unamortized issuance costs, net of debt premium - Senior Secured Notes (2.4) (2.2) (0.2) Total unamortized issuance costs and debt discounts (2.4) (3.2) 0.8 Total debt outstanding, net $ 367.5 $ 443.4 $ (75.9) (1) This amount was excluded from current liabilities as it was supported by the Revolving Credit Facility and restricted cash from the proceeds of the Senior Secured Notes Add On (as defined in Note 6, Borrowings ), which were expected to, and did, remain outstanding for an uninterrupted period extending beyond one year from the balance sheet date.
We believe that our operating cash flow, cash on our balance sheet, availability under our Revolving Credit Facility and Equipment Credit Facility, and our ability to access the credit and capital markets are sufficient to meet our anticipated operating activities and cash commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis.
We believe that our operating cash flow, cash on our balance sheet, availability under our Revolving Credit Facility, and our ability to access the credit and capital markets are sufficient to meet our anticipated operating activities and cash commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis.
“Risk Factors.” Inventories, net Inventory is valued at the lower of cost or net realizable value. Costs include materials, labor, external service and manufacturing overhead and is computed using standard cost, which approximates actual cost, on a first-in-first-out basis. We review inventory quantities on hand and record provisions for estimated excess, slow moving, and obsolete inventory.
“ Risk Factors .” Inventories, net Inventory is valued at the lower of cost or net realizable value. Costs include materials, labor, external service and manufacturing overhead and is computed using standard cost, which approximates actual cost, on a first-in-first-out basis. We review inventory quantities on hand and record provisions for estimated excess, slow moving, and obsolete inventory.
In fiscal years 2023 and 2022, we performed the annual goodwill qualitative impairment test for our two reporting units and determined that, at those times, it was not more likely than not that the fair values of the reporting units were less than their carrying amounts and accordingly recorded no impairment.
In fiscal years 2024 and 2023, we performed the annual goodwill qualitative impairment test for our two reporting units and determined that, at those times, it was not more likely than not that the fair values of the reporting units were less than their carrying amounts and accordingly recorded no impairment.
Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements, Item 8 "Financial Statements and Supplementary Data" describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. For a discussion of how these estimates and other factors may affect our business, see Item 1A.
Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements, Item 8. " Financial Statements and Supplementary Data " describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. For a discussion of how these estimates and other factors may affect our business, see Item 1A.
See Item 3 "Legal Proceedings" of this Annual Report for additional information regarding legal proceedings and Note 13, Commitments and Contingencies, in the Notes to the Consolidated Financial Statements for further information regarding certain of our contractual obligations and contingencies, which discussion is incorporated herein by reference.
See Item 3 " Legal Proceedings " of this Annual Report for additional information regarding legal proceedings and Note 16, Commitments and Contingencies, in the Notes to the Consolidated Financial Statements for further information regarding certain of our contractual obligations and contingencies, which discussion is incorporated herein by reference.
Should conditions differ from management’s estimates at the 36 Table of Contents time of the acquisition, material write-downs of intangible assets and/or goodwill may be required, which would adversely affect our operating results.
Should conditions differ from management’s estimates at the 37 Table of Contents time of the acquisition, material write-downs of intangible assets and/or goodwill may be required, which would adversely affect our operating results.
For additional information on risks related to supply chain and logistics challenges, cost increases, changes in U.S. and worldwide economic conditions, geopolitical tensions, and other risks that could impact our results, see Item 1A "Risk Factors". Fiscal Year Our fiscal year is the 52- or 53-week period ending on the Friday nearest September 30.
For additional information on risks related to tariffs and trade wars, supply chain and logistics challenges, cost increases, changes in U.S. and worldwide economic conditions, geopolitical tensions, and other risks that could impact our results, see Item 1A “ Risk Factors ”. Fiscal Year Our fiscal year is the 52- or 53-week periods ending on the Friday nearest September 30.
Refer to Note 16, Taxes on Income, of our consolidated financial statements for additional information on the composition of valuation allowances.
Refer to Note 12, Taxes on Income (Loss), of our Consolidated Financial Statements for additional information on the composition of valuation allowances.
Days Sales Outstanding Trade accounts receivable days sales outstanding (“DSO”) was 70 days and 65 days at September 27, 2024 and September 29, 2023, respectively. Our accounts receivable and DSO are impacted by a number of factors, including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.
Days Sales Outstanding Trade accounts receivable days sales outstanding (“DSO”) was 62 days and 70 days at October 3, 2025 and September 27, 2024, respectively. Our accounts receivable and DSO are impacted by a number of factors, including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.
In connection with those laws and certain of our past and present operations and facilities, we are obligated to indemnify Varian for the cleanup liabilities related to prior corporate restructuring activities. As of September 27, 2024, our estimated environmental liability for these sites is $3.9 million, net of expected insurance proceeds.
In connection with those laws and certain of our past and present operations and facilities, we are obligated to indemnify Varian for the cleanup liabilities related to prior corporate restructuring activities. As of October 3, 2025, our estimated environmental liability for these sites is $3.2 million, net of expected insurance proceeds.
For further information on our operating leases, see Note 3, Leases , included in the accompanying Notes to the Consolidated Financial Statements. For further discussion regarding our borrowings, see Note 9, Borrowings, included in the accompanying Notes to the Consolidated Financial Statements.
For further information on our operating leases, see Note 8, Leases , included in the accompanying Notes to the Consolidated Financial Statements. For further discussion regarding our borrowings, see Note 6, Borrowings, included in the accompanying Notes to the Consolidated Financial Statements.
Changes in our current estimates, due to unanticipated business conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets. The valuation allowance balances were $74.7 million and $18.7 million as of September 27, 2024 and September 29, 2023, respectively.
Changes in our current estimates, due to unanticipated business conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets. The valuation allowance balances were $79.4 million and $74.7 million as of October 3, 2025 and September 27, 2024, respectively.
Gross uncertain tax positions, exclusive of interest and penalties, were $1.6 million and $1.4 million as of September 27, 2024, and September 29, 2023, respectively. We believe the resolution of these matters will not materially affect our consolidated financial statements. Income taxes are described further in Note 16, Taxes on Income, in our Notes to the Consolidated Financial Statements.
Gross uncertain tax positions, exclusive of interest and penalties, were $1.3 million and $1.6 million as of October 3, 2025, and September 27, 2024, respectively. We believe the resolution of these matters will not materially affect our consolidated financial statements. Income taxes are described further in Note 12, Taxes on Income (Loss), in our Notes to the Consolidated Financial Statements.
Our year-over-year changes, financial condition, and results of operations for the fiscal years ended September 27, 2024 and September 29, 2023 are set forth below.
Our year-over-year changes, financial condition, and results of operations for the fiscal years ended October 3, 2025 and September 27, 2024 are set forth below.
The annual net payment will continue for the life of the MeVis Agreement, which we anticipate will continue for as long as we remain as the controlling shareholder of MeVis. As of September 27, 2024, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.3% of the outstanding shares.
The annual net payment will continue for the life of the DPLTA, which we anticipate will continue for as long as we remain as the controlling shareholder of MeVis Medical. As of October 3, 2025, noncontrolling shareholders together held approximately 0.5 million shares of MeVis Medical, representing 26.3% of the outstanding shares.
We did not have any material contingent liabilities as of September 27, 2024 and September 29, 2023. Legal expenses are expensed as incurred.
We did not have any material contingent liabilities as of October 3, 2025 and September 27, 2024. Legal expenses are expensed as incurred.
Our success depends, among other things, on our ability to anticipate and respond to changes in our business, the direction of technological innovation, and the demand from our customers. For additional information on our business, see Item 1 "Business". Impact of General Economic Environment We remain cautious about the general economic environment as many factors remain dynamic and unpredictable.
Our success depends, among other things, on our ability to anticipate and respond to changes in our business, the direction of technological innovation, and the demand from our customers. For additional information on our business, see Item 1 "Business". Impact of Current Economic and Trade Environment The current economic and trade environment remains dynamic and unpredictable.
Material Contractual Obligations The following table summarizes, as of September 27, 2024, the total amount of future payments due in various future periods: Payments Due by Period (In millions) Total Fiscal Year 2025 Fiscal Years 2026-2027 Fiscal Years 2028-2029 Beyond Lease obligations $ 46.9 $ 6.6 $ 10.7 $ 8.3 $ 21.3 Principal payments on borrowings 446.6 201.5 245.1 — — dpiX fixed cost commitment 3.1 3.1 — — — Dividends to MeVis noncontrolling interest 2.5 0.5 1.0 1.0 — Development and share purchase commitments 1.0 1.0 — — — Non-cancellable supplier purchase obligations 6.7 5.5 1.2 — — Total $ 506.8 $ 218.2 $ 258.0 $ 9.3 $ 21.3 We lease office space under non-cancelable operating leases.
Material Contractual Obligations The following table summarizes, as of October 3, 2025, the total amount of future payments due in various future periods: Payments Due by Period (In millions) Total Fiscal Year 2026 Fiscal Years 2027-2028 Fiscal Years 2029-2030 Beyond Lease obligations $ 46.2 $ 6.9 $ 11.3 $ 8.5 $ 19.5 Principal payments on borrowings 369.9 1.5 368.4 — — dpiX fixed cost commitment 3.4 3.4 — — — Dividends to MeVis noncontrolling interest 2.5 0.5 1.0 1.0 — Non-cancellable supplier purchase obligations 3.0 3.0 — — — Total $ 425.0 $ 15.3 $ 380.7 $ 9.5 $ 19.5 We lease office space under non-cancelable operating leases.
Net cash used in financing activities was $3.3 million and $0.2 million for the fiscal years 2024 and 2023, respectively.
Net cash used in financing activities was $75.9 million and $3.3 million for fiscal years 2025 and 2024, respectively.
Accordingly, the Company performed a quantitative impairment analysis to determine the fair values of those reporting units, using both an income approach utilizing the discounted cash flow method and market approach utilizing the public company market multiple method.
Accordingly, we performed a quantitative impairment analysis to determine the fair values of those reporting units, using both an income approach utilizing the discounted cash flow method and a market approach utilizing the public company market multiple method. Based on the output of the analysis, we determined that the carrying amount of our Medical reporting unit exceeded its fair value.
Results of Operations For a discussion and analysis of our year-over-year changes, financial condition, and results of operations for the fiscal years ended September 29, 2023 and September 30, 2022 refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended September 29, 2023, filed with the SEC on November 16, 2023.
Fiscal year 2025 was the 53-week period that ended October 3, 2025, fiscal year 2024 was the 52-week period that ended September 27, 2024, and fiscal year 2023 was the 52-week period that ended September 29, 2023. 31 Table of Contents Results of Operations For a discussion and analysis of our year-over-year changes, financial condition, and results of operations for the fiscal years ended September 27, 2024 and September 29, 2023 refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended September 27, 2024, filed with the SEC on November 19, 2024.
The uncertain economic and geopolitical environment, supply chain and logistic challenges, and geopolitical tensions and local conflicts have contributed to, and may continue to contribute to, inflation, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor and materials, exchange rate volatility, increased tariffs, and other similar effects.
The uncertain outcome and effect of tariffs and reciprocal actions between the United States and other countries and its impact on the economic and geopolitical environment, supply chain and logistic challenges, and geopolitical tensions and local conflicts have contributed to, and may continue to contribute to, delayed customer purchasing decisions, increased tariff costs, higher inflation, fluctuations in interest rates and capital costs, supply chain disruption, increased costs of labor and materials, exchange rate volatility, increased shipping costs, and other similar effects.
Recent Accounting Standards or Updates Not Yet Effective See Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements for a description of recent accounting standards, including the expected dates of adoption and the estimated effects on our consolidated financial statements.
Recent Accounting Standards or Updates Not Yet Effective See Note 1, Summary of Significant Accounting Policies , of the accompanying Notes to the Consolidated Financial Statements for a description of recent accounting standards, including the expected dates of adoption and the estimated effects on our Consolidated Financial Statements. 38 Table of Contents Backlog Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid.
Revenues by Region 31 Table of Contents (In millions) 2024 % Change 2023 % Change 2022 Americas $ 266.5 (5)% $ 281.8 3% $ 273.3 EMEA 280.3 (4)% 290.7 4% 280.8 APAC 264.2 (18)% 320.9 5% 305.3 Total revenues, net $ 811.0 (9)% $ 893.4 4% $ 859.4 Americas as a percentage of total revenues 32.9 % 31.5 % 31.8 % EMEA as a percentage of total revenues 34.6 % 32.5 % 32.7 % APAC as a percentage of total revenues 32.6 % 35.9 % 35.5 % The Americas revenues decreased $15.3 million in fiscal year 2024 compared to 2023 primarily due to decreased sales of digital detectors.
Revenues, net by Region (In millions) 2025 % Change 2024 % Change 2023 Americas $ 276.5 4% $ 266.5 (5)% $ 281.8 EMEA 284.8 2% 280.3 (4)% 290.7 APAC 283.3 7% 264.2 (18)% 320.9 Total revenues, net $ 844.6 4% $ 811.0 (9)% $ 893.4 Americas as a percentage of total revenues 32.7 % 32.9 % 31.5 % EMEA as a percentage of total revenues 33.7 % 34.6 % 32.5 % APAC as a percentage of total revenues 33.5 % 32.6 % 35.9 % Overall revenue during fiscal year 2025 increased as compared to fiscal year 2024.
Some of these purchase agreements are non-cancellable and thus contractually obligate us to future cash payments. 35 Table of Contents Our operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances.
As of October 3, 2025, our non-cancellable supplier purchase obligations totaled $3.0 million. 36 Table of Contents Our operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances.
Cash used in investing activities was $27.5 million and $44.9 million for the fiscal years 2024 and 2023, respectively.
Net cash provided by (used in) investing activities. Cash provided by (used in) investing activities was $10.3 million and $(27.5) million for fiscal years 2025 and 2024, respectively.
In October 2015, pursuant to a Domination and Profit and Loss Transfer Agreement (the “MeVis Agreement”), we committed to grant the noncontrolling shareholders of MeVis: (1) an annual recurring net compensation of €0.95 per MeVis share; and, (2) a put right for their MeVis shares at €19.77 per MeVis share.
In August 2015, pursuant to a Domination and Profit and Loss Transfer Agreement (the “DPLTA”), we committed to pay the noncontrolling shareholders of MeVis Medical an annual recurring net compensation of €0.95 per MeVis Medical share.
Comparison of Results of Operations for Fiscal Years 2024 and 2023 Revenues, net (In millions) 2024 % Change 2023 % Change 2022 Medical $ 581.7 (14)% $ 673.3 —% $ 674.7 Industrial 229.3 4% 220.1 19% 184.7 Total revenues, net $ 811.0 (9)% $ 893.4 4% $ 859.4 Medical as a percentage of total revenues 71.7 % 75.4 % 78.5 % Industrial as a percentage of total revenues 28.3 % 24.6 % 21.5 % Medical revenues decreased $91.6 million in fiscal year 2024 compared to 2023 primarily due to lower sales in our China business, as well as decreased sales of fluoroscopy, oncology, and dental applications.
Comparison of Results of Operations for Fiscal Years 2025 and 2024 Revenues, net (In millions) 2025 % Change 2024 % Change 2023 Medical $ 592.6 2% $ 581.7 (14)% $ 673.3 Industrial 252.0 10% 229.3 4% 220.1 Total revenues, net $ 844.6 4% $ 811.0 (9)% $ 893.4 Medical as a percentage of total revenues 70.2 % 71.7 % 75.4 % Industrial as a percentage of total revenues 29.8 % 28.3 % 24.6 % Medical revenues increased $10.9 million in fiscal year 2025 compared to fiscal year 2024, primarily due to increased sales of CT, oncology, and mammography of $24.6 million, partially offset by decreased sales in radiography, veterinary, and dental modalities of $13.7 million.
The Company enters into purchase agreements with its suppliers in the ordinary course of its business for the purchase of goods and services.
The Company enters into purchase agreements with its suppliers in the ordinary course of its business for the purchase of goods and services. Some of these purchase agreements are non-cancellable and thus contractually obligate us to future cash payments.
Taxes on Income Fiscal Years 2024 2023 Effective tax rate 1,044.0 % (55.6) % We had an income tax expense of $52.2 million and an income tax benefit of $17.4 million, resulting in effective rates of 1,044.0% and (55.6)%, for fiscal years 2024 and 2023, respectively.
Taxes on Income (Loss) Fiscal Years 2025 2024 Effective tax rate (18.1) % 1,066.0 % We had an income tax expense of $10.7 million and an income tax expense of $53.3 million, resulting in effective rates of (18.1)% and 1,066.0%, for fiscal years 2025 and 2024, respectively.
Aged orders that are not expected to be converted to revenues are deemed dormant and are reflected as a reduction in the backlog amounts in the period identified. 37 Table of Contents In addition to orders for which revenues have not been recognized and are still considered valid, we have pricing agreements with many of our established customers that span multi-year periods.
In addition to orders for which revenues have not been recognized and are still considered valid, we have pricing agreements with many of our established customers that span multi-year periods. These pricing agreements include volume ranges under which orders are placed.
Net cash provided by operating activities was $47.3 million and $108.4 million for the fiscal years 2024 and 2023, respectively.
Cash provided by operating activities was $41.7 million and $47.3 million for fiscal years 2025 and 2024, respectively. Net cash provided by operating activities decreased $5.6 million for fiscal year 2025 compared to fiscal year 2024.
EMEA revenues decreased $10.4 million primarily due to decreased sales of digital detectors, partially offset by increased sales in security inspection products. APAC revenues decreased $56.7 million primarily due to decreased sales of X-ray tubes and digital detectors.
EMEA revenues increased $4.5 million primarily due to increased digital detector sales of $4.3 million, other product sales of $2.4 million, and security inspection product sales of $0.9 million, partially offset by decreased veterinary sales of $1.8 million, software sales of $0.7 million, and X-ray tubes sales of $0.5 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis contain forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under "Forward-Looking Statements." Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report on Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis contains forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under "Forward-Looking Statements." Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report on Form 10-K. 30 Table of Contents Our Business Varex Imaging Corporation is a leading innovator, designer and manufacturer of X-ray imaging components including X-ray tubes, flat panel and photon counting detectors and accessories, linear accelerators, and image software processing solutions, which are critical components of a variety of X-ray based imaging equipment, and stand-alone X-ray based systems in select application areas.
Orders may be revised or canceled, either according to their terms or as customers' needs change. Consequently, it is difficult to predict with certainty the amount of backlog that will result in revenues. We perform a quarterly review to verify that outstanding orders in the backlog remain valid.
Consequently, it is difficult to predict with certainty the amount of backlog that will result in revenues. We perform a quarterly review to verify that outstanding orders in the backlog remain valid. Aged orders that are not expected to be converted to revenues are deemed dormant and are reflected as a reduction in the backlog amounts in the period identified.
We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during or beyond the next 12 months, except for $200.0 million of our Convertible Notes that become due in June 2025 that we currently anticipate refinancing using some combination of future borrowings under our Revolving Credit Facility and cash.
We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during the next 12 months. Beyond the next 12 months, our Senior Secured Notes mature in October 2027.
Operating Expenses (In millions) 2024 % Change 2023 % Change 2022 Research and development $ 87.0 3% $ 84.8 10% $ 77.0 As a percentage of total revenues 10.7 % 9.5 % 9.0 % Selling, general and administrative $ 137.8 7% $ 128.4 9% $ 118.3 As a percentage of total revenues 17.0 % 14.4 % 13.8 % Operating expenses $ 224.8 5% $ 213.2 9% $ 195.3 As a percentage of total revenues 27.7 % 23.9 % 22.7 % Research and Development Research and development costs for fiscal year 2024 increased to 10.7% of revenues primarily due to increased spending on material costs supporting research, partially offset by decreased development initiatives costs in the current fiscal year when compared to the prior fiscal year.
Operating Expenses (In millions) 2025 % Change 2024 % Change 2023 Research and development $ 91.1 5% $ 87.0 3% $ 84.8 As a percentage of total revenues 10.8 % 10.7 % 9.5 % Selling, general and administrative $ 133.3 (3)% $ 137.8 7% $ 128.4 As a percentage of total revenues 15.8 % 17.0 % 14.4 % Impairment of goodwill $ 93.9 100% $ — —% $ — As a percentage of total revenues 11.1 % — % — % Operating expenses $ 318.3 42% $ 224.8 5% $ 213.2 As a percentage of total revenues 37.7 % 27.7 % 23.9 % Research and Development Research and development costs for fiscal year 2025 remained relatively unchanged at 10.8% of total revenue when compared to fiscal year 2024.
The amended agreement requires us to pay for 50% of the fixed costs (as defined in the amended agreement), as determined at the beginning of each calendar year. For the remainder of calendar year 2024, we estimate that we have fixed cost commitments of $3.1 million related to this amended agreement.
For the remainder of calendar year 2025, we estimate that we have fixed cost commitments of $3.4 million related to this amended agreement. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).
The fixed cost commitment for future periods will be determined and approved by the dpiX board of directors at the beginning of each calendar year. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).
The amended agreement requires us to pay for 50% of the fixed costs (as defined in the amended agreement), as determined and approved by the dpiX board of directors at the beginning of each calendar year. In January 2025, the Company's fixed cost commitment was determined to be $13.7 million for calendar year 2025.
Interest and Other Expense, Net The following table summarizes our interest and other expense, net: 32 Table of Contents (In millions) 2024 % Change 2023 % Change 2022 Interest income $ 7.3 97% $ 3.7 825% $ 0.4 Interest expense (30.2) 3% (29.3) (26)% (39.8) Other expense, net (4.2) (79)% (20.2) 370% (4.3) Interest and other expenses, net $ (27.1) (41)% $ (45.8) 5% $ (43.7) Interest income increased in fiscal year 2024 compared to fiscal year 2023 primarily due to an increase in the average balance of investments in marketable debt securities during fiscal year 2024 when compared to the average balance during fiscal year 2023.
See Note 5, Goodwill and Intangible Assets, of the Notes to the Consolidated Financial Statements of this report for further details. 33 Table of Contents Interest and Other Expense, Net The following table summarizes the Company’s interest and other expense, net: (In millions) 2025 % Change 2024 % Change 2023 Interest income $ 8.5 16% $ 7.3 97% $ 3.7 Interest expense (35.5) 18% (30.2) 3% (29.3) Other expense, net (4.4) 5% (4.2) (79)% (20.2) Interest and other expenses, net $ (31.4) 16% $ (27.1) (41)% $ (45.8) Interest income increased primarily due to an increase in the average cash and cash equivalents balance being held in interest bearing deposit accounts during fiscal year 2025 as compared to fiscal year 2024.
Gross Profit (In millions) 2024 % Change 2023 % Change 2022 Medical $ 176.7 (14)% $ 205.5 (2)% $ 210.5 Industrial 80.2 (5)% 84.8 16% 73.0 Total gross profit $ 256.9 (12)% $ 290.3 2% $ 283.5 Medical gross margin 30.4 % 30.5 % 31.2 % Industrial gross margin 35.0 % 38.5 % 39.5 % Total gross margin 31.7 % 32.5 % 33.0 % The Medical segment gross profit decreased $28.8 million in fiscal year 2024 compared to 2023 primarily due to lower volumes of X-ray tubes and digital detectors.
See Note 2, Revenue , of the Notes to the Consolidated Financial Statements for information regarding disaggregated revenue by country. 32 Table of Contents Gross Profit (In millions) 2025 % Change 2024 % Change 2023 Medical $ 200.1 13% $ 176.7 (14)% $ 205.5 Industrial 90.4 13% 80.2 (5)% 84.8 Total gross profit $ 290.5 13% $ 256.9 (12)% $ 290.3 Medical gross margin 33.8 % 30.4 % 30.5 % Industrial gross margin 35.9 % 35.0 % 38.5 % Total gross margin 34.4 % 31.7 % 32.5 % Medical segment gross profit increased $23.4 million in fiscal year 2025 compared to fiscal year 2024 primarily due to increased sales volume, increased favorable product mix, and lower material costs of $13.3 million and improved productivity of $10.1 million.
In the fourth quarter of 2024, changes in facts and circumstances related to reduced demand of the Company's medical products, coupled with a sustained decrease in the Company's stock price, resulted in the Company determining that an indicator of possible impairment existed within its reporting units.
In fiscal year 2025, changes in facts and circumstances related to a sustained decrease in our stock price, a decrease in our market capitalization, and downward revisions in our longer term forecast, which included the impact of tariffs and the MOFCOM initiating two investigations related to medical products imported into China resulted in our management determining that an indicator of possible impairment existed within our reporting units.
Selling, General and Administrative Selling, general and administrative expenses as a percentage of total revenues increased to 17.0% for fiscal year 2024 from 14.4% for fiscal year 2023 primarily due to decreased revenue, increased fixed cost commitments to a supplier, increased litigation costs, and increased severance costs, partially offset by lower intangible asset amortization expense.
Selling, General, and Administrative Selling, general, and administrative expenses for fiscal year 2025 decreased primarily due to a decrease in fixed cost commitments to a supplier of $3.5 million and amortization of intangibles of $3.0 million, partially offset by an increase in depreciation costs of $1.2 million.
Backlog Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid. Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Our estimated total backlog at September 27, 2024 was approximately $299 million.
Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Our estimated total backlog at October 3, 2025 was approximately $262 million. Orders may be revised or canceled, either according to their terms or as customers' needs change.
We made an accounting policy election, as allowed by the SEC and FASB, to recognize the impact of GILTI as a period cost if and when incurred. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities.
These unfavorable items were partially offset by the favorable impact of U.S. tax reform regarding international provisions, R&D credits, and return to provision adjustments. Liquidity and Capital Resources We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities.
The decrease in cash used in investing activities was primarily due to increased proceeds from the 34 Table of Contents maturities of marketable debt securities, partially offset by increased purchases of marketable securities, increased purchases of property, plant, and equipment, and the settlement of net investment hedges in the prior year. Net cash used in financing activities.
This strategy resulted in lower purchases of short-term marketable securities and CDs of $30.4 million, increased proceeds from maturities and sales of marketable debt securities of $4.8 million, and lower purchases of property, plant, and equipment of $4.0 million. Net cash used in financing activities.
Industrial revenues increased $9.2 million due to increased sales of security inspection products and industrial tubes.
Industrial revenues increased $22.7 million in fiscal year 2025 compared to fiscal year 2024, primarily due to increased sales of security inspection products and X-ray tubes of $15.3 million, digital detectors of $6.0 million and other components of $1.4 million.
During fiscal year 2023, our effective tax rate varied from the U.S. federal statutory rate of 21% primarily due to the favorable impact of the release of the U.S. valuation allowance, U.S. tax reform regarding international provisions, R&D credits, and return to provision adjustments.
During fiscal year 2025, our effective tax rate varied from the U.S. federal statutory rate of 21% primarily due to the goodwill impairment that took place in the third quarter of fiscal year 2025, the unfavorable impact of U.S. deferred tax attributes and losses in certain foreign jurisdictions for which a valuation allowance is provided as well as profit in foreign jurisdictions with statutory tax rates greater than 21%.
Removed
Our Business Varex Imaging Corporation is a leading innovator, designer and manufacturer of X-ray imaging components including X-ray tubes, flat panel and photon counting detectors and accessories, linear accelerators, and image software processing solutions, which 30 Table of Contents are critical components of a variety of X-ray based imaging equipment, and stand-alone X-ray based systems in select application areas.
Added
Additionally, a sustained United States government shutdown could negatively impact the global economy and in turn our financial condition and results of operations. During the calendar year 2025, the United States Administration has announced and/or imposed a variety of new tariffs on imports from other countries.
Removed
We experienced fewer supply chain, manufacturing, and logistics challenges in fiscal year 2024 than in fiscal year 2023. However, shortages of certain materials and delivery delays from some suppliers caused, and may in the future cause, delays in manufacturing products, as well as operational and customer order fulfillment challenges.
Added
In response, a number of those impacted or potentially impacted countries have announced and/or imposed retaliatory tariffs on United States imports. These actions impacted our results of operations and profitability in fiscal year 2025, particularly the bilateral United States and Chinese tariffs.
Removed
In addition, since late 2023 our Medical business has been negatively impacted by the Chinese government's anti-corruption campaign related to the healthcare industry, which we expect to continue at some level through fiscal year 2025. We continue to observe cautious purchasing behaviors by our customers, which we expect to subside by calendar year-end 2024.
Added
Absent a de-escalation in the current trade wars, particularly the trade war between the United States and China, these tariffs have and are expected to make our products less competitive with similar product not imported from the United States, which has had and in the future is expected to negatively impact our business and financial results.
Removed
The impact to our business from potential changes to tariffs as a result of the outcome of the recent United States presidential and congressional elections is unknown at this time. We continue to monitor developments in this area.
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Additional new tariffs, trade restrictions or other retaliatory actions aimed at specific industries, such as X-ray imaging products, could also materially impact our business. We remain committed to working with our customers to minimize the effects of the tariffs.
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Fiscal year 2024 was the 52-week period that ended September 27, 2024, fiscal year 2023 was the 52-week period that ended September 29, 2023, and fiscal year 2022 was the 52-week period that ended September 30, 2022.
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In this regard, we are actively working to implement a number of options that could reduce the impact, including pursuing commonly utilized mitigation practices and localizing more manufacturing in the region. At this time, however, we do not anticipate these efforts will allow us to fully offset the additional costs or other negative impacts resulting from such tariffs.
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The Industrial segment gross profit decreased $4.6 million in fiscal year 2024 compared to 2023 primarily as a result of decreased volumes of digital detectors, partially offset by an increase in the sale of security inspection products.
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Considering the mitigation efforts we have in flight at this point, we are not currently planning to do any restructuring in China.
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We are committed to investing in research and development efforts to support long-term growth objectives by bringing new and innovative products to market for our customers.
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We continue to monitor potential changes in customer procurement decisions resulting from the current trade climate, along with other tariff-related actions, investigations and other activities that might negatively affect our costs or otherwise impact our business and results of operations.
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Interest expense increased in fiscal year 2024 compared to fiscal year 2023 primarily due to the termination of the ABL facility which resulted in the recognition of $0.6 million of the remaining unamortized deferred issuance costs.
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Furthermore, if international customers’ negative perceptions of the actions of the United States Administration influence their buying decisions, our business and results of operations could be negatively impacted. In April 2025, the China Ministry of Commerce initiated two investigations related to medical products imported into China.
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Other expense, net decreased in fiscal year 2024 compared to fiscal year 2023 primarily due to a gain on business acquisition and decreased losses in certain investments in privately-held companies and equity investments, partially offset by increased foreign exchange expense.
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One investigation relates to the impact of imports of X-ray tubes on the domestic industry and its competitiveness, and another relates to imports into China of certain medical CT X-ray tubes and tube inserts for CT devices (collectively “CT Tubes and Inserts”) originating from the United States and India.
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These favorable items were partially offset by the unfavorable impact of profit in foreign jurisdictions with statutory tax rates greater than 21%.
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We produce CT Tubes and Inserts in the United States and export them to China, but we do not produce CT Tubes and Inserts in India. Total sales of medical X-ray tubes we import into China represented approximately 10% of our total revenue in fiscal year 2025.
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We estimated the fiscal year 2024 GILTI (global intangible low-taxed income), BEAT (base-erosion anti-abuse tax), FDII (foreign-derived intangible income), limitations on interest expense deductions, and other components of U.S. tax reform, and have included these amounts in the calculation of the fiscal year 2024 tax provision.
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Both investigations were temporarily suspended in May 2025 and again in August 2025, and then both were indefinitely suspended in November 2025. If recommenced, we anticipate that the MOFCOM Investigations may take approximately one year to resolve. We are committed to complying with all applicable regulations.
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The availability under our Revolving Credit Facility and Equipment Credit Facility is $155.0 million and $20.0 million, respectively. As of September 27, 2024, our Revolving Credit Facility and Equipment Credit Facility remain undrawn.
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In the past, we have experienced supply chain, manufacturing, and logistics challenges but these challenges have largely subsided. However, given the current tariff environment and uncertainty around how it may impact customer purchasing decisions and the timing of those decisions, supply chain and logistics challenges could re-emerge.
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The decrease in cash provided by operating activities was primarily due to a decrease in net income and a decrease in cash inflows for inventory and prepaid expenses and other assets, partially offset by decreased payments for accounts payable during fiscal year 2024. Net cash used in investing activities .
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During fiscal year 2025, Americas revenues increased $10.0 million due to increased security inspection products sales of $13.3 million, increased X-ray tubes sales of $4.7 million, increased other product sales of $0.7 million, partially offset by decreased veterinary sales of $4.7 million, digital detector sales of $2.2 million, and software sales of $1.8 million.
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The decrease in cash used in financing activities was primarily due to increased cash payments related to debt issuance costs and taxes for net share settlement of equity awards, partially offset by reduced repayments of borrowings when compared to fiscal year 2023.
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APAC revenues increased $19.1 million primarily due to increased X-ray tubes sales of $14.7 million, security inspection products sales of $3.2 million, digital detector sales of $1.8 million, and software sales of $0.6 million, partially offset by decreased other product sales of $1.3 million.
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In the fourth quarter of fiscal year 2022, we entered into a development agreement and a share purchase agreement with a third-party company. For more information about these agreements, see Note 13, Commitments and Contingencies , included in the accompanying Notes to the Consolidated Financial Statements.
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Industrial segment gross profit increased $10.2 million in fiscal year 2025 compared to fiscal year 2024, primarily due to improved sales volume and favorable product mix of $20.1 million, partially offset by decreased productivity and increased material costs of $9.9 million.
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Based on the output of the analysis, the Company determined that the fair values of both the Medical and Industrial reporting units exceeded their carrying amounts. Accordingly, no impairment charges were recorded during the year ended September 27, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe try to protect against such volatility through various business 38 Table of Contents strategies. During the fiscal year ended September 27, 2024, we did not have any commodity derivative instruments in place to manage our exposure to price changes.
Biggest changeDuring fiscal year 2025, we did not have any commodity derivative instruments in place to manage our exposure to price changes. Sensitivity Analysis The following table sets forth the potential loss in future earnings, fair value, or cash flows resulting from hypothetical changes in relevant market rates or prices as of October 3, 2025.
Additionally, we may choose not to hedge certain foreign exchange exposures for a variety of reasons including, but not limited to, accounting considerations, the prohibitive economic cost of hedging particular exposures, or due to natural offsets among the different exposures. See Note 8, Financial Derivatives and Hedging Activities, of the Notes to the Consolidated Financial Statements for further information.
Additionally, we may choose not to hedge certain foreign exchange exposures for a variety of reasons including, but not limited to, accounting considerations, the prohibitive economic cost of hedging particular exposures, or due to natural offsets among the different exposures. See Note 9, Financial Derivatives and Hedging Activities, of the Notes to the Consolidated Financial Statements for further information.
Market Risk Category Hypothetical Change Estimated Impact (In millions) Impact Category Foreign Currency - Revenue 10% decrease in foreign exchange rates $ 13.5 Earnings Interest Rate - Marketable Securities 100 basis point decrease in interest rate of underlying investments 1.6 Earnings Commodity Price 10% increase in commodity prices $ 3.7 Earnings
Market Risk Category Hypothetical Change Estimated Annual Impact (In millions) Impact Category Foreign Currency - Revenue 10% decrease in foreign exchange rates $ 14.6 Earnings Interest Rate - Marketable Securities 100 basis point decrease in interest rate of underlying investments 0.9 Earnings Commodity Price 10% increase in commodity prices $ 3.1 Earnings
Interest Rate Risk Borrowings under our Revolving Credit Facility and Equipment Credit Facility bear interest at floating interest rates. At September 27, 2024, we had no borrowings subject to floating interest rates. See Note 9, Borrowings, of the Notes to the Consolidated Financial Statements for further information.
Interest Rate Risk Borrowings under our Revolving Credit Facility bear interest at floating interest rates. As of October 3, 2025, we had no borrowings subject to floating interest rates. See Note 6, Borrowings, of the Notes to the Consolidated Financial Statements for further information.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks We are exposed to four primary types of market risks: foreign currency exchange rate risk, credit and counterparty risk, interest rate risk and commodity price risk. These risks, as discussed below, have not changed materially versus the prior reporting period.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to four primary types of market risks: foreign currency exchange rate risk, credit and counterparty risk, interest rate risk, and commodity price risk.
In addition, we are not aware of any facts or circumstances that would significantly impact such exposures in the near term. Risks Foreign Currency Exchange Rate Risk A significant portion of our customers are outside the United States, while our financial statements are denominated, and our products are generally priced in U.S. Dollars. A strong U.S.
Foreign Currency Exchange Rate Risk A significant portion of our customers are outside the United States, while our financial statements are denominated, and our products are generally priced in U.S. Dollars. A strong U.S.
Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.
Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. 39 Table of Contents Commodity Price Risk We are exposed to market risks related to volatility in the prices of raw materials used in our products.
Commodity Price Risk We are exposed to market risks related to volatility in the prices of raw materials used in our products. The prices of these raw materials fluctuate in response to changes in supply and demand fundamentals and our product margins and level of profitability tend to fluctuate with changes in these raw materials prices.
The prices of these raw materials fluctuate in response to changes in supply and demand fundamentals and our product margins and level of profitability tend to fluctuate with changes in these raw materials prices. We try to protect against such volatility through various business strategies.
Sensitivity Analysis The following table sets forth the potential loss in future earnings, fair value, or cash flows resulting from hypothetical changes in relevant market rates or prices as of September 27, 2024. The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analysis.
The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analysis.

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