Varex Imaging (VREX) CJS Securities 26th Annual "New Ideas for the New Year” Investor Conference summary

Company overview and market position

• Largest independent provider of X-ray imaging components for medical and industrial applications, with 70% of revenue from medical and 30% from industrial as of FY2025.

• Revenue is geographically diversified across Americas, EMEA, and Asia, each contributing about a third.

• Main products are X-ray tubes and detectors, accounting for 90% of revenue.

• Sells to nearly all major global OEMs in the medical X-ray space, including GE, Siemens, Canon, and Philips.

• Holds a strong IP portfolio with 660 patents and 210 pending, and invests significantly in R&D.

Segment performance and growth strategies

• Medical segment is focused on CT, with 40% of medical sales from CT tubes; aims to penetrate CT detector market via photon-counting technology.

• Industrial segment is growing faster (5%-7%) than medical (2%-3%), driven by new product launches and greenfield opportunities.

• Security and non-destructive testing each make up about 40% of industrial revenue, with security business at $100 million in FY2025.

• Replacement demand for tubes and detectors provides stable recurring revenue, accounting for 25%-30% annually.

• Long customer relationships and high switching costs due to regulatory and technical barriers.

Recent challenges and operational improvements

• Past two years impacted by customer destocking, supply chain issues, and healthcare investigations in China, now resolved.

• Tariffs have become a baseline cost, with price increases passed to customers to offset impact.

• Flat revenue and declining earnings from 2022-2025 attributed to price erosion and market share loss in Rad detectors, especially from Asian competition.

• Strategic response includes building two factories in India to produce lower-cost products and regain Rad market share.

• Increased R&D and CapEx investments in photon counting, cargo systems, and India manufacturing, with expectations for future growth.