Varex Imaging (VREX) Jefferies 2024 Global Healthcare Conference summary

Market overview and growth drivers

• Serves nearly all global X-ray OEMs, with high customer retention over decades.

• Healthcare segment grows 2%-4% annually, driven by population growth, aging, and new technologies.

• Industrial segment represents 25% of sales, growing 6%-8% annually, leveraging healthcare tech for new applications.

• Industrial growth fueled by greenfield X-ray applications in oil & gas, food inspection, and automotive.

Current market pressures and outlook

• Medical segment down mid-teens in H1, impacted by China’s anti-corruption campaign and global inventory adjustments.

• Inventory destocking expected to last 6-9 months; some improvement anticipated by year-end.

• China, about 14% of revenue, expected to recover gradually post-campaign, with potential pent-up demand.

• Recovery pace in China depends on macro conditions, anti-corruption progress, and stimulus rollout.

Competitive landscape and industry trends

• Minimal competition in X-ray sources; some competition in detectors, mainly static, but limited revenue exposure.

• Industry trend favors outsourcing over insourcing, with increasing OEM specialization and demand for focused solutions.

• Scale and R&D focus enable delivery of innovative, cost-effective X-ray components.