Varex Imaging Corporation Q2 FY2026 earnings call

For medical business, photon counting technology is expanding beyond CT into other modalities like CBCT, DR, breast imaging with 8 customers actively engaged. OEMs for CT are making steady progress. Pricing power exists, with ability to pass on costs in certain cases, especially on contract renewal. Industrial and EMEA segments have some lumpy nature, but industrial business grew couple percentage points year over year and expected to continue growing. Annual guidance resumption due to improved forecasting procedures and more stable demand side.

Resumed annual guidance as demand side is more stable post supply chain crisis and China market issues. Expect second half growth similar to first half with similar split between medical and industrial, around 3% growth overall.

Challenges in general environment affecting costs, material availability, lead times, logistics

Q: Regarding photon counting for medical business, status of OEMs and launch timeline?

A: Two CT OEMs are far along, talking to 8 others in other modalities. Launch plans of CT OEMs not public, still on track for 2029 goals.

Q: When issues like chip price increase occur, pricing power?

A: Have pricing power, passed on costs in previous FPGA issue, can pass on if cost increase is too unusual.

Q: Why sounding cautious this quarter?

A: Cautious about general environment, but demand side not impacted much, effect on costs and logistics.

Q: EMEA and industrials performance?

A: EMEA and industrials somewhat connected, industrial business grew couple percentage points year over year, expected to continue growing.

Q: Reason for resuming annual guidance?

A: Improved forecasting procedures, demand side more stable post crises.

Q: Growth split and concern on top line?

A: Growth split expected similar in second half, no change in confidence.

Q: Non-cash charge on micro-ex shares?

A: 1.8 million non-cash charge, part of EPS, EBITDA etc.

Q: OPX higher than expected?

A: Due to funding growth initiatives like R&D and channel development.

Q: Cargo screening update?

A: Booking deals consistently, well distributed, ramping up production and implementation as anticipated