Varex Imaging 2025 Q4 Earnings Strong Performance as Net Income Surges 123.9%

Varex Imaging (VREX) delivered a strong Q4 2025 performance, with revenue and earnings surpassing expectations. The company reported $229 million in revenue, a 11.3% year-over-year increase, and returned to profitability with EPS of $0.29, reversing a prior-year loss of $1.24. Management provided Q1 2026 guidance in line with expectations, signaling confidence in sustained growth.

Revenue

The company’s revenue growth was driven by robust demand in both the Medical and Industrial segments. The Medical segment, which includes CT tubes and imaging components, generated $152 million in revenue, reflecting a 5% year-over-year increase. Meanwhile, the Industrial segment, bolstered by record cargo systems sales, contributed $77 million, a 25% rise compared to the prior year. This segment’s performance underscored Varex’s successful diversification strategy, with Industrial revenue reaching its highest quarterly contribution in company history.

Earnings/Net Income

Varex’s turnaround was marked by a dramatic improvement in profitability. The company achieved a net income of $12.2 million in Q4 2025, compared to a net loss of $51 million in Q4 2024, representing a 123.9% positive swing. This was driven by operational discipline and favorable product mix, with non-GAAP gross margin expanding to 34%. The EPS of $0.29 signaled a significant reversal from the prior-year loss, highlighting the company’s improved financial health.

Post-Earnings Price Action Review

The strategy of buying VREX shares following a revenue beat and holding for 30 days appears promising. Varex’s Q4 revenue of $229 million exceeded estimates by 4.44%, driven by strong performance in both core segments. Post-earnings, shares rose 3.76% in after-hours trading, reflecting investor optimism. For Q1 2026, the company guided revenue between $200 million and $215 million, with non-GAAP EPS of $0.05–$0.25, aligning with its growth trajectory. Strategic initiatives, including advancements in photon counting CT technology and expansion in India, position Varex for long-term gains. While historical data on post-beat performance is limited, the company’s consistent outperformance of estimates suggests a 30-day holding period could capitalize on its momentum. However, investors must remain cautious about broader market risks.

CEO Commentary

Sunny Sanyal, CEO, emphasized the company’s operational discipline and strategic focus on innovation. He highlighted the Industrial segment’s record $77 million revenue and a 34% non-GAAP gross margin, driven by higher volume and product mix. Sanyal also noted progress in photon counting CT technology and India’s radiographic detector production. Challenges, including U.S.-China tariff uncertainties, were acknowledged, though he expressed optimism about 2026, citing stronger China tender activity and India’s manufacturing scale.

Guidance

Sam Maheshwari, CFO, provided Q1 2026 revenue guidance of $200–$215 million and non-GAAP EPS of $0.05–$0.25. He projected a non-GAAP gross margin of 32%–34% and operating expenses of ~$52 million. Maheshwari noted stable China demand, industrial growth, and margin expansion from service revenue. Full-year 2026 guidance was deferred, but Sanyal indicated expectations for medical and industrial revenue growth, with China modeled as flat to slightly up.

Additional News

Recent developments include a $16 price target increase from B.Riley, reflecting analyst confidence in Varex’s growth potential. The company also announced $17 million in orders for non-intrusive cargo inspection systems, underscoring its industrial segment strength. Additionally, Varex’s CEO highlighted strategic priorities such as supply chain regionalization and R&D investments in photon counting and nanotube cold emitters. These moves aim to solidify its leadership in medical and industrial imaging technologies.