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Varian (VAR) Misses Earnings, Beats Revenue Estimates in Q4
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Varian Medical Systems, Inc.’s fourth-quarter fiscal 2018 adjusted earnings of $1.16 per share missed the Zacks Consensus Estimate of $1.19. Adjusted earnings also improved 11.5% on a year-over-year basis.
Revenues totaled $801.6 million, which beat the consensus mark of $762.7 million. On a year-over-year basis, revenues rose 11.1% or 12% at constant currency (cc).
Varian has a Zacks Rank #4 (Sell).
Let’s delve deeper into the company’s quarterly results.
FY18 Results
Varian registered revenues of $2.92 billion in the fiscal, up 11.4% year over year. The company registered adjusted earnings of $4.42 per share, up 35.6% year over year.
Oncology Systems: In the fourth quarter, revenues in the segment totaled $756 million, up 13% year over year.
Varian’s worldwide net installed base was 8,057 units, up 224 units on a year-over-year basis. As a whole, gross orders totaled $1.1 billion, up 13% from the year-ago quarter’s tally.
Geographically, gross orders in Americas increased 6% on a year-over-year basis. Gross orders in North America increased 4% on a year-over-year basis. In EMEA, gross orders increased 14% year over year. In APAC, gross orders increased 31% year over year.
Operating earnings in the segment rose 8% year over year.
Proton Solutions: Revenues in the segment declined 12% on a year-over-year basis to $46 million.
Notably, the company did not book any new ProBeam order in the quarter.
Halcyon Drives Revenues
In the fourth quarter, the Halcyon platform received 84 new orders.Nearly 40% of these orders were for greenfield sites. During the quarter, the company had 510(k) clearance for Halcyon with kilovoltage cone-beam CT imaging.
Since the launch, approximately 40% of the Halcyon orders have been received from the emerging markets.
Margins
Total company gross profit in the reported quarter was $338.7 million, up 10.8% year over year. Gross margin in the reported quarter was 42.3% of net revenues, down 10 basis points (bps) on a year-over-year basis.
Research and development expenses rose 15.3% year over year to $59.6 million. Selling, general and administrative expenses increased 4.1% year over year. As a percentage of revenues, operating margin increased 240 bps in the quarter.
Guidance
Varian issued guidance for fiscal 2019.
For fiscal 2019, year-over-year revenue growth is expected in the range of $3.06-$3.15 billion, up 5-8% year over year. The Zacks Consensus Estimate for revenues is pegged at $3.04 billion, lower than the previous guidance.
Adjusted operating earnings, as a percentage of revenues, is projected in the range of 17-18%.
Adjusted net earnings per share (EPS) is expected in the range of $4.60 to $4.75. The Zacks Consensus Estimate for earnings is pegged at $4.86, which is above the guidance.
Cash flow from operations is expected in the range of $460-$510 million for the fiscal.
Wrapping Up
Varian ended the fourth quarter of fiscal 2018 on a mixed note, wherein adjusted earnings missed estimates, while revenues beat the same. No new ProBeam orders is a concern.
Varian's lackluster performance in the Proton Solutions unit is a headwind. The company competes with large electronic companies as well as smaller and more specialized radiation therapy equipment manufacturers. Thus, competition is likely to mar revenues.
However, the company’s Halcyon platform has been the key growth driver of growth, which is now operational in centers across Africa. Solid revenues from the Oncology segment and strong overseas presence, particularly in the emerging countries are positives. The recent display of brachytherapy solutions also deserves mention. Varian has also been going global in acquisitions and agreements. Recent acquisitions include Sirtex of Australia and COOP of Taiwan. A solid guidance for fiscal 2018 instills optimism.
Upcoming Releases from the MedTech Industry
A few better-ranked stocks in the MedTech space are Inogen, Inc (INGN - Free Report) , Baxter International Inc (BAX - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
Inogen is expected to release third-quarter fiscal 2018 results on Nov 6. The Zacks Consensus Estimate is pegged at 52 cents for the quarter’s adjusted EPS and the same for revenues is pegged at $91.1. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for the period’s adjusted EPS is 74 cents and the same for revenues is pegged at $2.79 billion. The stock carries a Zacks Rank #2.
Henry Schein is slated to release third-quarter 2018 results on Nov 6. The Zacks Consensus Estimate for adjusted EPS is $1.01 for the to-be-reported quarter and the same for the top line is pegged at $3.36 billion. The stock carries a Zacks Rank #2.
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Varian (VAR) Misses Earnings, Beats Revenue Estimates in Q4
Varian Medical Systems, Inc.’s fourth-quarter fiscal 2018 adjusted earnings of $1.16 per share missed the Zacks Consensus Estimate of $1.19. Adjusted earnings also improved 11.5% on a year-over-year basis.
Revenues totaled $801.6 million, which beat the consensus mark of $762.7 million. On a year-over-year basis, revenues rose 11.1% or 12% at constant currency (cc).
Varian has a Zacks Rank #4 (Sell).
Let’s delve deeper into the company’s quarterly results.
FY18 Results
Varian registered revenues of $2.92 billion in the fiscal, up 11.4% year over year. The company registered adjusted earnings of $4.42 per share, up 35.6% year over year.
Varian Medical Systems, Inc. Price and Consensus
Varian Medical Systems, Inc. Price and Consensus | Varian Medical Systems, Inc. Quote
Segment Details
Oncology Systems: In the fourth quarter, revenues in the segment totaled $756 million, up 13% year over year.
Varian’s worldwide net installed base was 8,057 units, up 224 units on a year-over-year basis. As a whole, gross orders totaled $1.1 billion, up 13% from the year-ago quarter’s tally.
Geographically, gross orders in Americas increased 6% on a year-over-year basis. Gross orders in North America increased 4% on a year-over-year basis. In EMEA, gross orders increased 14% year over year. In APAC, gross orders increased 31% year over year.
Operating earnings in the segment rose 8% year over year.
Proton Solutions: Revenues in the segment declined 12% on a year-over-year basis to $46 million.
Notably, the company did not book any new ProBeam order in the quarter.
Halcyon Drives Revenues
In the fourth quarter, the Halcyon platform received 84 new orders.Nearly 40% of these orders were for greenfield sites. During the quarter, the company had 510(k) clearance for Halcyon with kilovoltage cone-beam CT imaging.
Since the launch, approximately 40% of the Halcyon orders have been received from the emerging markets.
Margins
Total company gross profit in the reported quarter was $338.7 million, up 10.8% year over year. Gross margin in the reported quarter was 42.3% of net revenues, down 10 basis points (bps) on a year-over-year basis.
Research and development expenses rose 15.3% year over year to $59.6 million. Selling, general and administrative expenses increased 4.1% year over year. As a percentage of revenues, operating margin increased 240 bps in the quarter.
Guidance
Varian issued guidance for fiscal 2019.
For fiscal 2019, year-over-year revenue growth is expected in the range of $3.06-$3.15 billion, up 5-8% year over year. The Zacks Consensus Estimate for revenues is pegged at $3.04 billion, lower than the previous guidance.
Adjusted operating earnings, as a percentage of revenues, is projected in the range of 17-18%.
Adjusted net earnings per share (EPS) is expected in the range of $4.60 to $4.75. The Zacks Consensus Estimate for earnings is pegged at $4.86, which is above the guidance.
Cash flow from operations is expected in the range of $460-$510 million for the fiscal.
Wrapping Up
Varian ended the fourth quarter of fiscal 2018 on a mixed note, wherein adjusted earnings missed estimates, while revenues beat the same. No new ProBeam orders is a concern.
Varian's lackluster performance in the Proton Solutions unit is a headwind. The company competes with large electronic companies as well as smaller and more specialized radiation therapy equipment manufacturers. Thus, competition is likely to mar revenues.
However, the company’s Halcyon platform has been the key growth driver of growth, which is now operational in centers across Africa. Solid revenues from the Oncology segment and strong overseas presence, particularly in the emerging countries are positives. The recent display of brachytherapy solutions also deserves mention. Varian has also been going global in acquisitions and agreements. Recent acquisitions include Sirtex of Australia and COOP of Taiwan. A solid guidance for fiscal 2018 instills optimism.
Upcoming Releases from the MedTech Industry
A few better-ranked stocks in the MedTech space are Inogen, Inc (INGN - Free Report) , Baxter International Inc (BAX - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
Inogen is expected to release third-quarter fiscal 2018 results on Nov 6. The Zacks Consensus Estimate is pegged at 52 cents for the quarter’s adjusted EPS and the same for revenues is pegged at $91.1. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for the period’s adjusted EPS is 74 cents and the same for revenues is pegged at $2.79 billion. The stock carries a Zacks Rank #2.
Henry Schein is slated to release third-quarter 2018 results on Nov 6. The Zacks Consensus Estimate for adjusted EPS is $1.01 for the to-be-reported quarter and the same for the top line is pegged at $3.36 billion. The stock carries a Zacks Rank #2.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>