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Varian (VAR) Q1 Earnings Beat Estimates, Revenues Miss Mark

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Varian Medical Systems, Inc. (VAR - Free Report) reported first-quarter fiscal 2021 adjusted earnings per share (EPS) of $1.14, beating the Zacks Consensus Estimate by 9.6%. The bottom line, however, fell 1.7% year over year.

Revenue Details

The company reported revenues of $778.8 million, which missed the consensus mark by 8.3%. Also, the top line declined 6% year over year and 8% at constant currency (cc).

Segment Details

Oncology Systems: Revenues totaled $744 million, down 5% year over year.

As a whole, gross orders inched up 2% from the year-ago quarter to $789 million.

Orders in the Americas dropped 4% year over year, which included a flat growth rate in North America. In EMEA, orders rose 21% year over year while APAC orders decreased 12% year over year.

Proton Solutions: Revenues were down 7% to $26 million.

Other: Revenues grossed $9 million, down 54%. For investors’ notice, the segment comprises Interventional Solutions business including cryoablation, embolic microspheres and microwave ablation. Moreover, it comprises investments in cardiac radioablation.

Margins

Total gross profit in the reported quarter was $359 million, down 2.1% year over year. Gross margin in the reported quarter was 46.1% of net revenues, up 185 basis points (bps).

Adjusted operating profit came in at $125 million, up 1.8% year over year. As a percentage of revenues, adjusted operating margin was 16%, reflecting an expansion of 123 bps.

Cash Position

The company exited the fiscal first quarter with $773.3 in cash and cash equivalents compared with $766.1 million in the sequentially previous quarter.

Cumulative net cash provided by operating activities at the end of the reported quarter was $141.4 million compared with $112.6 million in the year-ago period.

 

Varian Medical Systems, Inc. Price, Consensus and EPS Surprise

Varian Medical Systems, Inc. Price, Consensus and EPS Surprise

 

Varian Medical Systems, Inc. price-consensus-eps-surprise-chart | Varian Medical Systems, Inc. Quote

 

Guidance

In the quarter under review, the company did not issue any guidance due to the continued uncertainty surrounding the magnitude and duration of the COVID-19 pandemic.

Our Take

Varian exited the first quarter of fiscal 2021 on a mixed note. Expansion in both margins is an added positive. Management is optimistic about the completed acquisitions of CyberHeart, Endocare and Alicon. The receipt of 13 Ethos orders (including eight in North America, four in EMEA and one in APAC) and one Proton order in China buoys optimism. Oncology gross orders climbed in the quarter, especially in EMEA.

Moreover, the company’s merger agreement with Siemens Healthineers will enable it to grow its renowned customer care, thereby offering service to clinicians and patients from the very first stage of cancer. Notably, the deal is expected to close in the first half of calendar year 2021.

On the flip side, the company saw revenue declines at each of its core operating segments in the quarter.

Zacks Rank and Key Picks

Varian currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks, which are likely to report earnings soon, are Amedisys, Inc. (AMED - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Hologic, Inc. (HOLX - Free Report) .

The Zacks Consensus Estimate for Amedisys' fourth-quarter 2020 adjusted EPS is currently pegged at $1.45. The consensus estimate for revenues stands at $553.1 million. The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDEXX currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for fourth-quarter 2020 adjusted EPS is currently pegged at $1.43. The consensus estimate for revenues stands at $677.5 million.

Hologic currently sports a Zacks Rank #1. The Zacks Consensus Estimate for its first-quarter fiscal 2021 adjusted EPS is pegged at $2.14. The consensus estimate for revenues stands at $1.38 billion.

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