UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 10-Q

____________________________________________________________


☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~July~~January 42, ~~2025~~2026


☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-37860

____________________________________________________________

VAREX IMAGING CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________________________________


Delaware									81-3434516
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification Number)

1678 S. Pioneer Road, Salt Lake City, Utah									84104
(Address of principal executive offices)									(Zip Code)

(801) 972-5000

(Registrant’s telephone number, including area code)

____________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock VREX The Nasdaq ~~Global~~Stock ~~Select~~ Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer

☒☐

Accelerated filer

☐☒

Non-Accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~February 13, ~~2025~~2026, there were 41.59 million shares of the registrant’s common stock outstanding.

VAREX IMAGING CORPORATION

FORM 10-Q

For the Quarter Ended ~~July~~January 42, ~~2025~~2026

INDEX

Part I.	Financial Information	2
Item 1.	Unaudited Financial Statements	2
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income	3
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Stockholders' Equity	5
	Condensed Consolidated Statements of Cash Flows	76
	Notes to the Condensed Consolidated Financial Statements	87
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3327
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4435
Item 4.	Controls and Procedures	4536
Part II.	Other Information	4637
Item 1.	Legal Proceedings	4637
Item 1A.	Risk Factors	4637
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6151
Item 3.	Defaults Upon Senior Securities	6151
Item 4.	Mine Safety Disclosures	6151
Item 5.	Other Information	6151
Item 6.	Exhibits	6252
Signatures		6353

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

(Unaudited)



	Three Months Ended
(In millions, except per share amounts)	January 2, 2026		January 3, 2025
Revenues, net	$	209.6	$	199.8
Cost of revenues	139.8		131.3
Gross profit	69.8		68.5
Operating expenses:
Research and development	21.7		23.5
Selling, general, and administrative	32.7		33.8

Total operating expenses	54.4		57.3
Operating income	15.4		11.2
Interest income	0.6		2.1
Interest expense	(7.9)		(8.0)
Other expense, net	(4.3)		(2.8)
Interest and other expense, net	(11.6)		(8.7)
Income before taxes	3.8		2.5
Income tax expense	1.4		2.6
Net income (loss)	2.4		(0.1)
Less: Net income attributable to noncontrolling interests	0.1		0.2
Net income (loss) attributable to Varex	$	2.3	$	(0.3)
Net income (loss) per common share attributable to Varex
Basic	$	0.06	$	(0.01)
Diluted	$	0.05	$	(0.01)
Weighted average common shares outstanding
Basic	41.8		41.1
Diluted	42.3		41.1

	Three Months Ended				Nine Months Ended
(In millions, except per share amounts)	July 4, 2025		June 28, 2024		July 4, 2025		June 28, 2024
Revenues, net	$	203.0	$	209.1	$	615.7	$	605.3
Cost of revenues	135.5		142.2		403.0		415.5
Gross profit	67.5		66.9		212.7		189.8
Operating expenses:
Research and development	21.4		22.0		66.9		65.1
Selling, general, and administrative	32.9		35.6		99.3		103.5
Impairment of goodwill	93.9		—		93.9		—
Total operating expenses	148.2		57.6		260.1		168.6
Operating (loss) income	(80.7)		9.3		(47.4)		21.2
Interest income	2.5		1.8		7.5		5.5
Interest expense	(9.4)		(7.4)		(27.6)		(22.6)
Other income (expense), net	1.0		(2.9)		(5.8)		(1.6)
Interest and other expense, net	(5.9)		(8.5)		(25.9)		(18.7)
(Loss) income before taxes	(86.6)		0.8		(73.3)		2.5
Income tax expense (benefit)	2.5		(0.7)		8.8		(0.2)
Net (loss) income	(89.1)		1.5		(82.1)		2.7
Less: Net income attributable to noncontrolling interests	—		0.1		0.4		0.4
Net (loss) income attributable to Varex	$	(89.1)	$	1.4	$	(82.5)	$	2.3
Net (loss) income per common share attributable to Varex
Basic	$	(2.15)	$	0.03	$	(2.00)	$	0.06
Diluted	$	(2.15)	$	0.03	$	(2.00)	$	0.06
Weighted average common shares outstanding
Basic	41.5		40.9		41.3		40.7
Diluted	41.5		41.2		41.3		41.2

See accompanying Notes to the Condensed Consolidated Financial Statements.

Table of Contents

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(~~LOSS~~Unaudited) ~~INCOME~~

(Unaudited)



	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025
Net income (loss)	$	2.4	$	(0.1)
Other comprehensive (loss) income



Foreign currency translation adjustments	(0.3)		2.6
Total comprehensive income	2.1		2.5
Less: Comprehensive income attributable to noncontrolling interests	0.1		0.2
Comprehensive income attributable to Varex	$	2.0	$	2.3

	Three Months Ended				Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024		July 4, 2025		June 28, 2024
Net (loss) income	$	(89.1)	$	1.5	$	(82.1)	$	2.7
Other comprehensive loss
Foreign currency translation adjustments	(3.0)		(0.1)		(2.5)		(0.6)
Total comprehensive (loss) income	(92.1)		1.4		(84.6)		2.1
Less: Comprehensive income attributable to noncontrolling interests	—		0.1		0.4		0.4
Comprehensive (loss) income attributable to Varex	$	(92.1)	$	1.3	$	(85.0)	$	1.7

See accompanying Notes to the Condensed Consolidated Financial Statements.

Table of Contents

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)

~~(In millions, except share and per share amounts)~~

~~July 4, 2025~~

(In millions, except share and per share amounts)

~~September~~January 272, ~~2024~~2026

October 3, 2025

~~Assets~~

Assets

~~Current assets:~~

Current assets:

~~Cash and cash equivalents~~

~~136.4~~

Cash and cash equivalents

~~168~~119.75

145.0

~~Marketable securities~~

~~16.2~~

Marketable securities

316.81

10.1

Accounts receivable, net of allowance for credit losses of $1.4 million and $1.0 million at July 4, 2025 and September 27, 2024, respectively

137.0

157.7

Accounts receivable, net of allowance for credit losses of $2.6 million and $2.1 million at January 2, 2026 and October 3, 2025, respectively

146.5

156.6

~~Inventories, net~~

~~298.7~~

Inventories, net

~~264~~328.80

299.4

~~Prepaid expenses and other current assets~~

~~31.2~~

Prepaid expenses and other current assets

2633.95

30.7

~~Total current assets~~

~~619.5~~

Total current assets

~~649~~633.96

641.8

~~Property, plant, and equipment, net~~

~~152.6~~

Property, plant, and equipment, net

~~153~~160.42

157.8

~~Goodwill~~

~~198.5~~

Goodwill

~~291~~198.04

198.4

~~Intangible assets, net~~

~~15.0~~

Intangible assets, net

1614.17

14.0

~~Investments in privately-held companies~~

~~24.6~~

Investments in privately-held companies

2621.83

24.5

~~Deferred tax assets~~

~~3.0~~

Deferred tax assets

12.39

2.9

~~Operating lease assets~~

~~24.1~~

Operating lease assets

2829.31

29.4

~~Other assets~~

~~36.1~~

Other assets

4637.8

38.6

~~Total assets~~

~~1,073.4~~

Total assets

1,~~213~~098.60

1,107.4

~~Liabilities and stockholders' equity~~

Liabilities and stockholders' equity

~~Current liabilities:~~

Current liabilities:

~~Accounts payable~~

~~70.7~~

Accounts payable

5978.19

69.9

~~Accrued liabilities and other current liabilities~~

~~86.0~~

Accrued liabilities and other current liabilities

7865.67

98.4

~~Current operating lease liabilities~~

~~3.9~~

Current operating lease liabilities

4.06

4.4

~~Current maturities of long-term debt, net~~

~~1.5~~

Current maturities of long-term debt, net

461.34

1.5

~~Deferred revenues~~

~~14.6~~

Deferred revenues

712.94

13.0

~~Total current liabilities~~

~~176.7~~

Total current liabilities

~~195~~163.90

187.2

~~Long-term debt, net~~

~~366.0~~

Long-term debt, net

~~397~~366.12

366.0

~~Deferred tax liabilities~~

~~2.6~~

Deferred tax liabilities

45.05

5.5

~~Operating lease liabilities~~

~~19.4~~

Operating lease liabilities

23.03

24.0

~~Other long-term liabilities~~

~~39.2~~

Other long-term liabilities

5049.42

38.1

~~Total liabilities~~

~~603.9~~

Total liabilities

~~670~~607.42

620.8

~~Stockholders' equity:~~

Stockholders' equity:

~~Preferred stock, $0.01 par value: 20,000,000 shares authorized, none issued~~

—

Preferred stock, $0.01 par value: 20,000,000 shares authorized, none issued

—

~~Common stock, $0.01 par value: 150,000,000 shares authorized~~

Common stock, $0.01 par value: 150,000,000 shares authorized

Shares issued and outstanding: 41,520,742 and 41,094,179 at July 4, 2025 and September 27, 2024, respectively

0.4

Shares issued and outstanding: 41,919,432 and 41,689,672 at January 2, 2026 and October 3, 2025, respectively

0.4

~~Additional paid-in capital~~

~~478.4~~

Additional paid-in capital

~~467~~485.26

483.3

~~Accumulated other comprehensive loss~~

~~(5.4)~~

Accumulated other comprehensive loss

(25.95)

(5.2)

(Accumulated deficit) retained earnings

(18.1)

64.4

Accumulated deficit

(3.6)

(5.9)

~~Total Varex stockholders' equity~~

~~455.3~~

Total Varex stockholders' equity

~~529~~476.19

472.6

~~Noncontrolling interests~~

~~14.2~~

Noncontrolling interests

1413.19

14.0

~~Total stockholders' equity~~

~~469.5~~

Total stockholders' equity

~~543~~490.28

486.6

~~Total liabilities and stockholders' equity~~

~~1,073.4~~

Total liabilities and stockholders' equity

1,~~213~~098.60

1,107.4

See accompanying Notes to the Condensed Consolidated Financial Statements.

Table of Contents

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(Unaudited)

(Unaudited)


	Three Months Ended January 2, 2026
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Varex Equity		Noncontrolling Interests		Total Stockholders' Equity

(In millions)	Shares	Amount
October 3, 2025	41.7	$	0.4	$	483.3	$	(5.2)	$	(5.9)	$	472.6	$	14.0	$	486.6
Net income	—	—		—		—		2.3		2.3		0.1		2.4


Common stock issued upon vesting of restricted shares	0.3	—		—		—		—		—		—		—
Shares withheld for taxes on vesting of restricted stock	(0.1)	—		(1.5)		—		—		(1.5)		—		(1.5)

Share-based compensation	—	—		3.8		—		—		3.8		—		3.8







Foreign currency translation adjustments	—	—		—		(0.3)		—		(0.3)		—		(0.3)




Other	—	—		—		—		—		—		(0.2)		(0.2)
January 2, 2026	41.9	$	0.4	$	485.6	$	(5.5)	$	(3.6)	$	476.9	$	13.9	$	490.8

	Three Months Ended July 4, 2025
	Three Months Ended January 3, 2025
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		~~Accumulated~~Retained ~~Other Comprehensive Loss~~Earnings		~~Retained~~Total ~~Earnings~~Varex ~~(Accumulated Deficit)~~Equity		~~Total~~Noncontrolling ~~Varex Equity~~Interests		~~Noncontrolling~~Total ~~Interests~~Stockholders' Equity		~~Total Stockholders' Equity~~
(In millions)	Shares	Amount
April 4, 2025	41.5	$	0.4	$	474.7			$	(2.4)	$	71.0	$	543.7	$	14.2	$	557.9
September 27, 2024	41.1	$	0.4	$	467.2	$	(2.9)	$	64.4	$	529.1	$	14.1	$	543.2
Net loss	—	—		—				—		(89.1)		(89.1)		—		(89.1)
Net (loss) income	—	—		—		—		(0.3)		(0.3)		0.2		(0.1)
Share-based compensation	—	—		3.7				—		—		3.7		—		3.7
Common stock issued upon vesting of restricted shares	0.2	—		—		—		—		—		—		—
Foreign currency translation adjustments	—	—		—				(3.0)		—		(3.0)		—		(3.0)
Shares withheld for taxes on vesting of restricted stock	(0.1)	—		(1.2)		—		—		(1.2)		—		(1.2)
July 4, 2025	41.5	$	0.4	$	478.4			$	(5.4)	$	(18.1)	$	455.3	$	14.2	$	469.5
Share-based compensation	—	—		4.0		—		—		4.0		—		4.0
Foreign currency translation adjustments	—	—		—		2.6		—		2.6		—		2.6
Other	—	—		—		—		—		—		(0.3)		(0.3)
January 3, 2025	41.2	$	0.4	$	470.0	$	(0.3)	$	64.1	$	534.2	$	14.0	$	548.2

	Three Months Ended June 28, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Varex Equity		Noncontrolling Interests		Total Stockholders' Equity
(In millions)	Shares	Amount
March 29, 2024	40.9	$	0.4	$	458.4	$	(1.7)	$	114.1	$	571.2	$	14.1	$	585.3
Net income	—	—		—		—		1.4		1.4		0.1		1.5
Shares withheld on vesting of restricted stock	—	—		(0.1)		—		—		(0.1)		—		(0.1)
Share-based compensation	—	—		3.9		—		—		3.9		—		3.9
Foreign currency translation adjustments	—	—		—		(0.1)		—		(0.1)		—		(0.1)
Other	—	—		—		—		—		—		(0.1)		(0.1)
June 28, 2024	40.9	$	0.4	$	462.2	$	(1.8)	$	115.5	$	576.3	$	14.1	$	590.4

See accompanying Notes to the Condensed Consolidated Financial Statements.

Table of Contents

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS'~~CASH ~~EQUITY~~FLOWS(Unaudited)

(Unaudited)



	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025
Cash flows from operating activities:
Net income (loss)	$	2.4	$	(0.1)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Share-based compensation expense	3.8		4.1

Depreciation	5.7		6.2
Amortization of intangible assets	1.1		0.9
Deferred taxes	0.6		0.1
Loss from equity method investments	3.2		1.7


Amortization of deferred loan costs	0.5		0.8


Inventory write-down	1.1		0.5


Other, net	0.5		1.9
Changes in assets and liabilities:
Accounts receivable	8.9		19.5
Inventories, net	(30.1)		(15.6)
Prepaid expenses and other assets	(2.1)		(2.4)
Accounts payable	12.1		6.8
Accrued liabilities and other current and long-term liabilities	(23.8)		(16.4)
Deferred revenues	—		1.5

Net cash (used in) provided by operating activities	(16.1)		9.5
Cash flows from investing activities:
Purchases of property, plant, and equipment	(10.7)		(4.2)

Proceeds from sales of marketable debt securities	—		9.5
Proceeds from maturities of marketable debt securities	4.0		10.6
Purchase of marketable debt securities	—		(21.4)


Proceeds from maturities of certificates of deposit	—		3.4




Other, net	(1.0)		(0.9)
Net cash used in investing activities	(7.7)		(3.0)
Cash flows from financing activities:


Taxes related to net share settlement of equity awards	(1.5)		(1.2)
Proceeds from issuance of senior secured notes	—		126.9


Repayments of borrowings	—		(0.7)





Other, net	(0.1)		(0.1)
Net cash (used in) provided by financing activities	(1.6)		124.9

Net (decrease) increase in cash and cash equivalents and restricted cash	(25.4)		131.4
Cash and cash equivalents and restricted cash at beginning of period	147.1		170.4
Cash and cash equivalents and restricted cash at end of period	$	121.7	$	301.8
Supplemental cash flow information:
Cash paid for interest	$	14.6	$	13.7
Income taxes paid, net of refunds	4.0		6.2
Supplemental non-cash activities:
Purchases of property, plant, and equipment financed through accounts payable	$	2.3	$	0.7

	Nine Months Ended July 4, 2025
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings (Accumulated Deficit)		Total Varex Equity		Noncontrolling Interests		Total Stockholders' Equity
(In millions)	Shares	Amount
September 27, 2024	41.1	$	0.4	$	467.2	$	(2.9)	$	64.4	$	529.1	$	14.1	$	543.2
Net (loss) income	—	—		—		—		(82.5)		(82.5)		0.4		(82.1)
Common stock issued upon vesting of restricted shares	0.3	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(1.9)		—		—		(1.9)		—		(1.9)
Common stock issued under employee stock purchase plan	0.2	—		1.7		—		—		1.7		—		1.7
Share-based compensation	—	—		11.5		—		—		11.5		—		11.5
Foreign currency translation adjustments	—	—		—		(2.5)		—		(2.5)		—		(2.5)
Other	—	—		(0.1)		—		—		(0.1)		(0.3)		(0.4)
July 4, 2025	41.5	$	0.4	$	478.4	$	(5.4)	$	(18.1)	$	455.3	$	14.2	$	469.5

	Nine Months Ended June 28, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Varex Equity		Noncontrolling Interests		Total Stockholders' Equity
(In millions)	Shares	Amount
September 29, 2023	40.5	$	0.4	$	450.4	$	(1.2)	$	113.2	$	562.8	$	13.3	$	576.1
Net income	—	—		—		—		2.3		2.3		0.4		2.7
Common stock issued upon vesting of restricted shares	0.3	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(1.9)		—		—		(1.9)		—		(1.9)
Common stock issued under employee stock purchase plan	0.2	—		2.0		—		—		2.0		—		2.0
Share-based compensation	—	—		11.7		—		—		11.7		—		11.7
Foreign currency translation adjustments	—	—		—		(0.6)		—		(0.6)		—		(0.6)
Business acquisitions	—	—		—		—		—		—		0.7		0.7
Other	—	—		—		—		—		—		(0.3)		(0.3)
June 28, 2024	40.9	$	0.4	$	462.2	$	(1.8)	$	115.5	$	576.3	$	14.1	$	590.4

See accompanying Notes to the Condensed Consolidated Financial Statements.

Table of Contents

VAREX IMAGING CORPORATION

~~CONDENSED~~NOTES ~~CONSOLIDATED~~TO ~~STATEMENTS~~THE OFCONDENSED ~~CASH~~CONSOLIDATED ~~FLOWS~~FINANCIAL STATEMENTS(Unaudited)

	Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024
Cash flows from operating activities:
Net (loss) income	$	(82.1)	$	2.7
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Share-based compensation expense	11.6		11.8
Depreciation	17.6		15.6
Amortization of intangible assets	2.9		8.9
Deferred taxes	(3.2)		(14.3)
Loss from equity method investments	2.5		0.8
Amortization of deferred loan costs, net of premium	2.3		2.1
Gain on purchase of business	—		(2.1)
Impairment of goodwill	93.9		—
Inventory write-down	3.0		3.4
Other, net	0.2		2.0
Changes in assets and liabilities:
Accounts receivable	20.2		12.4
Inventories, net	(37.6)		(8.0)
Prepaid expenses and other assets	(5.3)		0.5
Accounts payable	11.6		6.9
Accrued liabilities and other current and long-term liabilities	(11.4)		(19.2)
Deferred revenues	7.6		(2.1)
Net cash provided by operating activities	33.8		21.4
Cash flows from investing activities:
Purchases of property, plant, and equipment	(17.3)		(20.9)
Proceeds from sales of marketable debt securities	10.5		—
Proceeds from maturities of marketable debt securities	45.3		45.2
Purchase of marketable debt securities	(30.6)		(37.1)
Purchase of marketable equity securities	—		(0.2)
Proceeds from maturities of certificates of deposit	3.4		—
Settlement of net investment hedge	(0.8)		—
Acquisitions of businesses, net of cash acquired	—		0.9
Other, net	0.5		(1.4)
Net cash provided by (used in) investing activities	11.0		(13.5)
Cash flows from financing activities:
Taxes related to net share settlement of equity awards	(1.9)		(1.9)
Proceeds from issuance of senior secured notes	126.9		—
Repayments of borrowing under credit agreements	(201.5)		(1.2)
Payment of debt issuance costs	(1.2)		(2.2)
Proceeds from shares issued under employee stock purchase plan	1.7		2.0
Other, net	(1.0)		(0.8)
Net cash used in financing activities	(77.0)		(4.1)
Effects of exchange rate changes on cash and cash equivalents and restricted cash	0.3		—
Net (decrease) increase in cash and cash equivalents and restricted cash	(31.9)		3.8
Cash and cash equivalents and restricted cash at beginning of period	170.4		154.0
Cash and cash equivalents and restricted cash at end of period	$	138.5	$	157.8
Supplemental cash flow information:
Cash paid for interest	$	30.6	$	27.6
Income taxes paid, net of refunds	17.1		16.7
Supplemental non-cash activities:
Purchases of property, plant, and equipment financed through accounts payable	$	0.7	$	1.4

See accompanying Notes to the Condensed Consolidated Financial Statements.

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VAREX IMAGING CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Varex Imaging Corporation (the “Company” or “Varex”) designs, manufactures, sells, and services a broad range of medical products, which include X-ray imaging components including X-ray tubes, flat panel and photon counting detectors and accessories, ionization chambers, high voltage connectors, image processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, automatic exposure control devices, generators, and heat exchangers. The Company sells its products to imaging system original equipment manufacturer (“OEM”) customers for incorporation into new medical diagnostic, radiation therapy, dental, and veterinary equipment, as well as to independent service companies and distributors, and directly to end-users for replacement purposes.

The Company also designs, manufactures, sells and services industrial products, which include Linatron® X-ray linear accelerators, X-ray tubes, digital detectors, high voltage connectors, coolers, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The Company generally sells security and inspection products to OEM customers who incorporate Varex’s products into their inspection or irradiation systems and processes. The Company also manufactures and sells its own X-ray imaging systems for industrial applications. The Company conducts an active research and development program to focus on new technologies and applications in both medical and industrial X-ray imaging.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these unaudited Condensed Consolidated Financial Statements include all adjustments necessary for a fair presentation of the results for the interim periods. The Company has consolidated all of its majority owned subsidiaries and entities over which it has control. All intercompany balances and transactions have been eliminated as part of the consolidation.

These Condensed Consolidated Financial Statements and the accompanying notes are unaudited and should be read in conjunction with the Consolidated Financial Statements and notes thereto for the fiscal year ended ~~September~~October 273, ~~2024~~2025 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on November 1918, ~~2024~~2025. The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. Except for the change in certain policies upon adoption of the accounting standards described below, there have been no material changes to the Company's significant accounting policies, compared to the accounting policies described in Note 1, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for fiscal year ~~2024~~2025.

~~Revision~~Reclassification of Prior Period ~~Financial Statements~~Presentation

InCertain ~~connection~~prior ~~with~~period amounts in the ~~preparation~~Notes ofto the ~~Company's~~ Condensed Consolidated Financial Statements ~~for~~have ~~the~~had ~~three~~a ~~and~~change ~~nine~~in ~~months~~presentation ~~ended~~to ~~July~~conform ~~4, 2025, the Company identified an accounting error related~~ to ~~its~~current ~~deferred tax assets and liabilities and income tax expense calculations in prior periods. The Company has revised its prior~~ period ~~condensed consolidated balance sheets and condensed consolidated statements of stockholders' equity to correct this error~~presentation. ~~The~~This ~~Company~~change ~~evaluated~~does ~~the~~not ~~effect~~affect ~~of the error on the~~ previously ~~issued~~reported ~~condensed consolidated financial statements and determined that the related impacts were not material, individually or in aggregate~~results. However, correcting the cumulative effect of the errors as out-of-period adjustments would be material for the current year. As such the Company has corrected these errors in the Condensed Consolidated Financial Statements for all prior periods presented herein.

Tax expenses are reflective of the Company’s current estimated federal, state and foreign effective tax rate. The Company determined that the impact of these errors on the prior interim and annual periods' annual effective rate calculation and the related impact on the condensed consolidated statements of operations for such prior interim and annual periods is immaterial. As a result, the income statement impact on these periods will be reflected in the restatement of the consolidated statements of operations for fiscal years 2023 and 2024 within the fiscal year 2025 annual report on Form 10K.

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The following tables provide a reconciliation of the revisions for the previously reported condensed consolidated balance sheet as of the year ended September 27, 2024, the condensed consolidated statements of stockholder's equity for the three and nine months ended June 28, 2024, and the condensed consolidated statements of stockholder's equity for the three and nine months ended July 4, 2025, see Condensed Consolidated Statements of Stockholders' Equity and Condensed Consolidated Balance Sheet above.

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

	September 27, 2024
(In millions)	As Previously Reported		Revision		As Revised
Deferred tax assets	$	4.7	$	(3.4)	$	1.3
Total assets	1,217.0		(3.4)		1,213.6
Deferred tax liabilities	1.4		2.6		4.0
Total liabilities	667.8		2.6		670.4
Retained earnings	70.4		(6.0)		64.4
Total Varex stockholders' equity	535.1		(6.0)		529.1
Total stockholders' equity	549.2		(6.0)		543.2
Total liabilities and stockholders' equity	$	1,217.0	$	(3.4)	$	1,213.6

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

	Three Months Ended June 28, 2024
	As Previously Reported						Revision						As Revised
(In millions)	Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity
March 29, 2024	$	119.0	$	576.1	$	590.2	$	(4.9)	$	(4.9)	$	(4.9)	$	114.1	$	571.2	$	585.3
June 28, 2024	$	120.4	$	581.2	$	595.3	$	(4.9)	$	(4.9)	$	(4.9)	$	115.5	$	576.3	$	590.4
	Nine Months Ended June 28, 2024
	As Previously Reported						Revision						As Revised
(In millions)	Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity
September 29, 2023	$	118.1	$	567.7	$	581.0	$	(4.9)	$	(4.9)	$	(4.9)	$	113.2	$	562.8	$	576.1
June 28, 2024	$	120.4	$	581.2	$	595.3	$	(4.9)	$	(4.9)	$	(4.9)	$	115.5	$	576.3	$	590.4

	Three Months Ended July 4, 2025
	As Previously Reported						Revision						As Revised
(In millions)	Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity
April 4, 2025	$	77.0	$	549.7	$	563.9	$	(6.0)	$	(6.0)	$	(6.0)	$	71.0	$	543.7	$	557.9
	Nine Months Ended July 4, 2025
	As Previously Reported						Revision						As Revised
(In millions)	Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity		Retained Earnings		Total Varex Equity		Total Stockholders' Equity
September 27, 2024	$	70.4	$	535.1	$	549.2	$	(6.0)	$	(6.0)	$	(6.0)	$	64.4	$	529.1	$	543.2

These revisions had no impact on gross profit, operating expenses, or operating income in any of the fiscal periods.

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Segment Reporting

The Company has two reportable operating segments; (i) Medical and (ii) Industrial, which aligns with how its Chief Executive Officer, who is the Company's Chief Operating Decision Maker (“CODM”), reviews the Company’s performance. See Note 1513, Segment Information, for further information on the Company’s segments.

Fiscal Year

The fiscal years of the Company as reported are the 52 or 53-week periods ending on the Friday nearest September 30. Fiscal year ~~2025~~2026 is the 5352-week period ending October 3 2, ~~2025~~2026. Fiscal year ~~2024~~2025 was the 5253-week period that ended on ~~September 27~~October 3, ~~2024~~2025. The fiscal quarters ended ~~July 4~~January 2, ~~2025~~2026 and ~~June 28,~~January ~~2024 were both 13-week periods. The nine-month fiscal periods ended July 4~~3, 2025 ~~and June~~ ~~28, 2024~~ were a 4013-week period and a 3914-week period, respectively.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include the valuation of inventories, valuation of goodwill and intangible assets, receivables, warranties, refund liabilities, long-lived asset valuations, impairment of investments, valuation of financial instruments, and taxes on income. Actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers unrestricted currency on hand, demand deposits, time deposits, and all highly -liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Restricted Cash

Restricted cash primarily consists of cash collateral related to certain leases and inventory arrangements. Restricted cash is included in other assets on the Company's Condensed Consolidated Balance Sheets. Cash and cash equivalents and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows consisted of the following:

Restricted cash primarily consists of cash collateral for certain lease and inventory arrangements. Restricted cash is included in other assets on the Company's Condensed Consolidated Balance Sheets. Cash and cash equivalents and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows consisted of the following:


	January 2, 2026				January 3, 2025
(In millions)	Beginning of Period		End of Period		Beginning of Period		End of Period
Cash and cash equivalents	$	145.0	$	119.5	$	168.7	$	176.0
Restricted cash	2.1		2.2		1.7		125.8
Total as presented in the Condensed Consolidated Statements of Cash Flows	$	147.1	$	121.7	$	170.4	$	301.8

	Nine Months Ended				Nine Months Ended
	July 4, 2025				June 28, 2024
(In millions)	Beginning of Period		End of Period		Beginning of Period		End of Period
Cash and cash equivalents	$	168.7	$	136.4	$	152.6	$	156.4
Restricted cash	1.7		2.1		1.4		1.4
Total as presented in the Condensed Consolidated Statements of Cash Flows	$	170.4	$	138.5	$	154.0	$	157.8

Concentration of Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities, certificates of deposit, and trade accounts receivable. Cash held with financial institutions may exceed the Federal Deposit Insurance Corporation insurance limits or similar limits in foreign jurisdictions. To date, the Company has not realized any losses on its deposits of cash and cash equivalents. The Company performs ongoing credit evaluations of its customers and, except for government tenders, group purchases, and orders with a letter of credit, its industrial customers often provide a down payment. The Company maintains an allowance for credit losses based upon the expected collectability of all accounts receivable. The Company obtains some of the components in its products from a limited group of suppliers or from a single-source supplier. When these suppliers are unable to meet the Company's supply needs, the Company's production is negatively impacted.

Credit is extended to customers based on an evaluation of the customer’s financial condition, and collateral is not required. In certain circumstances, a customer may be required to prepay all or a portion of the contract price prior to transfer of control. During the periods presented, one of the Company's customers accounted for a significant portion of revenues, as set forth below:



	Three Months Ended
	January 2, 2026		January 3, 2025
Canon Medical Systems Corporation	15.8	%	16.6	%

10 Canon Medical Systems Corporation accounted for 11.9% and 14.0% of the Company’s accounts receivable as of January 2, 2026 and October 3, 2025, respectively.

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	Three Months Ended				Nine Months Ended
	July 4, 2025		June 28, 2024		July 4, 2025	June 28, 2024
Canon Medical Systems Corporation	17.8	%	18.0	%	17.8%	18.3%

Canon Medical Systems Corporation accounted for 13.5% and 9.5% of the Company’s accounts receivable as of July 4, 2025 and September 27, 2024, respectively.

Equity Method Investments

The Company accounts for its equity investments in privately-held companies under the equity method of accounting if the Company has the ability to exercise significant influence in, but not control of, these investments. The Company records impairment losses on its equity method investments if an impairment exists and is deemed to be other-than-temporary, which is based on various factors, including but not limited to, the length of time the fair value of the investment is below the carrying value, the absence of an ability to recover the carrying amount of the investment, and the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. There were no impairments recorded during the three ~~and nine~~ months ended ~~July~~January 42, ~~2025~~2026 and ~~June~~January 283, ~~2024~~2025, respectively.

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Marketable Securities

The Company's marketable securities consist primarily of financial instruments such as United States treasury securities, United States agency obligations, certificates of deposit, corporate bonds, commercial paper, money market funds, and equity securities.

Marketable Debt Securities

The Company's marketable debt securities are classified as available-for-sale. Classification of marketable debt securities is determined at the time of purchase, and the Company reevaluates such classification as of each balance sheet date. Marketable debt securities are recorded at estimated fair value and included in cash and cash equivalents, marketable securities, and other assets within the Condensed Consolidated Balance Sheets. Any unrealized gains or losses are included in accumulated other comprehensive loss within the Condensed Consolidated Balance Sheets. When the fair value of a marketable debt security declines below its amortized cost basis, any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the security, is recognized in the Condensed Consolidated Statements of Operations. When the fair value of a marketable debt security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in other comprehensive (loss) income and are recognized in the Condensed Consolidated Statements of Operations only if the Company sells or intends to sell the security before recovery of its cost basis. There were no impairments related to marketable debt securities recorded during the three ~~and nine~~ months ended ~~July~~January 42, ~~2025~~2026 and ~~June 28~~January 3, ~~2024~~2025.

Marketable Equity Securities

Marketable equity securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date and included in other assets within the Condensed Consolidated Balance Sheets. All unrealized gains and losses on marketable equity securities are recorded as part of other ~~income (~~expense), net in the Company's Condensed Consolidated Statements of Operations. See Note 64, Fair Value, for further details.

Goodwill and Intangible Assets

Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. Purchased intangible assets are carried at cost, net of accumulated amortization, and are included in intangible assets, net in the Company's Condensed Consolidated Balance Sheets. Intangible assets with finite lives are amortized over their estimated useful lives of primarily two to seven years using the straight-line method.

Business Combinations

The Company uses the acquisition method of accounting for acquired businesses. Under the acquisition method, the Company’s financial statements reflect the operations of an acquired business starting from the date of acquisition. The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Useful lives of identified tangible and intangible assets are determined based on the expected time period in which the cash flows of the related assets are expected to be realized. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Any excess of the estimated fair values of the identifiable net assets acquired over the purchase price is recorded as a gain on bargain purchase.

Transactions between entities under common control are excluded from the scope of the business combinations guidance. The Company accounts for transfers of assets, net assets or equity interests between entities under common control prospectively at the parent's carrying values.

Impairment of Long-lived Assets, Intangible Assets, and Goodwill

The Company reviews long-lived assets and identifiable intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses these assets for impairment based on their estimated undiscounted future cash flows. If the carrying value of the assets exceeds the estimated future undiscounted cash flows, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.

11 The Company evaluates goodwill for impairment at least annually at the beginning of the fourth quarter of each fiscal year or whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation includes consideration of qualitative factors including industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. If the Company determines that a quantitative analysis is necessary, the Company performs a step one analysis, which consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit.

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The Company evaluates goodwill for impairment at least annually at the beginning of the fourth quarter of each fiscal year or whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation includes consideration of qualitative factors including industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. If the Company determines that a quantitative analysis is necessary, the Company performs a step one analysis, which consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. In fiscal year 2024 changes in facts and circumstances related to reduced demand for the Company's medical products, coupled with a sustained decrease in the Company's stock price, resulted in the Company determining that an indicator of possible impairment existed within its reporting units. Accordingly, the Company performed a quantitative impairment analysis to determine the fair values of those reporting units, using both an income approach utilizing the discounted cash flow method and market approach utilizing the public company market multiple method. Based on the output of the analysis, the Company determined that the fair values of both the Medical and Industrial reporting units exceeded their carrying amounts. Accordingly, no impairment charges were recorded during the year ended September 27, 2024.

During the three months ended July 4, 2025, changes in facts and circumstances related to a sustained decrease in the Company's stock price, a decrease in its market capitalization, and downward revisions in its longer term forecast received during the quarter, which included the impact of tariffs and the China Ministry of Commerce (“MOFCOM”) initiating two investigations related to medical products imported into China (the “MOFCOM Investigations”), resulted in the Company determining that an indicator of possible impairment existed within its reporting units. Accordingly, in connection with the preparation of its financial statements for the fiscal quarter ended July 4, 2025, the Company performed a quantitative impairment analysis to determine the fair values of those reporting units, using both an income approach utilizing the discounted cash flow method and a market approach utilizing the public company market multiple method. Based on the output of the analysis, the Company determined that the carrying amount of its Medical reporting unit exceeded its fair value. Accordingly, the Company recorded $93.9 million of impairment charge to its Medical reporting unit within impairment of goodwill in the Condensed Consolidated Statements of Operations. See Note 8, Goodwill and Intangible Assets, for further details.

Loss Contingencies

From time to time, the Company is involved in legal proceedings, claims, and government inspections or investigations, customs and duties audits, and other contingency matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise. The Company accrues amounts for probable losses, to the extent they can be reasonably estimated, that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss (including, among other things, probable settlement value). A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. When a loss contingency is probable but not reasonably estimable, the nature of the contingency and the fact that an estimate cannot be made is disclosed.

Supplier Finance Programs

The Company participates in voluntary supply chain finance programs with a financial intermediary which provide participating suppliers the option to be paid by the intermediary earlier than the original invoice due date. The Company’s responsibility is limited to making payments on the terms originally negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. As part of participating in these arrangements, the Company generally receives more favorable payment terms from its suppliers. The Company does not receive fees, payments, extended payment terms, or other direct economic benefits from the intermediary. The total amounts due to the financial intermediary to settle supplier invoices under supply chain finance programs as of July 4, 2025 and September 27, 2024 were $4.3 million and $2.6 million, respectively. These amounts are included within accounts payable in the Condensed Consolidated Balance Sheets.

The total amounts due to the financial intermediary to settle supplier invoices under supply chain finance programs as of January 2, 2026 and October 3, 2025 were $2.0 million and $2.9 million, respectively. These amounts are included within accounts payable in the Condensed Consolidated Balance Sheets.

Environmental Obligations

The Company's operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport, and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances. In connection with those laws and certain of our past and present operations and facilities, the Company is obligated to indemnify Varian Medical Systems, Inc. ("Varian") for the cleanup liabilities related to prior corporate restructuring activities. The Company anticipates that it will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these sites (after adjusting for any insurance proceeds or tax benefits received by Varian). As of ~~July~~January 42, ~~2025~~2026 and ~~September~~October 273, ~~2024~~2025, ~~our~~the Company's estimated environmental liability for these sites was $3.30 million and $3.92 million, net of expected insurance proceeds, respectively.

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Product Warranty

The Company warrants most of its products for a specific period of time, usually 12 to 27 months from delivery or acceptance, against material defects. The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty.

The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience of product failures, adjusted for current information on repair costs. For new products, estimates include the historical experience of similar products, as well as a reasonable allowance for warranty expenses associated with new products. On a quarterly basis, the Company reviews the accrued warranty costs and updates the historical warranty cost trends, if required.

The following table reflects the changes in the Company’s accrued product warranty:

	Nine Months Ended
	Three Months Ended
(In millions)	~~July~~January 42, ~~2025~~2026		~~June~~January 283, ~~2024~~2025
Accrued product warranty, at beginning of period	$	~~10.~~8.5	$	710.78
New accruals charged to cost of revenues	104.03		~~15.~~3.6
Product warranty expenditures	(114.62)		(133.17)
Accrued product warranty, at end of period	$	98.26	$	910.97

Leases

The Company determines if an arrangement is or contains a lease at the inception of an arrangement. The Company's operating lease right-of-use ("ROU") assets represent the right to use an underlying asset over the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets may also include initial direct costs incurred and prepaid lease payments, less lease incentives. Lease liabilities and their corresponding ROU assets are recognized based on the present value of lease payments over the lease term, discounted using the Company's incremental borrowing rate. The Company recognizes operating leases with lease terms of more than twelve months in operating lease assets, current operating lease liabilities, and operating lease liabilities on its Condensed Consolidated Balance Sheets. The Company recognizes finance leases with lease terms of more than twelve months in property, plant, and equipment, net, accrued liabilities and other current liabilities, and other long-term liabilities on its Condensed Consolidated Balance Sheets. For purposes of calculating lease liabilities and the corresponding ROU assets, the Company's lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

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prepaid lease payments, less lease incentives. Lease liabilities and their corresponding ROU assets are recognized based on the present value of lease payments over the lease term, discounted using the Company's incremental borrowing rate. The Company recognizes operating leases with lease terms of more than twelve months in operating lease assets, current operating lease liabilities, and operating lease liabilities on its Condensed Consolidated Balance Sheets. The Company recognizes finance leases with lease terms of more than twelve months in property, plant, and equipment, net, accrued liabilities and other current liabilities, and other long-term liabilities on its Condensed Consolidated Balance Sheets. For purposes of calculating lease liabilities and the corresponding ROU assets, the Company's lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

Revenue Recognition

The Company’s revenues are derived primarily from the sale of hardware and services. The Company recognizes its revenues net of any value-added or sales tax and net of sales discounts.

The Company sells a high proportion of its X-ray products to a limited number of OEM customers. X-ray imaging components including X-ray tubes, digital detectors and image-processing tools, and security and inspection products are generally sold on a stand-alone basis. However, the Company occasionally sells its digital detectors, X-ray tubes and imaging processing tools as a package that is optimized for digital X-ray imaging and sells its Linatron® X-ray linear accelerators together with its image processing software and image detection products to OEM customers that incorporate them into their inspection or irradiation systems and processes. Service contracts are often sold with certain security and inspection products and computer-aided detection products.

The Company determines revenue recognition through the following steps:

•Identification of the contract, or contracts, with a customer

•Identification of the performance obligations in the contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, a performance obligation is satisfied

Contracts and Performance Obligations

The Company accounts for a contract with a customer when there is an approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the consideration is probable. The Company's performance obligations consist mainly of transferring control of products and services identified in the contracts or purchase orders. For each contract, the Company considers the obligation to transfer products and services to the customer, which are distinct, to be performance obligations.

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identified in the contracts or purchase orders. For each contract, the Company considers the obligation to transfer products and services to the customer, which are distinct, to be performance obligations.

Transaction Price and Allocation to Performance Obligations

Transaction prices of products or services are typically based on contracted rates. To the extent that the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method when there is a large number of transactions with similar characteristics or the most likely amount method when there are two possible outcomes, depending on the circumstances of the transaction, to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current, and forecasted) that is reasonably available.

The Company allows customers to return specific parts of purchased X-ray tubes for a partial refund credit, which is identified as variable consideration. For sales with a right of return, revenue is reduced and a liability is recorded for expected returns, and an asset is recorded for the right to recover products from customers on settling the liability. The Company recognizes a reduction to revenue and cost of sales at the time of sale and a corresponding refund liability and right of return asset. The Company records this estimate based on the historical volume of product returns and adjusts the estimate on a quarterly basis based on the current quarter sales and current quarter returns.

If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation could be sold separately.

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Recognition of Revenue

Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer.

Product revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract.

Service revenue is generally recognized over the term of the service contract. Services are expected to be transferred to the customer throughout the term of the contract, and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer.

Disaggregation of Revenue

Revenue is disaggregated from contracts between geography and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. Refer to Note 1513, Segment Information, ~~included in this report,~~ for the disaggregation of the Company’s revenue based on reportable operating segments and Note 2, Revenue ~~Recognition~~, for the disaggregation of revenue by geographic region and country.

Contract Balances

Contract liabilities are included within the deferred revenues, and other long-term liabilities balances in the Condensed Consolidated Balance Sheets. The Company does not have any material contract assets.

Deferred revenue represents the Company's obligation to transfer goods or services to its customers for which it has already received consideration (or the amount is due) from the customer. The Company's deferred revenue balance primarily relates to contract advances and billings for warranty contracts.

Deferred revenue that is estimated to be recognized during the following twelve-month period is recorded as deferred revenues and the remaining portion is recorded as other long-term liabilities in the Condensed Consolidated Balance Sheets.

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Costs to Obtain or Fulfill a Customer Contract

The Company has certain costs to obtain and fulfill a customer contract, such as commissions and shipping costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Incremental costs of obtaining contracts that would be recognized over greater than one year are not material. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. These costs are included as a component of cost of revenues.

Recently Adopted Accounting Pronouncements

None.

Recent Accounting Standards or Updates Not Yet Effective

In November ~~2023~~2024, the ~~Financial Accounting Standards Board ("~~FASB") issued ~~Accounting Standard Updated ("~~ASU") ~~2023~~2024-0703, ~~Improvements~~Income toStatement ~~Reportable~~- ~~Segment~~Reporting ~~Disclosures.~~Comprehensive ~~ASU~~Income ~~2023~~-07 ~~requires~~Expense ~~disclosure~~Disaggregation ofDisclosures ~~significant~~(Subtopic ~~segment~~220-40): ~~expenses~~Disaggregation ~~that~~of ~~are~~Income ~~regularly~~Statement ~~provided~~Expenses. toThis ~~the~~standard ~~chief~~requires ~~operating~~public ~~decision~~companies ~~maker~~to ~~(“CODM”) and included within the segment measure of profit or loss~~disclose, anin ~~amount~~interim and ~~description~~annual ofreporting ~~its~~periods, ~~composition~~additional ~~for~~information ~~other~~about ~~segment~~certain ~~items~~expenses toin ~~reconcile to segment profit or loss, and~~ the ~~title~~notes ~~and~~to ~~position of~~ the ~~entity’s~~financial ~~CODM~~statements. ~~ASU~~This ~~2023-07~~standard ~~will be applied retrospectively and~~ is effective for annual ~~reporting~~ periods ~~in fiscal years~~ beginning after December 15, ~~2023~~2026, and interim ~~reporting~~ periods inwithin ~~fiscal~~annual ~~years~~reporting periods beginning after December 3115, ~~2024~~2027, but early adoption is permitted. The Company is currently ~~reviewing~~evaluating the impact ~~that the adoption~~ of ~~ASU~~this ~~2023-07~~standard ~~may have~~ on its Condensed Consolidated Financial Statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies to annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 ~~will~~became be effective for the Company's annual ~~reporting~~ periods beginning in fiscal ~~years~~year ~~beginning after December 15, 2024~~2026. The Company iswill ~~currently~~provide ~~evaluating~~the ~~ASU~~required ~~2023-09~~disclosures ~~and~~in ~~does~~its ~~not~~Annual ~~expect~~Report iton toForm ~~have~~10-K afor ~~material~~the ~~effect~~year onended ~~its~~October ~~Condensed~~2, ~~Consolidated Financial Statements and disclosures~~2026.

~~2. REVENUE RECOGNITION~~12

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2. REVENUE

Disaggregation of Revenue

Revenue is disaggregated from contracts by geographic region, country, and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors.

~~Our~~The Company operates various manufacturing and marketing operations outside the United States. The Company's products are sold in three geographic regions: the Americas, EMEA, and APAC. The Americas includes North America (primarily the United States) and Latin America. EMEA includes Europe, the Middle East, India, and Africa. APAC includes Asia (other than India) and Australia. Revenues by region ~~and country~~ are based on the known final destination of products sold.

The following table disaggregates the Company’s revenue by geographic region:

~~Three Months Ended~~

Three Months Ended

~~Nine Months Ended~~

~~(In millions)~~

~~July 4, 2025~~

(In millions)

~~June~~January 282, ~~2024~~2026

~~July~~January 43, 2025

~~June 28, 2024~~

~~Americas~~

~~71.0~~

Americas

7075.23

~~204~~64.84

~~200.8~~

~~EMEA~~

~~69.6~~

EMEA

7064.94

~~201~~60.74

~~208.6~~

~~APAC~~

~~62.4~~

APAC

6869.09

~~209~~75.20

~~195.9~~

~~Total revenues, net~~

~~203.0~~

Total revenues, net

209.16

~~615~~199.78

~~605.3~~

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The following table disaggregates the Company’s revenue by country:

~~Three Months Ended~~

Three Months Ended

~~Nine Months Ended~~

~~(In millions)~~

~~July 4, 2025~~

(In millions)

~~June~~January 282, ~~2024~~2026

~~July~~January 43, 2025

~~June 28, 2024~~

~~United States~~

~~63.3~~

United States

6865.05

~~189~~61.43

~~192.7~~

~~Japan~~

~~30.0~~

Japan

3632.49

~~106~~37.0

~~99.2~~

~~China~~

~~30.2~~

China

2934.28

9635.20

~~86.7~~

~~Other(1)~~

~~79.5~~

Other(1)

7576.54

~~224~~66.15

~~226.7~~

~~Total revenues, net~~

~~203.0~~

Total revenues, net

209.16

~~615~~199.78

~~605.3~~

(1) No individual country included in the ~~other~~Other category generated more than 10% of total revenues, net.

Refer to Note 1513, Segment Information, for the disaggregation of the Company’'s revenue based on reportable operating segments.

Right of Return Assets and Refund Liabilities

Right of return assets are included within the prepaid expenses and other current assets and other assets balances in the Condensed Consolidated Balance Sheets. Refund liabilities are included within the accrued liabilities and other current liabilities and other long-term liabilities balances in the Condensed Consolidated Balance Sheets. The following table summarizes the changes in the right of return assets and refund liabilities for the three months ended January 2, 2026 and January 3, 2025:

	~~Right of Return Assets~~			Right of Return Assets
	Nine Months Ended
				Three Months Ended
~~(In millions)~~	~~July 4, 2025~~		(In millions)	~~June~~January 282, ~~2024~~2026		January 3, 2025
~~Balance at beginning of period~~	$	~~25.2~~	Balance at beginning of period	$	2624.09	$	25.2
~~Costs recovered from product returns during the period~~	~~(5.2)~~		Costs recovered from product returns during the period	(51.30)		(1.4)
~~Right of return assets from shipments of products subject to return during the period~~	~~4.8~~		Right of return assets from shipments of products subject to return during the period	41.47		1.6
~~Adjustment for actual vs. reserved product returns~~	~~0.2~~		Adjustment for actual vs. reserved product returns	(0.57)		(0.2)
~~Balance at end of period~~	$	~~25.0~~	Balance at end of period	$	2524.69	$	25.2

	Refund Liabilities
	Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024
Balance at beginning of period	$	28.0	$	28.9
Release of refund liability included in beginning of year refund liability	(5.8)		(5.9)
Additions to refund liabilities	5.4		4.9
Adjustment for actual vs. reserved product returns	0.2		0.5
Balance at end of period	$	27.8	$	28.4

Contract Balances

During the three and nine months ended July 4, 2025, the Company recognized revenue of $0.4 million and $7.5 million, respectively, related to deferred revenues which existed at September 27, 2024. During the three and nine months ended June 28, 2024, the Company recognized revenue of $1.3 million and $9.4 million, respectively, related to deferred revenues that existed at September 29, 2023.

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3. LEASES



	Refund Liabilities
	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025
Balance at beginning of period	$	27.7	$	28.0
Release of refund liability included in beginning of year refund liability	(1.2)		(1.6)
Additions to refund liabilities	1.9		1.8
Adjustment for actual vs. reserved product returns	(0.8)		(0.3)
Balance at end of period	$	27.6	$	27.9

(In millions)	Balance Sheet Location	July 4, 2025		September 27, 2024
Assets
Operating lease right-of-use assets	Operating lease assets	$	24.1	$	28.3
Finance lease right-of-use assets	Property, plant, and equipment, net	6.0		6.6
Liabilities
Operating lease liabilities (current)	Current operating lease liabilities	3.9		4.0
Finance lease liabilities (current)	Accrued liabilities and other current liabilities	0.4		0.4
Operating lease liabilities (non-current)	Operating lease liabilities	19.4		23.0
Finance lease liabilities (non-current)	Other long-term liabilities	$	5.7	$	5.9

Contract Balances

	Three Months Ended				Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024		July 4, 2025		June 28, 2024
Total operating lease costs(1)	$	1.6	$	1.5	$	4.7	$	4.7
Total finance lease costs	$	0.4	$	0.1	$	1.1	$	0.2
Operating cash flows from operating leases	$	1.6	$	1.5	$	4.5	$	4.4
Operating cash flows from finance leases	0.1		—		0.3		—
Financing cash flows from finance leases	0.1		0.1		0.5		0.4
Total cash paid for amounts included in the measurement of lease liabilities	$	1.8	$	1.6	$	5.3	$	4.8
Noncash operating right-of-use assets obtained in exchange for new lease liabilities	$	0.2	$	0.8	$	1.0	$	4.7
Noncash finance right-of-use assets obtained in exchange for new lease liabilities	—		0.1		0.2		0.8
Total right-of-use assets obtained in exchange for new lease liabilities	$	0.2	$	0.9	$	1.2	$	5.5

During the three months ended January 2, 2026, the Company recognized revenue of $9.1 million related to deferred revenues which existed at October 3, 2025. During the three months ended January 3, 2025, the Company recognized revenue of $6.7 million related to deferred revenues, which existed at September 27, 2024.

~~(1)~~3. ~~Includes variable and short~~RELATED-~~term~~PARTY ~~lease expense which were immaterial for the three and nine months ended July 4, 2025 and June 28, 2024.~~TRANSACTIONS

4.Investment ~~RELATED~~in Privately-~~PARTY~~Held ~~TRANSACTIONS~~Companies

~~Investments~~ The Company has a 40% ownership interest in ~~Privately~~dpiX Holding Company LLC ("dpiX Holding"), a holding company that has a 100% ownership interest in dpiX LLC ("dpiX"), a supplier of amorphous silicon-~~Held~~based ~~Companies~~thin film transistor arrays for flat panels used in the Company's digital image detectors. In accordance with the dpiX Holding operating agreement, net profits or losses are allocated to the members in accordance with their ownership interests.

The ~~Company~~investment ~~has~~in adpiX ~~40%~~Holding ~~ownership~~is ~~interest~~accounted infor ~~dpiX~~under ~~Holding~~the equity method of accounting. When the Company ~~LLC~~recognizes (“its share of net profits or losses of dpiX Holding”), aprofits ~~holding~~or ~~company~~losses ~~that~~in ~~has~~inventory apurchased ~~100%~~from ~~ownership~~dpiX ~~interest~~are ineliminated. ~~dpiX~~During ~~LLC~~the ~~(“dpiX”)~~three months ended January 2, a2026 ~~supplier~~and ofJanuary 3, ~~amorphous~~2025, ~~silicon-based~~the ~~thin~~Company ~~film~~recorded ~~transistor~~a ~~arrays~~loss ~~for~~on ~~flat~~the ~~panels~~equity ~~used~~investment in ~~the~~dpiX ~~Company's~~Holding ~~digital~~of ~~image~~$3.2 ~~detectors~~million and $1.6 Inmillion, ~~accordance~~respectively. ~~with~~The loss on the equity investment in dpiX Holding ~~operating~~is ~~agreement~~included in other expense, net ~~profits~~in orthe ~~losses~~Condensed ~~are~~Consolidated ~~allocated~~Statements toof Operations. The carrying value of the ~~members~~equity investment in ~~accordance~~dpiX ~~with~~Holding ~~their~~was ~~ownership~~$19.3 ~~interests~~million and $22.5 million at January 2, 2026 and October 3, 2025, respectively.

The investment in dpiX Holding is accounted for under the equity method of accounting. When the Company recognizes its share of net profits or losses of dpiX Holding, profits or losses in inventory purchased from dpiX are eliminated. During the three months ended ~~July~~January 42, ~~2025~~2026 and ~~June~~January 283, ~~2024~~2025, the Company ~~recorded~~purchased ~~income~~glass ~~(loss)~~transistor onarrays ~~the~~from ~~equity investment in~~ dpiX ~~Holding~~totaling of $16.4 million and $(14.8)6 million, respectively. ~~During~~These ~~the~~purchases ~~nine~~of ~~months~~glass ~~ended~~transistor ~~July~~arrays 4,are ~~2025~~included ~~and~~as ~~June 28,~~a ~~2024,~~component ~~the Company recorded loss on the equity investment in dpiX Holding~~ of ~~$2.2 million and $0.7 million~~inventories, ~~respectively.~~net ~~The income and loss~~ on the ~~equity~~Condensed ~~investment~~Consolidated inBalance ~~dpiX~~Sheets ~~Holding~~or ~~are~~cost ~~included~~of inrevenues ~~other income (expense), net~~ in the Condensed Consolidated Statements of Operations. ~~The carrying value of the equity investment in dpiX Holding was $22.6 million and $24.8 million at July 4, 2025 and September 27, 2024, respectively.~~

17 As of January 2, 2026 and October 3, 2025, the Company had accounts payable to dpiX totaling $2.1 million and $1.9 million, respectively.

~~Table~~ In October 2013, the Company entered into an amended agreement with dpiX and other parties that, among other things, provides it with the right to 50% of ~~Contents~~dpiX’s total manufacturing capacity. In addition, the Company is required to pay for 50% of dpiX's fixed costs, as determined at the beginning of each calendar year. In January 2026, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $13.7 million for calendar year 2026. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

~~During~~The ~~the~~Company ~~three~~has ~~months~~determined ~~ended~~that ~~July~~dpiX 4,Holding ~~2025~~is ~~and~~a ~~June 28,~~variable ~~2024,~~interest entity because the ~~Company~~at-risk ~~purchased~~equity ~~glass~~holders, ~~transistor~~as ~~arrays~~a ~~from~~group, ~~dpiX~~lack ~~totaling~~the ~~$4.9~~characteristics ~~million~~of ~~and~~a ~~$4.8~~controlling ~~million,~~financial ~~respectively~~interest. ~~During~~Majority ~~the~~votes ~~nine~~are ~~months~~required ~~ended~~to ~~July~~direct 4,the ~~2025~~manufacturing ~~and June 28~~activities, ~~2024,~~legal ~~the~~operations ~~Company~~and ~~purchased~~other ~~glass~~activities ~~transistor~~that ~~arrays~~most ~~from~~significantly affect dpiX’s ~~totaling~~economic ~~$14~~performance.7 ~~million~~The Company does not have majority voting rights and ~~$13.8~~no ~~million~~power to unilaterally direct the activities of dpiX Holding, ~~respectively.~~and ~~These~~therefore, ~~purchases~~is not the primary beneficiary of ~~glass~~dpiX ~~transistor~~Holding. ~~arrays~~The ~~are~~Company’s ~~included~~exposure to loss as a ~~component~~result of ~~inventories,~~its ~~net~~involvement onwith ~~the~~dpiX ~~Condensed~~Holding ~~Consolidated~~is ~~Balance~~limited ~~Sheets~~to orthe ~~cost~~carrying value of ~~revenues~~the inCompany’s ~~the~~investment ~~Condensed~~of ~~Consolidated~~$19.3 ~~Statements~~million ofand ~~Operations~~fixed cost commitments.

As of July 4, 2025 and September 27, 2024, the Company had accounts payable to dpiX totaling $1.8 million and $3.0 million, respectively.

In October 2013, the Company entered into an amended agreement with dpiX and other parties that, among other things, provides it with the right to 50% of dpiX's total manufacturing capacity. In addition, the Company is required to pay for 50% of dpiX's fixed costs, as determined at the beginning of each calendar year. In January 2025, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $13.7 million for calendar year 2025. As of July 4, 2025, the Company estimated it has fixed cost commitments of $6.8 million related to the amended agreement with dpiX through the remainder of the calendar year 2025. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

The Company has determined that dpiX Holding is a variable interest entity because the at-risk equity holders, as a group, lack the characteristics of a controlling financial interest. Majority votes are required to direct the manufacturing activities, legal operations and other activities that most significantly affect dpiX’s economic performance. The Company does not have majority voting rights and no power to unilaterally direct the activities of dpiX Holding, and therefore, is not the primary beneficiary of dpiX Holding. The Company’s exposure to loss as a result of its involvement with dpiX Holding is limited to the carrying value of the Company’s investment of $22.6 million and fixed cost commitments.

In November 2018, the Company (through one of its wholly-owned subsidiaries) and CETTEEN GmbH (“CETTEEN”), formed a German limited liability company that governs the affairs and conduct of the business of VEC Imaging GmbH & Co. KG (“VEC”), a joint venture formed to develop technology for use in X-ray imaging components. In accordance with the VEC agreement, net profits or losses are allocated to the members in accordance with their ownership interest. The Company's investment in VEC is accounted for under the equity method of accounting. The Company has determined that VEC is a variable interest entity.

During the three months ended July 4, 2025 and June 28, 2024, the Company recorded no income on the equity investment in VEC. During the nine months ended July 4, 2025 and June 28, 2024, the Company recorded income (loss) on the equity investment in VEC of $0.0 million and $(0.1) million, respectively. The Company's investment in VEC was $2.0 million at both July 4, 2025 and September 27, 2024. As of July 4, 2025 and September 27, 2024, the Company had loans and other receivables outstanding from VEC of $0.8 million and $0.7 million, respectively, which are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.14

5. FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES

As part of the Company’s overall risk management practices, the Company enters into financial derivatives to manage its financial exposures to foreign currency exchange rates and interest rates.

The Company records all derivatives on the Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. A qualitative assessment of hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate the hedge may no longer be highly effective, in which case the Company would test for effectiveness on a more frequent basis. The changes in fair value for all trades that are not designated for hedge accounting are recognized in current period income. The Company does not offset fair value amounts recognized for derivative instruments in its Condensed Consolidated Balance Sheets for presentation purposes.

Credit risk related to derivative transactions reflect the risk that a party to the transaction could fail to meet its obligation under the derivative contracts. Therefore, the Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions that meet certain minimum credit ratings to help mitigate counterparty credit risk.

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~~Derivatives~~ During ~~Designated~~the three months ended January 2, 2026 and January 3, 2025, the Company recorded no income on the equity investment in VEC. The Company's investment in VEC was $2.0 million as ~~Hedging~~of ~~Instruments~~each -of ~~Net~~January 2, ~~Investment~~2026 ~~Hedges~~and October 3, 2025. As of each of January 2, 2026 and October 3, 2025, the Company had loans and other receivables from VEC of $0.8 million, which are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

~~The Company uses cross currency swap contracts as net investment hedges to manage its risk of variability in foreign currency-denominated net investments in wholly-owned international operations~~4. ~~All~~FAIR changes in fair value of the derivatives designated as net investment hedges are reported in accumulated other comprehensive loss along with the foreign currency translation adjustments on those investments.VALUE

(In millions, except number of instruments)			Number of Instruments						Notional Value
Cross currency swap contracts			2						$	51.8

The following table summarizes the amount of pre-tax income recognized from derivative instruments for the periods indicated and the line items in the accompanying statements of operations where the results are recorded for net investment hedges:

	Amount of (Loss) Gain Recognized in OCI on DerivativeThree Months Ended				Location of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)	Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)Three Months Ended
(In millions)	July 4, 2025		June 28, 2024			July 4, 2025		June 28, 2024
Cross currency swap contracts	$	(4.0)	$	0.1	Interest expense	$	0.2	$	0.2
	Amount of Loss Recognized in OCI on DerivativeNine Months Ended				Location of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)	Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024			July 4, 2025		June 28, 2024
Cross currency swap contracts	$	(2.9)	$	(1.3)	Interest expense	$	0.6	$	0.7

These derivative instruments are subject to master netting agreements giving effect to rights of offset with each counterparty. None of the balances were eligible for netting. The following table summarizes the gross fair values of derivative instruments as of the periods indicated and the line items in the accompanying Condensed Consolidated Balance Sheets where the instruments are recorded:

(In millions)		Derivative Assets and Liabilities
Derivatives Designated as Net Investment Hedges	Balance Sheet Location	July 4, 2025		September 27, 2024
Cross currency swap contracts	Prepaid expenses and other current assets	$	—	$	1.0
Cross currency swap contracts	Accrued liabilities and other current liabilities	10.5		—
Cross currency swap contracts	Other long-term liabilities	—		8.6

Derivatives not Designated as Hedging Instruments

During the three months ended April 4, 2025, the Company elected to partially dedesignate $6.9 million of the cross currency swap contracts that ceased to meet the effectiveness criteria and hedge accounting was discontinued. At the time of dedesignation, the total amount recorded for the dedesignated portion as a cumulative fair value basis adjustment on the cross currency swap was a loss of $0.4 million. The loss on the cross currency swap dedesignation is recorded in accumulated other comprehensive loss where it will remain until such time that substantial liquidation of the international operations should occur. The dedesignated cross currency swap contract is considered an economic hedge of the Company's investments in wholly-owned international operations. As such, changes in the fair value of the dedesignated cross currency swap after the date of dedesignation have been reported in other income (expense), net in the Condensed Consolidated Statements of Operations. During the three months ended July 4, 2025, the Company unwound the dedesignated portion of its outstanding cross currency swap contract which resulted in cash paid upon settlement of $0.8 million. The Company recognized $0.1 million of loss on the unwinding of the dedesignated portion, which was reported in other income (expense), net in the Condensed Consolidated Statements of Operations.

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Balance Sheet Hedges

The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency-denominated monetary assets and liabilities, primarily cash, lease contracts, third-party accounts receivable and payable, and intercompany accounts receivable and payable. These forward contracts are generally entered into at the end of one fiscal period and expire by the end of the next fiscal period. These forward contracts are not designated for hedge accounting treatment; therefore, the change in fair value of these derivatives is recorded as a component of other income (expense), net in the Condensed Consolidated Statements of Operations and offsets the change in fair value of the foreign currency-denominated assets and liabilities, which are also recorded as a component of other income (expense), net. The Company has not and does not intend to use derivative financial instruments for speculative or trading purposes.

	Notional Value of Derivatives not Designated as Hedging Instruments:
(In millions of equivalent USD)	Buy Contracts		Sell Contracts
Australian Dollar	$	—	$	1.8
Chinese Renminbi	—		11.6
Euro	—		40.5
Indian Rupee	—		3.9
Japanese Yen	5.8		—
Mexican Peso	—		1.2
Philippine Peso	11.8		—
Swiss Franc	2.1		—
Total notional value	$	19.7	$	59.0

6. FAIR VALUE

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair values of certain of the Company’s financial instruments, including bank deposits included in cash and cash equivalents, ~~restricted cash,~~ accounts receivable, net and accounts payable, approximate their fair values due to their short maturities. The fair ~~value~~values of the Company’s Senior Secured Notes, as defined in Note 96, Borrowings, isand measured using Level 1 inputs, and as of ~~July~~January 42, ~~2025~~2026 and ~~September~~October 273, ~~2024~~2025 was $~~373~~375.17 million and $~~247~~375.68 million, respectively. The Company has elected to use the income approach to value its derivative instruments using standard valuation techniques and Level 2 inputs, such as currency spot rates, forward points and credit default swap spreads.

In the tables below, the Company has segregated all assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.



	Fair Value at January 2, 2026
(In millions)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	17.9	$	—	$	—	$	17.9

Corporate notes/bonds	—		4.0		—		4.0

U.S. treasury bills	—		2.1		—		2.1

Derivative assets	—		0.1		—		0.1
Deferred compensation plan(1)	8.0		—		—		8.0
Marketable equity securities	3.6		—		—		3.6
Total assets measured at fair value	$	29.5	$	6.2	$	—	$	35.7

Liabilities:
Derivative liabilities	$	—	$	10.8	$	—	$	10.8


Total liabilities measured at fair value	$	—	$	10.8	$	—	$	10.8

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	Fair Value at July 4, 2025
(In millions)	Quoted Prices in Active Markets(Level 1)		Significant OtherObservable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Assets:
Money market funds	$	—	$	7.3	$	—	$	7.3
Commercial paper	—		3.1		—		3.1
Corporate notes/bonds	—		6.0		—		6.0
Government agencies	—		4.0		—		4.0
U.S. treasury bills	—		3.1		—		3.1
Deferred compensation plan(1)	7.9		—		—		7.9
Marketable equity securities	1.6		—		—		1.6
Total assets measured at fair value	$	9.5	$	23.5	$	—	$	33.0
Liabilities:
Derivative liabilities	$	—	$	11.0	$	—	$	11.0
Total liabilities measured at fair value	$	—	$	11.0	$	—	$	11.0

(1) The assets held under the Company’s deferred compensation plan are classified in Level 1, as they relate primarily to publicly traded mutual funds for which there are observable market prices in active markets.

	Fair Value at September 27, 2024
(In millions)	Quoted Prices in Active Markets(Level 1)		Significant OtherObservable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
Assets:
Money market funds	$	—	$	24.4	$	—	$	24.4
Corporate notes/bonds	—		16.5		—		16.5
Government agencies	—		18.3		—		18.3
U.S. treasury bills	—		6.1		—		6.1
Certificates of deposit	—		0.9		—		0.9
Derivative assets	—		1.0		—		1.0
Deferred compensation plan(1)	7.5		—		—		7.5
Marketable equity securities	2.6		—		—		2.6
Total assets measured at fair value	$	10.1	$	67.2	$	—	$	77.3
Liabilities:
Derivative liabilities	$	—	$	8.6	$	—	$	8.6
Total liabilities measured at fair value	$	—	$	8.6	$	—	$	8.6

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Nonrecurring Fair Value Measurements



	Fair Value at October 3, 2025
(In millions)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:

Commercial paper	$	—	$	2.0	$	—	$	2.0
Corporate notes/bonds	—		4.0		—		4.0
Government agencies	—		2.0		—		2.0
U.S. treasury bills	—		15.8		—		15.8


Deferred compensation plan(1)	8.4		—		—		8.4
Marketable equity securities	3.6		—		—		3.6
Total assets measured at fair value	$	12.0	$	23.8	$	—	$	35.8

Liabilities:
Derivative liabilities	$	—	$	10.4	$	—	$	10.4

Total liabilities measured at fair value	$	—	$	10.4	$	—	$	10.4

In(1) ~~the third quarter of fiscal year 2025, the Company assessed its goodwill for impairment and concluded that the carrying value of the Medical reporting unit was greater than its fair value.~~ The ~~nonrecurring~~assets ~~fair~~held ~~value~~under ~~measurements used by~~ the Company’s todeferred ~~determine~~compensation ~~the~~plan ~~impairment~~are ofclassified the Medical reporting unit goodwill was calculated by equal weighting of the income approach based on estimated discounted future cash flows and the market approach based on comparable publicly traded companies in ~~similar~~Level ~~lines of businesses. Under the income approach~~1, ~~fair~~as ~~value~~they isrelate ~~determined~~primarily ~~based on a discounted cash flow technique that uses estimates of cash flows discounted~~ to ~~present~~publicly ~~value~~traded ~~using~~mutual ~~rates~~funds ~~commensurate~~for ~~with~~which ~~the~~there ~~risks~~are ~~associated~~observable ~~with those cash flows. Under the~~ market ~~approach,~~prices a market-based value is derived by relating multiples for earnings and cash flow measures for a group of comparable public companies to the same measure for each reporting unit to estimate fair value. This valuation resulted in aactive ~~Level 3 nonrecurring fair value measurement~~markets. ~~See Note 8, Goodwill and Intangible Assets, for further information on the nature of the impairment.~~

Marketable Debt Securities

The following is a summary of marketable debt securities, which are included within the cash and cash equivalents, marketable securities, and other assets balances on the Condensed Consolidated Balance Sheets.

	July 4, 2025
				January 2, 2026
~~(In millions)~~	~~Amortized Costs~~		(In millions)	Amortized Costs		~~Unrealized Losses~~		~~Fair Value~~		Fair Value
Commercial paper	$	3.1				$	—	$	3.1
			Corporate notes/bonds	$	4.0					$	4.0
Corporate notes/bonds	6.1					(0.1)		6.0
			U.S. treasury bills	2.1						2.1
U.S. treasury bills	3.1					—		3.1
			Total marketable debt securities	$	6.1					$	6.1
Government agencies	4.0					—		4.0
Total marketable debt securities	$	16.3				$	(0.1)	$	16.2

	September 27, 2024
				October 3, 2025
~~(In millions)~~	~~Amortized Costs~~		(In millions)	~~Unrealized~~Amortized ~~Gains~~Costs		~~Fair~~Unrealized ~~Value~~Losses		Fair Value
Corporate notes/bonds	$	16.4		$	0.1	$	16.5
			Commercial paper	$	2.0	$	—	$	2.0
U.S. treasury bills	6.1			—		6.1
			Corporate notes/bonds	4.1		(0.1)		4.0
Government agencies	18.3			—		18.3
			U.S. treasury bills	15.8		—		15.8
Certificates of deposit	0.9			—		0.9
			Government agencies	2.0		—		2.0
~~Total marketable debt securities~~	$	~~41.7~~	Total marketable debt securities	$	023.19	$	41(0.81)	$	23.8

The contractual maturities of marketable debt securities as of ~~July~~January 42, ~~2025~~2026, are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

	July 4, 2025
				January 2, 2026
~~(In millions)~~	~~Amortized Costs~~		(In millions)	~~Fair~~Amortized ~~Value~~Costs		Fair Value
~~Contractual maturities:~~			Contractual maturities:
~~Due within one year~~	$	~~16.3~~	Due within one year	$	166.21	$	6.1
Due after one year through five years	—			—
			Total marketable debt securities	$	6.1	$	6.1
Total marketable debt securities	$	16.3		$	16.2

During the three ~~and nine~~ months ended ~~July~~January 42, ~~2025~~2026, there were no gross realized gains or losses from the sale of certain marketable debt securities that were reclassified out of accumulated other comprehensive loss.

2216

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The following tables summarize the balance sheet locations for marketable debt securities:

July 4, 2025

January 2, 2026

(In millions)

~~Commercial Paper~~

Corporate Notes/Bonds

~~Government Agencies~~

Treasury Bills

Total

Marketable securities

~~3.1~~

~~6.0~~$

4.0

~~4.0~~

~~3.1~~$

2.1

~~16.2~~$

6.1

Total marketable debt securities

~~3.1~~

64.0

~~4.0~~

32.1

166.21

			September 27, 2024
	October 3, 2025
(In millions)	Commercial Paper		Corporate Notes/Bonds		Government Agencies		Treasury Bills		~~Certificates of Deposit~~		Total		~~Total~~
Cash and cash equivalents	$	—	$	—	$	—	$	113.07	$	—	$	13.7	$	~~1.0~~
Marketable securities	2.0		104.50		162.30		42.1		~~0.9~~		10.1		~~31.8~~
Other assets			6.0		2.0		1.0		—				9.0
Total marketable debt securities	$	2.0	$	4.0	$	2.0	$	15.8			$	23.8
Total marketable debt securities			$	16.5	$	18.3	$	6.1	$	0.9			$	41.8

75. ~~INVENTORIES~~GOODWILL AND INTANGIBLE ASSETS

(In millions)	July 4, 2025		September 27, 2024
Raw materials and parts	$	231.9	$	214.5
Work-in-process	28.0		16.2
Finished goods	38.8		34.1
Total inventories, net	$	298.7	$	264.8

The following table reflects goodwill by reportable operating segment:

8. GOODWILL AND INTANGIBLE ASSETS



(In millions)	Medical		Industrial		Total
Balance at October 3, 2025	$	79.8	$	118.6	$	198.4



Balance at January 2, 2026	$	79.8	$	118.6	$	198.4

	Medical		Industrial		Total
Balance at January 2, 2026
Goodwill	$	173.7	$	118.6	$	292.3
Accumulated impairment losses	(93.9)		—		(93.9)
Total goodwill	$	79.8	$	118.6	$	198.4

(In millions)	Medical		Industrial		Total
Balance at September 27, 2024	$	173.0	$	118.0	$	291.0
Impairment of goodwill	(93.9)		—		(93.9)
Foreign currency translation adjustments	0.8		0.6		1.4
	$	79.9	$	118.6	$	198.5
Balances at July 4, 2025
Goodwill	$	173.8	$	118.6	$	292.4
Accumulated impairment losses	(93.9)		—		(93.9)
	$	79.9	$	118.6	$	198.5

The following table reflects the gross carrying amount and accumulated amortization of the Company’s finite-lived intangible assets included in intangible assets, net in the Condensed Consolidated Balance Sheets:


	January 2, 2026						October 3, 2025
(In millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired existing technology	$	75.1	$	(66.1)	$	9.0	$	74.9	$	(65.5)	$	9.4
Patents, licenses and other	7.7		(6.2)		1.5		6.2		(6.2)		—
Customer contracts and supplier relationship	52.3		(48.1)		4.2		52.3		(47.7)		4.6


Total intangible assets	$	135.1	$	(120.4)	$	14.7	$	133.4	$	(119.4)	$	14.0

Amortization expense for intangible assets was $1.1 million and $0.9 million for the three months ended January 2, 2026 and January 3, 2025, respectively. During the three months ended January 2, 2026, in connection with an asset acquisition, the Company recorded additional intangible assets of $1.5 million related to acquired licenses.

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	July 4, 2025						September 27, 2024
(In millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired existing technology	$	76.0	$	(66.0)	$	10.0	$	73.8	$	(63.5)	$	10.3
Patents, licenses, and other	11.5		(11.5)		—		12.6		(12.6)		—
Customer contracts and supplier relationship	52.4		(47.4)		5.0		52.8		(47.0)		5.8
Total intangible assets	$	139.9	$	(124.9)	$	15.0	$	139.2	$	(123.1)	$	16.1

6. BORROWINGS

~~Amortization~~The ~~expense~~following ~~for~~table ~~intangible~~summarizes ~~assets was $1.0 million and $1.7 million for~~ the three months ended July 4, 2025 and June 28, 2024, respectively. Amortization expense for intangible assets was $2.9 million and $8.9 million for the nine months ended July 4, 2025 and June 28, 2024, respectively. In connection with the business combination discussed in Note 10. Business Combinations, during fiscal year 2024, the Company’s ~~recorded~~short-term ~~additional intangible assets of $2.6 million, of which $2.1 million related to customer contracts~~ and ~~supplier~~long-term ~~relationships and $0.5 million related to acquired existing technology.~~debt:

The Company performs its annual goodwill impairment test as of the beginning of the fourth quarter of each fiscal year or whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Refer to Note 1, Summary of Significant Accounting Policies, for further details concerning our annual goodwill impairment evaluation. During the three months ended July 4, 2025, the Company identified triggering events in its Industrial and Medical reporting units due to a sustained decline in its market capitalization, a sustained decline in its stock price, and downward revisions in its longer-term forecast received during the quarter, which included the impact of tariffs and MOFCOM Investigations announcements.



	January 2, 2026		October 3, 2025
(In millions, except for percentages)	Amount		Amount		Contractual Interest Rate	Effective Interest Rate
Current maturities of long-term debt:

Other debt	$	1.4	$	1.5
Total current maturities of long-term debt	$	1.4	$	1.5

Non-current maturities of long-term debt:


Senior Secured Notes	$	368.0	$	368.0	7.9%	8.2%
Other debt	0.3		0.4
Total non-current maturities of long-term debt	$	368.3	$	368.4

Unamortized issuance costs and debt premiums:

Unamortized issuance costs, net of debt premium - Senior Secured Notes	$	(2.1)	$	(2.4)

Total debt outstanding, net	$	367.6	$	367.5

The following table summarizes the Company’s interest expense:

As a result, in connection with the preparation of its financial statements for the fiscal quarter ended July 4, 2025, the Company performed a quantitative impairment analysis for goodwill related to its Medical and Industrial reporting units. The fair value of the reporting units were determined using both an income approach utilizing the discounted cash flow method and market approach utilizing the public company market multiple method. Based on this analysis, the Company determined that the carrying amount of the Medical reporting unit was below its fair value, and recorded a goodwill impairment charge of $93.9 million to its Medical reporting unit within impairment of goodwill in the Condensed Consolidated Statements of Operations. Additionally, based on the output of the analysis, the Company determined that the fair value of the Industrial reporting unit exceeded its carrying amount. Accordingly, no impairment charge was recorded relating to its Industrial reporting unit.



	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025
Contractual interest coupon and other	$	7.4	$	7.1
Amortization of debt issuance costs	0.5		0.9

Total interest expense	$	7.9	$	8.0

The goodwill within the Medical reporting unit remains susceptible to future impairment charges. Any significant adverse change in the Company's near- or long-term projections or macroeconomic conditions would result in future impairment charges for the Medical reporting unit.

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9. BORROWINGS

	July 4, 2025		September 27, 2024
(In millions, except for percentages)	Amount		Amount		Contractual Interest Rate	Effective Interest Rate
Current maturities of long-term debt:
Convertible Senior Unsecured Notes	$	—	$	45.0	4.0%	4.8%
Other debt	1.5		1.5
Total current maturities of long-term debt	$	1.5	$	46.5
Non-current maturities of long-term debt:
Convertible Senior Unsecured Notes(1)	$	—	$	155.0	4.0%	4.8%
Senior Secured Notes	368.0		243.0		7.9%	8.2%
Other debt	0.7		2.1
Total non-current maturities of long-term debt	$	368.7	$	400.1
Unamortized issuance costs and debt premiums:
Unamortized issuance costs - Convertible Notes	$	—	$	(1.0)
Unamortized issuance costs, net of debt premium - Senior Secured Notes	(2.7)		(2.2)
Total	(2.7)		(3.2)
Total debt outstanding, net	$	367.5	$	443.4

(1) This amount has been excluded from current liabilities as it is supported by the Revolving Credit Facility and restricted cash from the proceeds of the Senior Secured Notes Add On (as defined below), which are expected to remain outstanding for an uninterrupted period extending beyond one year from the balance sheet date.

	Three Months Ended				Nine Months Ended
	July 4, 2025		June 28, 2024		July 4, 2025		June 28, 2024
Contractual interest coupon and other	$	8.7	$	6.6	$	25.2	$	19.9
Amortization of debt issuance costs	0.7		0.8		2.4		2.7
Total interest expense	$	9.4	$	7.4	$	27.6	$	22.6

Senior Secured Revolving Credit Facility

On March 26, 2024, the Company entered into a senior secured revolving credit agreement (the "Credit Agreement") providing for a senior secured revolving credit facility of up to $155.0 million (the “Revolving Credit Facility”). Simultaneous with its entry into the Revolving Credit Facility, the Company terminated its $100.0 million asset-based loan revolving credit facility (the "ABL Facility"), dated as of September 30, 2020. As of January 2, 2026, the Revolving Credit Facility remained undrawn.

The maximum availability under the Revolving Credit Facility is $155.0 million, which is available to the Company for revolving loans in U.S. dollars and for the issuance of letters of credit. As of ~~July~~January 42, ~~2025~~2026, the amount available under the Revolving Credit Facility was $154.8 million. The Company may make and repay borrowings from time to time until the maturity of the Revolving Credit Facility. Borrowings under the Revolving Credit Facility will mature, and lending commitments thereunder will terminate, on September 26, 2027. The interest rate for Revolving Credit Facility borrowings is the Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 0.00%) plus a margin of 2.00% to 2.75%, depending on the consolidated total net leverage ratio of the Company (as defined in the Credit Agreement). Alternatively, the Company has the option of selecting a base rate equal to the highest of (a) the prime rate, (b) the Federal Funds Rate plus 0.50% and (c) the one-month SOFR (subject to a floor of 0.00%) plus a margin of 1.00%. A Base Rate Loan also has an additional margin of 1.00% to 1.75%. depending on the consolidated total net leverage ratio of the Company at that time. An unused commitment fee of between 0.~~375~~30% to 0.40% per annum ~~was~~is payable ~~from~~quarterly ~~March~~on ~~26,~~the ~~2024~~actual ~~until~~daily ~~June~~unused ~~28,~~portion ~~2024~~of the Revolving Credit Facility, depending on the consolidated total net leverage ratio of the Company.

25 Debt issuance costs, including unamortized deferred costs for continuing lenders under the previously existing ABL Facility, of $2.3 million were capitalized and are included within other assets on the Condensed Consolidated Balance Sheets. These costs will be amortized over the term of the new agreement and will be recorded within interest expense in the Condensed Consolidated Statements of Operations.

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~~and~~ The ~~thereafter~~Credit anAgreement ~~unused~~contains ~~commitment~~customary ~~fee~~covenants restricting the Company’s activities, as well as those of ~~between~~its ~~0.30%~~subsidiaries, including limitations on the ability to ~~0.40%~~sell ~~per~~assets, ~~annum~~engage isin ~~payable~~mergers, ~~quarterly~~or other fundamental changes, enter into capital leases or certain leases not in the ordinary course of business, enter into transactions involving related parties or derivatives, incur or prepay indebtedness, grant liens or negative pledges on its assets, make loans or other investments, pay dividends or repurchase stock or other securities, guarantee third-party obligations, engage in sale leasebacks, and make changes in its corporate structure, though there are certain exceptions and carveouts related to these restrictions. One such covenant involves maintaining compensating cash balances. The Company must maintain with the ~~actual~~Cash ~~daily~~Management ~~unused~~Banks ~~portion~~(as defined in the Credit Agreement) in one or more accounts and/or Bank Products (as defined in the Credit Agreement) at least 80% of its U.S. cash availability. The compensating balances may be withdrawn but the availability of the Revolving Credit Facility is dependent upon maintenance of such compensating balances. In addition, ~~depending~~the onCredit Agreement includes financial covenants related to the Company’s consolidated total net leverage ratio ofand ~~the~~its ~~Company~~consolidated fixed charge coverage ratio.

Debt issuance costs, including unamortized deferred costs for continuing lenders under the previously existing ABL Facility, of $2.3 million were capitalized and are included within other assets on the Condensed Consolidated Balance Sheets. These costs will be amortized over the term of the new agreement and are being recorded within interest expense in the Condensed Consolidated Statements of Operations.

The Credit Agreement contains customary covenants restricting the Company’s activities, as well as those of its subsidiaries, including limitations on the ability to sell assets, engage in mergers, or other fundamental changes, enter into capital leases or certain leases not in the ordinary course of business, enter into transactions involving related parties or derivatives, incur or prepay indebtedness, grant liens or negative pledges on its assets, make loans or other investments, pay dividends or repurchase stock or other securities, guarantee third-party obligations, engage in sale leasebacks, and make changes in its corporate structure, though there are certain exceptions and carveouts related to these restrictions. One such covenant involves maintaining compensating cash balances. The Company must maintain with the Cash Management Banks (as defined in the Credit Agreement) one or more accounts and/or Bank Products (as defined in the Credit Agreement) at least 80% of its U.S. cash availability. The compensating balances may be withdrawn but the availability of the Revolving Credit Facility is dependent upon maintenance of such compensating balances. In addition, the Credit Agreement includes financial covenants related to the Company’s consolidated total net leverage ratio and its consolidated fixed charge coverage ratio.

The Company’s obligations under the Revolving Credit Facility are guaranteed by the Company and a number of Company subsidiaries. These guarantees are secured on a first lien basis by specified assets, including inventory, accounts receivable, cash, intercompany accounts and loans, and certain real property. In addition, the Revolving Credit Facility is secured by second liens on certain assets securing the Company’s 7.875% Senior Secured Notes due 2027. An intercreditor agreement governs how the collateral securing the respective debt obligations will be treated among the secured parties.

Equipment Credit Agreement

On April 26, 2024, the Company entered into a secured delayed draw term loan credit agreement (the “Equipment Credit Agreement”), providing for a secured equipment credit facility of up to $20.0 million (the “Equipment Credit Facility”). On December 20, 2024, the Company terminated the Equipment Credit Agreement and recognized $0.1 million of the remaining unamortized issuance costs in interest expense in the Condensed Consolidated Statements of Operations. There was no principal balance outstanding under the Equipment Credit Facility when it was terminated.

Convertible Senior Unsecured Notes

On June 9, 2020, the Company issued $200.0 million in aggregate principal amount of 4.00% Convertible Senior Unsecured Notes due 2025 (“Convertible Notes”). The net proceeds from the issuance of the Convertible Notes, after deducting transaction fees and offering expense payable by the Company, were approximately $193.1 million. The Convertible Notes bear interest at the annual rate of 4.00%, payable semiannually on June 1 and December 1 of each year. On June 1, 2025, the Convertible Notes matured and were settled using $200.0 million in cash.

The Convertible Notes were convertible into cash, shares of Varex common stock or a combination thereof, at Varex’s election, at an initial conversion rate of 48.048 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $20.81 per share, subject to adjustment pursuant to the terms of the indenture governing the Convertible Notes. The maximum number of shares issuable upon conversion of the Convertible Notes was 9.6 million.

Call Spread

On June 4, 2020 and June 5, 2020, Varex entered into privately negotiated warrant transactions (collectively, the “Warrant Transactions”), whereby the Company sold warrants at a higher strike price relating to the same number of shares of Varex common stock that initially underlie the Convertible Notes, subject to customary anti-dilution adjustments. The initial strike price of the warrants is $24.975 per share (subject to adjustment under the terms of the Warrant Transactions), which is 50% above the last reported sale price of Varex common stock on June 4, 2020. The Warrant Transactions could have a dilutive effect to the Company's stockholders to the extent that the market price per share of Varex common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants. The number of shares underlying the Warrant Transactions is 9.6 million. The number of warrants outstanding as of July 4, 2025 was 9.6 million. The warrants expire after a 90 day trading period (as described in the warrant agreements) that begins on September 2, 2025.

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Senior Secured Notes

~~The~~Varex ~~Company~~ issued $300.0 million aggregate principal amount of 7.875% Senior Secured Notes due 2027 (the "Senior Secured Notes") pursuant to an indenture dated September 30, 2020 ~~(the "Base Indenture")~~. Interest payments are paid semiannually on April 15 and October 15 of each year, beginning on April 15, 2021. The Senior Secured Notes will mature on October 15, 2027, unless earlier redeemed or repurchased by ~~the Company~~Varex. On July 15, 2021, ~~the~~we ~~Company~~ redeemed $30.0 million, and on March 18, 2022, ~~the~~we ~~Company~~ redeemed $27.0 million of the Senior Secured Notes.

On December 20, 2024, the Company issued an additional $125.0 million of Senior Secured Notes (the "Senior Secured Notes Add On") pursuant to the ~~Base Indenture~~indenture, as supplemented by a supplemental indenture, dated December 20, 2024. The net proceeds from the Senior Secured Notes Add On after initial purchasers’ premium, commissions, estimated fees, accrued interest in arrears, and expenses of $1.1 million, were approximately $123.9 million. ~~The Company used the proceeds from the offering to repay a portion of the Convertible Notes on their maturity date of June 1, 2025.~~ As of ~~July~~January 42, ~~2025~~2026, the aggregate principal amount of the outstanding Senior Secured Notes was $368.0 million.

The Senior Secured Notes are secured by a first priority lien on substantially all of the assets of ~~the~~Varex ~~Company~~ and the assets and capital stock of its subsidiary guarantors (subject to exceptions), except for assets for which a first priority security interest is pledged for the Revolving Credit Facility, in which the Senior Secured Notes have a second lien security interest. The Senior Secured Notes include negative covenants, subject to certain exceptions, restricting or limiting ~~the Company~~Varex's ability and the ability of its restricted subsidiaries to, among other things, incur liens on collateral; sell certain assets; incur additional indebtedness; pay dividends; issue preferred shares; consolidate, merge, or sell all or substantially all of its assets; and enter into certain transactions with their affiliates.

107. ~~BUSINESS~~NET ~~COMBINATIONS~~INCOME (LOSS) PER SHARE

AsBasic ofnet ~~September~~income ~~29,~~(loss) ~~2023,~~per ~~the~~common ~~Company,~~share ~~through~~is ~~two~~computed ofby ~~its~~dividing ~~consolidated~~the ~~subsidiaries,~~net ~~Varex~~income ~~Imaging~~(loss) ~~Deutschland~~for AGthe ~~and~~period ~~MeVis~~by ~~Medical~~the ~~Solutions~~weighted AGaverage ~~("MeVis~~number ~~Medical"),~~of ~~held~~shares aof ~~combined~~common ~~ownership~~stock ~~interest~~outstanding induring ~~MeVis~~the ~~BreastCare~~reporting ~~GmbH~~period. ~~and~~Diluted ~~MeVis~~net ~~BreastCare~~income ~~Gmbh~~(loss) &per Cocommon KGshare ~~(referred~~reflects tothe ineffects ~~combination~~of aspotentially ~~"MeVis~~dilutive ~~Breastcare")~~securities, ofwhich ~~37.6%.~~is ~~Because~~computed by dividing the ~~Company~~sum ~~had~~of ~~the~~net ~~ability~~income to(loss) ~~exercise~~and ~~significant~~any ~~influence~~adjustments ~~in,~~to ~~but~~net ~~not~~income ~~control~~by ~~over,~~the ~~MeVis~~sum ~~Breastcare,~~of itthe ~~was~~weighted ~~historically~~average ~~accounted~~number ~~for~~of ascommon anshares ~~equity~~outstanding ~~method~~and ~~investment~~dilutive common shares.

During the first quarter of fiscal year 2024, the Company increased its ownership in MeVis Breastcare to 87.1% for a purchase price of $0.9 million, resulting in the Company holding a controlling interest in MeVis Breastcare. The purchase of this additional ownership interest was accounted for as a business combination achieved in stages, or step acquisition. As a result, the previously held equity interest was remeasured to its acquisition-date fair value, with a gain of $0.9 million recognized in other income (expense), net in the Condensed Consolidated Statements of Operations. The assets and liabilities of MeVis Breastcare were then recorded on the Company's balance sheet at their fair values in accordance with ASC 805, and a gain on bargain purchase of $1.2 million was recorded during the first quarter of fiscal year 2024 in other income (expense), net in the Condensed Consolidated Statements of Operations. Because the purchase price did not give consideration to the other assets of the business, the fair value of the ownership interest acquired exceeded the price paid to the third party partial owner and this resulted in a gain on bargain purchase.19

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A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per common share is as follows:

The following table summarizes the consideration paid for MeVis Breastcare and the amounts of the assets acquired and liabilities assumed recognized at their estimated acquisition date fair values, as well as the estimated fair value at the acquisition date of the noncontrolling interest in MeVis Breastcare.



	Three Months Ended
(In millions, except per share amounts)	January 2, 2026		January 3, 2025
Net income (loss) per share - basic
Net income (loss) attributable to Varex	$	2.3	$	(0.3)
Basic weighted average shares outstanding	41.8		41.1
Basic net income (loss) per share attributable to Varex	$	0.06	$	(0.01)

Net income (loss) per share - diluted
Net income (loss) attributable to Varex	$	2.3	$	(0.3)



Basic weighted average shares outstanding	41.8		41.1

Dilutive effect of share-based awards and other	0.5		—

Diluted weighted average shares outstanding	42.3		41.1
Diluted net income (loss) per share attributable to Varex	$	0.05	$	(0.01)

Anti-dilutive share summary
Share-based awards and other	2.6		3.4
Convertible notes	—		9.6
Warrants	—		9.6
Total anti-dilutive shares	2.6		22.6

	USD(in millions)
Consideration paid
Cash	$	0.9
Fair value of total consideration transferred	0.9
Remeasurement of previous equity interest
Carrying value of previous equity interest before acquisition	1.1
Fair value of previous equity interest at acquisition date	2.0
Remeasurement gain recorded on previous equity interest	0.9
Total of consideration paid and fair value of previous equity interest	$	2.9
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents	$	1.8
Accounts receivable, net	1.2
Intangible assets, net	2.6
Accounts payable	(0.1)
Accrued liabilities and other current liabilities	(0.6)
Other long-term liabilities	(0.1)
Total identifiable net assets	4.8
Noncontrolling interest in MeVis Breastcare	(0.7)
Bargain purchase gain	(1.2)
Total	$	2.9

Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying stock options, unvested stock awards, purchase rights granted under the employee stock purchase plan, warrants, and convertible notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share attributable to Varex when their effect is dilutive.

118. ~~NONCONTROLLING INTERESTS~~LEASES

The Company has operating and finance leases for office space, warehouse and manufacturing space, vehicles, and equipment. The following table presents supplemental balance sheet information related to the Company's operating and finance leases:

In September 2018, the Company entered into a partnership in Saudi Arabia. The Company has majority voting rights with an approximate 75% interest. Accordingly, the Company has consolidated the operations of the Saudi Arabia partnership in its Condensed Consolidated Financial Statements and recorded the noncontrolling interests. The noncontrolling interest related to the partner’s approximate 25% interest is included in noncontrolling interests in the equity section of the Company’s Condensed Consolidated Balance Sheets. Income representing the noncontrolling partner's share of income from operations is included in the Company's Condensed Consolidated Statements of Operations.


(In millions)	Balance Sheet Location	January 2, 2026		October 3, 2025
Assets
Operating lease right-of-use assets	Operating lease assets	$	29.1	$	29.4
Finance lease right-of-use assets	Property, plant, and equipment, net	5.5		5.7
Liabilities
Operating lease liabilities (current)	Current operating lease liabilities	4.6		4.4
Finance lease liabilities (current)	Accrued liabilities and other current liabilities	0.4		0.4
Operating lease liabilities (non-current)	Operating lease liabilities	23.3		24.0
Finance lease liabilities (non-current)	Other long-term liabilities	$	5.4	$	5.6

In April 2015, the Company acquired 73.5% of the then outstanding shares of MeVis Medical, a publicly traded company based in Bremen, Germany that provides image processing software and services for cancer screening. In August 2015, the Company, through one of its German subsidiaries, entered into a Domination and Profit and Loss Transfer Agreement (the “DPLTA”) with MeVis Medical. In fiscal years 2017 and 2018, the Company purchased an additional 0.2% of outstanding shares such that the Company now owns 73.7% of the outstanding shares of common stock of MeVis Medical. Under the DPLTA, MeVis Medical subordinates its management to the Company and undertakes to transfer all its annual profits and losses to the Company. In return, the DPLTA grants the noncontrolling shareholders of MeVis Medical, an annual recurring net compensation of €0.95 per MeVis Medical share. At July 4, 2025, noncontrolling shareholders together held approximately 0.5 million shares of MeVis Medical, representing 26.3% of the outstanding shares.20

During the first quarter of fiscal year 2024, the Company acquired a controlling interest in MeVis Breastcare, in which the Company now holds an 87.1% ownership interest. In association with this acquisition, the Company recorded an associated noncontrolling interest of $0.7 million.

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The following table provides information related to the Company’s operating and finance leases:

	Nine Months Ended
				Three Months Ended
~~(In millions)~~	~~July 4, 2025~~		(In millions)	~~June~~January 282, ~~2024~~2026		January 3, 2025
Noncontrolling interests, at beginning of period	$	14.1		$	13.3
			Total operating lease costs(1)	$	1.6	$	1.6
Net income attributable to noncontrolling interests	0.4			0.4
			Amortization of right-of-use assets	$	0.3	$	0.3
Business acquisitions	—			0.7
			Interest on lease liabilities	0.1		0.1
Other	(0.3)			(0.3)
			Total finance lease costs	$	0.4	$	0.4
Noncontrolling interests, at end of period	$	14.2		$	14.1
			Operating cash flows from operating leases	$	1.6	$	1.5
			Operating cash flows from finance leases	0.1		—
			Financing cash flows from finance leases	0.1		0.2
			Total cash paid for amounts included in the measurement of lease liabilities	$	1.8	$	1.7
			Noncash operating right-of-use assets obtained in exchange for new lease liabilities	$	0.8	$	0.3

~~12. NET~~ (~~LOSS~~1) ~~INCOME~~Includes ~~PER~~variable ~~SHARE~~and short-term lease expense which were immaterial for the three months ended January 2, 2026 and January 3, 2025.

~~Basic net (loss) income per common share is computed by dividing the net (loss) income for the period by the weighted average number of shares of common stock outstanding during the reporting period~~9. ~~Diluted~~FINANCIAL ~~net~~DERIVATIVES ~~(loss)~~AND ~~income~~HEDGING per common share reflects the effects of potentially dilutive securities, which is computed by dividing the sum of net (loss) income and any adjustments to net (loss) income by the sum of the weighted average number of common shares outstanding and dilutive common shares.ACTIVITIES

	Three Months Ended				Nine Months Ended
(In millions, except per share amounts)	July 4, 2025		June 28, 2024		July 4, 2025		June 28, 2024
Net (loss) income per share - basic
Net (loss) income attributable to Varex	$	(89.1)	$	1.4	$	(82.5)	$	2.3
Basic weighted average shares outstanding	41.5		40.9		41.3		40.7
Basic net (loss) income per share attributable to Varex	$	(2.15)	$	0.03	$	(2.00)	$	0.06
Net (loss) income per share - diluted
Net (loss) income attributable to Varex	$	(89.1)	$	1.4	$	(82.5)	$	2.3
Basic weighted average shares outstanding	41.5		40.9		41.3		40.7
Dilutive effect of share-based awards and other	—		0.3		—		0.5
Diluted weighted average shares outstanding	41.5		41.2		41.3		41.2
Diluted net (loss) income per share attributable to Varex	$	(2.15)	$	0.03	$	(2.00)	$	0.06
Anti-dilutive share summary
Share-based awards and other	3.5		2.8		3.4		3.0
Convertible notes	—		9.6		—		9.6
Warrants	9.6		9.6		9.6		9.6
Total anti-dilutive shares	13.1		22.0		13.0		22.2

As part of the Company’s overall risk management practices, the Company enters into financial derivatives to manage its financial exposures to foreign currency exchange rates and interest rates.

~~Potentially~~The ~~dilutive~~Company ~~shares,~~records ~~which~~all ~~are~~derivatives ~~based~~ on the ~~weighted-average~~Condensed ~~shares~~Consolidated ofBalance ~~common~~Sheets ~~stock~~at ~~underlying~~fair ~~stock~~value. ~~options,~~The ~~unvested~~accounting ~~stock~~for ~~awards,~~changes ~~purchase~~in ~~rights~~the ~~granted~~fair ~~under~~value of derivatives depends on the ~~employee~~intended ~~stock~~use ~~purchase~~of ~~plan,~~the ~~warrants~~derivative, whether the Company has elected to designate a derivative in a hedging relationship and ~~Convertible~~apply ~~Notes~~hedge ~~using~~accounting, and whether the ~~treasury~~hedging ~~stock~~relationship ~~method~~has orsatisfied the ~~if-converted~~criteria ~~method~~necessary to apply hedge accounting. A qualitative assessment of hedge effectiveness is performed on a quarterly basis, asunless ~~applicable~~facts and circumstances indicate the hedge may no longer be highly effective, in which case the Company would test for effectiveness on a more frequent basis. The changes in fair value for all trades that are ~~included~~not ~~when~~designated ~~calculating~~for ~~diluted~~hedge ~~net~~accounting ~~(loss)~~are recognized in current period income. ~~per~~The ~~share~~Company ~~attributable~~does tonot ~~Varex~~offset ~~when~~fair ~~their~~value ~~effect~~amounts isrecognized ~~dilutive.~~for derivative instruments in its Condensed Consolidated Balance Sheets for presentation purposes.

13 Credit risk related to derivative transactions reflect the risk that a party to the transaction could fail to meet its obligation under the derivative contracts. ~~EMPLOYEE~~Therefore, ~~STOCK~~the ~~PLANS~~Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions that meet certain minimum credit ratings to help mitigate counterparty credit risk.

Derivatives Designated as Hedging Instruments - Net Investment Hedges

The Company uses cross currency swap contracts as net investment hedges to manage its risk of variability in foreign currency-denominated net investments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment hedges are reported in accumulated other comprehensive loss along with the foreign currency translation adjustments on those investments. During the three months ended January 2, 2026, the Company completed a blend-and-extend transaction on its cross-currency swaps with an original maturity date in November 2025. The previous swaps were replaced with new fixed-to-fixed cross-currency swaps maturing in September 2027 with a notional amount of $51.8 million. Under the new contracts, the Company will receive fixed-rate United States dollar-denominated interest at contracted rates and will pay fixed-rate euro-denominated interest at a rate of 0%. These swaps have been designated as net investment hedges.

As of January 2, 2026, the Company had the following outstanding derivatives designated as net investment hedging instruments:


(In millions, except number of instruments)	Number of Instruments	Notional Value
Cross currency swap contracts	2	$	51.8

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The following table summarizes the amount of pre-tax income recognized from derivative instruments for the periods indicated and the line items in the accompanying Condensed Consolidated Statements of Operations where the results are recorded for net investment hedges:



	Amount of (Loss) Gain Recognized in OCI on Derivative Three Months Ended				Location of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)	Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Three Months Ended
(In millions)	January 2, 2026		January 3, 2025			January 2, 2026		January 3, 2025
Cross currency swap contracts	$	(0.4)	$	4.8	Interest expense	$	—	$	0.2



(In millions)		Derivative Assets and Liabilities
Derivatives Designated as Net Investment Hedges	Balance Sheet Location	January 2, 2026		October 3, 2025
Cross currency swap contracts	Prepaid expenses and other current assets	$	0.1	$	—

Cross currency swap contracts	Accrued liabilities and other current liabilities	—		10.4
Cross currency swap contracts	Other long-term liabilities	$	10.8	$	—

Balance Sheet Hedges

The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency-denominated monetary assets and liabilities, primarily cash, lease contracts, third-party accounts receivable and payable, and intercompany accounts receivable and payable. These forward contracts are generally entered into at the end of one fiscal period and expire by the end of the next fiscal period. These forward contracts are not designated for hedge accounting treatment; therefore, the change in fair value of these derivatives is recorded as a component of other expense, net in the Condensed Consolidated Statements of Operations and offsets the change in fair value of the foreign currency-denominated assets and liabilities, which are also recorded as a component of other expense, net. The Company has not and does not intend to use derivative financial instruments for speculative or trading purposes.

The following table shows the notional amounts of outstanding foreign currency contracts as of January 2, 2026:



	Notional Value of Derivatives not Designated as Hedging Instruments:
(In millions of equivalent USD)	Buy Contracts		Sell Contracts
Australian Dollar	$	—	$	3.2
Chinese Renminbi	—		14.1
Euro	—		18.8

Japanese Yen	8.6		—
Mexican Peso	—		1.3
Philippine Peso	17.9		—
Swiss Franc	2.3		—
Total notional value	$	28.8	$	37.4

10. NONCONTROLLING INTERESTS

In September 2018, the Company entered into a partnership in Saudi Arabia. The Company has majority voting rights with an approximate 75% interest. Accordingly, the Company has consolidated the operations of the Saudi Arabia partnership in its Condensed Consolidated Balance Sheets and recorded the noncontrolling interests. The noncontrolling interest related to the partner’s 25% interest is included in noncontrolling interests in the equity section of the Company’s Condensed Consolidated Balance Sheets.

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Income representing the noncontrolling partner's share of income from operations is included in the Company's Condensed Consolidated Statements of Operations.

In April 2015, the Company acquired 73.5% of the then outstanding shares of MeVis Medical, a publicly traded company based in Bremen, Germany that provides image processing software and services for cancer screening. In August 2015, the Company, through one of its German subsidiaries, entered into a Domination and Profit and Loss Transfer Agreement (the “DPLTA”) with MeVis Medical. In fiscal years 2017 and 2018, the Company purchased an additional 0.2% of outstanding shares such that the Company now owns 73.7% of the outstanding shares of common stock of MeVis Medical. Under the DPLTA, MeVis Medical subordinates its management to the Company and undertakes to transfer all its annual profits and losses to the Company. In return, the DPLTA grants the noncontrolling shareholders of MeVis Medical, an annual recurring net compensation of €0.95 per MeVis Medical share. At January 2, 2026, noncontrolling shareholders together held approximately 0.5 million shares of MeVis Medical, representing 26.3% of the outstanding shares.

The changes in noncontrolling interests were as follows:



	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025
Noncontrolling interests, at beginning of period	$	14.0	$	14.1
Net income attributable to noncontrolling interests	0.1		0.2

Other	(0.2)		(0.3)
Noncontrolling interests, at end of period	$	13.9	$	14.0

11. EMPLOYEE STOCK PLANS

Share-Based Compensation Expense

Share-based compensation expense recognized in the Condensed Consolidated Statements of Operations is based on awards ultimately expected to vest. Share-based compensation expense includes expenses related to the Company’s direct employees.

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The table below summarizes the effect of recording share-based compensation expense and the option value of the employee stock purchase plan shares:

	Three Months Ended				~~Nine Months Ended~~
(In millions)	~~July~~January 42, ~~2025~~2026		~~June~~January 283, ~~2024~~2025		~~July 4, 2025~~		~~June 28, 2024~~
Cost of revenues	$	0.5	$	0.45	$	~~1.6~~	$	~~1.4~~
Research and development	0.78		0.89		~~2.4~~		~~2.6~~
Selling, general, and administrative	2.5		2.7		~~7.6~~		~~7.8~~
Total share-based compensation expense	$	3.78	$	34.91	$	~~11.6~~	$	~~11.8~~

Stock Option Activity

The following table summarizes stock option activity under Varex’s employee incentive plans for the Company's employees:

~~(In thousands, except per share amounts and the remaining term)~~	~~Options~~	(In thousands, except per share amounts and the remaining term)	~~Price Range~~Options	~~Weighted Average Exercise~~ Price Range		Weighted Average ~~Remaining~~Exercise ~~Term (in years)~~Price		~~Aggregate~~Weighted ~~Intrinsic~~Average ~~Value~~Remaining Term (1in years)		Aggregate Intrinsic Value(1)
Outstanding at September 27, 2024	2,097		$13.61 - $37.60	$	26.79	5.5		$	—
		Outstanding at October 3, 2025	1,830	$13.61 - $31.42		$	25.61	5.1		$	—
Canceled, expired, or forfeited	(223)		$22.13 - $37.60	35.91
		Outstanding at January 2, 2026	1,830	$13.61 - $31.42		$	25.61	4.9		$	—
Outstanding at July 4, 2025	1,874		$13.61 - $31.42	$	25.70	5.2		$	—
		Exercisable at January 2, 2026	1,717	$13.61 - $31.42		$	25.88	4.7		$	—
Exercisable at July 4, 2025	1,674		$13.61 - $31.42	$	26.02	5.0		$	—

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of Varex common stock of $811.8065 as of ~~July~~January 32, ~~2025~~2026, the last trading date of the Company's ~~third~~first quarter, and which represents the amount that would have been received by the option holders had all option holders exercised their in-the-money options and sold the shares received upon exercise as of that date.

~~Restricted Stock Units, Performance Stock Units, and Deferred Stock Units~~ 23

The Company issues performance stock units ("PSUs") to certain officers and key employees in connection with our long-term incentive program. Each PSU represents the right to receive one share of our common stock, provided that the applicable performance and vesting conditions are satisfied. The fair value of certain PSUs are linked to the achievement of performance goals based on Adjusted EBITDA margin. The fair value of certain other PSUs are linked to a market condition based on our relative total shareholder return over the performance period compared to a predetermined peer group.

(In thousands, except per share amounts)	Number of Shares	Weighted Average Grant-Date Fair Value
Outstanding at September 27, 2024	1,670	$	20.74
Granted	771	14.93
Vested	(405)	21.28
Canceled or expired	(73)	20.69
Outstanding at July 4, 2025	1,963	$	18.33

14. TAXES ON (LOSS) INCOME

For the three months ended July 4, 2025, the Company recognized income tax expense of $2.5 million on $86.6 million of pre-tax loss. For the three months ended June 28, 2024, the Company recognized income tax benefit of $0.7 million on $0.8 million of pre-tax income. For the nine months ended July 4, 2025, the Company recognized income tax expense of $8.8 million on $73.3 million of pre-tax loss. For the nine months ended June 28, 2024, the Company recognized income tax benefit of $0.2 million on $2.5 million of pre-tax income. The Company is unable to recognize a tax benefit for pre-tax book losses in certain foreign jurisdictions but has recognized tax expense for profitable jurisdictions.

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~~The~~Restricted ~~Company's~~Stock ~~tax expense increased for the three and nine months ended July 4~~Units, ~~2025,~~Performance ~~primarily~~Stock ~~due to the non-tax deductible $93.9 million goodwill impairment~~Units, ~~increased~~Restricted ~~pre-tax~~Stock ~~income in certain jurisdictions~~Awards, ~~valuation allowance positions in the U.S. on deferred tax assets~~ and ~~losses~~Deferred inStock ~~certain~~Units ~~foreign jurisdictions for which no benefit can be recorded.~~

The ~~Organization~~Company ~~for~~issues ~~Economic~~performance ~~Cooperation~~stock ~~and~~units ~~Development~~("PSUs") ~~enacted~~to ~~model~~certain ~~rules~~officers ~~for~~and akey ~~15%~~employees ~~global~~in ~~minimum~~connection ~~tax~~with ~~framework~~our ~~("Pillar~~long-term ~~Two"),~~incentive ~~which~~program. ~~became~~Each ~~effective~~PSU ~~for~~represents the ~~Company~~right into ~~fiscal~~receive ~~year~~one ~~2025.~~share ~~There~~of ~~remains~~our ~~uncertainty~~common asstock, toprovided that the ~~final~~applicable ~~Pillar~~performance ~~Two~~and ~~model~~vesting ~~rules~~conditions are satisfied. The ~~Company~~fair ~~continues~~value toof ~~evaluate~~PSUs are linked to the ~~Pillar~~achievement ~~Two~~of ~~rules~~financial ~~and~~performance ~~their~~metrics ~~potential~~or ~~impact~~a onmarket ~~future~~condition ~~periods~~based ~~but~~on ~~does~~our ~~not~~relative ~~expect~~total ~~the~~shareholder ~~rules~~return toover ~~have~~the aperformance ~~material~~period ~~impact~~compared onto ~~the~~a ~~effective~~predetermined ~~tax~~peer ~~rate~~group.

The following table summarizes the activity for restricted stock units, performance stock units, restricted stock awards, and deferred stock units under the 2020 Omnibus Stock Plan:

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including the option to claim 100% accelerated depreciation deductions on qualified property, with retroactive application beginning January 20, 2025. The legislation has multiple effective dates, with the 100% accelerated depreciation deduction starting to be effective during the fiscal year ending on October 3, 2025, and others implemented through future years. The Company is currently assessing the OBBBA's impact on its future consolidated financial statements.



(In thousands, except per share amounts)	Number of Shares	Weighted Average Grant-Date Fair Value
Outstanding at October 3, 2025	1,946	$	18.35
Granted	984	12.06
Vested	(370)	22.21

Canceled or expired	(1)	19.81
Outstanding at January 2, 2026	2,559	$	15.36

The Company is maintaining its reinvestment assertion with respect to foreign earnings for the three months ended July 4, 2025, which is that all earnings prior to fiscal year 2018 are permanently reinvested for all countries, and that all earnings for Varex Imaging Sweden and Oy Varex Imaging Finland are also indefinitely reinvested in those countries, but post fiscal year 2017 earnings in all other countries are not permanently reinvested12. ~~Due~~TAXES toON the level of earnings available for repatriation, the treaty benefits applicable to jurisdictions in which those earnings are located, and the now favorable United States tax treatment of repatriated foreign earnings, the amount of deferred tax liability recorded related to the potential repatriation is approximately $0.1 million. This estimated liability is for United States state income taxes and foreign withholding taxes that would apply if the foreign earnings were repatriated in the form of a dividend. INCOME

15 For the three months ended January 2, 2026, the Company recognized income tax expense of $1.4 ~~SEGMENT~~million ~~INFORMATION~~on $3.8 million of pre-tax income. For the three months ended January 3, 2025, the Company recognized income tax expense of $2.6 million on $2.5 million of pre-tax income. The Company is unable to recognize a tax benefit for pre-tax book losses in certain foreign jurisdictions but has recognized tax expense for profitable jurisdictions.

The Company ~~has two reportable operating segments: Medical and Industrial, which aligns with how the CODM reviews the Company~~'s ~~performance.~~tax ~~The~~expense ~~segments~~decreased ~~align~~for the ~~Company’s~~three ~~products~~months ~~and~~ended ~~service~~January ~~offerings~~2, ~~with~~2026, ~~customer~~primarily ~~use~~due into ~~medical~~increased ~~and~~pre-tax ~~industrial~~income ~~and~~in ~~are~~certain ~~consistent~~jurisdictions ~~with how the Company’s CEO evaluates the business~~ for ~~the~~which ~~allocation~~a ofvaluation ~~resources.~~allowance ~~The~~is ~~CODM~~in ~~allocates~~place, ~~resources~~partially tooffset ~~and~~by ~~evaluates~~losses ~~the~~in ~~financial~~certain ~~performance~~foreign ofjurisdictions ~~each~~for ~~operating~~which ~~segment~~no ~~primarily~~benefit ~~based~~can onbe ~~revenues and gross profit~~recorded. ~~The operating and reportable segment structure provides alignment between business strategies and operating results.~~

The Organization for Economic Cooperation and Development ("OECD") enacted model rules for Pillar Two, which became effective for the Company in fiscal year 2025. On January 5, 2026, the OECD released new guidance providing for a side-by-side system where U.S.-parented groups, such as ours, would be exempted from certain provisions of Pillar Two. This guidance has not yet been enacted by any country where we operate and that implements the Pillar Two model rules. As a result, there remains a great deal of uncertainty.

On July 4, 2025, the OBBBA was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, including the option to expense certain research and development expenses immediately rather than capitalizing those. The legislation has multiple effective dates, with the expensing of certain research and development expenses starting to be effective during the fiscal year ending October 2, 2026, and others implemented through future years.

The Company is maintaining its reinvestment assertion with respect to foreign earnings for the three months ended January 2, 2026, which is that all earnings prior to fiscal year 2018 are permanently reinvested for all countries, and that post fiscal year 2017 earnings available for repatriation in entities incorporated in Sweden, Finland, the Philippines, Saudi Arabia, and India remain indefinitely reinvested. Due to the level of earnings available for repatriation, the treaty benefits applicable to jurisdictions in which those earnings are located, and the now favorable United States tax treatment of repatriated foreign earnings, the amount of deferred tax liability recorded related to the potential repatriation is immaterial. This estimated liability is for United States state income taxes and foreign withholding taxes that would apply if the foreign earnings were repatriated in the form of a dividend.

13. SEGMENT INFORMATION

The Company has two reportable operating segments: Medical and Industrial, which aligns with how its CEO, who is the CODM, reviews the Company’s performance. The segments align the Company’s products and service offerings with customer use in medical and industrial markets and are consistent with how the Company’s CEO evaluates the business for the allocation of resources. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on revenues and gross profit. The operating and reportable segment structure provides alignment between business strategies and operating results.

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Description of Segments

The Medical segment designs, manufactures, sells, and services X-ray imaging components, including X-ray tubes, digital detectors and accessories, ionization chambers, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, automatic exposure control devices, generators, and heat exchangers. These components are used in a range of medical imaging applications including CT, mammography, oncology, cardiac, surgery, dental, and other diagnostic radiography uses.

The Industrial segment designs, develops, manufactures, sells and services X-ray imaging products for use in a number of markets, including security applications for cargo screening at ports and borders, baggage screening at airports, and nondestructive testing, irradiation, and inspection applications used in a number of other vertical markets, as well as X-ray imaging systems for industrial applications. The Company's industrial products include Linatron® X-ray linear accelerators, non-intrusive cargo inspection systems, X-ray tubes, digital detectors, high voltage connectors, and coolers. In addition, the Company licenses proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to industrial customers.

Accordingly, the following information is provided for purposes of achieving an understanding of operations, but it may not be indicative of the financial results of the reported segments were they independent organizations. In addition, comparisons of the Company’s operations to similar operations of other companies may not be meaningful.

Information related to the Company’s segments is as follows:



	Three Months Ended
(In millions)		January 2, 2026		January 3, 2025
Revenues, net
Medical		$	144.8	$	144.6
Industrial		64.8		55.2
Total revenues, net		209.6		199.8
Cost of revenues
Medical		98.8		95.1
Industrial		41.0		36.2
Total cost of revenues		139.8		131.3
Gross profit
Medical		46.0		49.5
Industrial		23.8		19.0
Total gross profit		69.8		68.5
Total operating expenses		54.4		57.3
Interest and other expense, net		(11.6)		(8.7)
Income before taxes		3.8		2.5
Income tax expense		1.4		2.6
Net income (loss)		2.4		(0.1)
Less: Net income attributable to noncontrolling interests		0.1		0.2
Net income (loss) attributable to Varex		$	2.3	$	(0.3)

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	Three Months Ended				Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024		July 4, 2025		June 28, 2024
Revenues, net
Medical	$	142.1	$	148.6	$	440.5	$	437.3
Industrial	60.9		60.5		175.2		168.0
Total revenues, net	203.0		209.1		615.7		605.3
Gross profit
Medical	46.7		46.2		152.1		129.8
Industrial	20.8		20.7		60.6		60.0
Total gross profit	67.5		66.9		212.7		189.8
Total operating expenses	148.2		57.6		260.1		168.6
Interest and other expense, net	(5.9)		(8.5)		(25.9)		(18.7)
(Loss) income before taxes	(86.6)		0.8		(73.3)		2.5
Income tax expense (benefit)	2.5		(0.7)		8.8		(0.2)
Net (loss) income	(89.1)		1.5		(82.1)		2.7
Less: Net income attributable to noncontrolling interests	—		0.1		0.4		0.4
Net (loss) income attributable to Varex	$	(89.1)	$	1.4	$	(82.5)	$	2.3

The Company does not disclose total assets by segment as this information is not provided to the CODM.

~~16.~~ See ~~OTHER~~Note ~~FINANCIAL~~2, ~~INFORMATION~~Revenue, for disaggregation of revenue by geographic region and country.

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14. OTHER FINANCIAL INFORMATION

The following table summarizes the Company’s accrued liabilities and other current liabilities:

~~(In millions)~~	~~July 4, 2025~~		(In millions)	~~September~~January 272, ~~2024~~2026		October 3, 2025
~~Accrued compensation and benefits~~	$	~~37.0~~	Accrued compensation and benefits	$	3029.03	$	43.4
~~Product warranty~~	~~9.2~~		Product warranty	~~10.~~8.6		8.5
~~Taxes payable~~	~~3.5~~		Taxes payable	82.19		5.3
~~Refund liability~~	~~7.6~~		Refund liability	7.56		7.7
Derivative liabilities	10.5			—
			Derivative liability	—		10.4
~~Accrued interest~~	~~6.3~~		Accrued interest	116.72		13.5
~~Other~~	~~11.9~~		Other	1011.51		9.6
Total	$	86.0		$	78.6
			Total accrued liabilities and other current liabilities	$	65.7	$	98.4

3215. INVENTORIES

The following table summarizes the Company’s inventories, net:


(In millions)	January 2, 2026		October 3, 2025
Raw materials and parts	$	250.9	$	228.1
Work-in-process	24.7		31.3
Finished goods	52.4		40.0
Total inventories, net	$	328.0	$	299.4

16. SUBSEQUENT EVENTS

On January 20, 2026, the Company entered into a significant commitment to purchase manufacturing equipment over a 3 year term to be used in the Company’s operations. The Company anticipates accounting for the transaction as an asset acquisition in accordance with U.S. GAAP. The purchase price for the asset acquisition is approximately $7.3 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with the unaudited Condensed Consolidated Financial Statements and notes thereto that are contained in this Quarterly Report on Form 10-Q (this "Quarterly Report") as well as our Annual Report on Form 10-K for the fiscal year ended ~~September~~October 273, ~~2024~~2025 ("Annual Report") and our other filings, including the Current Reports on Form 8-K, that have been filed with the Securities and Exchange Commission ("SEC") through the date of this report.

In this Quarterly Report, unless otherwise specified or the context otherwise requires, the "Company," "Varex," "we," "us," and "our" refer to Varex Imaging Corporation.

Forward-Looking Statements

This Quarterly Report contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for statements about future events, ~~products,~~ and ~~future~~ financial performance that are based on the beliefs of, estimates made by, and information currently available to the management of Varex. Actual results and the outcome or timing of certain events described in these forward-looking statements are subject to ~~risks~~risk and uncertainties and may differ significantly from those described. Important factors that could cause our actual results and financial condition to differ significantly from those projections or expectations include, among other things, the following:

•reduction in or loss of business of one or more of our limited original equipment manufacturing (“OEM”) customers;

•changes in import/export regulatory regimes, tariffs, trade wars, and national policies, including exemptions thereto;

•reduction in or loss of business of one or more of our limited original equipment manufacturing (“OEM”) customers;

•global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, tariffs, trade wars, and other risks associated with international manufacturing, operations, and sales;

•loss of business to, and an inability to effectively compete with, competitors;

•pricing pressures and other factors that could result in margin erosion and loss of customers;

•failure to meet customers’ needs and demands;

•~~global,~~the ~~regional,~~financial ~~and~~results ~~country-specific~~of ~~economic~~our ~~instability,~~equity ~~shifting~~method ~~political environments~~investments, ~~changing~~including ~~tax~~joint ~~treatment,~~ventures ~~tariffs,~~that ~~trade~~we ~~wars,~~do ~~and~~not ~~other risks associated with international manufacturing, operations, and sales~~control;

•supply chain disruptions resulting in delayed product delivery, and increased costs as a result of reliance on a limited number of suppliers for certain key components;

•~~inability~~disruption toof ~~maintain~~critical orinformation ~~defend~~systems ~~our~~or ~~intellectual~~material ~~property~~breaches ~~rights,~~in ~~and~~the ~~high~~security ~~cost~~ of ~~protecting~~our ~~and~~systems ~~defending~~or ~~such~~systems ~~rights~~of ~~and~~third ~~defending~~parties ~~against~~upon ~~infringement~~which ~~claims~~we rely;

•~~disruption~~inability ofto ~~critical~~maintain ~~information~~or ~~systems~~defend orour ~~material~~intellectual ~~breaches~~property inrights, ~~the~~and ~~security~~costs ofassociated with protecting our ~~systems~~intellectual property and defending such rights and defending against infringement claims;

•noncompliance with regulations applicable to marketing, manufacturing, labeling, and distributing our products and delays in obtaining regulatory clearances or approvals;

•limitations imposed by operating and financial restrictions of our debt financing agreements that could harm our long-term interests, limit our ability to make payments on our debt obligations, and impact our ability to maintain sufficient liquidity and/or to refinance our debt obligations; and

•other factors cited in Part I, Item 1A, "Risk Factors" in our Annual Report and in Part II, Item 1A, "Risk Factors" of this Quarterly Report.

Statements concerning legislative, tariff, and trade wars and trade policy reforms, ~~responsive retaliatory actions by affected countries,~~ government investigations, and the uncertainty resulting therefrom; geopolitical tensions; supply chain and logistics challenges; cost increases and expense management; changes in U.S. and worldwide economic conditions, such as the impact of inflation, changes in interest rates, and fluctuations in foreign currency exchange rates; industry or business segment outlook; customer acceptance of or transition to new products or technologies such as advanced X-ray tube and digital flat panel detector products; growth drivers; future orders, revenues, market share, backlog, earnings or other financial results; and any statements using the terms “believe,” “expect,” “anticipate,” “can,” “should,” “would,” “could,” “estimate,” “~~expand,” “drive”, “~~may,” “intend,” “potential,” and “possible” or similar statements are forward-looking statements that involve risks and uncertainties that could cause our actual results and the outcome and timing of certain events to differ materially from those projected or management’s current expectations.

Any forward-looking statement made in this Quarterly Report (including in any exhibits or documents incorporated by reference) is based ~~only~~ on information currently available to Varex and its management and speaks only as of the date on which it is made. We have not assumed any obligation to, and you should not expect us to, update or revise those statements because of new information, future events or otherwise.

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Overview

Varex Imaging Corporation is a leading innovator, designer and manufacturer of X-ray imaging components including X-ray tubes, flat panel and photon counting detectors and accessories, linear accelerators, image software processing solutions, and stand-alone X-ray based systems in select application areas. Our components are used in medical diagnostic imaging, security inspection systems, and industrial quality inspection systems, as well as for analysis and measurement applications in industrial manufacturing applications. Global OEMs incorporate our X-ray imaging components into their systems to detect, diagnose, protect, irradiate, and inspect. Varex has approximately 2,~~300~~400 full-time equivalent employees, located at engineering, manufacturing, and service center sites in North America, Europe, and Asia.

Our products are sold in three geographic regions: the Americas, EMEA, and APAC. The Americas includes North America (primarily the United States) and Latin America. EMEA includes Europe, the Middle East, India, and Africa. APAC includes Asia (other than India) and Australia. Revenues by region ~~and country~~ are based on the known final destination of products sold.

Our success depends, among other things, on our ability to anticipate and respond to changes in our business, the direction of technological innovation, and the demand from our customers. We continually invest in research and development and employ approximately 400 individuals in product development related activities. Our focus on innovation and product performance along with strong and long-term customer relationships allows us to collaborate with our customers to deliver industry-leading X-ray imaging products. We continue to work to improve the life and quality of our imaging components and leverage our scale as one of the largest independent X-ray imaging component suppliers to provide cost-effective solutions for our customers.

Impact of Current Economic and Trade Environment

The current economic and trade environment remains dynamic and unpredictable. The uncertain outcome and effect of tariffs and reciprocal actions between the United States and other countries and its impact on the economic and geopolitical environment, supply chain and logistic challenges, ~~and~~as well as geopolitical tensions and local conflicts have contributed to, and may continue to contribute to, delayed customer purchasing decisions, increased tariff costs, higher inflation, ~~higher~~fluctuations in interest rates and capital costs, supply chain disruption, increased costs of labor and materials, exchange rate volatility, increased shipping costs, and other similar effects. Additionally, a sustained United States government shutdown could negatively impact the global economy and in turn our financial condition and results of operations.

~~During~~Changes ~~the~~to ~~calendar~~tariff ~~year~~policies in 2025, by the United States ~~Administration has announced~~ and~~/or~~ ~~imposed a variety of new tariffs on imports from~~ other countries~~. In response~~, aparticularly ~~number~~the ofbilateral ~~those impacted or potentially impacted countries have announced and/or imposed retaliatory tariffs on~~ United States ~~imports. This situation is ongoing~~ and ~~remains~~Chinese ~~fluid.~~tariffs, ~~These actions~~ impacted our results of operations and profitability ~~during~~in ~~the current~~ fiscal year, ~~particularly~~2025 ~~the~~and ~~bilateral~~in ~~United~~the ~~States~~first ~~and~~quarter ~~Chinese~~fiscal ~~tariffs~~year 2026. Absent a de-escalation in the current trade ~~wars~~environment, ~~particularly~~these ~~the~~tariffs ~~trade~~are ~~war~~expected ~~between~~to ~~the~~continue ~~United~~to ~~States and China, these tariffs could~~ make our products less competitive with similar ~~product~~products not imported from the United States, which has had and ~~could~~ in the future is expected to have a ~~material~~negative ~~adverse~~ impact on our business and financial results. ~~Additional~~Increases to existing or additional new tariffs, trade restrictions or other retaliatory actions aimed at specific industries, such as X-ray imaging products, could also materially impact our business. We remain committed to working with our customers to minimize the effects of the tariffs. In this regard, we are actively working to implement a number of options that could reduce the impact, including pursuing commonly utilized mitigation practices and localizing more manufacturing in the region. At this time, however, we do not anticipate these efforts will allow us to fully offset the additional costs or other negative impacts resulting from such tariffs. Considering the mitigation efforts we have in flight at this point, we are not currently planning to do any restructuring in China.

We continue to monitor potential changes in customer procurement decisions resulting from the current trade climate, along with other tariff-related actions, investigations and ~~other~~ activities that might negatively affect our costs or otherwise impact our business and results of operations. Furthermore, if international customers’ negative perceptions of the actions of the United States Administration influence their buying decisions, our business and results of operations could be negatively impacted.

In April 2025, the China Ministry of Commerce initiated two investigations related to medical products imported into China. One investigation relates to the impact of imports of X-ray tubes on the domestic industry and its competitiveness, and another relates to imports into China of certain medical CT X-ray tubes and tube inserts for CT devices (collectively “CT Tubes and Inserts”) originating from the United States and India. We produce CT Tubes and Inserts in the United States and export them to China, but we do not produce CT Tubes and Inserts in India. Total sales of medical X-ray tubes we import into China represented approximately 10% of our total revenue in fiscal year 2024. While we are actively monitoring the situation and cooperating in the proceedings, the outcome of the MOFCOM Investigations remains uncertain. We are committed to complying with all applicable regulations. Currently, both investigations have been paused since mid-May 2025. If recommenced, we anticipate that the MOFCOM Investigations may take approximately one year to resolve.

In the past, we have experienced supply chain, manufacturing, and logistics challenges but these challenges have largely subsided. However, given the current tariff environment and uncertainty around how it may impact customer purchasing decisions and the timing of those decisions, supply chain and logistics challenges could re-emerge.

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For additional information on risks related to tariffs and trade wars, supply chain and logistics challenges, cost increases, changes in U.S. and worldwide economic conditions, geopolitical tensions, and other risks that could impact our results, see Item 1A “Risk Factors”.

Operating Segments and Products

We have two reportable operating segments: Medical and Industrial. The segments align our products and ~~service~~services offerings with customer use in medical and industrial imaging.

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Medical

In our Medical segment, we design, manufacture, sell and service X-ray imaging components, including X-ray tubes, flat panel and photon counting detectors and accessories, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, automatic exposure control devices, generators, and coolers. These components are used in a range of medical imaging applications including computed tomography ("CT"), mammography, oncology, cardiac, surgery, dental, fluoroscopy, and other diagnostic radiography uses.

Our X-ray imaging components are primarily sold to OEM customers. These OEM customers then design-in our products to their X-ray imaging systems for a variety of medical modalities. A substantial majority of medical X-ray imaging OEMs globally are our customers, and many of these have been our customers for over 35 years. We believe one of the reasons for customer loyalty is that our hardware and software products are tightly integrated with our customers' systems. We work very closely with our customers to create custom built components for their systems based on technology platforms that we have developed. Because our products are often customized for our customers' specific equipment, it can be costly and complex for our customers to switch to another provider. Once our components are designed into our customers' equipment, our customers will typically continue to buy from us for any replacement components and for service and support for that equipment. Some of our products are also included in product registrations for our customers' equipment that require regulatory approval to change. In addition to sales to OEM customers, we sell our products to independent service companies and distributors as well as directly to end-users for replacement purposes.

We are one of the largest independent global manufacturers of X-ray imaging components, and each year, we produce over 27,000 X-ray tubes and 20,000 X-ray detectors. We estimate that our world-wide installed base of products includes more than ~~160~~170,000 X-ray tubes, 170,000 X-ray detectors, 600,000 connect and control components, and 16,~~500~~800 software instances. Replacement and service of our existing installed base makes up a significant portion of our revenue. Many of our components need to be replaced regularly, depending upon usage and other factors. For example, CT X-ray tubes generally need to be replaced every 2 to 6 years, in comparison to a general radiography tube which can last up to 10 years, depending on utilization. In China, the replacement cycle for CT X-ray tubes currently can be as frequent as every 10 to 20 months due to high utilization of imaging equipment. Other products such as X-ray detectors have a useful life of as much as 7 years or more but can require more frequent service and repairs during their useful life. In addition, our detector customers often elect to upgrade products to newer technology before the end of a current product’s useful life. X-ray imaging software is a relatively small part of our business and includes maintenance revenue for software licenses.

In China, the government has continued its efforts to broaden the availability of healthcare services. In the past 20 years, the number of medical institutions and diagnostic radiology equipment per million of population in China has increased substantially. We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China. Over the long- term, our objective is to become the partner of choice both for new systems and for replacement components in existing systems as CT systems continue to be more widely adopted throughout China.

Industrial

In our Industrial segment, we design, develop, manufacture, sell, and service X-ray imaging products for use in a number of applications, including security applications for cargo screening at ports and borders, baggage screening at airports, and nondestructive testing, irradiation, and inspection applications used in a number of other verticals. We also manufacture and sell our own X-ray imaging systems for industrial applications. Our Industrial products include Linatron® X-ray linear accelerators, non-intrusive cargo inspection systems, X-ray tubes, flat panel and photon counting detectors, computed radiography scanners, high voltage connectors, and coolers. In addition, we license proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to our Industrial customers. Our Industrial business benefits from the research and development investment and manufacturing economies of scale on the Medical side of our business, as we continue to find new applications for our technology. Along with more favorable pricing dynamics, this allows us to generally achieve higher gross profit for Industrial products relative to our Medical business. In addition, our Industrial business benefits from our long-term service agreements for our Linatron® products.

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Security applications primarily consist of cargo security for the screening of trucks, trains, and cargo containers at ports and borders as well as airport security for checked baggage and palletized cargo. The end customers for border protection systems are typically government agencies, many of which are in oil-based economies and war zones where there can be significant variation in buying patterns. We have recently expanded our security offerings to include full systems that perform cargo and vehicle inspections. These systems are used for screening cargo at ports and borders.

Non-destructive testing and inspection verticals utilize X-ray imaging to scan items for inspection of manufacturing defects and product integrity in a wide range of industries including aerospace, automotive, electronics, oil and gas, food packaging, metal castings, and additive manufacturing. In addition, new applications for X-ray sources are being developed, such as sterilization of food and its packaging. We provide X-ray sources, digital detectors, high voltage connectors, and image processing software to OEM customers, system integrators, and manufacturers in a variety of these verticals. We believe that non-destructive testing represents a significant growth opportunity for our business, and we are actively pursuing new potential applications for our products.

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and its packaging. We provide X-ray sources, digital detectors, high voltage connectors, and image processing software to OEM customers, system integrators, and manufacturers in a variety of these verticals. We believe that non-destructive testing represents a significant growth opportunity for our business, and we are actively pursuing new potential applications for our products.

Critical Accounting Policies and Estimates

The preparation of our unaudited Condensed Consolidated Financial Statements and related disclosures in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are based on historical experience and on various other factors that we believe are reasonable under the circumstances. Our critical accounting policies that are affected by accounting estimates require us to use judgments, often as a result of the need to make estimates and assumptions regarding matters that are inherently uncertain, and actual results could differ materially from these estimates.

We periodically review our accounting policies, estimates, and assumptions and make adjustments when facts and circumstances dictate. Refer to our Annual Report on Form 10-K for the fiscal year ended ~~September~~October 273, ~~2024~~2025 filed with the SEC on November 1918, ~~2024~~2025 and Note 1, Summary of Significant Accounting Policies, of the Notes to the Condensed Consolidated Financial Statements of this report for further details. Our critical accounting policies that are affected by accounting estimates include valuation of inventories, assessment of recoverability of goodwill and intangible assets, and income taxes. ~~There~~Except for the changes in certain policies upon adoption of the accounting standard described in Note 1, Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements of this report, there have been no material changes to the Company’s significant accounting policies, compared to the accounting policies described in Note 1, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for fiscal year ~~2024~~2025.

Impairments

During the three months ended July 4, 2025, we recognized a goodwill impairment charge of $93.9 million, representing a partial impairment related to our Medical reporting unit. The impairment charges are a result of macroeconomic challenges, such as tariffs and the MOFCOM Investigations announcements, sustained declines in the Company's stock price and market capitalization, and a downward revision in the Company's longer-term forecast. For further details refer to Note 8, Goodwill and Intangible Assets, of the Notes to the Condensed Consolidated Financial Statements of this report.

Fiscal Year

Discussion of Results of Operations for the Three Months Ended ~~July~~January 42, ~~2025~~2026 Compared to the Three Months Ended ~~June~~January 283, ~~2024~~2025

Revenues, Net

	Three Months Ended
(In millions)	~~July~~January 42, ~~2025~~2026			~~June~~January 283, ~~2024~~2025			$ Change		% Change
Medical	$	~~142~~144.18		$	~~148~~144.6		$	(60.5)2	(40.4)1	%
Industrial	6064.98			6055.52			09.46		017.74	%
Total revenues, net	$	~~203~~209.06		$	~~209~~199.18		$	(69.1)8	(24.9)	%
Medical as a percentage of total revenues, net	7069.01		%	7172.14		%
Industrial as a percentage of total revenues, net	30.09		%	2827.96		%

36 Medical revenues increased $0.2 million, primarily due to increased sales of radiography, mammography, oncology, and other modalities of $5.4 million, partially offset by decreased sales in dental, veterinary, CT, and fluoroscopic modalities of $5.2 million.

Industrial revenues increased $9.6 million, primarily due to increased sales of inspection products of $8.2 million and digital detectors of $2.0 million, partially offset by decreased sales of other components of $0.6 million.

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Revenues, Net by Region

Medical revenues decreased $6.5 million, primarily due to decreased sales of CT, fluoroscopy and radiography modalities of $9.0 million, partially offset by increased sales of other medical modalities including mammography and oncology of $3.0 million.


	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025		$ Change		% Change
Americas	$	75.3	$	64.4	$	10.9	16.9	%
EMEA	64.4		60.4		4.0		6.6	%
APAC	69.9		75.0		(5.1)		(6.8)	%
Total revenues, net	$	209.6	$	199.8	$	9.8	4.9	%

~~Industrial~~Overall revenue during the three months ended January 2, 2026 increased as compared to the three months ended January 3, 2025. Americas revenue increased by $10.9 million due to increased sales of security inspection products of $8.6 million, digital detectors of $2.0 million, X-ray tubes of $1.0 million, and other product sales of $0.6 million, partially offset by decreased veterinary sales of $1.3 million. EMEA revenues increased $4.0 million due to increased sales of X-ray tubes of $2.4 million, security inspection products of $1.1 million, and other products of $0.5 million. APAC revenues decreased $5.1 million primarily due to ~~immaterial~~decreased ~~increases~~sales inof ~~sales~~X-ray ~~across~~tubes ~~various~~of $2.2 million, digital detectors of $2.1 million, and security inspection products inof ~~our~~$1.5 million, ~~Industrial~~partially ~~portfolio~~offset by increased sales of other products of $0.7 million.

	Three Months Ended
(In millions)	July 4, 2025		June 28, 2024		$ Change		% Change
Americas	$	71.0	$	70.2	$	0.8	1.1	%
EMEA	69.6		70.9		(1.3)		(1.8)	%
APAC	62.4		68.0		(5.6)		(8.2)	%
Total revenues, net	$	203.0	$	209.1	$	(6.1)	(2.9)	%

See Note 2, Revenue, to the Condensed Consolidated Financial Statements for information regarding disaggregated revenue by country.

Gross Profit

Overall revenue during the three months ended July 4, 2025 decreased as compared to the three months ended June 28, 2024. During the three months ended July 4, 2025 compared to the three months ended June 28, 2024. Americas revenue increased by $0.8 million due to increased security inspection products sales of $7.0 million, partially offset by decreased sales of digital detectors of $4.7 million and software of $1.4 million. EMEA revenues decreased $1.3 million due to decreased security inspection products sales of $5.0 million, partially offset by increased sales of X-ray tubes of $1.8 million, digital detectors of $1.4 million and other products of $0.9 million. APAC revenues decreased $5.6 million primarily due to decreased X-ray tubes sales.


	Three Months Ended
(In millions)	January 2, 2026			January 3, 2025			$ Change		% Change
Medical	$	46.0		$	49.5		$	(3.5)	(7.1)	%
Industrial	23.8			19.0			4.8		25.3	%
Total gross profit	$	69.8		$	68.5		$	1.3	1.9	%
Medical gross margin	31.8		%	34.2		%
Industrial gross margin	36.7		%	34.4		%
Total gross margin	33.3		%	34.3		%

~~See~~The ~~Note~~Medical segment gross profit decreased $3.5 million during the three months ended January 2, ~~Revenue~~2026 ~~Recognition,~~compared to ~~the~~three ~~Condensed~~months ~~Consolidated~~ended ~~Financial~~January ~~Statements~~3, ~~for~~2025, ~~information~~primarily ~~regarding~~due ~~disaggregated~~to ~~revenue~~increased material costs of $6.8 million, partially offset by ~~country~~improved productivity, increased sales volume, and a favorable shift in product sales mix of $3.4 million.

	Three Months Ended
(In millions)	July 4, 2025			June 28, 2024			$ Change		% Change
Medical	$	46.7		$	46.2		$	0.5	1.1	%
Industrial	20.8			20.7			0.1		0.5	%
Total gross profit	$	67.5		$	66.9		$	0.6	0.9	%
Medical gross margin	32.9		%	31.1		%
Industrial gross margin	34.2		%	34.2		%
Total gross margin	33.3		%	32.0		%

The Industrial segment gross profit increased $4.8 million during the three months ended January 2, 2026 compared to three months ended January 3, 2025, primarily due to both increased sales volume and a favorable shift in product sales mix of $9.2 million, partially offset by increased material costs and decreased productivity of $4.4 million.

~~The increase in Medical segment gross profit was minimal during the three months ended July 4, 2025 compared to the three months ended June 28, 2024.~~31

The increase in Industrial segment gross profit was also minimal during the three months ended July 4, 2025 compared to the three months ended June 28, 2024.

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Operating Expenses

	~~Three Months Ended~~				Three Months Ended
~~(In millions)~~	~~July 4, 2025~~			(In millions)	~~June~~January 282, ~~2024~~2026			$January ~~Change~~3, 2025			%$ Change			% Change
~~Research and development~~	$	~~21.4~~		Research and development	$	2221.07		$	(023.6)5		~~(2.7)~~$	(1.8)	%	(7.7)	%
~~As a percentage of total revenues, net~~	~~10.5~~		%	As a percentage of total revenues, net	10.54		%	11.8		%
~~Selling, general, and administrative~~	$	~~32.9~~		Selling, general, and administrative	$	3532.67		$	(233.7)8		~~(7.6)~~$	(1.1)	%	(3.3)	%
~~As a percentage of total revenues, net~~	~~16.2~~		%	As a percentage of total revenues, net	1715.06		%	16.9		%
Impairment of goodwill	$	93.9			$	—		$	93.9		100.0		%
				Operating expenses	$	54.4		$	57.3		$	(2.9)		(5.1)	%
~~As a percentage of total revenues, net~~	~~46.3~~		%	As a percentage of total revenues, net	—26.0		%	28.7		%
Operating expenses	$	148.2			$	57.6		$	90.6		157.3		%
As a percentage of total revenues, net	73.0		%		27.5		%

Research and Development

We are committed to investing in the business to support long-term growth and believe long-term research and development expenses of approximately 8% to 10% of annual revenues is the appropriate range that will allow us to innovate and bring new products to market for our global OEM customers. Research and development costs ~~was~~decreased to 10.54% of revenues for the ~~third~~first quarter of fiscal year ~~2025~~2026, ~~in-line~~due ~~with~~to ~~research~~increased ~~and~~revenue, ~~development~~decreased costs, inand the ~~prior~~final Micro-X technology transfer payment made during the first quarter of fiscal year ~~period~~2025.

Selling, General, and Administrative

Selling, general, and administrative expenses for the ~~third~~first quarter of fiscal year ~~2025~~2026 decreased $21.7 1 million, ~~primarily~~when compared to the first quarter of fiscal year 2025 due to adecreased ~~decrease~~compensation incosts ~~environmental~~of ~~remediation~~$3.3 million partially offset by increased marketing costs of $1.81 million and aincreased ~~decrease~~other inadministrative ~~amortization~~costs of ~~intangibles of~~ $01.41 million.

Impairment of Goodwill

During the third quarter of fiscal year 2025, we recognized a goodwill impairment charge of $93.9 million, following a determination that the fair value of the Medical reporting unit was below its carrying value. See Note 8, Goodwill and Intangible Assets, of the Notes to the Condensed Consolidated Financial Statements of this report for further details.

Interest and Other Expense, Net

The following table summarizes the Company’s interest and other expense, net:

	Three Months Ended
(In millions)	~~July~~January 42, ~~2025~~2026		~~June~~January 283, ~~2024~~2025		$ Change
Interest income	$	20.56	$	12.81	$	0(1.75)
Interest expense	(97.49)		(78.40)		~~(2.~~0).1
Other income (expense), net	1.0		(2.9)		3.9
Other expense, net	(4.3)		(2.8)		(1.5)
Interest and other expense, net	$	(511.96)	$	(8.57)	$	(2.69)

Interest income ~~increased~~decreased primarily due to ana ~~increase~~decline inof our cash, cash equivalents, and ~~restricted~~marketable ~~cash~~securities ~~from~~balances ~~the~~being ~~proceeds~~held ofin interest bearing deposit accounts when comparing the ~~$125.0 million~~first quarter of ~~Senior~~fiscal ~~Secured~~year ~~Noted~~2026 ~~Add~~to Onthe ~~offering~~first ~~completed~~quarter byof ~~the~~fiscal ~~Company~~year in2025. ~~December~~This ~~2024~~was ~~("Senior~~due ~~Secured~~to ~~Notes~~an ~~Add~~accumulation ~~On")~~of ~~being~~cash ~~held~~for inthe ~~interest~~repayment ~~bearing~~of ~~deposit~~our ~~accounts~~convertible notes maturing in June 2025.

Interest expense ~~increased~~was ~~primarily~~flat ~~due to interest costs~~ in ~~connection~~the ~~with~~first ~~the~~quarter ~~additional~~of ~~Senior~~fiscal ~~Secured~~year ~~Notes~~2026 ~~issued~~compared ~~during~~to the first quarter of fiscal year 2025.

Other ~~income (~~expense), net increased ~~primarily~~ due to ~~gains~~increased ~~and decreased~~ losses in certain investments in privately-held companies and equity investments of $2.80 million, ~~increased~~and ~~foreign~~other ~~exchange~~expenses ~~gain~~ of $0.46 million, ~~and~~partially aoffset ~~gain~~by ondecreased ~~sale~~foreign ofexchange ~~fixed~~expense ~~assets~~ of $01.61 million.

38Taxes on Income

~~Table~~ For the three months ended January 2, 2026, we recognized income tax expense of ~~Contents~~$1.4 million on $3.8 million of pre-tax income. For the three months ended January 3, 2025, we recognized income tax expense of $2.6 million on $2.5 million of pre-tax income. Our tax expense decreased for the three months ended January 2, 2026, primarily due to higher pre-tax income in certain jurisdictions for which a valuation allowance on deferred tax assets applies and favorable impacts of international tax provisions and tax credits in the U.S., partially offset by losses in certain foreign jurisdictions for which no benefit can be recorded.

Taxes on (Loss) income

For the three months ended July 4, 2025, we recognized income tax expense of $2.5 million on $86.6 million of pre-tax loss. For the three months ended June 28, 2024, we recognized income tax benefit of $0.7 million on $0.8 million of pre-tax income. Our tax expense increased for the three months ended July 4, 2025, primarily due to the non-tax deductible $93.9 million goodwill impairment, increased pre-tax income in certain jurisdictions, valuation allowance positions in the U.S. on deferred tax assets and losses in certain foreign jurisdictions for which no benefit can be recorded.

Discussion of Results of Operations for the Nine Months Ended July 4, 2025 Compared to the Nine Months Ended June 28, 2024

	Nine Months Ended
(In millions)	July 4, 2025			June 28, 2024			$ Change		% Change
Medical	$	440.5		$	437.3		$	3.2	0.7	%
Industrial	175.2			168.0			7.2		4.3	%
Total revenues, net	$	615.7		$	605.3		$	10.4	1.7	%
Medical as a percentage of total revenues, net	71.5		%	72.2		%
Industrial as a percentage of total revenues, net	28.5		%	27.8		%

Medical revenues increased $3.2 million, primarily due to increased sales of CT and oncology of $17.1 million, partially offset by decreased sales in radiography, fluoroscopic, dental, and veterinary modalities of $13.2 million.

Industrial revenues increased $7.2 million, primarily due to increased sales of security inspection products and X-ray tubes of $3.7 million, digital detectors of $1.9 million and other components of $1.8 million.

Revenue by Region

	Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024		$ Change		% Change
Americas	$	204.8	$	200.8	$	4.0	2.0	%
EMEA	201.7		208.6		(6.9)		(3.3)	%
APAC	209.2		195.9		13.3		6.8	%
Total revenues, net	$	615.7	$	605.3	$	10.4	1.7	%

Overall revenue during the nine months ended July 4, 2025 increased as compared to the nine months ended June 28, 2024. During the nine months ended July 4, 2025 compared to the nine months ended June 28, 2024 Americas revenues increased $4.0 million due to increased security inspection products sales of $10.7 million and increased X-ray tubes sales of $3.4 million, partially offset by decreased sales of software of $5.8 million and digital detector sales of $4.5 million. EMEA revenues decreased $6.9 million due to decreased security inspection products sales of $10.6 million, X-ray tubes sales of $2.6 million, and software of $1.1 million, partially offset by increased digital detector sales of $5.3 million and other product sales of $2.0 million. APAC revenues increased $13.3 million due to increased X-ray tubes sales of $10.4 million and security inspection products sales of $3.2 million.

See Note 2, Revenue Recognition, to the Condensed Consolidated Financial Statements for information regarding disaggregated revenue by country.

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	Nine Months Ended
(In millions)	July 4, 2025			June 28, 2024			$ Change		% Change
Medical	$	152.1		$	129.8		$	22.3	17.2	%
Industrial	60.6			60.0			0.6		1.0	%
Total gross profit	$	212.7		$	189.8		$	22.9	12.1	%
Medical gross margin %	34.5		%	29.7		%
Industrial gross margin %	34.6		%	35.7		%
Total gross margin %	34.5		%	31.4		%

The increase in Medical segment gross profit was primarily due to improved productivity and lower material costs of $16.4 million and increased sales volume and favorable product mix of $5.8 million.

The increase in Industrial segment gross profit was minimal during the nine months ended July 4, 2025 compared to the nine months ended June 28, 2024.

	Nine Months Ended
(In millions)	July 4, 2025			June 28, 2024			$ Change		% Change
Research and development	$	66.9		$	65.1		$	1.8	2.8	%
As a percentage of total revenues, net	10.9		%	10.8		%
Selling, general, and administrative	$	99.3		$	103.5		$	(4.2)	(4.1)	%
As a percentage of total revenues, net	16.1		%	17.1		%
Impairment of goodwill	$	93.9		$	—		$	93.9	100.0	%
As a percentage of total revenues, net	15.3		%	—		%
Operating expenses	$	260.1		$	168.6		$	91.5	54.3	%
As a percentage of total revenues, net	42.2		%	27.9		%

Research and Development

Research and development costs remained relatively unchanged at 10.9% of total revenue during the nine months ended July 4, 2025 compared to the nine months ended June 28, 2024.

Selling, General, and Administrative

Selling, general, and administrative expenses for the nine months ended July 4, 2025 were lower primarily due to a decrease in fixed cost commitments to a supplier of $0.8 million and amortization of intangibles of $3.0 million.

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Impairment of Goodwill

Interest and Other Expense, Net

	Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024		$ Change
Interest income	$	7.5	$	5.5	$	2.0
Interest expense	(27.6)		(22.6)		(5.0)
Other income (expense), net	(5.8)		(1.6)		(4.2)
Interest and other expense, net	$	(25.9)	$	(18.7)	$	(7.2)

Interest income increased primarily due to an increase in the average cash and cash equivalents balance being held in interest bearing deposit accounts.

Interest expense increased primarily due to interest costs in connection with the additional Senior Secured Notes issued during the first quarter of fiscal year 2025 and the Revolving Credit Facility established during the final week of the second quarter of fiscal year 2024.

Other income (expense), net increased primarily due to decreased gains on business acquisitions of $2.1 million, increased foreign exchange expense of $1.5 million, increased losses in certain investments in privately-held companies and equity investments of $1.1 million, and a loss related to lease impairments of $0.3 million, partially offset by a gain on sale of fixed assets of $0.6 million.

Taxes on (Loss) income

For the nine months ended July 4, 2025, we recognized income tax expense of $8.8 million on $73.3 million of pre-tax loss. For the nine months ended June 28, 2024, the Company recognized income tax benefit of $0.2 million on $2.5 million of pre-tax income. Our tax expense increased for the nine months ended July 4, 2025, primarily due to the non-tax deductible $93.9 million goodwill impairment, increased pre-tax income in certain jurisdictions, valuation allowance positions in the U.S. on deferred tax assets, and losses in certain foreign jurisdictions for which no benefit can be recorded.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities. We believe that our operating cash flow, cash on our balance sheet, availability under our Revolving Credit Facility, and our ability to access the credit and capital markets are sufficient to meet our anticipated operating activities and cash commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis. We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during or beyond the next 12 months. As of July 4, 2025, the availability under our Revolving Credit Facility was $154.8 million, and we had total debt of $367.5 million, net of deferred issuance costs of $2.7 million.

~~Cash and Cash Equivalents, Certificates of Deposit, and Marketable Debt Securities~~32

(In millions)	July 4, 2025		September 27, 2024		$ Change
Cash and cash equivalents	$	136.4	$	168.7	$	(32.3)
Certificates of deposit not included in cash and cash equivalents	—		3.4		(3.4)
Marketable debt securities not included in cash and cash equivalents	16.2		40.8		(24.6)
Total	$	152.6	$	212.9	$	(60.3)

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commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis. We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during the next 12 months. Beyond the next 12 months, our Senior Secured Notes mature in October 2027, which we currently expect to refinance in fiscal year 2026. As of January 2, 2026, the availability under our Revolving Credit Facility was $154.8 million, and we had total debt of $367.6 million, net of deferred issuance costs of $2.1 million.

Cash and Cash Equivalents, Certificates of Deposit, and Marketable Debt Securities

The following table summarizes our cash and cash equivalents, certificates of deposit, and marketable debt securities:



(In millions)	January 2, 2026		October 3, 2025		$ Change
Cash and cash equivalents	$	119.5	$	145.0	$	(25.5)

Marketable debt securities not included in cash and cash equivalents	6.1		10.1		(4.0)
Total	$	125.6	$	155.1	$	(29.5)

Borrowings

The following table summarizes the changes in our debt outstanding:

	July 4, 2025			September 27, 2024
				January 2, 2026		October 3, 2025
(In millions, except for percentages)	Amount			Amount		$ Change
			(In millions)	Amount		Amount		$ Change
~~Current maturities of long-term debt:~~			Current maturities of long-term debt:
Convertible Senior Unsecured Notes	$	—		$	45.0	$	(45.0)
			Other debt	$	1.4	$	1.5	$	(0.1)
Other debt	1.5			1.5		—
			Total current maturities of long-term debt	$	1.4	$	1.5	$	(0.1)
Total current maturities of long-term debt	$	1.5		$	46.5	$	(45.0)
			Non-current maturities of long-term debt:
Non-current maturities of long-term debt:
			Senior Secured Notes	$	368.0	$	368.0	$	—
Convertible Senior Unsecured Notes(1)	$	—		$	155.0	$	(155.0)
			Other debt	0.3		0.4		(0.1)
Senior Secured Notes	368.0			243.0		125.0
			Total non-current maturities of long-term debt	$	368.3	$	368.4	$	(0.1)
Other debt	0.7			2.1		(1.4)
			Unamortized issuance costs and debt premiums:
Total non-current maturities of long-term debt	$	368.7		$	400.1	$	(31.4)
			Unamortized issuance costs, net of debt premium - Senior Secured Notes	$	(2.1)	$	(2.4)	$	0.3
Unamortized issuance costs and debt premiums:
			Total debt outstanding, net	$	367.6	$	367.5	$	0.1
Unamortized issuance costs - Convertible Notes	$	—		$	(1.0)	$	1.0
Unamortized issuance costs, net of debt premium - Senior Secured Notes	(2.7)			(2.2)		(0.5)
Total	(2.7)			(3.2)		0.5
Total debt outstanding, net	$	367.5		$	443.4	$	(75.9)

Cash Flows

(1) This amount has been excluded from current liabilities as it is supported by the Revolving Credit Facility and restricted cash from the proceeds of the Senior Secured Notes Add On (as defined in Note 9, Borrowings), which are expected to remain outstanding for an uninterrupted period extending beyond one year from the balance sheet date.



	Three Months Ended
(In millions)	January 2, 2026		January 3, 2025
Net cash flow (used in) provided by:
Operating activities	$	(16.1)	$	9.5
Investing activities	(7.7)		(3.0)
Financing activities	(1.6)		124.9

Net (decrease) increase in cash and cash equivalents and restricted cash	$	(25.4)	$	131.4

	Nine Months Ended
(In millions)	July 4, 2025		June 28, 2024
Net cash flow provided by (used in):
Operating activities	$	33.8	$	21.4
Investing activities	11.0		(13.5)
Financing activities	(77.0)		(4.1)
Effects of exchange rate changes on cash and cash equivalents and restricted cash	0.3		—
Net (decrease) increase in cash and cash equivalents and restricted cash	$	(31.9)	$	3.8

Net cash (used in) provided by operating activities. Cash (used in) provided by operating activities was $(16.1) million and $9.5 million for the three months ended January 2, 2026 and January 3, 2025, respectively. Significant changes in operating assets and liabilities affecting cash flows during these periods included:

•Net ~~cash~~income ~~provided~~was by$2.4 ~~operating~~million ~~activities.~~for ~~Cash~~the ~~provided~~three bymonths ~~operating~~ended ~~activities~~January ~~was~~2, ~~$33.8 million~~2026 ~~and~~compared to a net loss of $210.4 1 million for the ~~nine~~three months ended ~~July~~January 43, 2025. ~~and~~The ~~June 28,~~increase ~~2024,~~in ~~respectively.~~net ~~Net~~income ~~cash~~was ~~provided~~primarily bydue ~~operating~~to ~~activities~~an ~~increased~~increase of $129.4 8 million ~~for~~in ~~the~~revenues ~~nine~~and ~~months~~a ~~ended~~decrease ~~July~~of 4,$1.2 ~~2025~~million ~~compared~~in toincome tax expense in the ~~nine~~three months ended ~~June~~January 283, ~~2024.~~2025 ~~Significant~~compared ~~changes~~to inthe ~~operating~~three ~~assets~~months ~~and~~ended ~~liabilities~~January ~~affecting~~3, ~~cash flows during these periods included:~~2025.

•Net loss was $82.1 million for the nine months ended July 4, 2025 compared to net income of $2.7 million for the nine months ended June 28, 2024. The change from net income to net loss was primarily due to a goodwill impairment charge of $93.9 million in the nine months ended July 4, 2025, partially offset by $10.4 million of higher sales compared to the nine months ended June 28, 2024 and $4.2 million of higher other income (expense), net in the nine months ended July 4, 2025 compared to the nine months ended June 28, 2024.33

•Non-cash increases of $102.6 million primarily due to the add backs related to the goodwill impairment charge of $93.9 million and $11.1 million in deferred tax assets due to the higher net income position during the nine months ended July 4, 2025.

•Cash used for inventories was $29.6 million higher in the nine months ended July 4, 2025, compared to the nine months ended June 28, 2024, primarily due to an increase in inventory for anticipated future demand.

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•Cash used for ~~accrued~~inventories ~~liabilities~~was ~~and~~$14.5 ~~other~~million ~~current~~higher ~~and~~in ~~other~~the ~~long-term~~three ~~liabilities~~months ~~decreased~~ended byJanuary ~~$7.8 million~~2, ~~due~~2026, compared to ~~increased~~the ~~interest~~three ~~costs~~months ~~primarily~~ended ~~related~~January to3, ~~the~~2025, ~~issuance~~primarily ofdue ~~the~~to ~~Senior~~an ~~Secure~~increase ~~Notes~~in ~~Add~~quantity Onof ~~and~~inventory ~~the~~for ~~timing~~anticipated offuture ~~certain payroll costs~~demand.

~~Net~~•Cash ~~cash~~ provided by ~~(used~~accounts ~~in)~~receivables ~~investing~~was ~~activities~~$10.6 ~~Cash~~million ~~provided~~lower byin ~~investing activities during~~ the ~~nine~~three months ended ~~July~~January 42, ~~2025~~2026, ~~was $11.0 million~~ compared to ~~net cash used in investing activities of $13.5 million for~~ the ~~nine~~three months ended ~~June~~January 283, ~~2024.~~2025, ~~The increase in cash provided by investing activities was~~ primarily due to ~~the~~increased ~~implementation~~days of ansales ~~investment strategy to increase the Company’s cash balance to pay down the~~ outstanding ~~Convertible Notes that matured~~ and ~~were repaid in full during the third quarter of fiscal year 2025. This strategy resulted in~~ increased ~~proceeds from maturities and~~ sales ~~of marketable debt securities of $10~~.~~6 million, lower purchases of short-term marketable securities of $6.5 million and lower purchases of property, plant, and equipment of $3.6 million.~~

~~Net~~•Cash ~~cash~~ used in ~~financing~~accrued ~~activities.~~liabilities ~~Net~~and ~~cash~~other ~~used~~current inand ~~financing~~other ~~activities~~long-term ~~was~~liabilities ~~$77.0~~increased ~~million~~by ~~and~~ $47.14 million ~~for~~in the ~~nine~~three months ended ~~July~~January 42, ~~2025 and June 28~~2026, ~~2024,~~compared ~~respectively.~~to ~~The~~the ~~increase~~three inmonths ~~cash~~ended ~~used~~January in3, ~~financing~~2025, ~~activities was~~ primarily due to the ~~repayment~~timing inof ~~full~~and estimation of ~~the~~certain ~~Convertible~~compensation ~~Notes~~costs of $~~200~~11.02 million, ~~partially~~and ~~offset by~~ the ~~issuance~~timing of ~~the~~interest payments related to our Senior Secured Notes ~~Add On~~ of $~~126~~2.95 million, ~~during~~partially ~~the~~offset ~~first~~by ~~quarter~~activity ofrelated ~~fiscal~~to ~~year~~our ~~2025~~net investment hedge of $5.9 million.

Net cash used in investing activities. Cash used in investing activities was $7.7 million and $3.0 million for the three months ended January 2, 2026 and January 3, 2025, respectively. The increase in cash used in investing activities was primarily due to an increase in purchases of property, plant, and equipment of $6.5 million, partially offset by net cash increases related to marketable debt securities and certificates of deposits activity of $1.9 million in the three months ended January 2, 2026, compared to the three months ended January 3, 2025.

Net cash (used in) provided by financing activities. Net cash (used in) provided by financing activities was $(1.6) million and $124.9 million for the three months ended January 2, 2026 and January 3, 2025, respectively. The change in cash (used in) provided by financing activities was primarily due to the issuance of $126.9 million of the Senior Secured Notes Add On during the first quarter of fiscal year 2025.

Material Contractual Obligations

In October 2013, we entered into an amended agreement with dpiX and other parties that, among other things, provides us with the right to 50% of dpiX’s total manufacturing capacity produced after January 1, 2014. The amended agreement requires us to pay for 50% of the fixed costs (as defined in the amended agreement), as determined and approved by the dpiX board of directors at the beginning of each calendar year. In January ~~2025~~2026, the Company's fixed cost commitment was determined to be $13.7 million for calendar year ~~2025~~2026. ~~As of July 4, 2025, the Company estimated it has $6.8 million related to this fixed cost commitment remaining for calendar year 2025.~~ The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

In August 2015, pursuant to a Domination and Profit and Loss Transfer Agreement (the “DPLTA”), we committed to pay the noncontrolling shareholders of MeVis Medical an annual recurring net compensation of €0.95 per MeVis Medical share. The annual net payment will continue for the life of the DPLTA, which we anticipate will continue for as long as we remain as the controlling shareholder of MeVis Medical. As of ~~July~~January 42, ~~2025~~2026, noncontrolling shareholders together held approximately 0.5 million shares of MeVis Medical, representing 26.3% of the outstanding shares.

The Company enters into purchase agreements with its suppliers in the ordinary course of its business for the purchase of goods and services. Some of these purchase agreements are non-cancellable and thus contractually obligate the Company to future cash payments. As of ~~July~~January 42, ~~2025~~2026, our non-cancellable supplier purchase obligations totaled $32.68 million.

Contingencies

From time to time, we are a party to or otherwise involved in legal proceedings, government inspections, investigations, customs and duty audits, and other claims and contingency matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We accrue amounts for probable losses, to the extent they can be reasonably estimated, that we believe are adequate to address any liabilities related to legal proceedings as well as other loss contingencies that we believe will result in a probable loss (including, among other things, probable settlement value). A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. We did not have any material contingent liabilities as of ~~July~~January 42, ~~2025~~2026 and ~~September~~October 273, ~~2024~~2025. Legal expenses are expensed as incurred.

Days Sales Outstanding

Trade accounts receivable days sales outstanding (“DSO”) was 6164 days and 62 days at ~~July~~January 42, ~~2025~~2026 and ~~70 days at September~~October 273, ~~2024~~2025, respectively. Our accounts receivable and DSO are impacted by a number of factors, including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.

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Recent Accounting Standards or Updates Not Yet Effective

See Note 1, Summary of Significant Accounting Policies, of the accompanying Notes to the Condensed Consolidated Financial Statements for a description of recent accounting standards, including the expected dates of adoption and the estimated effects on our Condensed Consolidated Financial Statements.

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Backlog

Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid. Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Our estimated total backlog at ~~July~~January 42, ~~2025~~2026 was approximately $~~284~~264 million.

Orders may be revised or canceled, either according to their terms or as customers' needs change. Consequently, it is difficult to predict with certainty the amount of backlog that will result in revenues. We perform a quarterly review to verify that outstanding orders in the backlog remain valid. Aged orders that are not expected to be converted to revenues are deemed dormant and are reflected as a reduction in the backlog amounts in the period identified.

In addition to orders for which revenues have not been recognized and are still considered valid, we have pricing agreements with many of our established customers that span multi-year periods. These pricing agreements include volume ranges under which orders are placed.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to four primary types of market risks: foreign currency exchange rate risk, credit and counterparty risk, interest rate risk, and commodity price risk.

Foreign Currency Exchange Rate Risk

A significant portion of our customers are outside the United States, while our financial statements are denominated, and our products are generally priced in U.S. Dollars. A strong U.S. Dollar may result in pricing pressure for our customers that are located outside the United States and that conduct their businesses in currencies other than the U.S. Dollar. Such pricing pressure has caused, and could continue to cause, some of our customers to ask for discounted prices, delay purchasing decisions, or consider moving to in-sourcing supply of components or migrating to lower cost alternatives. In addition, because our business is global and some payments may be made in local currency, fluctuations in foreign currency exchange rates can impact our revenues and expenses and/or the profitability in U.S. Dollars of products and services that we provide or purchase in foreign markets.

We may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, net investments in foreign subsidiaries, and forecast purchases denominated in foreign currencies. We may hedge portions of forecasted foreign currency exposure, typically for one to three months. In addition, we hold cross-currency swaps between the Euro and U.S. Dollar as a net investment hedge of our acquisition of Direct Conversion. Depending on the spot rate between the Euro and U.S. Dollar at the time of settlement and whether we have sufficient Euros available, we may have to borrow incrementally in U.S. Dollars to settle this obligation. Additionally, we may choose not to hedge certain foreign exchange exposures for a variety of reasons including, but not limited to, accounting considerations, the prohibitive economic cost of hedging particular exposures, or due to natural offsets among the different exposures. See Note 59, Financial Derivatives and Hedging Activities, of the Notes to the Condensed Consolidated Financial Statements for further information.

Credit and Counterparty Risk

We use a centralized approach to manage substantially all of our cash and to finance our operations. Our cash and cash equivalents and marketable securities may be exposed to a concentration of credit risk, and we may also be exposed to credit risk and interest rate risk to the extent that we enter into credit facilities.

We perform ongoing credit evaluations of our customers, and we maintain what we believe to be strong credit controls in evaluating and granting customer credit, including performing ongoing evaluations of our customers’ financial condition and creditworthiness and often using letters of credit or requiring certain customers to provide a down payment.

Interest Rate Risk

Borrowings under our Revolving Credit Facility bear interest at floating interest rates. As of ~~July~~January 42, ~~2025~~2026, we had no borrowings subject to floating interest rates. See Note 96, Borrowings, of the Notes to the Condensed Consolidated Financial Statements for further information.

Our exposure to interest rate risk also relates to our interest-bearing assets, primarily our cash and cash equivalents and marketable securities. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. 35

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Commodity Price Risk

We are exposed to market risks related to volatility in the prices of raw materials used in our products. The prices of these raw materials fluctuate in response to changes in supply and demand fundamentals and our product margins and level of profitability tend to fluctuate with changes in these raw materials prices. We try to protect against such volatility through various business strategies. During the three ~~and nine~~ months ended ~~July~~January 42, ~~2025~~2026, we did not have any commodity derivative instruments in place to manage our exposure to price changes.

Sensitivity Analysis

The following table sets forth the potential loss in future earnings, fair value, or cash flows resulting from hypothetical changes in relevant market rates or prices as of ~~July~~January 42, ~~2025~~2026. The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analysis.

Market Risk Category	Hypothetical Change	Estimated Annual Impact(In millions)		Impact Category
Foreign Currency - Revenue	10% decrease in foreign exchange rates	$	1415.10	Earnings
Interest Rate - Marketable Securities	100 basis point decrease in interest rate of underlying investments	1.0.6		Earnings
Commodity Price	10% increase in commodity prices	$	32.19	Earnings

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the end of the period covered by this report. Based on this evaluation, our CEO and our CFO have concluded that our disclosure controls and procedures were effective as of ~~July~~January 42, ~~2025~~2026.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~July~~January 42, ~~2025~~2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various claims, complaints, and legal actions in the normal course of business from time to time. The resolution of such claims, complaints, and legal actions is subject to significant uncertainty and may be expensive, time consuming and disruptive to our operations. At the present time, we do not believe we have any current or pending litigation for which the outcome could have a material adverse effect on our operations or financial position.

Item 1A. Risk Factors

Investing in Varex Imaging Corporation common stock involves risks, and the following risk factors and other information included in this Quarterly Report on Form 10-Q (this "Quarterly Report") under Part I, Item 2 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Part I, Item 3 "Quantitative and Qualitative Disclosures about Market Risk" should be carefully considered. Although the risk factors described below are the ones management deems significant, additional risks and uncertainties not presently known to us or that are presently known to us that we presently deem not material may also adversely affect our business operations.

Risks Relating to Our Business

We sell our products and services to a limited number of OEM customers, many of which are also our competitors, and a delay in an order to a future period, as well as a reduction in or loss of business of one or more of these customers has in the past and may in the future materially reduce our sales.

We had one customer during the three and nine months ended July 4, 2025 that accounted for approximately 18% and 18% of our revenue, respectively, all of which was in our Medical segment. Our ten largest customers as a group accounted for approximately 52% and 54% of our revenue for the three months ended July 4, 2025 and June 28, 2024, respectively. Our ten largest customers as a group accounted for approximately 53% and 54% of our revenue for the nine months ended July 4, 2025 and June 28, 2024, respectively. Because we often take significant time to replace lost business, in the past our operating results have been, and in the future it is likely that our operating results would be, materially and adversely affected if one or more of our major OEM customers were to cancel, delay, or reduce orders.

Furthermore, we generate significant accounts receivables from the sale of our products and the provision of services directly to these customers. One customer accounted for 13.5% of our accounts receivables as of July 4, 2025. If one or more of these customers were to cancel a product order or service contract, become insolvent, or otherwise be unable or fail to pay for our products and/or services in a timely manner, our operating results and financial condition could be materially and adversely affected.

Our business has in the past been, is currently being, and in the future may be, negatively impacted by changes in import/export regulatory regimes, tariffs, trade wars, and national policies, including exemptions thereto.

We are both a global importer of raw materials that are used in our finished products and an exporter of finished goods to our customers worldwide. Our products are integrated into the systems and products of our OEM customers, as well as into our own industrial systems. Tariffs, trade wars, import/export restrictions, boycotts, embargoes, government investigations, trade policies and compliance matters have in the past limited, are currently limiting, and in the future could limit our ability and our customers' ability to compete, which could cause our long-term prospects in such countries to suffer. Tariffs on imported materials have increased our costs and prices and lowered gross margins on some of our products, thereby having a direct adverse impact on our business and results of operations. Retaliatory tariffs have increased our customers’ costs for products exported from the United States, which has caused us to make, and may in the future require us to make, price and other concessions on some products and has caused, and may in the future cause, some customers to stop purchasing our products.

46 For example, changes to tariff policies in 2025 by the United States and other countries, particularly bilateral United States and Chinese tariffs, impacted our results of operations and profitability in fiscal year 2025 and in the first quarter fiscal year 2026. Absent a de-escalation of the current trade environment, the tariffs are expected to continue to negatively impact our business, results of operation, and financial condition, including by increasing our costs and prices, lowering gross margins, adversely impacting revenue, and making our products less competitive with similar products not imported from the United States. Additional new, or increases to existing tariffs, trade restrictions or other retaliatory actions aimed at specific industries, such as X-ray imaging products, could also materially impact our business.

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For example, during the calendar year 2025, the United States Administration has announced and imposed a variety of new tariffs on imports for other countries. In response, a number of those impacted or potentially impacted countries have announced and/or imposed retaliatory tariffs on United States imports. This situation is ongoing and remains fluid. These actions impacted our results of operations and profitability during the current fiscal year, particularly the bilateral United States and Chinese tariffs. Absent a de-escalation in the current trade wars, particularly the trade war between the United States and China, the tariffs are expected to negatively impact our business, results of operation, and financial condition, including by increasing our costs and prices, lowering gross margins, adversely impacting revenue, and making our products less competitive with similar products not imported from the United States, which could have a material adverse impact on our business. Additional new tariffs, trade restrictions or other retaliatory actions aimed at specific industries, such as X-ray imaging products, could also materially impact our business. Furthermore, if international customers' negative perceptions of the actions of the United States Administration influence their buying decisions, our business and results of operations could be negatively impacted.

In the past, both the governments of the United States and China have granted tariff exclusions that temporarily eliminate certain duties payable for specific commodities, providing partial relief from such tariffs, but with certain exceptions, they must be solicited and approved. There is no guarantee that exclusions will be granted or that existing exclusions will be extended by either government. In addition, we cannot provide any guarantee that we will be able to effectively implement other tariff mitigation measures, such as free trade zones, bonded mechanisms, or drawback programs.

In addition to tariffs, China’s stated policy of reducing its dependence on foreign manufacturers and technology companies may result in reduced demand for our products and our customers' products in China, which could have a material adverse impact on our business, results of operations and financial position. There are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position. As an example, in April 2025 the China Ministry of Commerce ("MOFCOM") initiated two investigations related to medical products imported into China (the "MOFCOM Investigations"). One investigation ~~relates~~related to the impact of imports of X-ray tubes on the domestic industry and its competitiveness, and another ~~relates~~related to imports into China of certain medical CT X-ray tubes and tube inserts for CT devices (collectively “CT Tubes and Inserts”) originating from the United States and India. We produce CT Tubes and Inserts in the United States and export them to ~~China, but do not produce CT Tubes and Inserts in India. Total sales of medical X-ray tubes we imported into China represented approximately 10% of our total revenue in fiscal year 2024.~~

Currently, MOFCOM has paused both of the MOFCOM Investigations. If recommenced, we anticipate that the MOFCOM Investigations may take approximately one year from commencement to resolve. If, as a result of the outcome of the MOFCOM Investigations, we are required to increase our prices or tariffs are imposed on the CT Tubes and Inserts we export to China, our prices may not be competitive with local and other manufacturers, which could negatively impact our ability to compete in China and negatively impact our business, results of operations and financial condition.37

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China, but do not produce CT Tubes and Inserts in India. Total sales of medical X-ray tubes we imported into China represented approximately 12% of our total revenue during the first quarter of fiscal year 2026.

MOFCOM temporarily suspended both of the MOFCOM Investigations in May 2025 and again in August 2025. In November 2025, the MOFCOM Investigations were suspended indefinitely. If recommenced, we anticipate that the MOFCOM Investigations may take approximately one year from recommencement to resolve. If, as a result of the outcome of the MOFCOM Investigations, we are required to increase our prices or tariffs are imposed on the CT Tubes and Inserts we export to China, our prices may not be competitive with local and other manufacturers, which could negatively impact our ability to compete in China and negatively impact our business, results of operations and financial condition.

Any of the foregoing factors could require us to reconsider our current operating model, including whether we can continue to operate in specifically impacted locations, or if we need to relocate or otherwise restructure existing operations. Such changes may require us to invest significant additional capital we had anticipated using for other purposes such as expanding existing operations, entering new markets, or paying down debt. Diversion of these funds from their anticipated uses could adversely impact our business, results of operations, financial position, and our ability to pay down or restructure our existing debt.

Increasing tensions between countries, such as China and Taiwan, as well as local conflicts including the Ukraine-Russia war and ~~Israel-Iran~~Middle ~~wars~~East conflicts, may lead the United States and/or other countries to impose new tariffs and sanctions or expand existing tariffs and sanctions, enact boycotts and embargoes, and otherwise seek to limit or stop the flow of goods to or from involved countries. In the past, such actions both in China and Russia, have caused, are causing, and could in the future cause, significant disruptions in the regions and industries we serve and in our supply chain, as well as decrease demand from customers for the ultimate products using our solutions and materially harm our business, financial condition, and results of operations.

We had one customer during the three months ended January 2, 2026 that accounted for 16% of our revenue, all of which was in our Medical segment. Our ten largest customers as a group accounted for approximately 52% of our revenue for both the three months ended January 2, 2026 and January 3, 2025. Because we often take significant time to replace lost business, in the past our operating results have been, and in the future it is likely that our operating results would be, materially and adversely affected if one or more of our major OEM customers were to cancel, or significantly delay or reduce orders.

Furthermore, we generate significant accounts receivables from the sale of our products and the provision of services directly to these customers. One customer accounted for 12% of our accounts receivables as of January 2, 2026. If one or more of these customers were to cancel a significant product order or service contract, become insolvent, or otherwise be unable or fail to pay for our products and/or services in a timely manner, our operating results and financial condition could be materially and adversely affected.

Customer-driven changes in order forecasts is a frequent occurrence that has created and continues to create challenges for us in accurately predicting the demand or delivery schedules for our products.

End-user product demand, economic uncertainties, the impact of pandemic diseases, natural disasters, armed conflicts, geopolitical tensions, ~~possible~~ legislative, tariff, and trade policy reforms, and ~~reactionary~~government ~~retaliatory~~investigations ~~responses to such reforms~~including, for example, ~~the~~those ~~tariffs~~described ~~announced~~in by the ~~United~~risk ~~States~~factor ~~this~~"Our ~~calendar~~business ~~year~~has ~~and~~in the ~~retaliatory~~past ~~actions~~been, ~~announced~~is bycurrently abeing, ~~number~~and ofin ~~countries~~the infuture ~~response~~may be, ~~potential~~negatively ~~social~~impacted ~~unrest~~by ~~and~~changes ~~uncertainty~~in ~~resulting~~import/export ~~therefrom,~~regulatory ~~government investigations~~regimes, ~~for example~~tariffs, ~~the~~trade ~~MOFCOM Investigations~~wars, and ~~before~~national ~~that~~policies, ~~the~~including ~~Chinese~~exemptions ~~government initiated anti-corruption investigations related to China's healthcare industry~~thereto", and other matters beyond our control, make it difficult for our customers to accurately forecast and plan future business activities, which makes it difficult for us to accurately predict demand or delivery schedules for our products. Because the manufacture of our products requires some lead-time, changes in customer purchasing forecasts have previously resulted in excess inventory and slowdowns in sales, which are likely to occur again in the future. Changes to customer forecasts can occur on short notice, as our customers face inherent competitive issues, new product introduction delays, and regulatory risks. Our agreements for imaging components contain purchasing estimates that are typically based on our customers’ forward-looking forecasts rather than firm commitments, and actual purchasing volumes under the agreements may vary significantly from these estimates. The variation from forecasted purchasing volume may be due, in part, to the increasing life of X-ray tubes, which can result in reduced demand for replacement X-ray tubes in ways we may not be able to accurately forecast. Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results.

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slowdowns in sales, which are likely to occur again in the future. Changes to customer forecasts can occur on short notice, as our customers face inherent competitive issues, new product introduction delays, and regulatory risks. Our agreements for imaging components contain purchasing estimates that are typically based on our customers’ forward-looking forecasts rather than firm commitments, and actual purchasing volumes under the agreements may vary significantly from these estimates. The variation from forecasted purchasing volume may be due, in part, to the increasing life of X-ray tubes, which can result in reduced demand for replacement X-ray tubes in ways we may not be able to accurately forecast. Reductions in purchasing patterns have in the past, and may in the future, materially and adversely affect our operating results.

We compete in highly competitive industries, and we are subject to pricing pressures and other factors that have in the past and may in the future result in margin erosion and loss of customers.

We compete in industries characterized by rapidly evolving technology, intense competition and pricing pressure. We often compete with companies that have greater financial, marketing and other resources than us. Some of the major diagnostic imaging systems companies, which are the primary OEM customers for our X-ray imaging components, also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own imaging systems products. We have experienced, and may in the future experience, decreased sales of our products to these customers if they manufacture a greater percentage of their components in-house or purchase components from external sources other than us, which has had and may in the future have an adverse effect on our business and results of operations. We have in the past made price and other concessions to maintain existing customers and attract new customers, and may have to make additional price and other concessions in the future.

In addition, we compete against other stand-alone, independent X-ray tube manufacturers for both the OEM business of major diagnostic imaging equipment manufacturers and the independent servicing business for X-ray tubes. The flat panel detectors industry is also very competitive, and we face intense competition from over a dozen smaller competitors. In our Industrial business, we also compete with other OEM suppliers primarily outside of the United States. Some of our competitors outside of the United States may have resources and support from their governments that we do not, such as preferences for local manufacturers, and may not be subject to the same tariffs, trade policies, trade compliance regulations and government investigations as us.38

~~Our~~Table competitors are not all subject to the same standards, regulatory and/or other legal requirements to which we are subject and, therefore, they could have a competitive advantage in developing, manufacturing, and marketing products and services. Any inability to develop, gain regulatory approval for, and supply commercial quantities of competitive products to existing and potential customers as quickly and effectively as our competitors could limit acceptance of our products and negatively and materially affect our pricing, sales, revenues, market share, and gross margins and our ability to maintain or increase our operating margins.Contents

systems companies, which are the primary OEM customers for our X-ray imaging components, also manufacture X-ray imaging components, including X-ray tubes and flat panel detectors, for use in their own imaging systems products. We have experienced, and may in the future experience, decreased sales of our products to these customers if they manufacture a greater percentage of their components in-house or purchase components from external sources other than us, which has had and may in the future have an adverse effect on our business and results of operations. We have in the past made price and other concessions to maintain existing customers and attract new customers, and may have to make additional price and other concessions in the future.

In addition, we compete against other stand-alone, independent X-ray tube manufacturers for both the OEM business of major diagnostic imaging equipment manufacturers and the independent servicing business for X-ray tubes. The flat panel detectors industry is also very competitive, and we face intense competition from over a dozen smaller competitors. In our Industrial business, we also compete with other OEM suppliers primarily outside of the United States. Some of our competitors outside of the United States may have resources and support from their governments that we do not, such as preferences for local manufacturers, and they may not be subject to the same tariffs, trade policies, trade compliance regulations and government investigations as us.

Our competitors may not all be subject to the same standards, regulatory and/or other legal requirements to which we are subject and, therefore, they could have a competitive advantage in developing, manufacturing, and marketing products and services. Any inability to develop, gain regulatory approval for, and supply commercial quantities of competitive products to existing and potential customers as quickly and effectively as our competitors could limit acceptance of our products and negatively and materially affect our pricing, sales, revenues, position in the market, and gross margins and our ability to maintain or increase our operating margins.

Our success depends on meeting our customers' needs and demands.

To be successful, we must anticipate our customers’ needs and demands, as well as potential shifts in preferences. If we are unable to anticipate these needs and demands, or the mix of products requested by our customers changes from what we expect, our revenue, margins, and financial results could be adversely affected. When the U.S. Dollar is strong compared to the operating currencies of our international customers, our ability to meet such customers’ pricing expectations is particularly challenging and may result in erosion of revenues, product margin, and/or ~~market~~position ~~share~~in the market or other concessions on business terms.

In addition, certain costs, including installation and warranty costs, associated with new products have been, and may in the future be proportionately greater than the costs associated with existing products and have or may therefore disproportionately, materially, and adversely affect our gross and operating margins. We may also experience lower margins due to increased commodities prices, higher tariffs, and inadequate transfer pricing favoring sales to third parties over internal sales. If we are unable to lower these costs over time, our operating results could be materially and adversely affected. Some of the electronic components and integrated circuits used in our flat panel detectors are susceptible to discontinuance and obsolescence risks, which may force us to incorporate newer generations of these components, resulting in unplanned additional R&D expenses, delays in the launch of new products, supply disruptions, and/or inventory write-downs. Further, using aging production equipment might hamper our capacity to innovate to meet customers’ needs and demands and stay competitive. Failure to develop and adopt artificial intelligence ("AI") technology could also hinder our competitiveness and growth potential. We may also experience challenges in developing and implementing effective product and sales strategies, leading to missed opportunities and customer dissatisfaction.

Our success depends on the successful development, introduction, and commercialization of new generations of products and enhancements to or simplifications of existing product lines.

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We operate in business segments characterized by rapid change and technological innovation. Our customers use our products in their medical diagnostic, security, and industrial imaging systems, and we must continually introduce new products at competitive prices while also improving existing products with higher quality, lower costs, and increased features. We and our joint ventures have in the past spent, and in the future may need to spend, more time and money than we expect to develop, market, and introduce new products, product enhancements, and technologies. Even if we succeed in introducing new products, enhancements, or technologies as soon as expected, potential customers may not accept or purchase these new products, enhancements, or technologies, and we may not be able to recover all or a meaningful part of our investment. Once introduced, new products may materially and adversely impact sales of our existing products or make them less desirable or even obsolete, which could materially and adversely impact our revenues and operating results.

Furthermore, we may not be able to successfully develop, manufacture, or introduce new products or enhancements to existing products, the roll-out of which involves compliance with complex quality assurance processes, including the Quality System Regulation (“QSR”) of the U.S. Food and Drug Administration (“FDA”). Failure to complete these processes timely and efficiently could result in delays that could affect our ability to attract and retain customers or cause customers to delay or cancel orders, which would materially and adversely affect our revenues and operating results.

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More than half of our revenue is currently generated from customers located outside the United States, and is subject to global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, tariffs, trade wars and other risks associated with international manufacturing, operations, and sales.

Revenues generated from customers located outside the United States accounted for approximately 69% ~~and 67%~~ of our total revenues for ~~the~~each ~~three months ended July 4, 2025 and June 28, 2024, respectively, and approximately 69% and 68%~~ of ~~our total revenues for~~ the ~~nine~~three months ended ~~July~~January 42, ~~2025~~2026 and ~~June~~January 283, ~~2024, respectively~~2025. We intend to continue to expand our presence internationally and expect to expend significant resources in doing so. Our results have in the past, are currently, and could in the future be impacted by a variety of factors, including:

•~~governmental~~events ~~imposition~~and ofactions ~~additional~~described ~~taxes,~~in ~~tariffs,~~the ~~global~~risk ~~economic~~factors ~~sanctions~~"Our ~~programs,~~business orhas ~~other~~in ~~restrictions~~the onpast ~~foreign~~been, ~~trade~~is currently being, and ~~responsive~~in ~~retaliatory~~the ~~actions~~future ~~from~~may be, negatively impacted ~~countries~~by changes in import/export regulatory regimes, ~~including~~tariffs, ~~for~~trade ~~example~~wars, ~~the~~and ~~current~~national ~~trade~~policies, ~~war~~including ~~between~~exemptions ~~the~~thereto" ~~United~~and ~~States~~"Customer-driven ~~and~~changes ~~China,~~in order forecasts is a frequent occurrence that has created and continues to create challenges for us in accurately predicting the ~~MOFCOM~~demand ~~Investigations~~or delivery schedules for our products";

•political and economic instability, including the possibility of civil unrest, terrorism, mass violence, armed conflict, or pandemic diseases, which may among other things, impact our operations and business access;

•currency fluctuations, and in particular the relative strength of the U.S. Dollar, which is our functional and reporting currency;

•difficulties in staffing and managing employee relations in foreign operations, including in foreign joint ventures, particularly in attracting and retaining personnel qualified to design, test, sell and support our products;

•difficulties in coordinating our operations globally and in maintaining uniform standards, controls, procedures, and policies across our operations;

•the longer payment cycles associated with many customers located outside the United States;

•difficulties in interpreting or enforcing agreements and collecting receivables through many foreign countries’ legal systems; and

•imposition of burdensome governmental regulations, including changing ~~laws~~data ~~and~~privacy ~~regulations~~laws ~~with respect to collecting~~ and ~~maintaining personally identifiable data; and~~regulations.

•compliance with import/export laws and requirements.

Some of our locations expose us to higher security risks, which could result in both harm to our employees and contractors or substantial costs. Some of our services are performed in or adjacent to high-risk locations where the country or location and surrounding area experience political, social, or economic turmoil, war or civil unrest, or high levels of criminal or terrorist activities. In those locations where we have employees or operations, we may incur substantial costs to maintain the safety of our personnel, and we may suffer the loss of employees and contractors, which could harm our business, reputation, and operating results.

We may be unable to complete future acquisitions or joint ventures or realize expected benefits from acquisitions of or investments in new businesses and joint ventures, products, or technologies, which could harm our business.

Our ability to identify and take advantage of attractive acquisitions or other business development opportunities (including through joint ventures) is an important component in implementing our overall business strategy. Such transactions involve a number of risks, including the following:

•we may not be able to identify suitable candidates or successfully complete or finance identified acquisitions;

•we may incur substantial costs, including advisory fees and diversion of management attention, in evaluating a potential transaction;

•we may be unable to achieve the anticipated benefits from the transaction, including a return on our investment;

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•we may have difficulty integrating organizations, products, technologies, or employees of an acquired business into our operations and may have difficulty retaining the key personnel of the acquired business;

•acquisitions, investments, and joint ventures could result in increased risks, including from potential litigation;

•we may find that we need to restructure or divest acquired businesses or assets of the acquired business; and

•if we fail to achieve the anticipated growth from an acquisition or joint venture, or if we decide to sell assets or a business, we may be required to dispose of a business at a lower price or on less advantageous terms, or to recognize an impairment loss on the write-down of our assets and goodwill.

We participate in joint ventures and other investments in privately held and publicly traded companies. For example, we hold a 40% ownership interest in dpiX Holding Company LLC, the parent company of the major supplier of our amorphous silicon-based thin film transistor arrays for flat panels used in our digital image detectors, a 50% interest in VEC Imaging GmbH & Co. KG ("VEC"), a joint venture formed to develop technology for use in X-ray imaging components, a 75% interest in Varex Imaging Arabia LLC, a joint venture in Saudi Arabia and a minority interest in another X-ray imaging components technology company. These and other investments are subject to risk of loss of investment capital as well as losses associated with contributed or jointly developed intellectual property, or intellectual property developed at or about the same time as these investments. These types of investments are inherently risky, in some instances because customer demand and sales for the technologies or products under development may never materialize, may develop more slowly than expected, or may underperform relative to our expectations. If these companies do not succeed, we could lose or be required to write down some or all of our investment in these companies~~. As discussed in the risk factor "Legal proceedings may materially and adversely affect our business~~, ~~results of operations, or cash flows,"~~ we may ~~incur~~experience significant ~~time, management resources,~~ and ~~costs~~unpredictable tolosses ~~enforce our rights, protect our intellectual property and other assets, address disputes~~ or ~~legal~~charges ~~claims~~as ~~that~~a ~~have~~result ~~arisen, are ongoing, or may arise in the future, and/or unwind, dispose~~ of ordecisions ~~terminate~~made ~~our~~by ~~arrangements with respect to these~~ joint ventures ~~and/or investments. There is no guarantee~~ that ~~the~~we ~~time~~do ~~and~~not ~~money~~control ~~invested~~but bywhose usfinancial inresults ~~developing~~proportionally ~~these~~affect ~~projects,~~our ~~intellectual~~reported ~~property,~~financial orresults. ~~product~~As ordiscussed ~~product~~in ~~enhancements, will yield~~ the ~~expected~~risk ~~returns~~factor on"Legal ~~the~~proceedings ~~anticipated~~may ~~timeline~~materially orand atadversely ~~all.~~

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affect our business, results of operations, or cash flows," we may incur significant time, management resources, and costs to enforce our rights, protect our intellectual property and other assets, address disputes or legal claims that have arisen, are ongoing, or may arise in the future, and/or unwind, dispose of or terminate our arrangements with respect to these joint ventures and/or investments. There is no guarantee that the time and money invested by us in developing these projects, intellectual property, or product or product enhancements, will yield the expected returns on the anticipated timeline or at all.

Legal proceedings may materially and adversely affect our business, results of operations, or cash flows.

From time to time, we are a party to or otherwise involved in legal proceedings, claims, government inspections, audits or investigations, and other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. Such proceedings are often lengthy, subject to significant uncertainty and may be expensive, time consuming, and disruptive to our operations. For these and other reasons, we may choose to settle legal proceedings and claims, regardless of their actual merit. If a legal proceeding were to be ultimately resolved against us, we may be required to pay damages or fines, some of which may be in excess of our insurance coverage, or may require us to change our business practices, which could materially and adversely impact our business, results of operations, or cash flows.

Our subsidiary Varex Imaging Deutschland AG ("Varex Germany") holds a 50% interest in VEC. InSince August 2023, ~~February 2024, and August 2024,~~ the partners to the VEC joint venture ~~filed~~have been engaged in judicial proceedings in Germany against one another disputing the validity of certain shareholder resolutions ~~passed in January 2023, January 2024, and August 2024, respectively. Each party is, in effect,~~ seeking to ~~have the other party’s managing director(s) removed and to~~ exclude the other party from the joint venture. If either party is successful, the prevailing party would be required to purchase the non-prevailing party’s interest in the joint venture for an amount equal to 75% of the fair market value thereof, which amount is in dispute. In addition, in June 2024, Varex Germany filed an action in Germany for a negative declaratory judgment and an injunction against business damaging statements made by certain third parties, and ~~in August 2024, October 2024 and subsequently,~~ Varex Germany and Varex Imaging Corporation have filed additional lawsuits in Germany and the United States relating to intellectual property matters, breach of contracts and other matters. ~~The October 2024 lawsuit was subsequently voluntarily dismissed while the parties try to negotiate a settlement.~~ These disputes, including any determinations not in Varex Germany’s favor, have diverted, are diverting, and could in the future divert management’s attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.

Our subsidiary Varex Imaging International AG holds a 75% interest in Varex Imaging Arabia LLC. We currently have ongoing disputes with our joint venture partner relative to the operation of the joint venture. These disputes have in the past, are currently and could in the future divert management's time and attention, increase our costs, and otherwise adversely impact our business, results of operations, or cash flows.

As discussed in the risk factor "Our business has in the past been, is currently being, and in the future may be, negatively impacted by changes in import/export regulatory regimes, tariffs, trade wars, and national policies," ~~MOFCOM~~including ~~initiated~~exemptions ~~and~~thereto," ~~then~~if ~~paused~~the ~~two~~MOFCOM ~~investigations~~Investigations ~~relating~~are torecommenced ~~medical~~in ~~products~~the ~~imported into China that include products we import to China. If recommenced~~future, the outcome of these investigations has the potential to negatively impact our business, results of operations and financial condition.

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Product defects or misuse may result in material product or other liability or professional errors and omissions claims, litigation, investigation by regulatory authorities, or product recalls.

Our business exposes us to potential product and other liability claims that are inherent in the manufacture, sale, installation, servicing, and support of components that are used in medical devices and other devices that deliver radiation. Because our products are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation, the possibility for significant personal injury or loss of life exists. Furthermore, if our xX-ray inspection systems fail to detect the presence of bombs, explosives, weapons, contraband, or other threats to personal safety, this may lead to personal injury, loss of life, and extensive property damage. We may also be subject to warranty and damage claims for property damage, personal injury, or economic loss related to or resulting from any errors or defects in our products or the installation, servicing, or support of our products. Any accident or mistreatment could subject us to legal costs, litigation, adverse publicity, and damage to our reputation, whether or not our products or services were a factor. We are currently a party to certain products liability litigation which, if adversely determined, could have an adverse material impact on our financial results. If a product we design or manufacture were defective, we may be required to correct or recall the product and notify regulatory authorities.

We may choose to settle product liability claims against us regardless of their actual merit. A product liability action determined against us could result in adverse publicity or significant damages, including the possibility of punitive damages, and our financial position, results of operations, or cash flows could be materially and adversely affected.

We maintain limited product liability insurance coverage. Our product liability insurance policies are expensive and have high deductible amounts and self-insured retentions. Our insurance coverage may prove to be inadequate, and future policies may not be available on acceptable terms or in sufficient amounts, if at all. If a material claim is not insured or is in excess of our insurance coverage, we may have to pay substantial damages, which could have a material and adverse effect on our financial position and/or results of operations.

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Risks Relating to the Manufacture of our Products

Supply chain disruptions, including the loss of a supplier, and any inability to obtain raw materials or supplies of important components due to inflation have impacted our ability to manufacture products, have caused delays in our ability to deliver products, and have increased our costs and may continue to do so.

Inflation and supply chain disruptions have had, and could in the future have, an impact on our ability to manufacture certain products. Any rise in future inflation has the potential to increase our overall cost structure, and sustained inflation has resulted in, and may continue to result in, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor, weakening exchange rates, and other similar effects.

Material shortages and delays due to inflation and other constraints have caused, and could in the future cause, us to temporarily stop production of certain products or miss opportunities to pursue additional sales of some products. We require certain raw materials, such as copper, nickel, silver, gold, lead, tungsten, iridium, rhenium, molybdenum, rhodium, niobium, zirconium, beryllium, and various high grades of steel alloy for X-ray tubes and industrial products. Worldwide demand, availability, and pricing of these raw materials ~~have~~is ~~been~~ volatile. If we are unable to obtain the materials necessary to make certain products without unreasonable cost or delay, our customers may seek alternative suppliers ~~who are less impacted by the current trade war between the United States and China~~, or decide to in-source certain products or if we must pay more for certain materials, it could reduce our profit margin or otherwise have a material adverse effect on our business and financial results. Further, our competitors with greater financial resources may be better able to restructure their manufacturing and supply chains in response to geopolitical and economic trends and thereby have a competitive advantage over us.

We obtain some of the components included in our products, such as transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets and windows, housings, glass frames, high-voltage cable, bearings, and various other components, from a limited group of suppliers, or from sole-source suppliers. If our suppliers cease producing these or other components, prioritize other customers, fail to provide products on our delivery timelines, are in countries subject to significant tariffs, or become unable to continue operations, we may be unable to obtain the components from other suppliers on reasonable terms or at all~~, and this could materially and adversely affect our business and financial results~~.

Furthermore, we may be required to obtain and qualify one or more replacement suppliers or to manufacture the components internally. Such an event could (1) require us to redesign or modify our products to incorporate new parts and/or further require us to obtain clearance, qualification, or certification of these products, including by the FDA, or obtain other applicable regulatory approvals in other countries, (2) significantly increase costs for the affected products, (3) cause material delays in the delivery of affected and other related products, or (4) prevent us from meeting our delivery obligations to our customers. Any of the foregoing, could materially and adversely affect our business and financial results.

51Our operations are vulnerable to interruption or loss due to natural or other disasters, the adverse effects of climate change, power loss, strikes, and other events beyond our control.

~~Table~~ We conduct some of ~~Contents~~our activities, including manufacturing, research and development, administration, and data processing at facilities located in areas that have in the past experienced or may in the future experience natural disasters. Natural disasters (such as a major fire, hurricane, earthquake, flood, tsunami, or volcanic eruption), severe weather conditions, adverse climate change-related events, war or terrorism, and disruption in utilities and other services affecting our facilities, or those of our suppliers, could significantly disrupt our operations and delay or prevent product manufacture and shipment during the time required to repair, rebuild, or replace our or our suppliers’ damaged manufacturing facilities. These delays could be lengthy and costly. If any of our customers’ facilities are adversely affected by such a disaster or event, shipments of our products could be delayed. Additionally, customers may delay purchases of our products until our or their operations return to normal. Even if our suppliers or customers are able to quickly respond to such a disaster or event, the ongoing effects could create some uncertainty in the operations of our business. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, or an outbreak of epidemic diseases have in the past had, and could in the future have, a negative effect on our business operations, those of our suppliers and customers, and the ability to travel, resulting in adverse consequences on our revenues and financial performance.

If we are not able to match our manufacturing capacity with demand for our products, our financial results may suffer.

Many of our products have a long production cycle, and we must anticipate demand for our products to ensure adequate manufacturing and testing capacity. If we are unable to anticipate demand, and our manufacturing or testing capacity does not keep pace with product demand, we will be unable to fulfill orders in a timely manner, which may negatively impact our financial results and overall business. Conversely, if demand for our products decreases, the fixed costs associated with excess manufacturing capacity may harm our financial results, including by decreasing gross margins and increasing research and development costs as a percentage of revenue.

~~Demand for our security, industrial, and inspection products tend to be unpredictable, leading to volatility in our revenues and earnings.~~42

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Demand for our security, industrial, and inspection products tends to be unpredictable, leading to volatility in our revenues and earnings.

The demand for our security and inspection products is heavily influenced by United States and foreign governmental policies on national and homeland security, border protection, and customs activities, which depend upon levels of government employment, government debt, and government budgets and appropriations that are subject to economic conditions, political changes, and oil prices. Even when government budgets and appropriations levels, economic and political conditions, and oil prices are favorable it is difficult to predict when governments may issue requests for bids, complete their bid process and award tenders, which tends to lead to volatility in our revenues and earnings.

~~Our~~Risks ~~operations~~Relating ~~are vulnerable~~ to ~~interruption~~our orInformation ~~loss~~Systems ~~due to natural or other disasters, the effects of climate change, power loss, strikes,~~ and ~~other~~Intellectual ~~events beyond our control.~~Property

WeDisruption ~~conduct some~~ of ~~our~~critical ~~activities,~~information ~~including~~systems ~~manufacturing,~~or

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