Varex Imaging Corporation operates as an 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. The company’s components are used in medical diagnostic imaging, security inspection systems, and industrial quality inspection systems, as well as for analysis and measurement applications...
Varex Imaging Corporation operates as an 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. The company’s 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 the company’s X-ray imaging components into their systems to detect, diagnose, protect, irradiate, and inspect.
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 are based on the known final destination of products sold.
The company continually invests in research and development and employ approximately 350 individuals in product development related activities. The company focuses on innovation and product performance along with strong and long-term customer relationships allows it to collaborate with its customers to deliver industry-leading X-ray imaging products. The company continues to work to improve the life and quality of its imaging components and leverage its scale as one of the largest independent X-ray imaging component suppliers to provide solutions for its customers.
Operating Segments and Products
The company operates through two segments: Medical and Industrial.
The segments align the company’s products and service offerings with customer use in medical and industrial imaging.
Medical
In its Medical segment, the company designs, manufactures, sells and services 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, collimators, 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.
The company’s X-ray imaging components are primarily sold to OEM customers. These OEM customers then design-in the company’s products to their X-ray imaging systems for a variety of medical modalities. A substantial majority of medical X-ray imaging OEMs globally are the company’s customers, and many of these have been its customers for over 35 years. One of the reasons for customer loyalty is that the company’s hardware and software products are tightly integrated with its customers' systems. The company works very closely with its customers to create custom built components for their systems based on technology platforms that it has developed. Because the company’s products are often customized for its customers' specific equipment, it can be costly and complex for its customers to switch to another provider. Once the company’s components are designed into its customers' equipment, its customers will typically continue to buy from it for any replacement components and for service and support for that equipment. Some of the company’s products are also included in product registrations for its customers' equipment that require regulatory approval to change. In addition to sales to OEM customers, the company sells its products to independent service companies and distributors as well as directly to end-users for replacement purposes.
The company is one of the largest independent global manufacturers of X-ray imaging components, and each year, it produces approximately 27,000 X-ray tubes and 20,000 X-ray detectors. The company estimates that its world-wide installed base of products includes more than 160,000 X-ray tubes, 170,000 X-ray detectors, 600,000 connect and control components and 16,500 software instances. Replacement and service of the company’s existing installed base makes up a significant portion of its revenue. Many of the company’s 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 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, the company’s 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 its business and includes maintenance revenue for software licenses.
The company is developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China.
Industrial
In its Industrial segment, the company designs, develops, manufactures, sells, and services 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. The company’s Industrial products include Linatron X-ray linear accelerators, X-ray tubes, flat panel and photon counting detectors, computed radiography scanners, 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 its Industrial customers. The company’s Industrial business benefits from the research and development investment and manufacturing economies of scale on the Medical side of its business, as it continues to find new applications for its technology. In addition, the company’s Industrial business benefits from its long-term service agreements for its Linatron products.
Security applications primarily consists 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. The company has recently expanded its 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. The company provides 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.
Customers
The company’s customers are primarily large OEMs. The company’s top five customers, measured by revenue, are Canon Medical Systems Corporation (Canon), United Imaging Healthcare, General Electric Company, Rapiscan Systems, Inc., and Siemens Healthineers AG, which collectively accounted for approximately 41% of total revenue in fiscal year 2024. The company’s largest customer, Canon, accounted for approximately 18% of its total revenue for fiscal year 2024, while its ten largest customers as a group accounted for approximately 53% of its revenue for fiscal year 2024.
Competition
The company competes with some OEM customers, such as Canon, Philips Healthcare and other companies who sell X-ray tubes to smaller OEMs and other manufacturers, as well as emerging X-ray tube manufacturers in China.
In its digital flat panel detector business, the company primarily competes against Trixell S.A.S., Canon, Vieworks Co., Ltd., Hamamatsu Corporation, iRay Technology (Shanghai) Limited, and Jiangsu CareRay Medical Systems Co., Ltd.
In the low-energy sector of its Industrial segment, the company competes with other OEM suppliers, such as iRay, Teledyne, and Comet AG. While there are other manufacturers of low-energy X-ray tubes and digital detectors for specialized and niche industrial applications, the company’s products are designed for a broad range of applications in inspection, analysis, and non-destructive testing. In the high-energy sector, the company competes against technologies from Nuctech Company Limited, Siemens AG, ETM Electromatic Inc., and PMB Alcen, whose X-ray sources are used in applications that include cargo and container scanning, border security, aerospace applications, castings, and pressure vessel inspections. The companies the company both sell to and compete with are Rapiscan, Smiths, Leidos, and Astrophysics.
Customer Services and Support
The company provides technical advice and consultation to major OEM customers from its offices in the United States, Europe, Asia, and India. The company’s application specialists and engineers make recommendations to meet the customer’s technical requirements within the customer’s budgetary constraints. The company often develop specifications for a unique product that will be designed and manufactured to meet a specific customer’s requirements.
Government Regulation
In the United States, as a manufacturer and seller of medical devices and devices emitting radiation or utilizing radioactive by-product material, the company and some of its suppliers and distributors are subject to extensive regulation by federal governmental authorities, such as the U.S. Food and Drug Administration (the FDA), the Nuclear Regulatory Commission (NRC), and state and local regulatory agencies, to ensure the devices are safe and effective and comply with laws governing products that emit, produce, or control radiation. Similar international regulations apply overseas. These regulations, which include the U.S. Food, Drug and Cosmetic Act (the FDC Act) and regulations promulgated by the FDA, govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale and marketing, and disposal of medical devices, post market surveillance, and reporting of serious injuries and death, repairs, replacements, recalls, and other matters relating to medical devices, radiation emitting devices, and devices utilizing radioactive by-product material. State regulations are extensive and vary from state to state. The company’s X-ray tube products, imaging workstations, and flat panel detectors are considered medical devices. Under the FDC Act, each medical device manufacturer must comply with quality system regulations that are strictly enforced by the FDA.
The company’s manufacturing operations for medical devices, and those of its third-party manufacturers, are required to comply with the FDA’s Quality System Regulation (QSR), which addresses a company’s responsibility for product design, testing, and manufacturing quality assurance, and the maintenance of records and documentation. The QSR requires that each manufacturer establish a quality systems program by which the manufacturer monitors the manufacturing process and maintains records that show compliance with FDA regulations and the manufacturer’s written specifications and procedures relating to the devices. QSR compliance is necessary to receive and maintain FDA clearance or approval to market new and existing products. The FDA makes announced and unannounced periodic and ongoing inspections of medical device manufacturers to determine compliance with the QSR.
The FDA and the Federal Trade Commission (the FTC) regulate advertising and promotion of the company’s products to ensure that the claims it makes are consistent with its regulatory clearances, that it has adequate and reasonable scientific data to substantiate its claims and that its promotional labeling and advertising is neither false nor misleading.
For it to market its products internationally, the company must obtain clearances or approvals for products and product modifications. The company is required to affix the CE mark to its products to sell them in member countries of the European Union (EU). The CE mark is an international symbol of adherence to certain essential principles of safety and effectiveness, which once affixed enables a product to be sold in member countries of the European Economic Area (EEA). The CE mark is also recognized in many countries outside the EU and can assist in the clearance process. To receive permission to affix the CE mark to its medical device products, the company must obtain approvals and Quality System certification, e.g., ISO 13485, through an accredited Notified Body and must otherwise have a quality management system that complies with the EU Medical Device Directive, which was superseded by the EU MDR-Medical Device Regulations in May 2021. The ISO promulgates standards for certification of quality assurance operations. The company is certified as complying with the ISO 9001 for its security and inspection products and ISO 13485 for its medical devices. Several Asian countries, including Japan and China, have adopted regulatory schemes that are comparable, and in some cases more stringent, than the EU scheme. To import medical devices into Japan, the requirements of the Japanese Pharmaceutical and Medical Device Act must be met and an approval to sell medical products in Japan, must be obtained. Similarly, a registration certification issued by the National Medical Products Administration and a China Compulsory Certification mark for certain products are required to sell medical devices in China. Obtaining such certifications on the company’s products can be time-consuming and can cause it to delay marketing or sales of certain products in such countries. Similarly, prior to selling a device in Canada, manufacturers of Class II devices must obtain a medical device license from Health Canada. Additionally, many countries have laws and regulations relating to radiation and radiation safety that apply to the company’s products. It is also important that the company’s products comply with electrical safety and environmental standards, such as those of Underwriters Laboratories (UL), the Canadian Standards Association (CSA), and the International Electrotechnical Commission (IEC). In addition, the manufacture and distribution of medical devices utilizing radioactive material requires a specific radioactive material license. For the United States, manufacture and distribution of these radioactive sources and devices also must be in accordance with a model-specific certificate issued by either the NRC or by an Agreement State. In essentially every country and state, installation and service of these products must be in accordance with a specific radioactive materials license issued by the applicable radiation control agency. Service of these products must be in accordance with a specific radioactive materials license.
The company is subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, and similar laws in foreign countries, such as the U.K. Bribery Act of 2010 and the law On the Fundamentals of Health Protection in the Russian Federation.
Intellectual Property
As of September 27, 2024, the company owned approximately 230 patents issued in the United States, approximately 410 patents issued throughout the rest of the world and had approximately 160 patent applications pending with various patent agencies worldwide. The patents issued expire between 2024 and 2042. The company has trademarks, both registered and unregistered that are maintained and enforced to provide customer recognition for its products in the marketplace. The company also has agreements with third parties that provide for licensing of patented or proprietary technology, including royalty-bearing licenses and technology cross-licenses.
In conjunction with the January 2017 separation from Varian Medical Systems, Inc. (Varian), the company entered into an Intellectual Property Matters Agreement with Varian, pursuant to which, among other things, it each granted the other licenses to use certain intellectual property. Varian was subsequently acquired by Siemens in April 2021.
History
Varex Imaging Corporation was founded in 2016. The company was incorporated in 2016.
