Investing.com -- Shares of Varex Imaging (NASDAQ:VREX) Corporation (NASDAQ: VREX) dropped 19% as the company's first-quarter revenue fell short of Wall Street expectations. Despite posting a slight earnings per share (EPS) beat, the company's revenue for the quarter was $200 million, not meeting the consensus estimate of $201.7 million.
The decline in Varex's stock followed the release of its unaudited financial results for the first quarter of fiscal year 2025. The company reported a GAAP net loss of $0.01 per diluted share, while non-GAAP net earnings were $0.07 per diluted share, which was $0.05 better than the analyst estimate of $0.02. However, the revenue figure represented only a 5% increase year-over-year (YoY), which was not enough to satisfy investor expectations.
Looking ahead, Varex provided guidance for the second quarter of fiscal year 2025, projecting revenues between $200 million and $215 million and non-GAAP net earnings per diluted share in the range of $0.05 to $0.20. This guidance compares to a consensus EPS estimate of $0.12 and revenue forecast of $201.6 million.
Sunny Sanyal, Varex's CEO, commented on the results, noting that demand in the first quarter was solid, with both Medical (TASE:PMCN) and Industrial revenue up YoY. He attributed the higher profitability and EPS to a favorable sales mix and productivity gains across both segments and expressed expectations for continued solid demand in the second quarter.
The company's Medical segment revenue of $145 million was up 3% YoY, while Industrial segment revenue of $55 million increased by 10% YoY. Non-GAAP gross margin improved to 35% compared to 31% in the first quarter of the previous fiscal year, and non-GAAP EPS increased from $0.06 to $0.07.
Varex's balance sheet showed a healthy cash flow from operations at $10 million for the quarter, with cash, cash equivalents, and marketable securities totaling $219 million at the end of the first quarter, up from $213 million at the end of the previous fiscal year.
Oppenheimer analyst Suraj Kalia provided insight into Varex's performance, highlighting the company's core competencies and market position. "VREX remains a deep-value name, we believe, with best in-class X-ray core competency, a 'sticky' end-user base, and call options on cold cathode technology and photon counting detectors, despite the near-term pressures," Kalia stated.
Investors reacted to the mixed financial results and the cautious outlook provided by the company, leading to the significant stock price decline in today's trading session.
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