Varian Medical completes spin-off of Salt Lake-based Varex Imaging Systems

Varian Medical Systems, based in Palo Alto, California, has completed its spin-off of Varex Imaging Corp., based in Salt Lake City.

The common stock of Varex has begun trading on the Nasdaq Global Select Market under the ticker symbol “VREX.” The spin-off had been announced last spring.

Varex designs and manufactures X-ray imaging components, which include tubes, digital flat-panel detectors and other image processing solutions. The components are used in medical imaging as well as in industrial and security imaging applications. The company has roughly 1,400 employees at manufacturing and service center sites in North America, Europe and Asia.

Varian manufactures medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The company also supplies informatics software for cancer treatment centers. Salt Lake City had served as headquarters for its X-ray products manufacturing operation.

Varian stockholders received fourth-tenths of a share of Varex stock for every share of Varian stock they held as of Jan. 20. Varex has approximately 38 million shares outstanding. Varex made a $200 million cash payment to Varian, funded through its $300 million revolving credit facility. The rest of the undrawn funds remain available to fund working capital needs and other general corporate purposes.

Varex will be led by Sunny Sanyal, president and chief executive officer. Sanyal previously was president of Varian’s imaging components business.

“The past few months have been very busy as we prepared for the spin-off of Varex Imaging and also announced the planned acquisition of the medical imaging business of PerkinElmer,” Sanyal said. “Much of our time recently has been filled with meetings, calls and roadshow presentations with the investor and analyst community. Overall, the past year has been an exciting time for us and I want to thank all the people at Varian and Varex who devoted so much time and effort to make the separation a success.”

Other management officials are chief financial officer Clarence Verhoef, previously Varian corporate controller and general counsel and corporate secretary Kim Honeysett, previously vice president and assistant general counsel and assistant corporate secretary for Varian.

In addition to Sanyal, Varex board members are Dr. Ruediger Naumann-Etienne (chairman), owner and managing director of Intertec Group since 1989; Christine A. Tsingos, chief financial officer of Bio-Rad Laboratories Inc. since 2002; Dow R. Wilson, president and chief executive officer of Varian Medical Systems; Dr. Erich R. Reinhardt, chairman of the board of Medical Valley Europaische Metropol Region in Nürnberg in Germany and former president and chief executive officer of Siemens Healthcare (formerly Siemens Medical Solutions); and Jay K. Kunkel, senior vice president and president of Asia-Pacific operations of Leer Corp.

Varex expects fiscal year 2017 revenues to be up 3 percent to 4 percent over the $620 million in fiscal 2016. It expects GAAP net earnings to be between $1.20 and $1.30 per diluted share for the second through fourth quarters of fiscal 2017.

Varex’s history dates to the 1930s with the creation of Eimac Products, which produced high-quality, high-power transmitter tubes. Eimac moved its manufacturing operations to Utah after receiving a large military contract in 1941. It later expanded activities to include new tube types, such as television cathode ray tubes (CRT) and microwave tubes for radar applications, and merged with Varian in 1965.

In December, Varian agreed to acquire the medical imaging business of PerkinElmer Inc., based in Waltham, Massachusetts, as an addition to the Varian business for $276 million. That PerkinElmer business has about 280 employees, with a base in California and operations in Germany, the Netherlands and the United Kingdom.