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Key Highlights of Varian Medical Systems’ Fiscal 2Q17 Earnings

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Aug. 4 2017, Updated 2:37 a.m. ET

Stock movement

On April 26, 2017, Varian Medical Systems (VAR) released its 2Q17 earnings. Varian Medical Systems beat consensus estimates for revenues in 2Q17 by ~0.8% and reported in-line earnings per share (or EPS).

However, after its earnings announcement, Varian Medical Systems’ stock price dropped due to concerns over a negative earnings outlook. Varian Medical Systems’ stock price has fallen ~2.2% since its 1Q17 earnings results published on January 25, 2017.

The iShares US Medical Devices ETF (IHI) gained ~12.2% in the same period. Varian Medical Systems makes up ~1.8% of IHI’s total holdings.

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2Q17 takeaways

In 2Q17, Varian Medical Systems earned revenues of ~$655 million, a rise of ~6% on a YoY (year-over-year) basis. It exceeded analysts’ estimates of ~$650 million.

The company registered earnings per share of $0.89, in line with the consensus earnings estimate. The quarter ended with backlogs of $3.1 billion, with a 6% rise in the Oncology segment backlog.

Segment-wise performance

The Oncology segment registered revenues of $624 million with growth of ~7%. Gross orders in the segment totaled around $648 million. Orders from the Americas grew ~3%, EMEA registered 6% growth, and the APAC order grew ~8%. The segment’s sales witnessed strong growth around the globe, particularly in emerging markets.

VAR’s Oncology Software and Services business also registered strong margins. However, the Oncology segment’s gross orders in 2Q17 totaled $897 million, representing a YoY decline of ~2%. This was due to weakness in Western Europe.

For the Imaging Components business, gross orders in 2Q17 rose ~2%. The company’s Particle Therapy business booked its first orders for its compact single room system in 2Q17.

Varian Medical Systems’ Particle Therapy business booked ~$28 million in orders during 2Q17. The revenues for the Particle Therapy business were ~$31 million, registering YoY growth of ~1%.

Varian Medical Systems’ peers CR Bard (BCR), Thermo Fisher Scientific (TMO), and Intuitive Surgical (ISRG) reported revenues of approximately $0.94 million, $4.8 billion, and $0.67 billion, respectively, in their recently ended quarters.

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