On April 25, 2018 Varian (NYSE: VAR) reported its second quarter fiscal year 2018 results (Press release, Varian Medical Systems, APR 25, 2018, View Source [SID1234525702]).
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We are proud of the team’s progress in the second quarter toward executing on our long-term value creation strategy," said Dow Wilson, Chief Executive Officer of Varian. "We continued to strengthen our leadership in radiation therapy and extend our global footprint with the Mobius and Evinance acquisitions. In addition, we are expanding our addressable markets into interventional oncology with the acquisition of Sirtex, expected to close by the end of May."
The company ended the quarter with $740 million in cash and cash equivalents and $255 million of debt. Net cash provided by operating activities was $66 million. During the quarter, the company invested $36 million to repurchase 325,000 shares of common stock.
Oncology Systems Segment
In the fiscal second quarter, Oncology revenues totaled $698 million, up 10 percent in dollars and 6 percent in constant currency. Gross orders were $664 million, up 5 percent in dollars and 1 percent in constant currency. Gross orders in the Americas increased 2 percent in dollars and in constant currency. In EMEA, gross orders rose 11 percent in dollars and were flat in constant currency; in APAC, gross orders increased 3 percent in dollars and 1 percent in constant currency. Operating earnings for the segment increased 16 percent.
Particle Therapy Segment
In the fiscal second quarter, Particle Therapy revenues totaled $32 million, up 2 percent. The company did not book any new ProBeam orders in the quarter.
Acquisition-Related Expenses and Impairment Charges in Q2
Varian’s GAAP net earnings include acquisition-related expenses totaling $20 million for the quarter, primarily driven by $16 million related to hedging the Australian dollar purchase price of the Sirtex acquisition, as well as an impairment charge of $11 million related to the expected refinancing of the Maryland Proton Treatment Center in Baltimore. These costs and the associated tax effects reduced Varian earnings in the second quarter of fiscal 2018 by $0.26 per diluted share on a GAAP basis, and were excluded from non-GAAP results.
FY18 Annual Guidance Updated
Considering the financial and operational performance in the first half and the impact of currency, fiscal year 2018 guidance is updated to the following:
Revenue growth range of 6 percent to 9 percent, which now includes the impact from currency for the remainder of the year
Non-GAAP Operating earnings as a percentage of revenues range of 18 percent to 19 percent
Non-GAAP effective tax rate of 20 percent
Weighted average diluted shares of 93 million
Non-GAAP Earnings per diluted share range of $4.43 to $4.53
Cash flow from operations range of $475 million to $550 million
This updated guidance does not reflect the impact of the Sirtex acquisition, which is expected to close at the end of May.
Please refer to "Discussion of Non-GAAP Financial Measures" below for a description of items excluded from expected non-GAAP earnings.
Investor Conference Call
Varian Medical Systems is scheduled to conduct its second quarter fiscal year 2018 conference call at 2 p.m. PT today. To hear a live webcast or replay of the call, visit the investor relations page on our web site at www.varian.com/investors where it will be archived for a year. To access the call via telephone, dial 1-877-869-3847 from inside the U.S. or 1-201-689-8261 from outside the U.S. The replay can be accessed by dialing 1-877-660-6853 from inside the U.S. or 1-201-612-7415 from outside the U.S. and entering confirmation code 13677574. The telephone replay will be available through 5 p.m. PT, Friday, April 27, 2018.