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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Oct. 03, 2025
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Varex Imaging Corporation (the “Company” or “Varex”) designs, manufactures, sells, and services a broad range of medical products, which include X-ray imaging components including X-ray tubes, flat panel and photon counting detectors and accessories, ionization chambers, high voltage connectors, image processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and heat exchangers. The Company sells its products to imaging system original equipment manufacturer (“OEM”) customers for incorporation into new medical diagnostic, radiation therapy, dental, and veterinary equipment, as well as to independent service companies and distributors, and directly to end-users for replacement purposes. The Company also designs, manufactures, sells and services industrial products, which include Linatron® X-ray linear accelerators, X-ray tubes, digital detectors, high voltage connectors, coolers, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The Company generally sells security and inspection products to OEM customers who incorporate Varex’s products into their inspection or irradiation systems and processes. The Company also manufactures and sells its own X-ray imaging systems for industrial applications. The Company conducts an active research and development program to focus on new technologies and applications in both medical and industrial X-ray imaging. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with accounting principles generally accepted in the United States ("GAAP"). The Company has consolidated all its majority owned subsidiaries and entities over which it has control. All intercompany balances and transactions have been eliminated in consolidation. Revision of Prior Period Financial Statements During the third quarter of 2025, the Company identified an accounting error related to its deferred tax assets and liabilities and income tax expense calculations in prior periods. The Company has revised its prior period Consolidated Statements of Operations, Consolidated Statements of Comprehensive (Loss) Income, Consolidated Balance Sheets, Consolidated Statements of Stockholders' Equity, and Consolidated Statements of Cash Flows to correct this error. The Company evaluated the effect of the error on the previously issued Consolidated Financial Statements and determined that the related impacts were not material, individually or in aggregate. However, correcting the cumulative effect of the errors as out-of-period adjustments would be material for the current year. As such the Company has corrected these errors in the Consolidated Financial Statements for all prior periods presented herein. The following tables provide a reconciliation of the revisions for the previously reported Consolidated Statements of Operations, Consolidated Statements of Comprehensive (Loss) Income, Consolidated Statements of Stockholders' Equity, and Consolidated Statements of Cash Flows as of the fiscal years ended September 27, 2024 and September 29, 2023 and the revisions for the previously reported Consolidated Balance Sheets as of the fiscal year ended September 27, 2024. CONSOLIDATED STATEMENTS OF OPERATIONS
| Fiscal Years
| 2024 |  | 2023
(In millions, except per share amounts) | As Previously Reported |  | Revision |  | As Revised |  | As Previously Reported |  | Revision |  | As Revised
Income tax expense (benefit) | $ | 52.2 |  |  | $ | 1.1 |  |  | $ | 53.3 |  |  | $ | (17.4) |  |  | $ | 0.8 |  |  | $ | (16.6) |
Net (loss) income | (47.2) |  |  | (1.1) |  |  | (48.3) |  |  | 48.7 |  |  | (0.8) |  |  | 47.9 |
Net (loss) income attributable to Varex | (47.7) |  |  | (1.1) |  |  | (48.8) |  |  | 48.2 |  |  | (0.8) |  |  | 47.4 |
Net (loss) income per common share attributable to Varex |  |  |  |  |  |  |  |  |  |  |
Basic | $ | (1.17) |  |  | $ | (0.03) |  |  | $ | (1.20) |  |  | $ | 1.20 |  |  | $ | (0.02) |  |  | $ | 1.18 |
Diluted | $ | (1.17) |  |  | $ | (0.03) |  |  | $ | (1.20) |  |  | $ | 1.08 |  |  | $ | (0.01) |  |  | $ | 1.07 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
| Fiscal Years
| 2024 |  | 2023
(In millions) | As Previously Reported |  | Revision |  | As Revised |  | As Previously Reported |  | Revision |  | As Revised
Net (loss) income | $ | (47.2) |  |  | $ | (1.1) |  |  | $ | (48.3) |  |  | $ | 48.7 |  |  | $ | (0.8) |  |  | $ | 47.9 |
Total comprehensive (loss) income | (48.9) |  |  | (1.1) |  |  | (50.0) |  |  | 47.4 |  |  | (0.8) |  |  | 46.6 |
Comprehensive (loss) income attributable to Varex | (49.4) |  |  | (1.1) |  |  | (50.5) |  |  | 46.9 |  |  | (0.8) |  |  | 46.1 |
CONSOLIDATED BALANCE SHEETS
|  | September 27, 2024
(In millions) |  | As Previously Reported |  | Revision |  | As Revised
Deferred tax assets |  | $ | 4.7 |  |  | $ | (3.4) |  |  | $ | 1.3 |
Total assets |  | 1,217.0 |  |  | (3.4) |  |  | 1,213.6 |
Deferred tax liabilities |  | 1.4 |  |  | 2.6 |  |  | 4.0 |
Total liabilities |  | 667.8 |  |  | 2.6 |  |  | 670.4 |
Retained earnings |  | 70.4 |  |  | (6.0) |  |  | 64.4 |
Total Varex stockholders' equity |  | 535.1 |  |  | (6.0) |  |  | 529.1 |
Total stockholders' equity |  | 549.2 |  |  | (6.0) |  |  | 543.2 |
Total liabilities and stockholders' equity |  | 1,217.0 |  |  | (3.4) |  |  | 1,213.6 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions) | Retained Earnings |  | Total Varex Equity |  | Total Stockholders' Equity
As Previously Reported |  |  |  |  |
For the Year Ended September 29, 2023 |  |  |  |  |
Balance at September 30, 2022 | $ | 63.8 |  |  | $ | 533.4 |  |  | $ | 546.7 |
Net income | 48.2 |  |  | 48.2 |  |  | 48.7 |
Balance at September 29, 2023 | $ | 118.1 |  |  | $ | 567.7 |  |  | $ | 581.0 |
Revision |  |  |  |  |
For the Year Ended September 29, 2023 |  |  |  |  |
Balance at September 30, 2022 | $ | (4.1) |  |  | $ | (4.1) |  |  | $ | (4.1) |
Net loss | (0.8) |  |  | (0.8) |  |  | (0.8) |
Balance at September 29, 2023 | $ | (4.9) |  |  | $ | (4.9) |  |  | $ | (4.9) |
As Revised |  |  |  |  |
For the Year Ended September 29, 2023 |  |  |  |  |
Balance at September 30, 2022 | $ | 59.7 |  |  | $ | 529.3 |  |  | $ | 542.6 |
Net income | 47.4 |  |  | 47.4 |  |  | 47.9 |
Balance at September 29, 2023 | $ | 113.2 |  |  | $ | 562.8 |  |  | $ | 576.1 |
(In millions) | Retained Earnings |  | Total Varex Equity |  | Total Stockholders' Equity
As Previously Reported |  |  |  |  |
For the Year Ended September 27, 2024 |  |  |  |  |
Balance at September 29, 2023 | $ | 118.1 |  |  | $ | 567.7 |  |  | $ | 581.0 |
Net loss | (47.7) |  |  | (47.7) |  |  | (47.2) |
Balance at September 27, 2024 | $ | 70.4 |  |  | $ | 535.1 |  |  | $ | 549.2 |
Revision |  |  |  |  |
For the Year Ended September 27, 2024 |  |  |  |  |
Balance at September 29, 2023 | $ | (4.9) |  |  | $ | (4.9) |  |  | $ | (4.9) |
Net loss | (1.1) |  |  | (1.1) |  |  | (1.1) |
Balance at September 27, 2024 | $ | (6.0) |  |  | $ | (6.0) |  |  | $ | (6.0) |
As Revised |  |  |  |  |
For the Year Ended September 27, 2024 |  |  |  |  |
Balance at September 29, 2023 | $ | 113.2 |  |  | $ | 562.8 |  |  | $ | 576.1 |
Net loss | (48.8) |  |  | (48.8) |  |  | (48.3) |
Balance at September 27, 2024 | $ | 64.4 |  |  | $ | 529.1 |  |  | $ | 543.2 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Fiscal Years
| 2024 |  | 2023
(In millions) | As Previously Reported |  | Revision |  | As Revised |  | As Previously Reported |  | Revision |  | As Revised
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |
Net (loss) income | $ | (47.2) |  |  | $ | (1.1) |  |  | $ | (48.3) |  |  | $ | 48.7 |  |  | $ | (0.8) |  |  | $ | 47.9 |
Deferred taxes | 37.0 |  |  | 1.1 |  |  | 38.1 |  |  | (39.5) |  |  | 0.8 |  |  | (38.7) |
These revisions had no impact on gross profit, operating expenses, or operating income in any of the fiscal periods. Segment Reporting The Company has two reportable operating segments; (i) Medical and (ii) Industrial. See Note 13, Segment Information, included in this report, for further information on the Company’s segments. Fiscal Year The fiscal years of the Company as reported are the 52- or 53-week periods ending on the Friday nearest September 30. Fiscal year 2025 was the 53-week period that ended October 3, 2025, fiscal year 2024 was the 52-week period that ended September 27, 2024, and fiscal year 2023 was the 52-week period that ended September 29, 2023. Variable Interest Entities For entities in which the Company has variable interests, the Company focuses on identifying which entity has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which entity has the obligation to absorb losses or the right to receive residual returns from the variable interest entity. If the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Company’s consolidated financial statements. As of October 3, 2025, the Company had variable interests in two entities, neither of which were consolidated by the Company. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include the valuation of inventories, valuation of goodwill and intangible assets, receivables, warranties, refund liabilities, long-lived asset valuations, impairment of investments, valuation of financial instruments, and taxes on income. Actual results could differ from these estimates. Restricted Cash Restricted cash primarily consists of cash collateral related to certain leases and inventory arrangements. Restricted cash is included in other assets on the Company's Consolidated Balance Sheets. Cash and cash equivalents and restricted cash as reported within the Consolidated Statements of Cash Flows consisted of the following:
| October 3, 2025 |  | September 27, 2024
(In millions) | Beginning of Period |  | End of Period |  | Beginning of Period |  | End of Period
Cash and cash equivalents | $ | 168.7 |  |  | $ | 145.0 |  |  | $ | 152.6 |  |  | $ | 168.7 |
Restricted cash | 1.7 |  |  | 2.1 |  |  | 1.4 |  |  | 1.7 |
Total as presented in the Consolidated Statements of Cash Flows | $ | 170.4 |  |  | $ | 147.1 |  |  | $ | 154.0 |  |  | $ | 170.4 |
Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. There is a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or, other inputs that are observable or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Derivative Instruments and Hedging Activities The Company records all derivatives on the Consolidated Balance Sheets at fair value as of the reporting date. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative is reported as a component of other comprehensive income or loss and reclassified from Accumulated other comprehensive loss ("OCI") into earnings when the hedged transaction affects earnings. For derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported as a component of other comprehensive income or loss until the hedged item is sold. The portion of the change in fair value of the Company's net investment hedges (or cross currency swaps) related to the cross-currency basis spread is an excluded component in the assessment of the effectiveness of these net investment hedges (or cross currency swaps). A qualitative assessment of hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate the hedge may no longer be highly effective, in which case, a quantitative assessment of hedge effectiveness is performed. Concentration of Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities, certificates of deposit, and trade accounts receivable. Cash held with financial institutions may exceed the Federal Deposit Insurance Corporation insurance limits or similar limits in foreign jurisdictions. To date, the Company has not realized any losses on its deposits of cash and cash equivalents. The Company performs ongoing credit evaluations of its customers and, except for government tenders, group purchases, and orders with a letter of credit, its industrial customers often provide a down payment. The Company maintains an allowance for credit losses based upon the expected collectability of all accounts receivable. The Company obtains some of the components in its products from a limited group of suppliers or from a single-source supplier. When these suppliers are unable to meet the Company's supply needs, the Company's production is negatively impacted. Credit is extended to customers based on an evaluation of the customer’s financial condition, and collateral is not required. In certain circumstances, a customer may be required to prepay all or a portion of the contract price prior to transfer of control. During the periods presented, one of the Company's customers accounted for a significant portion of revenues, as set forth below:
| Fiscal Years |  |
| 2025 |  | 2024 |  | 2023 |  |
Canon Medical Systems Corporation | 18.0 | % |  | 17.6 | % |  | 16.5 | % |  |
Canon Medical Systems Corporation accounted for 14.0% and 9.5% of the Company’s accounts receivable as of October 3, 2025 and September 27, 2024, respectively. Inventories, net Inventory is valued at the lower of cost or net realizable value. Costs include materials, labor, external service, and manufacturing overhead and is computed on a first-in-first-out basis. The Company evaluates the carrying value of its inventories taking into consideration such factors as historical and anticipated future sales compared to quantities on hand and the prices the Company expects to obtain for products. The Company adjusts excess and obsolete inventories to net realizable value and write-downs of excess and obsolete inventories are recorded as a component of cost of revenues. The following table summarizes the Company’s inventories, net:
(In millions) | October 3, 2025 |  | September 27, 2024
Raw materials and parts | $ | 228.1 |  |  | $ | 214.5 |
Work-in-process | 31.3 |  |  | 16.2 |
Finished goods | 40.0 |  |  | 34.1 |
Total inventories, net | $ | 299.4 |  |  | $ | 264.8 |
The Company recorded inventory write-downs of $3.8 million, $4.9 million, and $5.6 million in fiscal years ended 2025, 2024, and 2023, respectively. Property, Plant and Equipment, net Property, plant and equipment are stated at cost, net of accumulated depreciation. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or remaining lease term. Land is not subject to depreciation, but land improvements are depreciated over fifteen years. Land leasehold rights and leasehold improvements are depreciated over the lesser of their estimated useful lives or remaining lease terms. Buildings are depreciated up to thirty years. Machinery and equipment are depreciated over a range from three to seven years. Assets subject to lease are depreciated over the lesser of their estimated useful lives or remaining lease terms. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted, and an impairment assessment may be performed on the recoverability of the carrying amounts. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are removed from the accounts. The following table summarizes the Company’s property, plant, and equipment, net:
(In millions) | October 3, 2025 |  | September 27, 2024
Land | $ | 8.6 |  |  | $ | 8.6 |
Buildings and leasehold improvements | 166.3 |  |  | 165.5 |
Machinery and equipment | 217.0 |  |  | 206.5 |
Construction in progress | 36.9 |  |  | 25.0 |
Gross property, plant, and equipment | $ | 428.8 |  |  | $ | 405.6 |
Less: Accumulated depreciation and amortization | (271.0) |  |  | (252.2) |
Total property, plant, and equipment, net | $ | 157.8 |  |  | $ | 153.4 |
The Company recorded depreciation expense of $23.2 million, $21.2 million, and $19.5 million in fiscal years 2025, 2024 and 2023, respectively. Equity Method Investments The Company accounts for its equity investments in privately-held companies under the equity method of accounting if the Company has the ability to exercise significant influence in, but not control of, these investments. The Company records impairment losses on its equity method investments if an impairment exists and is deemed to be other-than-temporary, which is based on various factors, including but not limited to, the length of time the fair value of the investment is below the carrying value, the absence of an ability to recover the carrying amount of the investment, and the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. During fiscal year 2023, the Company recorded a before-tax impairment charge totaling $16.4 million, which is included in other expense, net in the Company's Consolidated Statements of Operations. There was no impairment recorded during fiscal years 2025 and 2024. Marketable Securities The Company's marketable securities consist primarily of financial instruments such as United States treasury securities, United States agency obligations, corporate bonds, commercial paper, money market funds, and equity securities. Marketable Debt Securities The Company's marketable debt securities are classified as available-for-sale. Classification of marketable debt securities is determined at the time of purchase, and the Company reevaluates such classification as of each balance sheet date. Marketable debt securities are recorded at estimated fair value and included in cash and cash equivalents, marketable securities, and other assets within the Consolidated Balance Sheets. Any unrealized gains or losses are included in accumulated other comprehensive loss within the Consolidated Balance Sheets. When the fair value of a marketable debt security declines below its amortized cost basis, any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the security, is recognized in the Consolidated Statements of Operations. When the fair value of a marketable debt security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in other comprehensive loss and are recognized in the Consolidated Statements of Operations only if the Company sells or intends to sell the security before recovery of its cost basis. There were no impairments related to marketable debt securities recorded during fiscal years 2025 and 2024. Marketable Equity Securities Marketable equity securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date and included in other assets within the Consolidated Balance Sheets. All unrealized gains and losses on marketable equity securities are recorded as part of other expense, net in the Company's Consolidated Statements of Operations. See Note 4, Fair Value, for further details. Goodwill and Intangible Assets Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. Purchased intangible assets are carried at cost, net of accumulated amortization, and are included in intangible assets, net in the Company's Consolidated Balance Sheets. Intangible assets with finite lives are amortized over their estimated useful lives of primarily two to seven years using the straight-line method. Impairment of Long-lived Assets, Intangible Assets, and Goodwill The Company reviews long-lived assets and identifiable intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses these assets for impairment based on their estimated undiscounted future cash flows. If the carrying value of the assets exceeds the estimated future undiscounted cash flows, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company evaluates goodwill for impairment at least annually at the beginning of the fourth quarter of each fiscal year or whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation includes consideration of qualitative factors including industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. If the Company determines that a quantitative analysis is necessary, the Company performs a step one analysis, which consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. In fiscal years 2024 and 2023 the Company performed the annual goodwill qualitative impairment test for our two reporting units and determined that, at those dates, it was not more likely than not that the fair values of the reporting units were less than their carrying amount and accordingly recorded no impairment. Loss Contingencies From time to time, the Company is involved in legal proceedings, claims, and government inspections or investigations, customs and duties audits, and other contingency matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise. The Company accrues amounts for probable losses, to the extent they can be reasonably estimated, that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss (including, among other things, probable settlement value). A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. When a loss contingency is probable but not reasonably estimable, the nature of the contingency and the fact that an estimate cannot be made is disclosed. Supplier Finance Programs The Company participates in voluntary supply chain finance programs with a financial intermediary which provide participating suppliers the option to be paid by the intermediary earlier than the original invoice due date. The Company’s responsibility is limited to making payments on the terms originally negotiated with the suppliers, regardless of whether the intermediary pays the supplier in advance of the original due date. As part of participating in these arrangements, the Company generally receives more favorable payment terms from its suppliers. The Company does not receive fees, payments, extended payment terms, or other direct economic benefits from the intermediary. The following table presents the change in the direct supplier financing obligation:
(In millions) | October 3, 2025 |  | September 27, 2024
Confirmed obligations outstanding at the beginning of the period | $ | 2.6 |  |  | $ | 4.2 |
Invoices confirmed during the period | 27.9 |  |  | 31.3 |
Confirmed invoices paid during the period | (27.6) |  |  | (32.9) |
Confirmed obligations outstanding at the end of the period | $ | 2.9 |  |  | $ | 2.6 |
Environmental Obligations The Company's operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport, and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances. In connection with those laws and certain of our past and present operations and facilities, the Company is obligated to indemnify Varian for the cleanup liabilities related to prior corporate restructuring activities. The Company anticipates that it will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these sites (after adjusting for any insurance proceeds or tax benefits received by Varian). As of October 3, 2025 and September 27, 2024, the Company's estimated environmental liability for these sites was $3.2 million and $3.9 million, net of expected insurance proceeds, respectively. Product Warranty The Company warrants most of its products for a specific period of time, usually 12 to 27 months from delivery or acceptance, against material defects. The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty. The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience of product failures, adjusted for current information on repair costs. For new products, estimates include the historical experience of similar products, as well as a reasonable allowance for warranty expenses associated with new products. On a quarterly basis, the Company reviews the accrued warranty costs and updates the historical warranty cost trends, if required. The following table reflects the changes in the Company’s accrued product warranty:
(In millions) | October 3, 2025 |  | September 27, 2024
Accrued product warranty, at beginning of period | $ | 10.8 |  |  | $ | 7.7 |
New accruals charged to cost of revenues | 13.0 |  |  | 21.0 |
Product warranty expenditures | (15.3) |  |  | (17.9) |
Accrued product warranty, at end of period | $ | 8.5 |  |  | $ | 10.8 |
Leases The Company determines if an arrangement is or contains a lease at the inception of an arrangement. The Company's operating lease right-of-use ("ROU") assets represent the right to use an underlying asset over the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets may also include initial direct costs incurred and prepaid lease payments, less lease incentives. Lease liabilities and their corresponding ROU assets are recognized based on the present value of lease payments over the lease term, discounted using the Company's incremental borrowing rate. The Company recognizes operating leases with lease terms of more than twelve months in operating lease assets, current operating lease liabilities, and operating lease liabilities on its Consolidated Balance Sheets. The Company recognizes finance leases with lease terms of more than twelve months in property, plant, and equipment, net, accrued liabilities and other current liabilities, and other long-term liabilities on its Consolidated Balance Sheets. For purposes of calculating lease liabilities and the corresponding ROU assets, the Company's lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Revenue Recognition The Company’s revenues are derived primarily from the sale of hardware and services. The Company recognizes its revenues net of any value-added or sales tax and net of sales discounts. The Company sells a high proportion of its X-ray products to a limited number of OEM customers. X-ray imaging components including X-ray tubes, digital detectors and image-processing tools, and security and inspection products are generally sold on a stand-alone basis. However, the Company occasionally sells its digital detectors, X-ray tubes and imaging processing tools as a package that is optimized for digital X-ray imaging and sells its Linatron® X-ray linear accelerators together with its image processing software and image detection products to OEM customers that incorporate them into their inspection or irradiation systems and processes. Service contracts are often sold with certain security and inspection products and computer-aided detection products. The Company determines revenue recognition through the following steps: •Identification of the contract, or contracts, with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations in the contract •Recognition of revenue when, or as, a performance obligation is satisfied Contracts and Performance Obligations The Company accounts for a contract with a customer when there is an approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the consideration is probable. The Company's performance obligations consist mainly of transferring control of products and services identified in the contracts or purchase orders. For each contract, the Company considers the obligation to transfer products and services to the customer, which are distinct, to be performance obligations. Transaction Price and Allocation to Performance Obligations Transaction prices of products or services are typically based on contracted rates. To the extent that the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method when there is a large number of transactions with similar characteristics or the most likely amount method when there are two possible outcomes, depending on the circumstances of the transaction, to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current, and forecasted) that is reasonably available. The Company allows customers to return specific parts of purchased X-ray tubes for a partial refund credit, which is identified as variable consideration. For sales with a right of return, revenue is reduced and a liability is recorded for expected returns, and an asset is recorded for the right to recover products from customers on settling the liability. The Company recognizes a reduction to revenue and cost of sales at the time of sale and a corresponding refund liability and right of return asset. The Company records this estimate based on the historical volume of product returns and adjusts the estimate on a quarterly basis based on the current quarter sales and current quarter returns. If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation could be sold separately. Recognition of Revenue Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer. Product revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over the term of the service contract. Services are expected to be transferred to the customer throughout the term of the contract, and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer. Disaggregation of Revenue Revenue is disaggregated from contracts between geography and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. Refer to Note 13, Segment Information, for the disaggregation of the Company’s revenue based on reportable operating segments and Note 2, Revenue, for the disaggregation of revenue by geographic region and country. Contract Balances Contract liabilities are included within the deferred revenues, and other long-term liabilities balances in the Consolidated Balance Sheets. The Company does not have any material contract assets. Deferred revenue represents the Company's obligation to transfer goods or services to its customers for which it has already received consideration (or the amount is due) from the customer. The Company's deferred revenue balance primarily relates to contract advances and billings for warranty contracts. Deferred revenue that is estimated to be recognized during the following twelve-month period is recorded as deferred revenues and the remaining portion is recorded as other long-term liabilities in the Consolidated Balance Sheets. Costs to Obtain or Fulfill a Customer Contract The Company has certain costs to obtain and fulfill a customer contract, such as commissions and shipping costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Incremental costs of obtaining contracts that would be recognized over greater than one year are not material. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. These costs are included as a component of cost of revenues. Allowance for Credit Losses The Company evaluates the creditworthiness of customers prior to authorizing shipment for all major sale transactions. On a quarterly basis, the Company considers historical trends, current information and any reasonable and supportable forecasts to determine if an amount should be included in the allowance for credit losses. The Company had an allowance for credit losses of $2.1 million and $1.0 million as of October 3, 2025 and September 27, 2024, respectively. Share-Based Compensation Expense The Company has an equity-based incentive plan that provides for the grant of nonqualified stock options, restricted stock units, and performance stock units to directors, officers, and other employees. The Company also permits employees to purchase shares under the Varex employee stock purchase plan. The Company values stock options granted and the option component of the shares of common stock purchased under the equity-based incentive plans and stock purchased under the employee stock purchase plan using the Black-Scholes option-pricing model. Share-based compensation expense for restricted stock units is measured using the fair value of the Company’s stock on the date of grant and is amortized over the award’s respective service period. The Black-Scholes option-pricing model requires the input of certain assumptions, and changes in the assumptions can materially affect the fair value estimates of share-based payment awards. The Company measures and recognizes expense for all share-based payment awards based on their fair values. Share-based compensation expense recognized in the Consolidated Statements of Operations includes compensation expense for the share-based payment awards based on the grant date fair value estimated in accordance with the guidance on share-based compensation. The Company records forfeitures as they occur. The Company attributes the value of share-based compensation to expense using the straight-line method. The Company considers only the direct tax impacts of share-based compensation awards when calculating the amount of tax windfalls or shortfalls. Vesting of certain performance stock units is linked to the achievement of performance goals based on Adjusted EBITDA margin. Share-based compensation expense for these performance stock units are recognized over the performance period based on the probability of achieving the performance targets. Certain performance stock units include a market condition based on our relative total shareholder return over the performance period compared to a predetermined peer group. The fair value of these awards is determined using a Monte Carlo simulation as of the date of the grant and share-based compensation expense will not be adjusted should the target awards vary from actual awards. For additional information, see Note 11, Employee Stock Plans, included in this report. Software Development Costs Costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized. No costs associated with the development of software have been capitalized as the Company believes its current software development process is essentially completed concurrent with the establishment of technological feasibility. Research and Development Research and development costs are expensed as incurred. These costs primarily include employees’ compensation, consulting fees, and material costs. Taxes on Income Current income tax expense or benefit is the amount of income taxes expected to be payable or receivable for the current year. Deferred income tax liabilities or assets are established for the expected future tax consequences resulting from the differences in financial reporting and tax bases of assets and liabilities. Future changes in tax regulation can have a material impact, including tax rate changes or the realization of deferred tax assets. In addition, we provide reserves for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by the authoritative guidance for accounting for income taxes. A portion of the U.S. general business tax credits for research outside of the financial statement line for research and development ("R&D") have a small degree of uncertainty. A reasonable reserve is maintained on the uncertain portion until either the Internal Revenue Service chooses to audit or the statute of limitation expires. A reserve for R&D is typical for companies that calculate and utilize this general business credit. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense. We regularly evaluate the realizability of our deferred tax assets based on the weight of all available evidence, both positive and negative, including the history of recent earnings and expected future taxable income on a jurisdictional basis and our ability to generate sufficient taxable income in the future to realize the net deferred tax assets. The 2017 Tax Cuts and Jobs Act ("TCJA") included a provision requiring research and development expenditures to be capitalized for tax years beginning after December 31, 2021, which was effective for the Company starting in fiscal year 2023. With the 2025 One Big Beautiful Bill Act ("OBBBA"), this provision will be repealed starting in fiscal year 2026. As a result of this repeal, U.S. taxable income and cash taxes are expected to be lower over the next several years. Foreign Currency Remeasurement and Translation The Company uses the U.S. Dollar predominately as the functional currency of its foreign operations. Gains and losses from remeasurement of foreign currency balances into U.S. Dollars are included in the Consolidated Statements of Operations in other expense, net. For the foreign subsidiaries where the local currency is the functional currency, translation adjustments of foreign currency financial statements into U.S. Dollars are recorded to a separate component of accumulated other comprehensive loss. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the segment measure of profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. The Company adopted this guidance beginning with this annual report and this guidance will be applied to interim periods starting in fiscal year 2026 on a retrospective basis. Refer to Note 13, Segment Information, Recent Accounting Standards or Updates Not Yet Effective In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard responds to investor input by requiring public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements. This standard is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, but early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies to annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 will be effective for the annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating ASU 2023-09 and does not expect it to have a material effect on its consolidated financial statements.

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