On July 25, 2018 Varian (NYSE: VAR) reported its third quarter fiscal year 2018 results (Press release, Varian Medical Systems, JUL 25, 2018, View Source [SID1234527868]). All comparisons in this announcement are year-over-year unless noted otherwise.
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GAAP Net Earnings, GAAP Net Earnings per Diluted Share, Non-GAAP Net Earnings and Non-GAAP Net Earnings per Diluted Share refer only to continuing operations.
Non-GAAP Net Earnings and Non-GAAP Net Earnings per Diluted Share are defined as GAAP Net Earnings and GAAP Net Earnings per Diluted Share adjusted to exclude the amortization of intangible assets, acquisition-related expenses and benefits, restructuring and impairment charges, significant litigation charges or benefits, legal costs and significant effects of tax legislation.
"In the third quarter, the team continued to deliver robust results, and we strengthened our leadership in radiation therapy with strong orders and revenue performance," said Dow Wilson, Chief Executive Officer of Varian. "Investment will continue to be a key driver of our long-term growth and value creation, and we made strategic investments in the quarter in R&D, Sales, and Marketing to support the company’s future innovation and growth strategies."
The company ended the quarter with $536 million in cash and cash equivalents and $18 million of debt. Net cash provided by operating activities was $102 million. During the quarter, the company invested $39 million to repurchase 325,000 shares of common stock.
Oncology Systems Segment
In the fiscal third quarter, Oncology revenues totaled $667 million, up 18 percent in dollars and 16 percent in constant currency. Gross orders were $763 million, up 11 percent in dollars and 9 percent in constant currency. Gross orders in the Americas increased 9 percent in dollars and in constant currency, driven by North America at 9 percent. In EMEA, gross orders rose 27 percent in dollars and 21 percent in constant currency; in APAC, gross orders decreased 7 percent in dollars and 9 percent in constant currency. Operating earnings for the segment increased 20 percent.
Particle Therapy Segment
In the fiscal third quarter, Particle Therapy revenues totaled $42 million, down 39 percent. The company did not book any new ProBeam orders in the quarter.
Acquisition-Related Expenses and Impairment Charges in Q3
Varian’s GAAP net earnings include acquisition-related expenses totaling $13 million for the quarter, primarily driven by acquisition costs and the loss related to hedging the Australian dollar purchase price of Sirtex, partially offset by the breakup fee received from Sirtex in connection with the termination of the acquisition. Additionally, GAAP net earnings include an impairment charge of $11 million related to the expected refinancing of the Maryland Proton Treatment Center in Baltimore. Together, these costs, and their associated tax effects, reduced Varian’s net earnings in the third quarter of fiscal 2018 by $0.20 per diluted share on a GAAP basis, and were excluded from non-GAAP results.
FY18 Annual Guidance Updated
Considering the financial and operational performance year-to-date and the impact of currency and tariffs, fiscal year 2018 guidance is updated to the following:
Revenue growth range of 9 percent to 11 percent
Non-GAAP Operating earnings as a percentage of revenues range of 17.5 percent to 18.0 percent
Non-GAAP effective tax rate of 20 percent
Weighted average diluted shares of 93 million
Non-GAAP Net Earnings per diluted share range of $4.43 to $4.48
Cash flows from operations range of $475 million to $550 million
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 third quarter fiscal year 2018 conference call at 2:00 p.m. Pacific Time today. To access the live webcast or replay of the call, visit the Investor Relations page on our website at www.varian.com/investors. 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 conference ID 13680748. The teleconference replay will be available through 5:00 p.m. Pacific Time, Friday, July 27, 2018.