Why Are Varex Imaging Shares Tumbling Today?

Varex Imaging Corporation VREX reported Q1 FY22 sales of $198.8 million, up from $177.1 million a year ago and missing the consensus of $208.27 million.

• Operating cash flow was $11 million. At the end of the first quarter, cash equivalents improved by $13 million sequentially to $158 million.
• Varex's revenues decreased 12% sequentially, with both the medical and industrial segments declining from Q4 FY21. 
• Compared to Q1 FY21, total revenue increased 12%, with the Medical segment up 12% and the Industrial segment up 14%. 
• "Demand for our products remained strong in the first quarter of fiscal 2022, but supply chain constraints limited our ability to fulfill orders as planned. This resulted in quarterly revenue of $199 million, which was below our expectations," said Sunny Sanyal, CEO.
• The adjusted gross margin remained stagnant at almost 34%, slightly below the Company's expectations, but reasonable in the face of ongoing supply chain and logistics-related challenges, added Sanyal in the Q1 earnings conference call.
• In contrast, the adjusted operating margin improved from 7.9% to $11.4%.
• Lower operating expenses helped drive adjusted EPS of $0.25 below the consensus of $0.28.
• Outlook: For Q2 FY22, Varex Imaging expects revenues of $190 million - $220 million, compared to the consensus of $210.95 million.
• The Company expects adjusted EPS of $0.15 - $0.40, versus the consensus estimate of $0.33.
• Price Action: VREX shares are trading 10.30% lower at $23.97 during the market session on the last check Wednesday.