PALO ALTO, Calif., Oct. 27, 2020 /PRNewswire/ --
Fourth Quarter 2020 Summary
Fiscal Year 2020 Summary
(1) Excludes the year-over-year impact of foreign exchange rates and growth from CTSI and Interventional Solutions businesses
Varian (NYSE: VAR) today announced its fourth quarter fiscal year 2020 results.
"Our fourth quarter performance continues to reaffirm the criticality of radiation therapy as a core treatment modality. I am proud of our dedicated employees who ensured our customers and their patients continued to have uninterrupted access to our innovative technology and solutions," said Dow Wilson, Chief Executive Officer of Varian. "While the pandemic continues to be a headwind, we are entering our next fiscal year with significant operating momentum, and we remain focused on executing our strategic growth priorities and closing the transaction with Siemens Healthineers."
As previously announced on August 2, 2020, Varian entered into a definitive agreement to combine with Siemens Healthineers AG (Frankfurt: SHL) in an all-cash transaction valued at $16.4 billion on a fully diluted basis. On October 15, 2020, Varian's stockholders voted in favor of the proposal to adopt the merger agreement with Siemens Healthineers. The transaction is expected to close in the first half of calendar year 2021, subject to regulatory approvals and other customary closing conditions.
Summary
(Dollars and shares in millions, except per share amounts)
Q4 2020
Q4 2019
Y/Y
FY 2020
FY 2019
Y/Y
Gross margin as a percentage of revenues
GAAP net earnings attributable to Varian
GAAP net earnings per share - diluted
Net cash provided by operating activities
Non-GAAP net earnings attributable to Varian (1)
Non-GAAP net earnings per share - diluted (1)
Shares used in computing GAAP and non-GAAP net earnings per diluted share
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 and amortization of inventory step-up, acquisition and integration-related expenses or benefits and in-process research and development, impairment charges, restructuring charges, significant litigation charges or benefits, legal costs, gains and losses on equity investments, and significant non-recurring tax expense or benefits. Reconciliation of GAAP and non-GAAP financial measures can be found at the end of the press release.
The company ended the quarter with $766 million in cash and cash equivalents and $355 million in debt. Net cash provided by operating activities was $266 million in the fourth quarter.
Oncology Systems Segment
Oncology Systems revenues totaled $800 million for the fourth quarter and $3.0 billion for the full year, both down 2%.
Gross orders for the fourth quarter were $1.0 billion, down 8%, and $3.3 billion for the full year, down 4%. Fourth quarter gross orders in the Americas were down 19%, including North America down 17%. In EMEA, gross orders fell 4%. In Asia-Pacific, gross orders were up 14%.
Proton Solutions Segment
Proton Solutions revenues totaled $38 million for the fourth quarter, down 8%, and $121 million for the full year, down 16%. The company received one new system order in the fourth quarter and four new system orders for the full year. Operating earnings in the quarter for Proton were impacted by $14 million in asset write-offs and bad debt reserves.
Other Segment
Revenues for the Other segment were $12 million for the fourth quarter, down 33%, and $49 million for the full year. The Other segment is comprised of the Interventional Solutions business, including cryoablation, embolic microspheres, and microwave ablation. Additionally, it includes investments in cardiac radioablation.
Non-GAAP Adjustments
This quarter, our GAAP net earnings and GAAP EPS included $15 million in gains on public and private equity investments, $11 million in acquisition expenses, $11 million in litigation charges and legal costs, and a $9 million impairment on our available-for-sale investments. As a reminder, in the fourth quarter of fiscal year 2019, GAAP net earnings and GAAP EPS included a charge of $19 million for a change in fair value of contingent consideration.
Investor Conference Call
In light of the pending transaction with Siemens Healthineers, Varian will not be hosting a conference call for its fourth quarter of fiscal year 2020 earnings.
About Varian
At Varian, we envision a world without fear of cancer. For more than 70 years, we have developed, built and delivered innovative cancer care technologies and solutions for our clinical partners around the globe to help them treat millions of patients each year. With an Intelligent Cancer Care approach, we are harnessing advanced technologies like artificial intelligence, machine learning and data analytics to enhance cancer treatment and expand access to care. Our 10,000 employees across 70 locations keep the patient and our clinical partners at the center of our thinking as we power new victories in cancer care. Because, for cancer patients everywhere, their fight is our fight. For more information, visit http://www.varian.com and follow @VarianMedSys on Twitter.
Forward-Looking Statements
Except for historical information, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning the timing of the company's acquisition by Siemens Healthineers, company's future orders and the anticipated impact of the COVID-19 pandemic on our business; and any statements using the terms "could," "believe," "expect," "promising," "outlook," "should," "well-positioned," "will" or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company's actual results to differ materially from those anticipated. Such risks and uncertainties include the future impact of the COVID-19 pandemic on our business, including but not limited to, the impact on our workforce, operations, supply chain, demand for our products and services, and our financial results and condition; our ability to successfully manage the challenges associated with the COVID-19 pandemic; our ability to achieve expected synergies from acquisitions; risks associated with integrating recent acquisitions; global economic conditions and changes to trends for cancer treatment regionally; currency exchange rates and tax rates; the impact of the Tax Cuts and Jobs Act; the impact of the Affordable Health Care for America Act (including excise taxes on medical devices) and any further healthcare reforms (including changes to Medicare and Medicaid), and/or changes in third-party reimbursement levels; recent and potential future tariffs, cross-border trade restrictions or a global trade war; demand for and delays in delivery of the company's products; the company's ability to develop, commercialize and deploy new products; the company's ability to meet Food and Drug Administration (FDA) and other regulatory requirements, regulations or procedures; changes in regulatory environments; risks associated with the company providing financing for the construction and start-up operations of particle therapy centers, challenges associated with commercializing the company's Proton Solutions business; challenges to public tender awards and the loss of such awards or other orders; the effect of adverse publicity; the company's reliance on sole or limited-source suppliers; the company's ability to maintain or increase margins; the impact of competitive products and pricing; the potential loss of key distributors or key personnel; challenges related to entering into new business lines; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Siemens Healthineers; the failure to obtain certain required regulatory approvals or the failure to satisfy any of the other closing conditions to the completion of the merger; risks related to disruption of management's attention from the company's ongoing business operations due to the merger; the effect of the announcement of the merger on the ability of the company to retain and hire key personnel and maintain relationships with its customers, suppliers, distributors and others with whom it does business, or on its operating results and business generally; the ability to meet expectations regarding the timing and completion of the merger; and the other risks listed from time to time in the company's filings with the Securities and Exchange Commission, which by this reference are incorporated herein. For additional information concerning factors that could cause actual results and events to differ materially from those projected herein, please refer to our Form 10-K for the year ended September 27, 2019 and subsequent Forms 8-K and 10-Q filed with the Securities and Exchange Commission. The company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise.
Varian has not filed its Form 10-K for the year ended October 2, 2020. As a result, all financial results described here should be considered preliminary, and are subject to change to reflect any necessary adjustments, completion of purchase accounting, or changes in accounting estimates, that are identified prior to the time the company files the Form 10-K.
Varian Medical Systems, Inc. and Subsidiaries
Preliminary Condensed Consolidated Statements of Earnings
(Unaudited)
(Dollars and shares in millions, except per share amounts)