Varian Medical Systems (NYSE:VAR) got a little Wall Street love today, despite reporting significant Q3 headwinds that spurred an adjustment of the company’s full-year guidance.
In light of sluggish revenue growth, "inventory adjustments" in Japan and uncertainty about funding for the company’s ongoing proton therapy project, Varian is now expecting 5% revenue growth in 2013, with diluted EPS in the range of $4.00-$4.04. The company had reported last quarter that it projected full-year earnings in the range of $4.09-$4.14.
The Palo Alto, Calif.-based radiosurgery devices maker’s revenues weren’t as high as the company had hopes, but earnings fell in line with expectations, CEO Dow Wilson said in prepared remarks. Varian’s Q3 medical device tax compliance tab came to $3 million, taking 2¢ per share away from the company’s bottom line.
In total Varian posted $112.8 million in profit, or $1.03 per diluted share, on sales of $726.2 million during the 3rd quarter. That’s a 3.7% bump in earnings and a 3% bump in revenues compared with Q3 last year, when the company posted profits of $108.8 million, or 96¢ per share, on sales of $705.3 million. The $1.03 diluted EPS beat analysts’ consensus estimates by 2¢.
Varian’s revenues took significant hits from "currency headwinds" with the Yen and a "sharp decline" in its Japanese X-ray tube business, Wilson added. The slack in the Japanese business offset gains in other units.
"Decisions by our X-ray tube customers in Japan to reduce inventory levels offset double-digit revenue growth in our flat panel business," Wilson said in prepared remarks. "The X-Ray Products business did a good job offsetting gross margin pressures with tight cost controls. Year to date, orders, revenues and profits are all up in double digits for this business."
Varian ended the quarter with a $2.8 billion backlog, the company said, 4% higher than the backlog reported at this time last year.
The medical device maker didn’t have much better luck during its 2nd quarter. Varian reported in April that Q2 oncology systems revenues were "disappointing, particularly in the U.S.," prompting a more than 7% drop on Wall Street.
VAR shares were up 1.9% to $73.48 as of about 12:25 p.m. today.
