customers interested in purchasing the company’s products.
The other questions seek input on making Varian’s products
more efficient and enjoyable to use, and approaches to entice
non-customers to buy its products. Finding the answer to those
questions has helped Varian Medical executives grow the business from $1.6 billion in fiscal 2006 to $2.2 billion in fiscal 2009
(year ended Oct. 2).
Remarkably, Varian’s question-and-answer growth strategy
even fostered expansion during one of the most severe recessions
on record. The company posted a 3 percent gain in net orders to
$2.4 billion, a 13 percent increase in operating earnings to $474
million and a 35 percent jump in working capital to $830 million.
Additionally, net earnings totaled $319 million, a 12 percent increase compared with the $279.5 million the company posted in
fiscal 2008 (year ended Sept. 26, 2008), and net earnings per diluted share improved 15 percent to $2.65.
By the end of fiscal 2009, the company had grown its net order
backlog by 9 percent to $2.1 billion, and built up its cash position
to a solid $554 million. Plus, stockholders’ equity skyrocketed 28
percent to $1.3 billion.“We entered fiscal year 2010 in a very strong
financial position,” President and CEO Timothy E. Guertin said in
a letter within the firm’s 2009 annual report.
That position was enhanced by a 2 percent workforce reduction
and significant decreases in capital expenditures across the company’s three business segments. Revenue increases in two of the
segments also gave the company the financial vitality it needed
to sustain growth through fiscal 2010.
Revenue grew the most in Varian’s X-ray products segment,
which posted $339 million in net orders and a backlog of $121
million. Revenue climbed 9 percent to $331 million, while operating earnings jumped 12. 3 percent to $82 million. The segment overcame a significant drop in orders during the second
and third fiscal quarters, when X-ray equipment manufacturers
reduced inventories of X-ray tubes and flat-panel detectors due
to the recession. Executives said the firm’s flat-panel products
represented more than 40 percent of the segment’s net orders
for the fiscal year.
Other growth drivers of X-ray products revenue in fiscal 2009
included the On-Board Imager image-guidance system for targeted radiotherapy. In October 2008, the company marked the
1,000th installation of the On-Board Imager at Kantonsspital in
The firm also introduced the PaxScan 3030+, a digital imager
that features speeds up to 30 frames per second. Executives
claim the PaxScan allows doctors to monitor interventional procedures, including the placement of catheters within blood vessels, in real time.
Oncology systems sales grew 8 percent to $1.8 billion, while
net orders totaled $1.9 billion and operating earnings shot up 17
percent to $482 million. Though it was not apparent in the segment’s overall financial performance, executives said the Oncology division was adversely affected by capital equipment budget
reductions at North American hospitals, uncertainty over health-
Medical X-ray tubes manufactured by Varian Medical. Revenue in
the company's X-ray products segment grew 9 percent in fiscal
2009. Photo courtesy of Varian Medical Systems Inc.
care reform in the United States, and a proposal from the U.S. government to cut reimbursement rates at freestanding clinics by up
to 40 percent.
“The troubles in North America during fiscal 2009 over-
shadowed many successes for our Oncology Systems business,”
Guertin said.“Annual orders in the international market rose by
11 percent, or 16 percent on a constant currency basis. Europe,
Asia and Latin America all contributed to this growth, demon-
strating there is a demand for cancer-fighting products in un-
Growth drivers of Oncology systems products revenue in fis-
cal 2009 included the Novalis Tx radiosurgery platform, the Rapi-
dArc two-minute radiation therapy treatment system (more than
270 were installed by fiscal year’s end) and the Unique low-energy
accelerator during fiscal 2009, a device that can deliver fast, image-
guided RapidArc treatments. The company also received 510(k)
clearance from the U.S. Food and Drug Administration for its
Acuros radiotherapy treatment system, which enables clinicians
to rapidly calculate patient doses of radiation at an extremely high
rate of speed.
The acquisition last summer of Houston, Texas-based
IKOEmed and IKOEtech, privately-owned suppliers of software
used in the planning of radiotherapy and radiosurgery treatments,
certainly helped the company add to its bottom line in fiscal 2009.
The company spent $2 million to acquire the IKOE assets.
Varian’s“Other Businesses” category includes the firm’s Security and Inspection products group, the Varian Particle Therapy
business, and the Ginzton Technology Center, which conducts research and development projects that support all the company’s
business units. The Other Business category posted an 8. 6 percent
decline in revenue to $85 million, an operating earnings loss of
$19 million, and a more than five-fold drop in capital expenditures to $3 million. Net orders, however, rose 60 percent to $151
million and its backlog nearly doubled to $143 million.