Table of ~~generally accepted accounting principles may materially and adversely affect Varex’s operating results.~~

Varex prepares its financial statements in accordance with GAAP. These principles are subject to interpretation by the FASB, American Institute of Certified Public Accountants, the SEC, and various other regulatory and/or accounting bodies. New accounting pronouncements, or a change in interpretations of, or its application of, existing principles can have a significant effect on Varex’s reported results and may even affect its reporting of transactions completed before a change is announced. In addition, when Varex is required to adopt new accounting standards, Varex’s methods of accounting for certain items may change, which could cause its results of operations to fluctuate from period to period, make it more difficult to compare its financial results to prior periods, and could cause Varex to delay required filings under the Exchange Act.

As its operations evolve over time, Varex may introduce new products and/or new technologies that require Varex to apply different accounting principles, including ones regarding revenue recognition, than Varex has applied in past periods. The application of different types of accounting principles and related potential changes may make it more difficult to compare its financial results from quarter to quarter, and the trading price of Varex common stock could suffer or become more volatile as a result.

Environmental laws impose compliance costs on ~~Varex’s~~our business and may also result in liability.

~~Varex is~~We are subject to environmental laws around the world. These laws regulate many aspects of ~~its~~our operations, including ~~its~~our handling, storage, transport, and disposal of hazardous substances, such as the chemicals and materials that ~~Varex uses~~we use in the course of ~~its~~our manufacturing operations. They can also impose cleanup liabilities, including with respect to discontinued operations. As a consequence, ~~Varex~~we can incur significant environmental costs and liabilities, some recurring and others not recurring. Although ~~it follows~~we follow procedures intended to comply with existing environmental laws, ~~Varex,~~we, like other businesses, may mishandle or inadequately manage hazardous substances used in ~~its~~our manufacturing operations and can never completely eliminate the risk of contamination or injury from certain materials that ~~it uses~~we use in ~~its~~our business and, therefore, itwe cannot completely eliminate the prospect of resulting claims and damage payments. ~~Varex~~We may also be assessed fines and/or other penalties for failure to comply with environmental laws and regulations. Insurance has provided coverage for portions of cleanup costs resulting from historical occurrences, but ~~Varex does~~we do not expect to maintain insurance coverage for costs or claims that might result from any future contamination.

Future changes in environmental laws could also increase ~~its~~our costs of doing business, perhaps significantly. Several countries, including some in the EU, now require medical equipment manufacturers to bear certain disposal costs of products at the end of the product’s useful life, thereby increasing its costs. The EU has also adopted directives that may lead to restrictions on the use of certain hazardous substances or other regulated substances in some of ~~its~~our products sold there. These directives, along with another that requires substance information to be provided upon request, could increase ~~Varex’s~~our operating costs in order to maintain ~~its~~our access to certain markets. All of these costs, and any future violations or liabilities under environmental laws or regulations, could have a material adverse effect on ~~its~~our business.

~~Fulfilling obligations incidental~~Failure to ~~being a public company place significant demands on Varex’s management, administrative,~~maintain effective internal controls and ~~operational resources, including accounting and information technology resources.~~procedures could negatively impact us.

As a public company, Varex is subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), and is required to prepare its financial statements according to the rules and regulations required by the SEC. The Exchange Act requires that Varex file annual, quarterly, and current reports. Varex’s failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject it to penalties under federal securities laws, cause it to be out of compliance with applicable stock exchange listing requirements, and expose it to lawsuits and restrict its ability to access financing. For example, as a result of the delayed filing of our 2019 Annual Report on Form 10-K, we received a notification letter from Nasdaq

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advising us that we were not in compliance with Nasdaq listing requirements. While we promptly regained compliance with the Nasdaq listing requirements, if we had failed to regain compliance in a timely manner, it would have negatively impacted Varex.

~~Varex~~ We must, among other things, ~~establish and~~ maintain effective internal controls and procedures for financial reporting and disclosure purposes. In the past, we have not always been successful in maintaining effective internal controls and procedures. Internal control over financial reporting is complex and may be revised over time to adapt to changes in ~~Varex’s~~our business or changes in applicable accounting rules. ~~As described in the following risk factor, Varex has identified material weaknesses in its internal control over financial reporting. Varex~~We cannot assure that ~~its~~our internal control over financial reporting will be effective in the future or that ~~additional~~ material weaknesses will not be discovered with respect to a prior period for which it had previously believed that internal controls were effective.

~~Matters impacting Varex’s~~ If our internal controls and procedures are not effective, our financial statements may cause Varex to be unable to report its financial information on a timely basis or may cause Varex to restate previously-issued financial information, thereby subjecting Varex to adverse regulatory consequences, including sanctions or investigations bynot accurately reflect the ~~SEC or in respect~~results of ~~violations of applicable stock exchange listing rules. There~~our business and operations. In addition, there could also be a negative reaction in the financial markets due to a loss of investor confidence in ~~Varex~~us and the reliability of ~~its~~our financial statements, which could affect ~~Varex’s stock price.~~

~~Varex identified material weaknesses in its internal control over financial reporting which, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact~~ our stock price.

As further described in Item 9A in our Annual Report on Form 10-K, for the fiscal year ended October 2, 2020, management determined that Varex’s internal control over financial reporting and its disclosure controls and procedures were not effective and that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified material weaknesses within our risk assessment process and control environment, which in turn, contributed to additional material weaknesses related to (1) inventory and cost of sales, and (2) financial reporting. Until remediated, these material weaknesses could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected on a timely basis. There can be no assurance that the remedial measures being implemented by Varex's management will be successful. In addition, because of the COVID-19 pandemic, a larger number of Varex’s employees are working remotely, which may make it harder to remediate existing material weaknesses and might make it harder to maintain proper internal controls over financial reporting. If Varex is unable to remediate the material weaknesses, or is otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, Varex's ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject Varex to litigation or investigations requiring management resources and payment of legal and other expenses, including civil penalties, negatively affect investor confidence in our financial statements and adversely impact our stock price.

Risks Relating to Our Indebtedness

~~Varex has~~We have significant debt obligations that could adversely affect ~~its~~our business, profitability and ability to meet ~~its~~our obligations.

As of ~~October 2, 2020, Varex’s~~September 30, 2022, our total combined indebtedness was approximately ~~$511.3~~$449.7 million. The borrowings under ~~Varex’s~~our unsecured convertible senior notes due 2025 (the “Convertible Notes”) bear interest at a fixed rate of 4.00% and borrowings under ~~Varex’s senior secured notes~~our Senior Secured Notes due 2027 (the “Senior Secured Notes”) bear interest at a fixed rate of 7.875%.

~~Varex's~~ Our debt could potentially have important consequences to ~~Varex~~us and ~~its~~our investors, including:

•limiting ~~Varex’s~~our flexibility in planning for, or reacting to, changes in ~~its~~our business and the industry; ~~and~~

•limiting ~~Varex’s~~our ability to borrow additional funds as needed or increasing the costs of any such ~~borrowing.~~borrowing;

•make it more difficult for us to satisfy our obligations, including our debt obligations;

•increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest;

•require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes;

•place us at a disadvantage compared to competitors that may have proportionately less debt; and

•limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements.

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If ~~Varex’s~~our cash requirements in the future are greater than expected, ~~its~~our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and ~~Varex~~we may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to refinance ~~Varex’s~~our debt. For example, holders of the Convertible Notes will have the right to require ~~Varex~~us to repurchase all or a portion of the Convertible Notes on the occurrence of a fundamental change at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. Further, if a make-whole fundamental change as defined in the Indenture governing the Convertible Notes occurs prior to the maturity date of the Convertible Notes, ~~Varex~~we will in some cases be required to increase the conversion rate for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change. ~~On the conversion of the Convertible Notes, unless Varex elects~~Unless we elect to deliver solely shares of common stock to settle ~~such~~a conversion of the Convertible Notes (other than paying cash in lieu of delivering any fractional share), ~~Varex~~we will be required to make cash payments for ~~the~~those Convertible Notes being converted. However, ~~Varex~~we may not have enough available cash or be able to obtain financing at the time ~~Varex is~~we are required to make such repurchases of the Convertible Notes surrendered or pay cash with respect to the Convertible Notes being converted.

Despite our substantial indebtedness, we may still be able to incur significantly more debt. This could intensify the risks described above.

We and our subsidiaries may be able to incur substantial indebtedness in the future. As of ~~October 2, 2020,~~September 30, 2022, we had approximately $100 million of additional available borrowing capacity (subject to borrowing base availability) under the ~~new~~ revolving credit agreement that we entered into on September 30, 2020 (the “Asset-Based Loan”, or "ABL Facility"). In addition to any amounts that might be available to us for borrowing under the ABL Facility, subject to certain conditions, we will have the right to request an increase of aggregate commitments under the ABL Facility by an aggregate amount of up to $75 million by obtaining additional commitments either from one or more of the lenders under the ABL Facility or other lending institutions.

Although the ABL Facility and the indenture governing our Senior Secured Notes contain restrictions on our and our subsidiaries’ ability to incur additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Furthermore, the covenants in the indenture governing our Convertible Notes do not restrict the incurrence of indebtedness by the company or any of its subsidiaries, and the covenants that may be contained in any future debt instruments could allow us to incur a significant amount of additional indebtedness.

The more leveraged we become, the more we, and in turn holders of our notes, will be exposed to certain risks described above under ~~“— Varex has~~“Risks Relating to Our Indebtedness—We have significant debt obligations that could adversely affect ~~its~~our business, profitability and ability to meet ~~its~~our obligations.”

The ABL Facility and the indenture governing our Senior Secured Notes impose significant operating and financial restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our ~~long term~~long-term interests and may limit our ability to make payments on the notes.

Our ABL Facility and the indenture governing our Senior Secured Notes impose significant operating and financial restrictions on ~~us.~~

~~These restrictions~~us limit our ability, among other things, to:

•incur, assume or permit to exist additional indebtedness (including guarantees thereof);

•pay dividends or certain other distributions on our capital stock or repurchase our capital stock or prepay subordinated indebtedness;

•prepay, redeem or repurchase certain debt;

•issue certain preferred stock or similar equity securities;

•incur liens on assets;

•make certain loans, investments or other restricted payments;

•allow to exist certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us;

•engage in transactions with affiliates;

•alter the business that we conduct; and

•sell certain assets or merge or consolidate with or into other companies.

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As a result of these restrictions, we may be:

•limited in how we conduct our business;

•unable to raise additional debt or equity financing to operate during general economic or business downturns; or

•unable to compete effectively or to take advantage of new business opportunities.

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A breach of the covenants under the indenture governing our Senior Secured Notes or the ABL Facility could result in an event of default under the applicable indebtedness. Such a default, if not cured or waived, may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt that is subject to an applicable cross-acceleration or cross-default provision. In addition, an event of default under the ABL Facility would permit the lenders under the ABL Facility to terminate all commitments to extend further credit under the ABL Facility. Furthermore, if we were unable to repay the amounts due and payable under the ABL Facility, those lenders could proceed against the collateral securing such indebtedness. In the event our lenders or holders of the notes offered hereby accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

Our ability to continue to have the necessary liquidity to operate our business may be adversely impacted by a number of factors, including uncertain conditions in the credit and financial markets, which could limit the availability and increase the cost of financing. A deterioration of our results of operations and cash flow resulting from decreases in consumer spending, could, among other things, impact our ability to comply with the fixed charge coverage ratio contained in our ABL Facility.

Our historical sources of liquidity to fund ongoing cash requirements include cash flows from operations, cash and cash equivalents, borrowings through our previous credit facility and convertible debt offerings. The sufficiency and availability of credit may be adversely affected by a variety of factors, including, without limitation, the tightening of the credit markets, including lending by financial institutions who are sources of credit for our borrowing and liquidity; an increase in the cost of capital; the reduced availability of credit; our ability to execute our strategy; the level of our cash flows, which will be impacted by customer demand for our products; compliance with a fixed charge coverage ratio that is included in our ABL Facility, interest rate fluctuations and the adverse impact of the COVID-19 outbreak on the U.S. and world-wide economies and on our business. ~~Interest rates in the U.S. generally increased in fiscal 2018 and 2019, but decreased in fiscal 2020.~~ We cannot predict the future level of interest rates or the effect of any increase in interest rates on the availability or aggregate cost of our borrowings. We cannot be certain that any additional required financing, whether debt or equity, will be available in amounts needed or on terms acceptable to us, if at all.

The ABL Facility contains a minimum Fixed Charge Coverage Ratio of 1.00 to 1.00 that is tested when excess availability under the ABL is less than the greater of (i) 10.0% of the ~~Line~~Loan Cap (the lesser of (a) the aggregate commitments under the ABL Facility and (b) the aggregate borrowing base) and (ii) $7.5 million. If we have to borrow in excess of 10.0% of the ~~Line~~Loan Cap and $7.5 million, and we do not increase our earnings, we also would be at risk of not being in compliance with the ABL Facility’s fixed charge coverage ratio. Compliance with the fixed charge coverage ratio is dependent on the results of our operations, which are subject to a number of factors including current economic conditions. Adverse developments in the economy, including as a result of the COVID-19 outbreak, could lead to reduced spending by our customers and end-users which could adversely impact our net sales and cash flow, which could affect our ability to comply with the fixed charge coverage ratio. In addition, the ABL Facility contains other affirmative and negative covenants that restrict ~~Varex’s~~our operating and financing activities. These provisions may limit our ability to, among other things, incur future indebtedness, contingent obligations or liens, guarantee indebtedness, make certain investments and capital expenditures, sell stock or assets, pay dividends and consummate certain mergers or acquisitions. Failure to comply with the fixed charge coverage ratio and other covenants, including the requirement to timely deliver financial statements within applicable grace periods, could result in an event of default. Upon an event of default, if the ABL Facility is not amended or the event of default is not waived, the lender could declare all amounts then outstanding, together with accrued interest, to be immediately due and payable. If this happens, ~~Varex~~we may not be able to make those payments or borrow sufficient funds from alternative sources to make those payments. Even if ~~Varex~~we were to obtain additional financing, that financing may be on unfavorable terms.

We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. Any future refinancing of our indebtedness could be at higher interest

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rates and may require us to comply with more onerous covenants which could further restrict our business operations. Additionally, the ~~Indenture~~indenture relating to our notes will limit the use of the proceeds from any disposition of our assets. As a result, the ~~Indenture~~indenture may prevent us from using the proceeds from such dispositions to satisfy our debt service obligations.

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Our credit rating and ability to access well-functioning capital markets are important to our ability to secure future debt financing on acceptable terms. Our credit ratings may not reflect all risks associated with an investment in our secured notes.

Our access to the debt markets and the terms of such access depend on multiple factors including the condition of the debt capital markets, our operating performance and our credit ratings. These ratings are based on a number of factors including an assessment of our financial strength and financial policies. Our borrowing costs will be dependent to some extent on the rating assigned to our debt. However, there can be no assurance that any particular rating assigned to us will remain in effect for any given period of time or that a rating will not be changed or withdrawn by a rating agency if, in that rating agency’s judgment, future circumstances relating to the basis of the rating so warrant. Incurrence of additional debt by us could adversely affect our credit rating. Any disruptions or turmoil in the capital markets or any downgrade of our credit rating could adversely affect our cost of funds, liquidity, competitive position and access to capital markets, which could materially and adversely affect our business operations, financial condition and results of operations. In addition, downgrading the credit rating of our debt securities or placing us on a watch list for possible future downgrading would likely have an adverse effect on the market price of our securities.

~~Varex~~We entered into certain hedging positions that may affect the value of the Convertible Notes and the volatility and value of ~~Varex’s~~our common stock.

In connection with the issuance of the Convertible Notes, ~~Varex~~we entered into certain convertible note hedge transactions. These hedge transactions are expected generally to reduce potential dilution of our common stock on any conversion of the Convertible Notes or offset any cash payments we are required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction or offset subject to a cap. The counterparties to these hedging positions or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to ~~Varex’s~~our common stock or purchasing or selling ~~Varex’s~~our common stock in secondary market transactions prior to the maturity of the Convertible Notes (and are likely to do so during any observation period related to a conversion of Convertible Notes or following any repurchase of Convertible Notes by ~~Varex~~us on any fundamental change repurchase date or otherwise). This activity could cause or avoid an increase or a decrease in the market price of ~~Varex~~our common stock or the Convertible Notes. In addition, if any such hedging positions fail to become effective, the counterparties to these hedging positions or their respective affiliates may unwind their hedge positions, which could adversely affect the value of ~~Varex~~our common stock.

Risks Relating to Our Common Stock

The trading price of ~~Varex’s~~our common stock may decline or fluctuate significantly and fluctuations in ~~Varex’s~~our operating results, including quarterly revenues, and margins, may cause ~~its~~our stock price to be volatile, which could cause losses for ~~its~~our stockholders.

In the past year, ~~Varex's~~our stock price has ranged from a low of ~~$10.37~~$18.90 to a high of ~~$33.00. Varex~~$32.65. We cannot guarantee that an active trading market will be sustained for ~~its~~our common stock. Nor can ~~Varex~~we predict the prices at which shares of ~~its~~our common stock may trade. ~~Varex has~~We have experienced and ~~expects~~expect in the future to experience fluctuations in ~~its~~our operating results, including revenues and margins, from period to period. These fluctuations may cause ~~Varex’s~~our stock price to be volatile, which could cause losses for ~~its~~our stockholders.

~~Varex’s~~ Our quarterly and annual operating results, including ~~its~~our revenues and margins, may be affected by a number of other factors, including:

•the introduction and timing of announcement of new products or product enhancements by ~~Varex~~us and ~~its~~our competitors;

•~~change~~changes in ~~its~~our or ~~its~~our competitors’ pricing or discount levels;

•changes in foreign currency exchange rates and other economic uncertainty;

•changes in import/export regulatory regimes including the imposition of tariffs on our products or those of our customers;

•changes in the relative portion of ~~its~~our revenues represented by ~~its~~our various products, including the relative mix between higher margin and lower-margin products;

•~~the ability to identify and remediate significant deficiencies and material weaknesses in internal controls;~~

•changes in the relative portion of ~~its~~our revenues represented by ~~its~~our international region as a whole and by regions within the overall region, as well as by individual countries (notably, those in emerging markets);

•fluctuation in ~~its~~our effective tax rate, which may or may not be known to ~~Varex~~us in advance;

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•the availability of economic stimulus packages or other government funding, or reductions thereof;

•disruptions in the supply or changes in the costs of raw materials, labor, product components or transportation services;

•changes to ~~its~~our organizational structure, which may result in restructuring or other charges;

•disruptions in ~~its~~our operations, including ~~its~~our ability to manufacture products, caused by events such as earthquakes, fires, floods, terrorist attacks or the outbreak of epidemic diseases;

•the unfavorable outcome of any litigation or administrative proceeding or inquiry, including governmental audits, as well as ongoing costs associated with legal proceedings and governmental audits; and

•accounting changes and adoption of new accounting pronouncements.

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Because many of ~~Varex’s~~our operating expenses are based on anticipated capacity levels, and a high percentage of these expenses are fixed for the short term, a small variation in the timing of revenue recognition can cause significant variations in operating results from quarter to quarter. If ~~Varex’s~~our gross margins fall below the expectation of securities analysts and investors, the trading price of ~~Varex~~our common stock may decline.

Conversion of the Convertible Notes may dilute the ownership interest of ~~Varex’s~~our stockholders or may otherwise depress the market price of ~~Varex’s~~our common stock.

The conversion of the Convertible Notes may dilute the ownership interests of ~~Varex’s~~our stockholders. On conversion of the Convertible Notes, ~~Varex has~~we have the option to pay or deliver, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock. If ~~Varex elects~~we elect to settle our conversion obligation in shares of common stock or a combination of cash and shares of common stock, any sales of ~~Varex~~our common stock issuable on such conversion could adversely affect prevailing market prices of ~~Varex’s~~our common stock. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of ~~Varex’s~~our common stock, any of which could depress the market price of ~~Varex’s~~our common stock.

The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditions for optional conversion of the Convertible Notes by holders are met before the close of business on the business day immediately preceding June 1, 2025, holders of the Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option. If ~~Varex elects~~we elect to satisfy our conversion obligation by settling all or a portion of ~~its~~our conversion obligation in cash, it could adversely affect ~~Varex’s~~our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, ~~Varex~~we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of ~~Varex~~our net working capital and may seriously harm ~~Varex’s~~our business.

Certain provisions in ~~Varex’s~~our Amended and Restated Certificate of Incorporation, ~~its~~our Amended and Restated Bylaws, ~~its~~our Indenture, and of Delaware law, may prevent or delay an acquisition of ~~Varex,~~our, which could decrease the trading price of ~~Varex’s~~our common stock.

~~Varex’s~~Our Amended and Restated Certificate of Incorporation, ~~and~~our Amended and Restated Bylaws, ~~contain,~~ and Delaware law ~~contains,~~contain, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with ~~Varex’s~~our board of directors rather than to attempt a hostile takeover. These provisions include, among others:

•the inability of ~~Varex’s~~our stockholders to call a special meeting;

•the inability of ~~Varex’s~~our stockholders to act without a meeting of stockholders;

•rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;

•the right of ~~Varex’s~~our board of directors to issue preferred stock without stockholder approval;

•~~the division of Varex’s board of directors into three classes of directors, with each class serving a staggered three-year term,~~ and, this classified board provision could have the effect of making the replacement of incumbent directors more time-consuming and difficult, until the 2022 annual meeting of stockholders, after which directors will be elected annually;

•~~a provision that stockholders may only remove directors with cause while the board is classified;~~

•the ability of ~~Varex’s~~our directors, and not stockholders, to fill vacancies on ~~Varex’s~~our board of ~~directors; and,~~directors.

•the requirement that the affirmative vote of stockholders holding at least 66 2/3% of Varex’s voting stock is required to amend certain provisions in Varex’s Amended and Restated Certificate of Incorporation (relating to the term and removal of its directors, the filling of its board vacancies, the calling of special meetings of stockholders, stockholder action by written

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consent, the elimination of liability of directors to the extent permitted by Delaware law and indemnification of directors and officers), although this requirement will expire on the completion of the 2021 annual meeting of stockholders, after which Varex's Amended and Restated Certificate of Incorporation may be amended by the affirmative vote of the holders of at least a majority of the outstanding voting stock.

In addition, because ~~Varex~~we did not elect to be exempt from Section 203 of the Delaware General Corporation Law (the “DGCL”), this provision could also delay or prevent a change of control that stockholders may favor. Section 203 provides that, subject to limited exceptions, persons that acquire, or who are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation, or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless: (1) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (2) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced; or (3) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.

These provisions are not intended to make ~~Varex~~us immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that ~~Varex’s~~our board of directors determines is not in the best interests of ~~Varex~~us and ~~Varex’s~~our stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

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Furthermore, certain provisions in ~~Varex’s Indenture~~our indenture governing the Convertible Notes may make it more difficult or expensive for a third party to acquire ~~Varex.~~us. For example, ~~the Indenture~~our indenture requires ~~Varex,~~us, at the holders’ election, to repurchase the Convertible Notes for cash on the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts ~~its~~our Convertible Notes in connection with a make-whole fundamental change. A takeover of ~~Varex~~us may trigger the requirement that we repurchase the Convertible Notes or increase the conversion rate, which could make it costlier for a third party to acquire ~~Varex. Varex’s~~us. Our Indenture also prohibits ~~Varex~~us from engaging in a merger or acquisition unless, among other things, the surviving entity assumes the obligations under the Convertible Notes and ~~Varex’s~~our Indenture. These and other provisions in ~~Varex’s Indenture~~our indenture could deter or prevent a third party from acquiring ~~Varex~~us even when the acquisition may be favorable to holders of the Convertible Notes or ~~Varex’s~~our stockholders.

Liabilities related to ~~Varex’s~~our operations when ~~it was~~we were part of Varian, or liabilities associated with ~~its~~our spin-off from Varian, could materially and adversely affect ~~Varex’s~~our business, financial condition, results of operations, and cash flows.

~~Varex~~ We entered into a Separation and Distribution Agreement when itwe spun off from Varian. The agreement provides for, among other things, indemnification obligations designed to make Varian financially responsible for liabilities allocable to Varian before the spin-off, and to make ~~Varex~~us financially responsible for liabilities allocable to ~~Varex~~us before the spin-off and for information contained in ~~the Varex~~our registration statement that describes the separation, ~~Varex,~~we, and the transactions contemplated by the Separation and Distribution Agreement. ~~Varex~~We may be subject to substantial liabilities if it is required to indemnify Varian or if Varian is required, but unable, to indemnify ~~Varex.~~us. Either of these could negatively affect ~~Varex’s~~our business, financial position, results of operations, and/or cash flows.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our ~~business~~corporate headquarters is ~~primarily~~ located in Salt Lake City, Utah, where we own approximately 37 acres of land and approximately 494,000 square feet of space used for manufacturing, administrative functions and research and development, for both our Medical and Industrial segments. We also own or lease 3424 other facilities throughout North America, Europe and Asia ~~(located in 8 states and 17 foreign countries)~~ that comprise over ~~2 million~~1,000,000 square feet of manufacturing facilities, warehouses, sales and service, research and development and office space, which are used for our Medical and/or Industrial segments, depending on the location.

In addition to our location in Salt Lake City, Utah, our other primary owned facilities are located in Las Vegas, ~~Nevada and~~Nevada; Franklin Park, ~~Illinois.~~Illinois; and Doetinchem, the Netherlands. Our Las Vegas, Nevada facility has approximately 5 acres of land and 94,000 square feet of space used for manufacturing, administrative functions and research and development, for our Industrial ~~segments.~~segment. Our Franklin Park, Illinois, facility has approximately 3 acres of land and approximately 61,000 square feet of space used for manufacturing, administrative functions and research and development, for both our Medical and Industrial segments. ~~Subsequent to the end of fiscal year 2020, construction on our owned~~Our Doetinchem, Netherlands, facility ~~in Doetinchem, the Netherlands, which~~ is approximately 4 acres and approximately ~~107,000~~100,000 square feet ~~was completed.~~of space used for manufacturing, engineering, administrative functions, and research and development, for our Medical and Industrial segments.

Primary leased facilities include approximately ~~144,000~~288,000 square feet in Laguna, Philippines, approximately 46,000 square feet in Wuxi, China, approximately 34,000 square feet in Bremen, Germany, approximately 34,000 of square feet in Walluf, Germany and approximately 26,000 square feet in San Jose, California, all of which are used for manufacturing, research and development, or administrative functions for our Medical and Industrial segments.

Item 3. Legal Proceedings

We are subject to various claims, complaints and legal actions in the normal course of business from time to time. We do not believe we have any currently pending litigation for which the outcome could have a material adverse effect on our operations or financial position. See Item 1A. "Risk Factors - Unfavorable results of legal proceedings could materially and adversely affect ~~Varex's~~our financial results."

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Varex's common stock is traded on the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “VREX.”

Since our inception, we have not paid any cash dividends and have no current plan to pay cash dividends on Varex common stock. As of November ~~3, 2020,~~7, 2022, there were ~~1,576~~1,385 holders of record of Varex common stock.

This graph shows the total return on VREX common stock ~~since listing on NASDAQ on January 20,~~from September 29, 2017 through September 30, 2022, with comparative total returns for the Russell 2000 Index (“RUT”) and the Dow Jones Medical Equipment Index (“DJUSAM”). The graph below assumes that $100.00 was invested on ~~January 20,~~September 29, 2017 in our common stock and the companies listed in the RUT and the DJUSAM, as well as a reinvestment of dividends paid on such investments throughout the period.

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Item 6. ~~Selected Financial Data~~[Reserved]

In January 2017, we separated from Varian. Prior to the date of separation, the financial statements were prepared on a stand-alone basis and derived from Varian’s consolidated financial statements as we operated as part of Varian.

The following data, in so far as it relates to each of the fiscal years from 2016 through 2020, has been derived from annual consolidated financial statements, including the consolidated balance sheets at October 2, 2020 and September 27, 2019 and the related consolidated statements of (loss) earnings, of comprehensive (loss) earnings, and of cash flows for the fiscal years 2020, 2019 and 2018 and notes thereto appearing elsewhere herein. In addition, the following financial data should be read in conjunction with our consolidated financial statements and the accompanying notes and the MD&A included elsewhere herein.

Summary of Operations: Fiscal Years
(In millions, except per share amounts) 2020 2019 2018
2017(1)
2016
Revenues $ 738.3 $ 780.6 $ 773.4 $ 698.1 $ 620.1
Gross profit $ 190.2 $ 256.7 $ 253.9 $ 253.5 $ 248.4
(Loss) earnings before taxes (72.6) 21.5 25.7 74.8 105.0
Taxes on (loss) earnings (15.2) 5.7 (2.6) 22.8 36.0
Net (loss) earnings (57.4) 15.8 28.3 52.0 69.0
Less: Net earnings attributable to noncontrolling interests 0.5 0.3 0.8 0.4 0.5
Net (loss) earnings attributable to Varex $ (57.9) $ 15.5 $ 27.5 $ 51.6 $ 68.5
(Loss) earnings per share attributable to Varex
(Loss) earnings per share - basic $ (1.49) $ 0.41 $ 0.73 $ 1.37 $ 1.83
(Loss) earnings per share - diluted $ (1.49) $ 0.40 $ 0.72 $ 1.36 $ 1.82
Financial Position at Fiscal Year End:
Working capital $ 361.4 $ 263.3 $ 306.1 $ 343.5 $ 282.1
Total assets 1,139.5 1,038.9 987.9 1,040.1 622.4
Total debt (excluding current maturities, net of deferred costs) 452.8 364.4 364.8 463.9 —

~~(1) The summary of operations for fiscal year 2017 includes operating results from the Acquired Detector Business for the period from May 1, 2017 through September 29, 2017.~~38

~~Selected Quarterly Financial Data (Unaudited)~~

The following table sets forth selected financial data from our unaudited quarterly consolidated statements of (loss) earnings for the eight quarters ended fiscal year 2020. The information for each quarter has been derived from unaudited consolidated financial statements and in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the unaudited interim periods and includes certain reclassifications and rounding differences. The quarterly data should be read together with our consolidated financial statements and related notes appearing elsewhere in this annual report.

Fiscal Year 2020
(In millions, except per share amounts, unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
Total revenues $ 200.1 $ 197.0 $ 171.2 $ 170.0 $ 738.3
Gross profit $ 61.1 $ 57.6 $ 26.3 $ 45.2 $ 190.2
Net (loss) $ (1.2) $ (1.8) $ (28.2) $ (26.2) $ (57.4)
Net (loss) attributable to Varex $ (1.3) $ (1.9) $ (28.3) $ (26.4) $ (57.9)
(Loss) per share - basic $ (0.03) $ (0.05) $ (0.73) $ (0.68) $ (1.49)
(Loss) per share - diluted $ (0.03) $ (0.05) $ (0.73) $ (0.68) $ (1.49)

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Fiscal Year 2019
(In millions, except per share amounts, unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
Total revenues $ 185.7 $ 195.8 $ 196.7 $ 202.4 $ 780.6
Gross profit $ 60.0 $ 64.4 $ 60.7 $ 71.6 $ 256.7
Net earnings (loss) $ 3.0 $ 5.9 $ (1.3) $ 8.2 $ 15.8
Net earnings (loss) attributable to Varex $ 3.0 $ 5.8 $ (1.4) $ 8.1 $ 15.5
Earnings (loss) per share - basic $ 0.08 $ 0.15 $ (0.04) $ 0.21 $ 0.41
Earnings (loss) per share - diluted $ 0.08 $ 0.15 $ (0.04) $ 0.21 $ 0.40

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Basis of Presentation~~

~~We became an independent publicly-traded company in January 2017 following our separation from Varian and subsequent distribution of shares of our common stock to Varian stockholders.~~

The following discussion and analysis contains forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under "Forward-Looking Statements." Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report on Form 10-K.

Our Business

Varex Imaging Corporation is a leading innovator, designer and manufacturer of X-ray tubes, digital detectors, linear accelerators and other image software processing solutions, which are ~~mission~~ critical components of a variety of X-ray based ~~diagnostic~~ imaging equipment. These products are used in medical imaging as well as in industrial and security imaging applications such as general X-ray, computed tomography (“CT”), C-arms, angiography, fluoroscopy, mammography, and dental. In addition, our components are also used in security and quality inspection systems, as well as for analysis and measurement applications in industrial manufacturing applications. Global original equipment manufacturers (“OEMs”) incorporate our X-ray imaging components in their systems to detect, diagnose, protect and inspect. As of October 2, 2020, we had approximately 2,000 full-time equivalent employees, located at manufacturing and service center sites in North America, Europe, and Asia.

Our products are sold in three geographic regions: the Americas, EMEA, and APAC. The Americas includes North America (primarily the United States) and Latin America. EMEA includes Europe, Russia, the Middle East, India and Africa. APAC includes Asia and Australia. Revenues by region are based on the known final destination of products sold.

Our success depends, among other things, on our ability to anticipate and respond to changes in our markets, the direction of technological innovation and the demands of our customers. ~~We continue to invest in research and development and employ approximately 500 individuals in product development. Combining this focus~~For additional information on ~~innovation and product performance with strong long-term customer relationships allows us to collaborate with~~ our customers to bring industry-leading products to the X-ray imaging market. We continue to work to improve the life and quality of our imaging components and leverage our scale as one of the largest independent X-ray imaging component suppliers to provide cost-effective solutions for our customers.

business, see Part I, Item 1.

Impact of COVID-19, Inflation and the General Economic Environment

The unprecedented nature of the COVID-19 pandemic and its ~~impact~~effect on the global economy ~~has created a disruption~~began to significantly disrupt our business ~~that includes increased uncertainty~~in fiscal year 2020 by initially reducing demand for our products followed by strong recovery in demand ~~for certain products for medical and industrial applications, as well as increased~~but increasing variability in supply of raw materials and manufacturing productivity.

During the twelve months ended September 30, 2022, demand for many of our products recovered to pre-pandemic levels and our business has continued to grow. We believe that demand for our products has increased due to increased investments in healthcare and diagnostics coupled with end-users (such as hospitals) making capital purchases that were previously deferred due to the uncertainty surrounding COVID-19. While we are encouraged by the recovery that we have seen, we remain cautious as many factors remain unpredictable and recent high rates of inflation have increased our costs and could negatively affect our future profit margins. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor, weakening exchange rates and other similar effects.

We continue to experience logistics, supply chain, and manufacturing productivity. The economic downturn triggered by COVID-19 has led to significantly lower demand from our customers and delays in equipment installations. In conjunction with this reduced forecast and uncertainty beyond the forecast horizon,challenges that we ~~evaluated our product offering and decided to discontinue certain low margin, low demand products.~~expect will continue into 2023. As a result, during the third quarter of fiscal year 2020 we took an approximately $15.8 million pre-tax non-cash charge for the write-down of associated inventory and restructuring activity, impaired $2.8 million of intangible assets and wrote off a $2.7 million cost investment in a privately-held company.

The COVID-19 pandemic has had a significant effect on hospitals, clinics and outpatient imaging centers as they have encountered declines in surgeries and other non-emergency procedures. In some cases, certain healthcare facilities have been closed and non-emergency procedures have been deferred. As a result, many hospitals, clinics and outpatient imaging centers have reduced their capital purchases of imaging equipment from OEMs which has led to lower demand for X-ray imaging components. In addition, reduced usage of certain X-ray equipment has resulted in less demand for replacement components that wear-out with use. Additionally, equipment installations were delayed, due to reduced access to healthcare institutions. Partially offsetting this has been increased demand for CT and certain radiographic diagnostic imaging equipment used to screen for or assist in the treatment of respiratory diseases (such as COVID-19).

~~While healthcare systems and~~ economies around the world continue to recover, shortages in raw materials have ~~begun~~become more widespread. During the latter half of fiscal year 2021 and throughout fiscal year 2022, we experienced shortages of certain materials and used more of our inventory on hand than we have used historically. Shortages of materials, particularly micro-controller chips and associated electronic components, have caused and may continue to ~~reopen,~~cause, delays in manufacturing products for our customers. In some cases, raw material shortages and delivery delays from our suppliers are communicated to us with very little advanced warning, which has caused operational and customer ~~demand has not returned to pre-pandemic levels, and the adverse effects of COVID-19 on our financial statements and results of operations have been significant.~~order fulfillment challenges. While we ~~believe that~~are dedicating significant resources to manage, mitigate, and resolve these issues, we currently expect supply chain challenges to continue to impact our ability to deliver products to our customers over the ~~fundamentals driving long-term demand in both our medical~~next several quarters. Increased freight charges and ~~industrial segments remain intact, we believe that in the near-term, reduced demand in our industrial segment and for certain higher end medical products will continue to~~

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depress our results of operations. While our manufacturing sites are currently up and running, COVID-19 and associated economic disruptions have had an adverse impact on our manufacturing capacity, supply chains and distribution systems, including as a result of impacts associated with preventive and precautionary measures that we, other businesses and governments are taking. Supply chain logisticsshipping delays have also become more ~~challenging~~common and ~~while we have had success in localizing our supply chain through our “local-for-local” initiative, supply chain logistics could remain challenging.~~

The actions taken to combat COVID-19 have had, and we believe will continue to have, a negative impact on our operating results, cash flows and financial condition. We expect uncertainty related to the COVID-19 pandemicare expected to continue into the ~~beginning of calendar~~foreseeable future. Due to the rising cost environment, in addition to ongoing expense management, we began to raise prices on certain products in fiscal year ~~2021. While we~~2022 and anticipate making further pricing adjustments throughout fiscal year 2023.

During the twelve months ended September 30, 2022, our manufacturing facilities continued to operate with minimal disruption. Notwithstanding the foregoing, local government lockdowns, particularly in China, have ~~implemented safeguards~~impacted, and ~~procedures and taken other measures~~could continue to ~~counter the~~ impact, ~~of the COVID-19 pandemic, the~~our manufacturing operations in affected countries.

The full extent to which the COVID-19 pandemic ~~has~~and ensuing supply chain challenges have and will directly or indirectly impact us, including our business, financial condition, and results of operations, will depend on future developments that are highly uncertain and cannot be accurately predicted. We will continue to actively monitor the situation and may take further actions that alter our business operations ~~as may be required by federal, state, or local authorities~~ or that we determine are in the best interests of our employees, customers, suppliers, and stockholders.

~~Subsequent Measurement of Goodwill~~

~~Goodwill is not amortized but is tested annually, or more often if impairment indicators are present, for impairment at a reporting unit level, based~~ For additional information on ~~a comparison of~~risks related to the fair value of the reporting unit with its carrying amount. Goodwill is tested for impairment via a one-step process by comparing the fair value of goodwill with its carrying amount. We recognize an impairment for the amount by which the carrying amount exceeds the fair value. We generally use both an income approach utilizing the discounted cash flow method ("DCF") and a market approach utilizing the public company market multiple method, when testing for impairment.

In the third quarter of 2020, changes in facts and circumstances and general market declines from COVID-19 resulted in reduced operating results. We considered these circumstances and the potential long-term impact on cash flows associated with our reporting units and determined that an indicator of possible impairment existed within our Medical and Industrial reporting units. Accordingly, we performed a quantitative impairment analysis to determine the fair values of those reporting units. We used both an income approach utilizing the discounted cash flow method ("DCF") and a market approach utilizing the public company market multiple method. We developed multiple forecasted future cash flow scenarios for the reporting units with varied recovery timing and sales impact assumptions. Based on the output of the analysis, we determined that the fair values of both the Medical and Industrial reporting units exceeded their carrying amounts. Accordingly, no impairment charges were required as of July 3, 2020. However, an impairment charge was required for the Company's in-process R&D.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, revenue growth rates, forecasted gross margins, market multiples, terminal valuepandemic and other market factors. This fair value measurement was based on significant inputs not observable in the market and thus represents a Level 3 fair value measurement. If current expectations of future revenue growth rates and forecasted gross margins, both in size and timing, are not met, if market factors outside of our control, such as discount rates, change, if market multiples decline, or if management’s expectations or plans otherwise change, including as a result of the development of our global five-year operating plan, then one or more of our reporting units might become impaired in the future. The Company will continue to monitor the financial performance of and assumptions for its reporting units. A future impairment charge for goodwill could have a material effect on the Company's consolidated financial position and results of operations.

~~Refer to Note 12.~~ ~~Goodwill and Intangible Assets,~~ ~~in the accompanying notes to the consolidated financial statements for more information regarding goodwill.~~

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~~Operating Segments and Products~~

Our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), evaluates our product groupings and measures our business performance in two reportable operating segments: Medical and Industrial. The segments align our products and service offerings with customer use in medical and industrial markets and are consistent with how the CODM evaluates the business for the allocation of resources. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on revenues and gross profit.

~~Medical~~

In our Medical segment, we design, develop, manufacture, sell and service X-ray imaging components, including X-ray tubes, digital detectors, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, heat exchangers, ionization chambers and buckys. These components are used in a range of medical imaging applications, including CT, mammography, oncology, cardiac, surgery, dental, and for other diagnostic radiography uses.

Our X-ray imaging components are sold primarily to OEM customers. These OEM customers then design-in our products into their X-ray imaging systems for a variety of medical modalities. A substantial majority of medical X-ray imaging OEMs globally are our customers, and many of these have been customers for over 25 years. We believe one of the reasons for customer loyalty is that our hardware and software products are tightly integrated with our customers’ systems. We work very closely with our customers to create custom built components for their systems based on technology platforms that we have developed. Because our products are often customized for our customers’ specific equipment, it can be costly and complex for our customers to switch to another provider. Once our components are designed into our customer’s equipment, our customers will typically continue to use us to supply any replacement components and for service and support for that equipment. Some of our products are also included in product registrations for our customer’s equipment that require regulatory approval to change. In addition to sales directly to OEM customers, we also sell our products to independent service companies and distributors and directly to end-users for replacement purposes.

We are one of the largest global manufacturers of X-ray components and each year we produce over 27,000 X-ray tubes and 20,000 X-ray detectors. We estimate that our worldwide installed base of products is over 150,000 X-ray tubes, 150,000 X-ray detectors, 300,000 connect and control components and 15,000 software instances. Replacement and service of our existing installed base makes up a significant portion of our revenue. Many of our components need to be replaced regularly. For example, CT X-ray tubes generally need to be replaced every 2 to 4 years. In China, the replacement cycle for CT X-ray tubes can be as frequent as every 6 to 12 months due to high utilization of imaging equipment. Other products such as X-ray Detectors have a useful life of as much as 7 years, but can require service and repairs during their useful life. In addition, our detector customers often elect to upgrade products to newer technology before the end of a current product’s useful life. X-ray imaging software is a relatively small part of our business with room to grow and includes consistent maintenance revenue on software licenses.

In China, the government is broadening the availability of healthcare services. As a result, the number of diagnostic X-ray imaging systems, including CT imaging systems, has grown significantly. We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China. We presently have multi-year pricing agreements for CT tubes with 8 medical X-ray imaging OEMs in China. Over the long-term, our objective is to become the partner of choice both for OEMs and in the replacement market as CT systems become more widely adopted throughout the Chinese market. In China, despite a COVID-19 related slowdown in the beginning of the year, demand for our products has returned, and full year fiscal 2020 results for China exceeded our pre-pandemic expectations.

In recent years our growth in China has been impacted by the trade war with the United States. Our business has been impacted in two principal ways: (1) imports of raw materials from China have become more expensive and (2) importing finished U.S. manufactured products into China has also become more difficult and more expensive. In order to mitigate the impact of tariffs on materials imported from China, we have implemented changes to secure more non-China sources of materials used to manufacture our X-ray imaging products. With respect to imports into China, the additional tariffs imposed by the Chinese government have led to a decrease in sales of radiographic detectors manufactured outside of China. To help address these issues, as well as to be closer to our global customer base, we continue to expand manufacturing capabilities at our facilities in China, Germany and the Philippines and also implemented local sourcing strategies to lower our costs and offer local content. This local-for-local strategy has been well received by both our local customers as well as global OEMs, and acts as a natural hedge against trade wars and other potential supply chain ~~disruptions.~~

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~~Industrial~~

Inrisks that could impact our Industrial segment, we design, develop, manufacture, sell and service X-ray imaging products for use in a number of markets, including security applications for cargo screening at ports and borders and also baggage screening at airports, and nondestructive testing and inspection applications used in a number of other vertical markets. Our Industrial products include Linatron® X-ray linear accelerators, X-ray tubes, digital detectors and high voltage connectors. In addition, we license proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to our Industrial customers. Our Industrial business benefits from the research and development investment as well as manufacturing economies of scale on the Medical side of our business, as we continue to find new applications for our technology. Along with more favorable pricing dynamics, this allows us to generally achieve higher gross profit for Industrial products relative to our Medical business. In addition, our Industrial business benefits from our long-term service agreements for our Linatron® products.results, see Part I, Item 1A - Risk Factors.

The security market primarily consists of airport security for carry-on baggage, checked baggage and palletized cargo, as well as cargo security for the screening of trucks, trains and cargo containers at ports and borders. The end customers for border protection systems are typically government agencies, many of which are in oil-based economies and war zones where there has been significant year over year variation in buying patterns.

Non-destructive testing and inspection verticals utilize X-ray imaging to scan items for inspection of manufacturing defects and product integrity in a wide range of industries including the aerospace, automotive, electronics, oil and gas, food packaging, metal castings and 3D printing industries. In addition, new applications for X-ray sources are being developed, such as sterilization of food and its packaging. We provide X-ray sources, digital detectors, high voltage connectors and image processing software to OEM customers, system integrators and manufacturers in a variety of these verticals. We believe that the non-destructive testing market represents a significant growth opportunity for our business and we are actively pursuing new potential applications for our products.

The economic downturn triggered by the COVID-19 pandemic has reduced the demand for X-ray imaging equipment utilized in the non-destructive testing market as manufacturers have focused on cash preservation and have reduced spending for capital equipment. Additionally, the unprecedented decrease in passenger air traffic has led to decrease in demand in the security market. The Company expects uncertainty in demand to continue for at least the remainder of the current calendar year.

Fiscal Year

Our fiscal year is the 52- or 53-week period ending on the Friday nearest September 30. Fiscal year 2022 was the 52-week period that ended September 30, 2022, fiscal year 2021 was the 52-week period that ended October 1, 2021, and fiscal year 2020 was the 53-week period that ended October 2, ~~2020, fiscal year 2019 was the 52-week period that ended September 27, 2019, and fiscal year 2018 was the 52-week period ended September 28, 2018.~~2020. Set forth below is a discussion of our results of operations for fiscal years ~~2020, 2019~~2022, 2021 and ~~2018.~~2020.

~~Comparison of~~ Results of Operations ~~for Fiscal Year 2020 and 2019~~

Our annual report on Form 10-K for the fiscal year ended ~~September 27, 2019,~~October 1, 2021, filed ~~December 20, 2019,~~November 19, 2021, includes a discussion and analysis of our year-over-year changes, financial condition, and results of operations for the fiscal years ended ~~September 27, 2019 and September 28, 2018 in Item 7 of Part II therein.~~

~~Revenues, net~~

(In millions) 2020 % Change 2019 % Change 2018
Medical $ 584.5 (2)% $ 596.8 (1)% $ 602.0
Industrial 153.8 (16)% 183.8 7% 171.4
Total revenues, net $ 738.3 (5)% $ 780.6 1% $ 773.4
Medical as a percentage of total revenues 79 % 76 % 78 %
Industrial as a percentage of total revenues 21 % 24 % 22 %

Medical revenues decreased $12.3 million primarily due to decreased sales of X-ray tubes and digital detectors for oncology, dental, mammography and fluoroscopic applications, offset by increase in sales of OEM X-ray tubes for CT applications and full year impact of revenues related to the acquisition of Direct Conversion in April of 2019.October 1, 2021

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and October 2, 2020 in Item 7 of Part II therein. Our year-over-year changes, financial condition, and results of operations for the fiscal years ended September 30, 2022 and October 1, 2021 are set forth below.

Comparison of Results of Operations for Fiscal Year 2022 and 2021

Revenues, net


(In millions)	2022			% Change	2021			% Change	2020
Medical	$	674.7		5%	$	643.8		10%	$	584.5
Industrial	184.7			6%	174.3			13%	153.8
Total revenues, net	$	859.4		5%	$	818.1		11%	$	738.3
Medical as a percentage of total revenues	78.5		%		78.7		%		79.2		%
Industrial as a percentage of total revenues	21.5		%		21.3		%		20.8		%

Medical revenues increased $30.9 million in fiscal year 2022 compared to 2021 primarily due to increased sales of X-ray tubes and digital detectors for CT, oncology and dental applications in fiscal year 2022.

Industrial revenues ~~decreased $30.0~~increased $10.4 million due to ~~decreased~~increased sales of X-ray tubes for airport security and digital detectors for

inspection applications ~~and were partially offset by the full~~in fiscal year ~~impact of revenues related to the acquisition of Direct Conversion in April of 2019.~~2022.

Revenues by Region


(In millions)	(In millions)	2020			% Change		2019			% Change		2018			(In millions)	2022			% Change	2021			% Change	2020
Americas	Americas	$	255.0		(10)	%	$	282.6		2	%	$	275.8		Americas	$	273.3		2%	$	268.5		5%	$	255.0
EMEA	EMEA	231.5			(14)	%	269.0			6	%	254.5			EMEA	280.8			2%	276.3			19%	231.5
APAC	APAC	251.8			10	%	229.0			(6)	%	243.1			APAC	305.3			12%	273.3			9%	251.8
Total revenues, net	Total revenues, net	$	738.3		(5)	%	$	780.6		1	%	$	773.4		Total revenues, net	$	859.4		5%	$	818.1		11%	$	738.3
Americas as a percentage of total revenues	Americas as a percentage of total revenues	35		%			36		%			36		%	Americas as a percentage of total revenues	31.8		%		32.8		%		34.5		%
EMEA as a percentage of total revenues	EMEA as a percentage of total revenues	31		%			34		%			33		%	EMEA as a percentage of total revenues	32.7		%		33.8		%		31.4		%
APAC as a percentage of total revenues	APAC as a percentage of total revenues	34		%			29		%			31		%	APAC as a percentage of total revenues	35.5		%		33.4		%		34.1		%

Table of ~~U.S. Tax Reform to the extent they are effective during the current reporting period.~~Contents

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. On July 2, 2020, the US Treasury Department issued a regulation providing an election to waive NOL carryback to a former consolidated group. The Company has evaluated the impact of the CARES Act and concludes the NOL carryback provision of the CARES Act will result in a material cash tax benefit. The CARES Act retroactively clarified treatment of qualified improvement property as 15-year property instead of 39-year property as defined under U.S. Tax Reform. Certain qualified improvement property is also eligible for bonus depreciation.

Foreign Currency Translation

The Company uses the U.S. Dollar predominately as the functional currency of its foreign operations. Gains and losses from remeasurement of foreign currency balances into U.S. Dollars are included in the ~~consolidated statements~~Consolidated Statements of ~~(loss) earnings.~~Operations in other expense, net. For the foreign subsidiaries where the local currency is the functional currency, translation adjustments of foreign currency financial statements into U.S. ~~dollars~~Dollars are recorded to a separate component of accumulated other comprehensive ~~loss.~~income.

Recently Adopted Accounting Pronouncements

In ~~February 2016,~~December 2019, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ~~ASU No. 2016-02, Leases, referred~~("ASU") 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to ~~as ASC 842. The purpose~~the current guidance, and improving the consistent application and simplification of ~~ASC 842 is to increase~~other areas of the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet, including those previously classified as operating leases under U.S. GAAP, and disclosing key information about leasing arrangements. ASC 842, as amended, is effective for public entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods and was effective for the Company beginning in fiscal year 2020.guidance. The Company adopted ~~the standard~~this ASU on October 2, 2021, using the transition method provided by ASU No. 2018-11, Leases ("Topic 842"): Targeted Improvements. Under this method, the Company applied the new leasing rules on September 28, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods were presented in accordance with the previously existing lease guidance under ASC Topic 840.

~~Upon transition, the Company applied the package of practical expedients permitted under ASC 842 transition guidance to its entire lease portfolio at September 28, 2019. As~~ a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, and (iii) initial direct costs for any existing leases. Also, the Company applied the hindsight practical expedient. Furthermore, as a lessee the Company elected to combine lease and non-lease components for the majority of its leases, which means that the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component.prospective approach. The ~~only asset class that did not combine lease and non-lease components were vehicle leases.~~

~~The most significant impact of the standards for the Company relate to the recognition of the right-of-use assets and lease liabilities for the operating leases in the balance sheet. Upon~~ adoption of the new lease standard, the Company recognized operating lease right-of-use assets and finance lease right-of-use assets of $26.8 million and $0.6 million, respectively, and corresponding operating lease liabilities and finance lease liabilities of $27.5 million and $0.6 million, respectively. This includes the recording of the Company’s existing capital leases as finance leases at transition. The cumulative impact of adoption was a $0.3 million decrease to retained earnings. Refer to Note 3.~~Leases,~~ ~~for a detailed description of the impact of adopting this standard and its impact on the consolidated financial statements and related disclosures.~~

~~F-17~~

~~Table of Contents~~

~~In February 2018, the FASB issued~~ ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides the option to reclassify certain income tax effects related to the Tax Cuts and Jobs Act passed in December of 2017 between accumulated other comprehensive income and retained earnings and also requires additional disclosures. The amendments in this ASU were effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Effective September 28, 2019, the Company adopted ASU 2018-02 and it2019-12 did not have a material ~~effect~~impact on the ~~Company’s~~Company's consolidated financial statements and related disclosures.

In ~~January 2017,~~June 2016, the FASB issued ASU ~~2017-04, Intangibles - Goodwill and Other, Simplifying the Test for Goodwill Impairment, which simplified the testing required for~~2016-13, Measurement of Credit Losses on Financial Instruments. This pronouncement changes the impairment model for most financial assets and certain other instruments, including trade and other receivables, held-to-maturity debt securities and loans and replaces the incurred loss methodology with a new, forward-looking “expected loss” model that considers the risk of ~~goodwill by removing Step 2 from~~loss over the ~~goodwill impairment test. Step 2~~asset’s contractual life, even if remote, historical experience, current conditions, and reasonable and supportable forecasts of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. ASU 2017-04 allows an entity to measure the impairment based off Step 1 of the impairment test, which calculates the impairment as the difference between the carrying amount of the reporting unit and its fair value. Adoption offuture relevant events. The Company adopted this ASU ~~was required for~~on October 3, 2020, using a modified retrospective approach. The adoption of ASU 2016-13 did not have a material impact on the ~~Company in the first quarter of fiscal year 2021. The Company elected to early adopt this standard effective April 4, 2020. This adoption was made on a prospective basis, as required by the standard.~~Company's consolidated financial statements and related disclosures.

Recent Accounting Standards Updates Not Yet Effective

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own ~~Equity, to address issues identified as a result of the complexity associated with applying GAAP for~~Equity. The standard removes certain ~~financial instruments with characteristics of liabilities and equity. In addressing the complexity, this ASU is focused on amending the guidance~~separation models in ASC 470-20 for convertible instruments, and, as a result, embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives ~~scope exception~~under ASC 815. These convertible debt instruments will be accounted for ~~contracts~~as a single liability measured at amortized cost. This will also result in ~~an entity’s own equity.~~the interest expense recognized for convertible debt instruments to be typically closer to the coupon interest rate. Further, the ASU made amendments to the earnings per share (“EPS”) guidance in Topic 260 for convertible instruments, the most significant impact of which is requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method. The ASU is effective for annual periods beginning after December 15, 2021, including interim periods within those years. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. The Company ~~is evaluating~~will adopt the new standard effective October 1, 2022, the first day of the fiscal year ending September 29, 2023, using the modified retrospective method. On the date of adoption, the Company estimates that its entry to adopt this ASU will be to record a reduction in additional paid-in capital of $34.6 million, an increase to long-term debt, net of $28.0 million, an increase to deferred tax assets of $6.7 million, and an increase to retained earnings of $13.3 million in 2023 for the after-tax impact of ~~adopting this guidance~~previously recognized amortization of the debt discount associated with the Company’s Convertible Senior Notes. The unamortized discount on our Convertible Notes (see Note 9, Borrowings) will be reclassified from equity to ~~its consolidated financial statements.~~liabilities and the interest expense from our Convertible Notes will decrease and be closer to the coupon rate of 4.00%. The impact that adoption of ASU 2020-06 will have on our net income per diluted share will depend on the amount of earnings in each period and our share price, and could result in additional dilution.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate (e.g., LIBOR) reform on financial reporting. Adoption of the guidance is elective and is permitted from March 12, 2020 through December 31, 2022. The Company ~~is currently evaluating the impact from the replacement~~will evaluate transactions or contract modifications occurring as a result of ~~the London Interbank Offered Rate (LIBOR)~~reference rate reform and determine whether ~~the Company will elect the adoption of~~to apply the optional ~~guidance.~~

~~In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the current~~ guidance and improving the consistent application of and simplification of other areas of the guidance. The standard is effective for the Company beginning in the first quarter of fiscal year 2022. Early adoption is permitted.on an ongoing basis. The Company ~~is evaluating the impact of adopting~~determined this ~~guidance to its consolidated financial statements.~~

~~In June 2016, the FASB issued~~ ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In addition, the ASU requires new disclosures. This standard will be effective for the Company's interim and annual periods beginning with the first quarter of fiscal 2021 and must be applied on a modified retrospective basis. This standard will not ~~materially~~have a material impact ~~the Company's consolidated~~on its financial ~~statements.~~position, results of operations or cash flows.

~~F-18~~F-17

Table of Contents

2. REVENUE RECOGNITION

The Company adopted ASC 606 on September 29, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for fiscal year 2020 and 2019 reflect the application of ASC 606 guidance while the reported results for fiscal year 2018 were prepared under the guidance of ASC 605, Revenue Recognition.

The following tables summarize the changes in the contract assets and refund liabilities for the twelve months ended September 30, 2022 and October ~~2, 2020 and September 27, 2019:~~1, 2021:

(In millions)

Contract Assets

Balance at ~~September 28, 2018~~October 2, 2020

~~24.4~~24.6

Costs recovered from product returns during the period

~~(6.4)~~(4.8)

Contract asset from shipments of products, subject to return during the period

~~5.7~~ 6.4

Adjustment for actual vs. reserved product returns

(1.9)

Balance at ~~September 27, 2019~~October 1, 2021

~~23.7~~24.3

Costs recovered from product returns during the period

~~(5.6)~~(5.4)

Contract asset from shipments of products, subject to return during the period

~~6.5~~ 7.1

Adjustment for actual vs. reserved product returns

(0.6)

Balance at ~~October 2, 2020~~September 30, 2022

~~24.6~~25.4

(In millions)

Refund Liabilities

Balance at ~~September 28, 2018~~October 2, 2020

~~27.1~~27.4

Release of refund liability included in beginning of year refund liability

~~(7.0)~~(5.3)

Additions to refund liabilities

~~6.3~~ 7.1

Adjustment for actual vs. reserved product returns

(2.2)

Balance at ~~September 27, 2019~~October 1, 2021

~~26.4~~27.0

Release of refund liability included in beginning of year refund liability

~~(6.2)~~(6.1)

Additions to refund liabilities

~~7.2~~ 7.9

Adjustment for actual vs. reserved product returns

(0.6)

Balance at ~~October 2, 2020~~September 30, 2022

~~27.4~~28.2

During fiscal year ~~2020,~~2022, the Company recognized revenue of ~~$8.4~~$6.7 million related to deferred revenue which existed at ~~September 27, 2019.~~October 1, 2021. During fiscal year ~~2019,~~2021, the Company recognized revenue of ~~$10.5~~$6.9 million related to deferred revenue which existed at ~~September 28, 2018.~~October 2, 2020.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which revenue has not yet been recognized, which are primarily related to contracts where control will be transferred to customers over the next 12 months. See Note 1.1, Summary of Significant Accounting Policies, for details on the nature of the remaining performance obligations within these contracts and how they will be resolved.

3. LEASES

On September 28, 2019, the Company adopted ASC 842, which ~~amends~~amended the guidance for the accounting and reporting of leases. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. The Company has operating and finance leases for office space, warehouse and manufacturing space, vehicles, and certain equipment. The Company's lease agreements do not contain any material residual value guarantees, variable lease costs, bargain purchase options or restrictive covenants. The Company does not have any lease transactions with related parties. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. The Company's leases have remaining lease terms of less than one year to approximately ~~seven~~ten years, some of which may include options to extend the leases for up to ~~six~~five years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised.

Right-of-use assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company's incremental borrowing rate is based on a credit-adjusted risk-free rate, which best approximates a secured rate over a similar term of lease.

~~F-19~~F-18

Table of Contents

During the twelve months ended September 30, 2022, the Company recorded a loss due to abandonment of $1.9 million, which is included in selling, general and administrative on the Consolidated Statements of Operations.

The following table presents supplemental balance sheet information related to the Company's operating and finance leases:

~~October 2, 2020~~

~~(In millions)~~

~~Balance Sheet Location~~

~~Operating Leases~~

~~Finance Leases~~

~~Assets~~

~~Operating lease right-of-use assets~~

~~Operating lease assets~~

~~27.7~~

—

~~Finance lease right-of-use assets~~

~~Property, plant and equipment, net~~

—

~~0.5~~

~~Liabilities~~

~~Operating lease liabilities (current)~~

~~Current operating lease liabilities~~

~~6.1~~

—

~~Finance lease liabilities (current)~~

~~Accrued liabilities and other current liabilities~~

—

~~0.2~~

~~Operating lease liabilities (non-current)~~

~~Operating lease liabilities~~

~~23.1~~

—

~~Finance lease liabilities (non-current)~~

~~Other long-term liabilities~~

—

~~0.4~~



(In millions)	Balance Sheet Location	September 30, 2022		October 1, 2021
Assets
Operating lease right-of-use assets	Operating lease assets	$	23.2	$	24.3
Finance lease right-of-use assets	Property, plant and equipment, net	0.3		0.5
Liabilities
Operating lease liabilities (current)	Current operating lease liabilities	4.0		6.2
Finance lease liabilities (current)	Accrued liabilities and other current liabilities	0.2		0.2
Operating lease liabilities (non-current)	Operating lease liabilities	18.0		18.7
Finance lease liabilities (non-current)	Other long-term liabilities	$	0.1	$	0.3

The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:

October 2, 2020
Operating Leases Finance Leases
Weighted average remaining lease term (in years) 6.6 3.3
Weighted average discount rate 4.5 % 4.1 %


	September 30, 2022		October 1, 2021
Operating lease weighted average remaining lease term (in years)	6.4		5.9
Operating lease weighted average discount rate	5.6	%	5.5	%
Finance lease weighted average remaining lease term (in years)	2.0		2.5
Finance lease weighted average discount rate	3.6	%	3.6	%

The following table provides information related to the Company’s operating and finance leases:


~~(In millions)~~	~~Fiscal Year 2020~~
~~Total operating lease costs (a)~~	$	~~8.4~~

~~Total finance lease costs~~	$	~~0.3~~

~~Operating cash flows from operating leases~~	$	~~8.0~~
~~Financing cash flows from finance leases~~	~~0.3~~
~~Total cash paid for amounts included in the measurement of lease liabilities~~	$	~~8.3~~

~~Noncash operating right-of-use assets obtained in exchange for new lease liabilities (b)~~	$	~~10.6~~
~~Noncash finance right-of-use assets obtained in exchange for new lease liabilities (b)~~	~~0.2~~
~~Total right-of-use assets obtained in exchange for new lease liabilities (b)~~	$	~~10.8~~


(In millions)	2022		2021		2020
Total operating lease costs(1)	$	6.4	$	8.1	$	8.4

Total finance lease costs	$	0.2	$	0.3	$	0.3

Operating cash flows from operating leases	$	7.3	$	7.9	$	8.0
Financing cash flows from finance leases	0.2		0.2		0.3
Total cash paid for amounts included in the measurement of lease liabilities	$	7.5	$	8.1	$	8.3

Noncash operating right-of-use assets obtained in exchange for new lease liabilities	$	5.4	$	5.6	$	10.6
Noncash finance right-of-use assets obtained in exchange for new lease liabilities	0.1		0.2		0.2
Total right-of-use assets obtained in exchange for new lease liabilities	$	5.5	$	5.8	$	10.8

~~(a)~~(1) Includes variable and short-term lease expense, which were immaterial for fiscal ~~year~~years 2022, 2021, and 2020.

~~(b)~~ ~~Excludes the impact of adopting the new leases standard in the first quarter of 2020.~~

~~For fiscal year 2019 and 2018 the Company's lease expense was $5.1 million and $5.3 million, respectively.~~

~~F-20~~F-19

Table of Contents

As of ~~October 2, 2020,~~September 30, 2022, maturities of operating lease and finance lease liabilities for each of the following five years and a total thereafter were as follows:


(In millions)	(In millions)					(In millions)
Fiscal years:	Fiscal years:	Operating Leases		Finance Leases		Fiscal years:	Operating Leases		Finance Leases
2021		$	7.1	$	0.2
2022		6.6		0.2
2023	2023	4.2		0.2		2023	$	5.2	$	0.2
2024	2024	3.5		0		2024	4.6		0.1
2025	2025	3.3		0		2025	4.4		—
2026						2026	3.1		—
2027						2027	2.8		—
Thereafter	Thereafter	9.4		0		Thereafter	6.5		—
Total future lease payments	Total future lease payments	$	34.1	$	0.6	Total future lease payments	$	26.6	$	0.3
Less: imputed interest	Less: imputed interest	(4.9)		0		Less: imputed interest	(4.6)		—
Present value of lease liabilities	Present value of lease liabilities	$	29.2	$	0.6	Present value of lease liabilities	$	22.0	$	0.3


Delaware									81-3434516
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification Number)

1678 S. Pioneer Road, Salt Lake City, Utah									84104
(Address of principal executive offices)									(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	VREX	The Nasdaq Global Select Market


Part I.	Financial Information	3

Item 1.	Business	3
Item 1A.	Risk Factors	1413
Item 1B.	Unresolved Staff Comments	37
Item 2.	Properties	37
Item 3.	Legal Proceedings	3837
Item 4.	Mine Safety Disclosures	3837

Part II.		3938

Item 5.	~~Marketing~~Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3938
Item 6.	~~Selected Financial Data~~[Reserved]	4038
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4239
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	5347
Item 8.	Financial Statements and Supplementary Data	5447
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	5447
Item 9A.	Controls and Procedures	5448
Item 9B.	Other Information	5650
Item 9C.	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections	50

Part III.		5750

Item 10.	Directors, Executive Officers and Corporate Governance	5750
Item 11.	Executive Compensation	5750
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5750
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5851
Item 14.	Principal Accountant Fees and Services	5851

Part IV.		5952

Item 15.	Exhibits and Financial Statement Schedules	5952
Item 16.	Form 10-K Summary	6154
	Signatures	6255


(In millions)	(In millions)	2020			% Change		2019			% Change		2018			(In millions)	2022			% Change	2021			% Change	2020
Medical	Medical	$	136.4		(28)	%	$	188.9		(1)	%	$	190.5		Medical	$	210.5		4%	$	203.2		49%	$	136.4
Industrial	Industrial	53.8			(21)	%	67.8			7	%	63.4			Industrial	73.0			7%	68.3			27%	53.8
Total gross profit	Total gross profit	$	190.2		(26)	%	$	256.7		1	%	$	253.9		Total gross profit	$	283.5		4%	$	271.5		43%	$	190.2
Medical gross margin	Medical gross margin	23		%			32		%			32		%	Medical gross margin	31.2		%		31.6		%		23.3		%
Industrial gross margin	Industrial gross margin	35		%			37		%			37		%	Industrial gross margin	39.5		%		39.2		%		35.0		%
Total gross margin	Total gross margin	26		%			33		%			33		%	Total gross margin	33.0		%		33.2		%		25.8		%


(In millions)	2020			% Change		2019			% Change		2018
Research and development	$	78.9		1	%	$	78.1		(6)	%	$	83.0
As a percentage of total revenues	10.7		%			10.0		%			10.7		%
Selling, general and administrative	$	142.2		11	%	$	128.1		4	%	$	123.4
As a percentage of total revenues	19.3		%			16.4		%			16.0		%
Impairment of intangible assets	$	2.8		(42)	%	$	4.8		60	%	$	3.0
As a percentage of total revenues	0.4		%			0.6		%			0.4		%
Operating expenses	$	223.9		6	%	$	211.0		1	%	$	209.4
As a percentage of total revenues	30.3		%			27.0		%			27.1		%


☒			ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Summary of Operations:	Fiscal Years
(In millions, except per share amounts)	2020		2019		2018		2017(1)		2016
Revenues	$	738.3	$	780.6	$	773.4	$	698.1	$	620.1
Gross profit	$	190.2	$	256.7	$	253.9	$	253.5	$	248.4
(Loss) earnings before taxes	(72.6)		21.5		25.7		74.8		105.0
Taxes on (loss) earnings	(15.2)		5.7		(2.6)		22.8		36.0
Net (loss) earnings	(57.4)		15.8		28.3		52.0		69.0
Less: Net earnings attributable to noncontrolling interests	0.5		0.3		0.8		0.4		0.5
Net (loss) earnings attributable to Varex	$	(57.9)	$	15.5	$	27.5	$	51.6	$	68.5
(Loss) earnings per share attributable to Varex
(Loss) earnings per share - basic	$	(1.49)	$	0.41	$	0.73	$	1.37	$	1.83
(Loss) earnings per share - diluted	$	(1.49)	$	0.40	$	0.72	$	1.36	$	1.82
Financial Position at Fiscal Year End:

Working capital	$	361.4	$	263.3	$	306.1	$	343.5	$	282.1
Total assets	1,139.5		1,038.9		987.9		1,040.1		622.4
Total debt (excluding current maturities, net of deferred costs)	452.8		364.4		364.8		463.9		—


	Fiscal Year 2020
(In millions, except per share amounts, unaudited)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total Year
Total revenues	$	200.1	$	197.0	$	171.2	$	170.0	$	738.3
Gross profit	$	61.1	$	57.6	$	26.3	$	45.2	$	190.2
Net (loss)	$	(1.2)	$	(1.8)	$	(28.2)	$	(26.2)	$	(57.4)
Net (loss) attributable to Varex	$	(1.3)	$	(1.9)	$	(28.3)	$	(26.4)	$	(57.9)
(Loss) per share - basic	$	(0.03)	$	(0.05)	$	(0.73)	$	(0.68)	$	(1.49)
(Loss) per share - diluted	$	(0.03)	$	(0.05)	$	(0.73)	$	(0.68)	$	(1.49)


	Fiscal Year 2019
(In millions, except per share amounts, unaudited)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total Year
Total revenues	$	185.7	$	195.8	$	196.7	$	202.4	$	780.6
Gross profit	$	60.0	$	64.4	$	60.7	$	71.6	$	256.7
Net earnings (loss)	$	3.0	$	5.9	$	(1.3)	$	8.2	$	15.8
Net earnings (loss) attributable to Varex	$	3.0	$	5.8	$	(1.4)	$	8.1	$	15.5
Earnings (loss) per share - basic	$	0.08	$	0.15	$	(0.04)	$	0.21	$	0.41
Earnings (loss) per share - diluted	$	0.08	$	0.15	$	(0.04)	$	0.21	$	0.40


(In millions)	(In millions)	October 2, 2020		September 27, 2019		$ Change		% Change		(In millions)	September 30, 2022		October 1, 2021		$ Change		% Change
Cash and cash equivalents	Cash and cash equivalents	$	100.6	$	29.9	$	70.7	236.5	%	Cash and cash equivalents	$	89.4	$	144.6	$	(55.2)	(38.2)	%
Marketable debt securities not included in cash and cash equivalents										Marketable debt securities not included in cash and cash equivalents	16.7		—		16.7		100.0	%
Certificates of deposit not included in cash and cash equivalents										Certificates of deposit not included in cash and cash equivalents	7.2		—		7.2		100.0	%
Total										Total	$	113.3	$	144.6	$	(31.3)	(21.6)	%


(In millions, except for percentages)	September 30, 2022		October 1, 2021		$ Change		% Change
Current maturities of long-term debt

Current portion of other debt	$	2.1	$	2.8	$	(0.7)	(25.0)	%

Total current maturities of long-term debt:	$	2.1	$	2.8	$	(0.7)	(25.0)	%
Non-current maturities of long-term debt:


Convertible Senior Unsecured Notes	$	200.0	$	200.0	$	—	—	%
Senior Secured Notes	243.0		270.0		(27.0)		(10.0)	%
Other debt	4.6		7.8		(3.2)		(41.0)	%
Total non-current maturities of long-term debt:	$	447.6	$	477.8	$	(30.2)	(6.3)	%
Unamortized issuance costs and debt discounts
Unamortized discount - Convertible Notes	$	(28.7)	$	(37.6)	$	8.9	(23.7)	%
Unamortized issuance costs - Convertible Notes	(3.1)		(4.1)		1.0		(24.4)	%
Debt issuance costs - Senior Secured Notes	(3.5)		(4.4)		0.9		(20.5)	%
Total	$	(35.3)	$	(46.1)	$	10.8	(23.4)	%
Total debt outstanding, net	$	414.4	$	434.5	$	(20.1)	(4.6)	%


		Payments Due by Period											Payments Due by Period
(In millions)	(In millions)	Total		Fiscal Year 2021		Fiscal Years 2022-2023		Fiscal Years 2024-2025		Beyond		(In millions)	Total		Fiscal Year 2023		Fiscal Years 2024-2025		Fiscal Years 2026-2027		Beyond
Operating lease obligations		$	34.1	$	7.1	$	10.8	$	6.8	$	9.4
Lease obligations												Lease obligations	$	26.9	$	5.4	$	9.1	$	5.9	$	6.5
Principal payments on borrowings	Principal payments on borrowings	511.3		2.5		5.0		202.9		300.9		Principal payments on borrowings	449.7		2.1		202.8		244.8		—
dpiX fixed cost commitment	dpiX fixed cost commitment	3.2		3.2		—		—		—		dpiX fixed cost commitment	3.3		3.3		—		—		—
Dividends to MeVis noncontrolling interest	Dividends to MeVis noncontrolling interest	3.8		0.5		1.1		1.1		1.1		Dividends to MeVis noncontrolling interest	3.1		0.4		0.9		0.9		0.9
Supplier equipment acquisition	Supplier equipment acquisition	10.4		6.3		4.1		—		—		Supplier equipment acquisition	2.5		2.5		—		—		—
Development and share purchase commitments												Development and share purchase commitments	6.6		6.6		—		—		—
Total	Total	$	562.8	$	19.6	$	21.0	$	210.8	$	311.4	Total	$	492.1	$	20.3	$	212.8	$	251.6	$	7.4


Plan Category (amounts in thousands except per share data)	Plan Category (amounts in thousands except per share data)	Number of securities to be issued upon exercise of outstanding options, warrants and rights (2) (a)	Weighted average exercise price of outstanding options, warrants, and rights (1) (b)		Number of securities remaining available for future issuance under equity compensation plans (3) (excluding securities reflected in columns (a) and (b))	Plan Category (amounts in thousands except per share data)	Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) (a)	Weighted average exercise price of outstanding options, warrants, and rights (2) (b)		Number of securities remaining available for future issuance under equity compensation plans (3) (excluding securities reflected in columns (a) and (b))
Equity compensation plans approved by security holders	Equity compensation plans approved by security holders	3,677	$	29.23	5,328	Equity compensation plans approved by security holders	3,947	$	28.97	3,981
Equity compensation plans not approved by security holders	Equity compensation plans not approved by security holders	—	—		—	Equity compensation plans not approved by security holders	—	—		—
Total	Total	3,677	$	29.23	5,328	Total	3,947	$	28.97	3,981


1.			Consolidated Financial Statements. We have filed the consolidated financial statements listed in the index to Consolidated Financial Statements, Schedules and Exhibits on page F-1 as part of this annual report on ~~Form-10K.~~Form10-K.



23.1						Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

23.2						Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm

31.1						Chief Executive Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act.

31.2						Chief Financial Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act.

32.1						Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101).

*						Incorporated herein by reference

†						Management contract or compensatory agreement.

++						~~Portions of this exhibit have been omitted pursuant to a confidential treatment request filed pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.~~


			VAREX IMAGING CORPORATION


Date:	November ~~30, 2020~~18, 2022	By:	/s/ Shubham Maheshwari
			Shubham Maheshwari
			Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)


2.			Financial Statement Schedules and Other. All financial statement schedules have been omitted because they are not applicable, or not material or the required information is shown in the consolidated financial statements or the notes thereto.


3.			Exhibits. The exhibits listed below are filed as part of this annual report on Form 10-K.


Exhibit Number						Description
2.1*						Separation and Distribution Agreement, dated as of January 27, 2017, by and between Varian and (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

2.2*						~~Master Purchase and Sale Agreement, dated as of December 21, 2016, by and between Varian Medical Systems, Inc. and PerkinElmer, Inc. (incorporated by reference to Exhibit 2.2 to~~ ~~the~~ ~~Company’s Amendment No. 3 to the Registration Statement on Form 10 filed December 30, 2016~~).

2.3*						Amendment No.1 to Master Purchase and Sale Agreement, entered into as of January 17, 2017, by and between PerkinElmer, Inc. and Varian Medical Systems, Inc. (incorporated by reference to Exhibit 2.2 to ~~the~~ ~~Company’s Quarterly Report on Form 10-Q filed May 12, 2017~~).

2.4*						Amendment No.2 to Master Purchase and Sale Agreement, entered into as of April 28, 2017, by and between PerkinElmer, Inc. and Varex Imaging Corporation (incorporated by reference to Exhibit 2.4 to the Company’s Quarterly Report on Form 10-Q filed May 12, 2017).

2.5*						Assignment and Assumption Agreement, dated January 27, 2017, by and between Varian Medical Systems, Inc. and Varex Imaging Corporation (incorporated by reference to Exhibit 2.3 to the Company’s Quarterly Report on Form 10-Q filed May 12, ~~2017~~)2017).

3.1*						Amended and Restated Certificate of Incorporation, dated January 27, 2017 (as corrected December 11, 2017) (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed November 27, ~~2018~~)2018).

3.2*						Amended and Restated Bylaws of the Company, as amended ~~January 27, 2017~~February 11, 2021 (incorporated by reference to Exhibit ~~3.2~~3.1 to the Company’s Current Report on Form 8-K filed ~~January 30, 2017~~)February 16, 2021).

4.1						Information required by Item 202(a) through (d) and (f) of Regulation S-K for each class of Company securities that is registered under Section 12 of the Exchange ~~Act~~.Act.

4.2*						Indenture, dated June 9, 2020, by and among Varex Imaging Corporation and Wells Fargo Bank, National Association, as Trustee, including form of 4.00% Convertible Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 9, 2020).

~~4.3~~4.3*						Indenture, dated as of September 30, 2020, by and among Varex Imaging Corporation, the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee and collateral agent,, including the form of 7.875% Senior Secured Notes due 2027 as Exhibit A.A (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 10-K filed November 30, 2021).

10.1*						Transition Services Agreement, dated as of January 27, 2017, by and between Varian and Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

10.2*						Tax Matters Agreement, dated as of January 27, 2017 by and between Varian and Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

10.3*						Employee Matters Agreement, dated as of January 27, 2017, by and between Varian and Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).


10.7*†						Form of Nonqualified Stock Option Agreement under the 2017 Omnibus Stock Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 16, ~~2017~~)2017).

10.8*†						Form of Restricted Stock Unit Award Agreement under the 2017 Omnibus Stock Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 16, ~~2017~~)2017).

10.9*†						Varex Imaging Corporation 2017 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 99.2 to the Company’s Form S-8, filed January 27, ~~2017~~)2017).

10.10*†						Varex Imaging Corporation Management Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

~~10.11*†~~10.11†						Form of Change in Control Agreement (incorporated by reference to Exhibit ~~10.10~~10.11 to the Company’s ~~Current~~Annual Report on Form ~~8-K~~10-K filed ~~January 30, 2017~~November 19, 2021)).

10.12*†						Form of Indemnification Agreement (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

10.13*†						Varex Imaging Corporation 2016 Deferred Compensation Plan (incorporated by reference to Exhibit 10.6 to Amendment No. 2 to Form 10 filed by the Company on December 8, ~~2016~~)2016).

10.14*†						Varex Imaging Corporation Frozen Deferred Compensation Plan (incorporated by reference to Exhibit 10.7 to Amendment No. 2 to Form 10 filed by the Company on December 8, ~~2016~~)2016).

10.15*†						Form of Grant Agreement for Deferred Stock Units under the 2017 Omnibus Stock Plan (incorporated by reference to Exhibit 10.17 to t he the Company's Annual Report on Form 10-K filed ~~December~~December 13, ~~2017~~.2017.

10.16*†						Form of Grant Agreement for Deferred Stock Units under the 2017 Omnibus Stock Plan (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K filed December 20, 2019).

10.17*†						Varex Imaging Corporation 2020 Omnibus Stock Plan, including the Form of Nonqualified Stock Option Agreement, the Form of Restricted Stock Unit Agreement and the Form of Grant Agreement – Deferred Stock Units (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 14, 2020).

~~10.18~~10.18*						Credit Agreement dated as of September 30, 2020, by and among Varex Imaging Corporation, Varex Imaging West, LLC, Varex Imaging Deutschland AG, the Guarantors party thereto and Bank of America N.A., as administrative and collateral agent, and the lenders party ~~thereto.~~thereto (incorporated by reference to Exhibit 10.18 to the Company’s Current Report on Form 10-K filed November 30, 2021).

10.19*						Form of Base Convertible Bond Hedge Confirmation, dated June 4, 2020, between Varex Imaging Corporation and each of the counterparties thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed June 9, 2020).

10.20*						Form of Base Warrant Confirmation, dated June 4, 2020, between Varex Imaging Corporation and each of the counterparties thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed June 9, 2020).

10.21*						Form of Additional Convertible Bond Hedge Confirmation, dated June 5, 2020, between Varex Imaging Corporation and each of the counterparties thereto (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed June 9, 2020).

10.22*						Form of Additional Warrant Confirmation, dated June 5, 2020, between Varex Imaging Corporation and each of the Counterparties (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed June 9, 2020).

10.23*						LIBOR Transition Amendment, dated as of March 9, 2022, among Varex Imaging Corporation, Varex Imaging West, LLC, Varex Imaging Deutschland AG, the other Loan Parties, the Lenders, Issuing Banks and Swing Line Lender, and BANK OF AMERICA, N.A., as administrative agent and collateral agent.

10.2310.24						Share Purchase Agreement dated March 21, 2019 between Varex Imaging Corporation, Varex Imaging Investments, B.V. and certain shareholders of Direct Conversions AB (publ) (incorporated by reference to Exhibit 10.1 to Company's Quarterly Report on Form 10-Q filed on May 8, ~~2019~~)2019).

10.2410.25†						Transition Agreement dated February 11, 2020 between Clarence Verhoef and Varex Imaging Corporation (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 13, 2020).

~~10.25†~~						Offer Letter dated June 8, 2020 by Varex Imaging Corporation to Shubham Maheshwari (incorporated by reference to Exhibit 10.25 to the Company’s Current Report on Form 10-K filed November 30, 2021).

21.1						List of Subsidiaries as of November ~~3, 2020~~14, 2022


Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)						F-1

Report of Independent Registered Public Accounting Firm (PCAOB ID No. 238)						F-3

Consolidated Statements of ~~(Loss)~~ ~~Earnings~~Operations for the fiscal years ended 2022, 2021 and 2020 ~~2019~~ ~~and2018~~						F-4

Consolidated Statements of Comprehensive Income (Loss) ~~Earnings~~ for the fiscal years ended 2022, 2021 and 2020 ~~2019~~ ~~and~~ ~~2018~~						F-5

Consolidated Balance Sheets as of the en dend of fiscal yyears 202 ~~ears 20~~202 aand 202 ~~nd 201~~91						F-6

Consolidated Statements of Stockholders' Equity for the fiscal years 2022, 2021 and 2020						F-7

Consolidated Statements of Cash Flows for the fiscal years ended 2022, 2021 and 2020 ~~2019~~ ~~and~~ ~~2018~~						F-8

~~Consolidated Statements of~~ S ~~tockholders'~~ ~~Equity for the fiscal years~~ ~~2020,~~ ~~2019~~ ~~and~~ ~~2018~~						F-7

Notes to ~~the~~ Consolidated Financial Statements						F-9


(In millions, except share amounts)	(In millions, except share amounts)	October 2, 2020		September 27, 2019		(In millions, except share amounts)	September 30, 2022		October 1, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	100.6	$	29.9	Cash and cash equivalents	$	89.4	$	144.6
Accounts receivable, net of allowance for doubtful accounts of $0.3 million and $1.0 million at October 2, 2020 and September 27, 2019, respectively		123.8		141.0
Inventories		271.9		248.2
Accounts receivable, net of allowance for credit losses of $0.6 million and $1.0 million at September 30, 2022 and October 1, 2021, respectively						Accounts receivable, net of allowance for credit losses of $0.6 million and $1.0 million at September 30, 2022 and October 1, 2021, respectively	173.3		155.3
Inventories, net						Inventories, net	303.2		224.8
Prepaid expenses and other current assets	Prepaid expenses and other current assets	25.7		19.3		Prepaid expenses and other current assets	44.0		29.5
Total current assets	Total current assets	522.0		438.4		Total current assets	609.9		554.2
Property, plant and equipment, net	Property, plant and equipment, net	145.2		142.3		Property, plant and equipment, net	141.3		140.2
Goodwill	Goodwill	293.1		290.8		Goodwill	284.5		292.2
Intangible assets, net	Intangible assets, net	67.5		86.3		Intangible assets, net	33.6		50.7
Investments in privately-held companies	Investments in privately-held companies	51.3		53.6		Investments in privately-held companies	46.4		49.3
Deferred tax assets	Deferred tax assets	0.5		—		Deferred tax assets	2.3		4.0
Operating lease assets	Operating lease assets	27.7		0		Operating lease assets	23.2		24.3
Other assets	Other assets	32.2		27.5		Other assets	43.2		32.6
Total assets	Total assets	$	1,139.5	$	1,038.9	Total assets	$	1,184.4	$	1,147.5
Liabilities, redeemable noncontrolling interests and stockholders' equity
Liabilities and stockholders' equity						Liabilities and stockholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	72.9	$	58.2	Accounts payable	$	78.2	$	58.8
Accrued liabilities and other current liabilities	Accrued liabilities and other current liabilities	70.5		75.7		Accrued liabilities and other current liabilities	81.4		89.7
Current operating lease liabilities	Current operating lease liabilities	6.1		0		Current operating lease liabilities	4.0		6.2
Current maturities of long-term debt	Current maturities of long-term debt	2.5		30.7		Current maturities of long-term debt	2.1		2.8
Deferred revenues	Deferred revenues	8.6		10.5		Deferred revenues	7.4		9.1
Total current liabilities	Total current liabilities	160.6		175.1		Total current liabilities	173.1		166.6
Long-term debt, net	Long-term debt, net	452.8		364.4		Long-term debt, net	412.3		431.7
Deferred tax liabilities	Deferred tax liabilities	2.3		8.2		Deferred tax liabilities	0.5		2.2
Operating lease liabilities	Operating lease liabilities	23.1		0		Operating lease liabilities	18.0		18.7
Other long-term liabilities	Other long-term liabilities	34.9		32.5		Other long-term liabilities	33.8		31.8
Total liabilities	Total liabilities	673.7		580.2		Total liabilities	637.7		651.0
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests		0		10.5
Stockholders' Equity:
Preferred stock, $0.01 par value: 20,000,000 shares authorized, NaN issued		0		0
Commitments and contingencies (Note 12)						Commitments and contingencies (Note 12)
Stockholders' equity:						Stockholders' equity:
Preferred stock, $0.01 par value: 20,000,000 shares authorized, none issued						Preferred stock, $0.01 par value: 20,000,000 shares authorized, none issued	—		—
Common stock, $0.01 par value: 150,000,000 shares authorized	Common stock, $0.01 par value: 150,000,000 shares authorized					Common stock, $0.01 par value: 150,000,000 shares authorized
Shares issued and outstanding: 39,059,094 and 38,371,305 at October 2, 2020 and September 27, 2019, respectively		0.4		0.4
Shares issued and outstanding: 40,085,126 and 39,435,830 at September 30, 2022 and October 1, 2021, respectively						Shares issued and outstanding: 40,085,126 and 39,435,830 at September 30, 2022 and October 1, 2021, respectively	0.4		0.4

Additional paid-in capital	Additional paid-in capital	434.4		371.8		Additional paid-in capital	469.1		449.4
Accumulated other comprehensive loss		0.8		(1.7)
Accumulated other comprehensive income						Accumulated other comprehensive income	0.1		—
Retained earnings	Retained earnings	16.1		74.4		Retained earnings	63.8		33.5
Total Varex stockholders' equity	Total Varex stockholders' equity	451.7		444.9		Total Varex stockholders' equity	533.4		483.3
Noncontrolling interests	Noncontrolling interests	14.1		3.3		Noncontrolling interests	13.3		13.2
Total stockholders' equity	Total stockholders' equity	465.8		448.2		Total stockholders' equity	546.7		496.5
Total liabilities, redeemable noncontrolling interests and stockholders' equity		$	1,139.5	$	1,038.9
Total liabilities and stockholders' equity						Total liabilities and stockholders' equity	$	1,184.4	$	1,147.5


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Varex Equity		Noncontrolling Interests		Total Stockholders' Equity
(In millions)	Shares	Amount
























September 29, 2017	37.6	0.4		342.7		0.8		35.1		379.0		0		379.0
Net earnings	—	—		—		—		27.5		27.5		0.3		27.8
Exercise of stock options	0.2	—		3.8		—		—		3.8		—		3.8
Common stock issued upon vesting of restricted shares	0.2	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(2.2)		—		—		(2.2)		—		(2.2)
Common stock issued under employee stock purchase plan	0.1			3.3		—		—		3.3		—		3.3
Share-based compensation	—	—		10.0		—		—		10.0		—		10.0
Unrealized gain on interest rate swap contracts, net of tax	—	—		—		5.2		—		5.2		—		5.2
Unrealized loss on defined benefit obligations, net of tax	—	—		—		(0.2)		—		(0.2)		—		(0.2)

Capital contribution by noncontrolling interest	—	—		—		—		—		—		1.8		1.8
Other	—	—		—		—		(0.2)		(0.2)		—		(0.2)
September 28, 2018	38.0	$	0.4	$	357.6	$	5.8	$	62.4	$	426.2	$	2.1	$	428.3
Effect of adoption of ASC 606	—	—		—		—		(3.5)		(3.5)		—		(3.5)
Net earnings	—	—		—		—		15.5		15.5		(0.2)		15.3
Exercise of stock options	0	—		0.8		—		—		0.8		—		0.8
Common stock issued upon vesting of restricted shares	0.2	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	0	—		(2.1)		—		—		(2.1)		—		(2.1)
Common stock issued under employee stock purchase plan	0.2	—		3.8		—		—		3.8		—		3.8
Share-based compensation	—	—		11.7		—		—		11.7		—		11.7
Unrealized loss on interest rate swap contracts, net of tax	—	—		—		(6.2)		—		(6.2)		—		(6.2)
Unrealized loss on defined benefit obligations, net of tax	—	—		—		(1.3)		—		(1.3)		—		(1.3)
Noncontrolling interest acquired/consolidated	—	—		—		—		—		—		1.4		1.4
September 27, 2019	38.4	$	0.4	$	371.8	$	(1.7)	$	74.4	$	444.9	$	3.3	$	448.2
Cumulative effect of accounting change	—	—		—		—		(0.3)		(0.3)		—		(0.3)
Net loss	—	—		—		—		(57.9)		(57.9)		0		(57.9)
Exercise of stock options	0.1	—		1.5		—		—		1.5		—		1.5
Common stock issued upon vesting of restricted shares	0.2	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(1.8)		—		—		(1.8)		—		(1.8)
Common stock issued under employee stock purchase plan	0.2	—		3.6		—		—		3.6		—		3.6
Share-based compensation	—	—		13.4		—		—		13.4		—		13.4
Unrealized gain on interest rate swap contracts, net of tax	—	—		—		0.4		—		0.4		—		0.4
Unrealized gain on defined benefit obligations, net of tax	—	—		—		0.6		—		0.6		—		0.6
Conversion feature of Convertible Notes, net of issuance costs	—	—		49.7		—		—		49.7		—		49.7
Purchase of hedges	—	—		(61.0)		—		—		(61.0)		—		(61.0)
Issuance of warrants	—	—		49.8		—		—		49.8		—		49.8
Currency translation adjustments	—	—		—		1.5		—		1.5		—		1.5
Shares issued to settle deferred consideration	0.3	—		7.4		—		—		7.4		—		7.4
Reclassification from mezzanine equity to equity for noncontrolling interest in MeVis Medical Solutions, AG	—	—		—		—		—		—		11.3		11.3

Other	—	—		—		—		(0.1)		(0.1)		(0.5)		(0.6)
October 2, 2020	39.1	$	0.4	$	434.4	$	0.8	$	16.1	$	451.7	$	14.1	$	465.8


		Twelve Months Ended October 2, 2020				Twelve Months Ended September 27, 2019					Twelve Months Ended September 30, 2022				Twelve Months Ended October 1, 2021
(In millions)	(In millions)	Beginning of Period		End of Period		Beginning of Period		End of Period		(In millions)	Beginning of Period		End of Period		Beginning of Period		End of Period
Cash and cash equivalents	Cash and cash equivalents	$	29.9	$	100.6	$	51.9	$	29.9	Cash and cash equivalents	$	144.6	$	89.4	$	100.6	$	144.6
Restricted cash	Restricted cash	1.4		1.5		1.5		1.4		Restricted cash	1.5		1.2		1.5		1.5
Cash and cash equivalents and restricted cash as reported per statement of cash flows	Cash and cash equivalents and restricted cash as reported per statement of cash flows	$	31.3	$	102.1	$	53.4	$	31.3	Cash and cash equivalents and restricted cash as reported per statement of cash flows	$	146.1	$	90.6	$	102.1	$	146.1


		Fiscal Years					Fiscal Years Ended
(In millions)	(In millions)	2020		2019		(In millions)	September 30, 2022		October 1, 2021
Accrued product warranty, at beginning of period	Accrued product warranty, at beginning of period	$	8.1	$	7.3	Accrued product warranty, at beginning of period	$	8.5	$	8.1
Charged to cost of revenues		15.1		12.9
Actual product warranty expenditures		(15.1)		(12.1)
New accruals charged to cost of revenues						New accruals charged to cost of revenues	11.3		13.0
Product warranty expenditures						Product warranty expenditures	(11.9)		(12.6)
Accrued product warranty, at end of period	Accrued product warranty, at end of period	$	8.1	$	8.1	Accrued product warranty, at end of period	$	7.9	$	8.5


~~(In millions)~~	~~Fair Value~~
~~Allocation of the purchase consideration:~~
~~Accounts receivable~~	$	~~2.4~~
~~Inventories~~	~~5.7~~
~~Prepaid expenses and other current assets~~	~~0.7~~
~~Property, plant, and equipment~~	~~0.9~~
~~Goodwill~~	~~47.2~~
~~Intangible assets~~	~~32.9~~
~~Total assets acquired~~	~~89.8~~
~~Accounts payable~~	~~(1.0)~~
~~Accrued liabilities~~	~~(1.5)~~
~~Current maturities of long-term debt~~	~~(1.0)~~
~~Deferred revenues~~	~~(0.9)~~
~~Long-term debt~~	~~(3.5)~~
~~Other long-term liabilities~~	~~(1.1)~~
~~Total liabilities assumed~~	~~(9.0)~~
~~Noncontrolling interest~~	~~(1.4)~~
~~Net assets acquired, less noncontrolling interest~~	$	~~79.4~~
~~Net cash paid~~	$	~~69.5~~
~~Deferred consideration~~	~~9.9~~
~~Total consideration~~	$	~~79.4~~


(In millions)	Fair Value		Estimated Weighted Average Useful Life (In Years)
Backlog	$	0.2	1
Trade names	2.5		5
Developed technology	18.4		10
In-process research and development	2.8		indefinite
Customer relationships	9.0		10
Total intangible assets acquired	$	32.9


~~(In millions)~~	~~Direct Conversion Revenue~~
~~Medical~~	$	~~4.5~~
~~Industrial~~	~~1.8~~
~~Total Direct Conversion revenues~~	$	~~6.3~~


(In millions)	Location of Restructuring Charges in Consolidated Statements of (Loss) Earnings	October 2, 2020		September 27, 2019

Inventory write downs	Cost of revenues	$	1.3	$	3.1
Intangible assets impairment	Impairment of intangible assets	0		4.8
Accelerated depreciation	Cost of revenues	2.9		4.5
Severance costs	Selling, general and administrative	5.7		6.2
Facility closure costs	Selling, general and administrative	3.6		0.3
Total restructuring charges		$	13.5	$	18.9


(In millions, except for number of instruments)	Number of Instruments	Notional Value
Forward contracts	4	$	2.5


	Amount of Loss Recognized in OCI on Derivatives Fiscal Year Ended						Location of Loss Reclassified from Accumulated OCI into Income	Amount of Loss Reclassified from Accumulated OCI into Income Fiscal Year Ended
(In millions)	2022		2021		2020			2022		2021		2020
Interest rate swap contracts	$	—	$	—	$	(3.4)	Interest expense	$	—	$	—	$	(1.5)
Forward contracts	(0.8)		—		—		Interest expense	—		—		—
	$	(0.8)	$	—	$	(3.4)		$	—	$	—	$	(1.5)


		Amount of Gain or (Loss) Recognized in OCI on Derivatives Fiscal Year Ended						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income		Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Fiscal Year Ended									Amount of Gain or (Loss) Recognized in OCI on Derivatives Fiscal Year Ended								Location of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)		Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
(In millions)	(In millions)	2020		2019		2018			2020		2019		2018		(In millions)	2022					2021			2020				2022			2021			2020
Interest Rate Swap Contracts		$	(3.4)	$	(6.3)	$	6.9		Interest expense		$	(1.5)	$	1.9			$	0.1
Cross currency swap contracts																	Cross currency swap contracts		$	8.7		$	(0.3)		$	(1.3)	Interest expense		$	1.2		$	1.3		$	1.5


	Amount of Gain or (Loss) Recognized in OCI on Derivatives Fiscal Year Ended						Location of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
(In millions)	2020		2019		2018			2020		2019		2018
Cross Currency Swap Contracts	$	(1.3)	$	(0.2)	$	0	Interest expense	$	1.5	$	0.2	$	0


	Derivative Assets					Derivative Liabilities
(In millions)		October 2, 2020		September 27, 2019			October 2, 2020		September 27, 2019
Derivatives designated as net investment hedges	Balance sheet location					Balance sheet location
Cross currency swap contracts	Other current assets	$	1.3	$	0	Other current liabilities	$	0	$	(0.2)
Cross currency swap contracts	Other non-current assets	0		0		Other non-current liabilities	(2.1)		0
		$	1.3	$	0		$	(2.1)	$	(0.2)


(In millions)		Derivative Assets and Liabilities
Derivatives Designated as Net Investment Hedges	Balance Sheet Location	2022		2021
Cross currency swap contracts	Prepaid expenses and other current assets	$	1.2	$	1.2
Cross currency swap contracts	Other assets	6.3		—

Cross currency swap contracts	Other long-term liabilities	$	—	$	2.4