•~~properly identify customer needs or long-term customer demands;~~Table of Contents

•~~prove the feasibility of new products;~~

•~~properly manage and control research and development costs;~~

•~~limit the time required from proof of feasibility to routine production;~~

•~~timely and efficiently comply with internal quality assurance systems and processes;~~

•~~limit the timing and cost of regulatory approvals;~~

•~~accurately predict and control costs associated with inventory overruns caused by the phase-in of new products and the phase-out of old products;~~

•~~price its products competitively and profitably, which can be particularly difficult with a strong U.S. Dollar;~~

•manufacture, deliver, and install its products in sufficient volumes on time and accurately predict and control costs associated with manufacturing installation, warranty, and maintenance of the products;

•~~appropriately manage its supply chain;~~

•~~manage customer acceptance and payment for products; and~~

•~~anticipate, respond to, and compete successfully with competitors.~~

~~Furthermore, as discussed in greater detail elsewhere in this “Risk Factors” section, Varex cannot be sure that it will~~We may not be able to successfully develop, manufacture, or introduce new products or enhancements to existing products, the roll-out of which involves compliance with complex quality assurance processes, including the Quality System Regulation (“QSR”) of the U.S. Food and Drug Administration (“FDA”). Failure to complete these processes timely and efficiently could result in delays that could affect ~~Varex’s~~our ability to attract and retain customers or cause customers to delay or cancel orders, which would materially and adversely affect ~~Varex’s~~our revenues and operating results.

More than half of ~~Varex’s revenues are~~our revenue is generated from customers located outside the United States, and is subject to global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, and other risks associated with international ~~sales~~manufacturing, operations and ~~operations could materially and adversely affect Varex’s sales or make them less predictable.~~sales.

~~Varex conducts business globally.~~ Revenues generated from customers located outside the United States accounted for approximately ~~66%~~69%, ~~65%~~69%, and ~~65%~~68% of ~~Varex’s~~our total revenues during fiscal years ~~2020, 2019,~~2023, 2022, and ~~2018,~~2021, respectively. ~~As a result, Varex must provide significant service and support globally. Varex intends~~We intend to continue to expand ~~its~~our presence in international markets and ~~expects~~expect to expend significant resources in doing so. Varex cannot be sure that it will be able to meet its sales, service, and support objectives or obligations in these international markets or recover its investment in these international markets. Varex’sOur future results could be ~~harmed~~impacted by a variety of factors, including:

•currency fluctuations, and in particular the strength of the U.S. Dollar (which is our functional and reporting currency) ~~relative~~;

•political and economic instability, including the possibility of civil unrest, terrorism, mass violence or armed conflict, which may among other things, impact our operations and business access;

•difficulties in staffing and managing employee relations in foreign operations, particularly in attracting and retaining personnel qualified to ~~many currencies, which have~~design, test, sell and ~~may~~support our products;

•difficulties in ~~the future adversely affect Varex’s financial results~~coordinating our operations globally and ~~cause some customers to delay purchasing decisions or move to in-sourcing supply or migrate to lower cost alternatives or ask for additional discounts;~~in maintaining uniform standards, controls, procedures, and policies across our operations;

•the longer payment cycles associated with many customers located outside the United States;

•difficulties in interpreting or enforcing agreements and collecting receivables through many foreign countries’ legal systems;

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•~~changes in restrictions on trade between the United States and other countries or unstable regional political and economic conditions;~~

•~~changes in the political, regulatory, safety or economic conditions in a country or region~~

•the imposition by governments of additional taxes, tariffs, global economic sanctions programs, or other restrictions on foreign trade such as the tariffs recently put into place by both China and the United States;

•~~any inability to obtain required export or import licenses or approvals, including the inability to obtain required export licenses during a U.S. government shutdown;~~

•~~natural disasters and pandemics;~~

•failure to comply with export laws and requirements, which may result in civil or criminal penalties and restrictions on Varex’s ability to export its products, particularly its industrial linear accelerator products;

•~~risks unique to the Chinese market, including import barriers and preferences for local manufacturers;~~

•failure to obtain proper business licenses or other documentation or to otherwise comply with local laws and requirements regarding marketing, sales, service, or any other business Varex conducts in a foreign jurisdiction, which may result in civil or criminal penalties and restrictions on its ability to conduct business in that jurisdiction; and

•~~difficulties in protecting Varex’s intellectual property in foreign countries.~~

Although Varex’s sales fluctuate from period to period, in recent years Varex’s international operations have represented a larger share of its business. The more Varex depends on international sales, the more vulnerable Varex becomes to these factors.

~~A change in the percentage of Varex’s total earnings from international sales or additional changes in tax laws could increase Varex’s effective tax rate.~~

Varex’s effective tax rate is impacted by tax laws in both the United States and in foreign countries. Earnings from Varex’s international subsidiaries are generally taxed at rates that differ from U.S. rates. A change in the percentage of Varex’s total earnings from the international subsidiaries, a change in the mix of particular tax jurisdictions between the international subsidiaries, or a change in currency exchange rates could cause Varex’s effective tax rate to increase. The Tax Cuts and Jobs Act of 2017 (“U.S. Tax Reform”) was signed into law on December 22, 2017. Prior to the enactment of U.S. Tax Reform, Varex was not taxed in the United States on certain undistributed earnings of certain foreign subsidiaries. While U.S. Tax Reform imposed a current tax on cumulative undistributed earnings, these earnings could also become subject to incremental foreign withholding or U.S. state taxes should they be actually remitted to the United States, in which case Varex’s financial results could be materially and adversely affected.

The changes included in U.S. Tax Reform are broad, complex, and subject to change and interpretation. Additional statutory changes or interpretive guidance issued by Federal or local authorities could have a material impact on income tax expense, the effective rate, or the value of deferred tax assets and liabilities. In addition, significant judgments and estimates are required to evaluate our tax position and the impact of the new tax law. If these judgments and estimates are incorrect, or if the underlying assumptions are modified by subsequent guidance or are different from what we expect, our tax liability could differ significantly from our current estimates. Changes in the valuation of Varex’s deferred tax assets or liabilities, additional changes in tax laws or rates, changes in the interpretation of tax laws in other jurisdictions, or other changes beyond Varex’s control could materially and adversely affect its financial position and results of operations.

Varex has entities in certain jurisdictions with cumulative net operating losses for which no income tax benefit can be recorded due to full valuation allowance positions. There could be additional future losses in these and other jurisdictions that would negatively impact Varex's effective tax rate.

~~Varex may face additional risks from the acquisition or development of new lines of business.~~

From time to time, Varex may acquire or develop new lines of business. There are substantial risks and uncertainties associated with new lines of business, particularly in instances where the markets are not fully developed. Risks include developing knowledge of and experience in the new business, recruiting market professionals, increasing research and development expenditures, and developing and capitalizing on new relationships with experienced market participants. This may mean significant investment and involvement of Varex’s senior management to acquire or develop, then integrate, the business into its operations. Timelines for integration of new businesses may not be achieved, and price and profitability targets may not prove feasible, as new products can carry lower gross margins than existing products. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences may also impact whether implementation of a new business will be successful. Failure to manage these risks could have a material and adverse effect on Varex’s business, results of operations, and/or financial condition.

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~~Varex may be unable to complete future acquisitions or realize expected benefits from acquisitions of or investments in new businesses, products, or technologies, which could harm Varex’s business.~~

Varex’s ability to identify and take advantage of attractive acquisitions or other business development opportunities is an important component in implementing its overall business strategy. Varex must grow its businesses in response to changing technologies, customer demands, and competitive pressures. In some circumstances, Varex may decide to grow its business through the acquisition of complementary businesses, products, or technologies, rather than through internal development; however, there is no guarantee that these acquisitions will be successful or that Varex will realize a return on its investment.

Identifying suitable acquisition candidates can be difficult, time consuming, and costly, and Varex may not be able to identify suitable candidates or successfully complete or finance identified acquisitions, including as a result of failing to obtain regulatory or competition clearances, which could impair Varex’s growth and ability to compete. In addition, completing an acquisition can divert Varex’s management and key personnel from its current business operations, which could harm its business and affect its financial results. Even if Varex completes an acquisition, Varex may not be able to successfully integrate newly-acquired organizations, products, technologies, or employees into its operations or may not fully realize some of the expected synergies.

Integrating an acquisition can also be expensive and time consuming and may strain Varex’s resources. It may cost Varex more to commercialize new products than originally anticipated or cause Varex to increase its expenses related to research and development, either of which could materially and adversely impact its results of operations. In many instances, integrating a new business will also involve implementing or improving internal controls appropriate for a public company into a business that lacks them. It is also possible that an acquisition could increase Varex’s risk of litigation, as a third party may be more likely to assert a legal claim following an acquisition because of perceived deeper pockets or a perceived greater value of a claim. In addition, Varex may be unable to retain the employees of acquired companies or the acquired company’s customers, suppliers, distributors, or other partners for a variety of reasons, including the fact that these entities may be Varex’s competitors or may have close relationships with its competitors.

Further, Varex may find that it needs to restructure or divest acquired businesses or assets of those businesses. Even if it does so, an acquisition may not produce the full efficiencies, growth, or benefits that were expected. If Varex decides to sell assets or a business, it may be difficult to identify buyers or alternative exit strategies on acceptable terms, in a timely manner, or at all, which could delay the accomplishment of its strategic objectives. Varex may be required to dispose of a business at a lower price or on less advantageous terms, or to recognize greater losses than it had anticipated.

If Varex acquires a business, it allocates the total purchase price to the acquired business’ tangible assets and liabilities, identifiable intangible assets, and liabilities based on their fair values as of the date of the acquisition and records the excess of the purchase price over those values as goodwill. If it fails to achieve the anticipated growth from an acquisition, or if it decides to sell assets or a business, it may be required to recognize an impairment loss on the write down of its assets and goodwill, which could materially and adversely affect its financial results. In addition, acquisitions can result in potentially dilutive issuances of equity securities or the incurrence of debt, contingent liabilities or expenses, or other charges, any of which could harm Varex’s business and affect its financial results.

Additionally, Varex participates in joint ventures and has investments in privately-held companies (for example, its 40% ownership in dpiX LLC, its major supplier of its amorphous silicon-based thin film transistor arrays (flat panels used in its digital detectors) that are subject to risk of loss of investment capital. These investments are inherently risky, in some instances because the markets for the technologies or products these companies have under development may never materialize. If these companies do not succeed, Varex could lose some or all of its investment in these companies.

~~Warranty claims may materially and adversely affect Varex’s business.~~

Varex could experience an increase in warranty claims as a result of issues with product quality or product failures as a direct result of Varex’s design, manufacturing, or issues in its supply chain. Such an occurrence may damage Varex’s market reputation, cause sales to decline, or require repairs or voluntary remedial measures to enhance customer satisfaction, which could materially and adversely impact Varex’s financial results. Increased warranty claims on any given product could cause Varex to halt production on that product and significantly impair Varex’s liquidity and profitability, and cause reputational harm to Varex. Because some categories of products tend to experience higher numbers of warranty claims than others, a shift in the types of products that Varex’s customers purchase could lead to an increase in warranty claims. If actual levels of warranty claims are greater than the level of claims Varex estimates, cost of sales could increase, and Varex’s financial condition could be materially and adversely affected. In addition, product quality issues could result in significant follow-on effects for Varex, including, among other things, reputational harm to

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~~Varex and its customers, loss of customers, and liability as a result of product quality issues. These outcomes would materially and adversely affect Varex’s business and financial condition.~~

Product defects or misuse may result in material product liability or professional errors and omissions claims, litigation, investigation by regulatory authorities, or product recalls that could harm Varex’s future revenues and require it to pay material uninsured claims.

Varex’s business exposes it to potential product liability claims that are inherent in the manufacture, sale, installation, servicing, and support of components that are used in medical devices and other devices that deliver radiation. Because Varex’s products, through incorporation in OEMs’ systems, are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation (for example, when Varex’s security and inspection products are being used to scan cargo or in the diagnosis of medical problems), the possibility for significant personal injury or loss of life exists. Although Varex’s products are incorporated into OEMs’ systems, and thus only perform pursuant to the design and operating systems of OEMs, Varex may also be subject to claims for property damage, personal injury, or economic loss related to or resulting from any errors or defects in its products or the installation, servicing, or support of its products. Any accident or mistreatment could subject Varex to legal costs, litigation, adverse publicity, and damage to its reputation, whether or not its products or services were a factor.

If Varex’s X-ray inspection systems fail to detect the presence of bombs, explosives, weapons, contraband, or other threats to personal safety, Varex could be subject to product and other liability claims or negative publicity, which could result in increased costs, reduced sales, and a decline in the market price of Varex’s common stock. There are many factors beyond Varex’s control that could result in the failure of its products to detect the presence of bombs, explosives, weapons, contraband, or other threats to personal safety, including operator error and misuse of or malfunction of Varex equipment. The failure of Varex’s systems to detect the presence of these dangerous materials may lead to personal injury, loss of life, and extensive property damage and may result in potential claims against Varex.

Product liability actions are subject to uncertainty and may be expensive, time consuming, and disruptive to Varex’s operations. For these and other reasons, Varex may choose to settle product liability claims against it regardless of their actual merit. A product liability action determined against Varex could result in adverse publicity or significant damages, including the possibility of punitive damages, and Varex’s combined financial position, results of operations, or cash flows could be materially and adversely affected.

If a product Varex designs or manufactures were defective (whether due to design, labeling or manufacturing defects, improper use of the product, or other reasons), Varex may be required to correct or recall the product and notify regulatory authorities. The adverse publicity resulting from a correction or recall could damage Varex’s reputation and cause customers to review and potentially terminate their relationships with Varex. A product correction or recall could consume management time and have an adverse financial impact on its business, including incurring substantial costs, losing revenues, and accruing losses.

Varex maintains limited product liability insurance coverage. Varex’s product liability insurance policies are expensive and have high deductible amounts and self-insured retentions. Varex’s insurance coverage may prove to be inadequate, and future policies may not be available on acceptable terms or in sufficient amounts, if at all. If a material claim is not insured or is in excess of Varex’s insurance coverage, Varex could have to pay substantial damages, which could have a material and adverse effect on its financial position and/or results of operations.

~~Varex’s business may suffer if it is not able to hire and retain qualified personnel.~~

Varex’s future success depends, to a great degree, on its ability to retain, attract, expand, integrate, and train its management team and other key personnel, such as qualified engineering, service, sales, marketing, and other staff. Varex competes for key personnel with other medical equipment and software manufacturers and technology companies, as well as universities and research institutions. Because this competition is intense, particularly in Utah, where unemployment rates are relatively low, compensation-related costs could increase significantly if the supply of qualified personnel decreases or demand increases. If Varex is unable to hire and train qualified personnel, Varex may not be able to maintain or expand its business. Additionally, if Varex is unable to retain key personnel, Varex may not be able to replace them readily or on terms that are reasonable, which also could hurt its business.

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~~Risks Relating to the Manufacture of our Products~~

~~A disruption at Varex’s manufacturing facilities, as well as fluctuating manufacturing costs, could materially and adversely affect its business.~~

The majority of Varex’s products are manufactured at its facility in Salt Lake City, Utah. Varex’s manufacturing operations are subject to potential power failures, the breakdown, failure, or substandard performance of equipment, the improper installation or operation of equipment, pandemics, and natural or other disasters. Loss or damage to its manufacturing facility due to any of these factors or otherwise could materially and adversely affect Varex’s ability to manufacture sufficient quantities of its products or otherwise deliver products to meet customer demand or contractual requirements, which may result in a loss of revenue and other adverse business consequences. Because of the time required to obtain regulatory approval and licensing of a manufacturing facility, Varex may not be available on a timely basis to replace any lost manufacturing capacity. The occurrence of these or any other operational issues at Varex’s manufacturing facilities could have a material and adverse effect on Varex’s business, financial condition, and results of operations.

Some of Varex’s products are manufactured in Wuxi, China; Walluf, Germany; Heerlen and Doetinchem, the Netherlands; and Calamba City, Philippines, which are subject to similar risks but may also face additional regulatory and political risks, which could impact Varex’s ability to manufacture and ship products in a timely manner or at all. Varex also manufactures security products in Las Vegas, Nevada, and these operations are also subject to potential power failures, the breakdown, failure, or substandard performance of equipment, the improper installation or operation of equipment, earthquakes, and other disasters, all of which could materially and adversely affect Varex’s ability to deliver products to meet customer demand. In addition, Varex’s costs associated with manufacturing its products can vary significantly from quarter to quarter, and fluctuations thereof may adversely affect its business, operating results, and/or financial condition.

Varex’s results have been and may continue to be affected by continuing worldwide economic instability, including changes in foreign currency exchange rates and fluctuations in the price of crude oil and other commodities.

The global economy has been impacted by a number of economic and political factors. In many markets, these conditions have shrunk capital equipment budgets, slowed decision-making and made it difficult for Varex’s customers and vendors to accurately forecast and plan future business activities. This, in turn, has caused Varex’s customers to be more cautious with, and sometimes freeze, delay, or dramatically reduce purchases and capital project expenditures. Some countries have adopted and may in the future adopt austerity or stimulus programs that could negatively affect Varex’s results from period to period. In addition, actions taken by the current U.S. administration may also create global economic uncertainty, which may cause our customers to reduce their spending, which, in turn, could adversely affect our business, financial condition, operating results, and cash flows. An uncertain economic environment may also disrupt supply or affect our service business, as customers’ constrained budgets may result in pricing pressure, extended warranty provisions, and even cancellation of service contracts. In addition, concerns over continued economic instability could make it more difficult for Varex to collect outstanding receivables. A weak or deteriorating healthcare market would inevitably materially and adversely affect Varex’s business, financial conditions, and results of operations.

Because Varex’s products are generally priced in U.S. Dollars, the strengthening of the U.S. Dollar in the last several years has caused, and could continue to cause, some customers to ask for discounts, delay purchasing decisions, or consider moving to in-sourcing such components or migrating to lower cost alternatives. Further, because Varex’s business is global and some payments may be made in local currency, fluctuations in foreign currency exchange rates can impact its results by affecting product demand, revenues and expenses, and/or the profitability in U.S. Dollars of products and services that Varex provides in foreign markets.

Changes in monetary or other policies here and abroad, including as a result of economic and/or political instability or in reaction thereto, would also likely affect foreign currency exchange rates. Furthermore, if one or more European countries were to replace the Euro with another currency, Varex’s sales in these countries, or in Europe generally, would likely be materially and adversely affected until stable exchange rates are established.

Additionally, fluctuations in commodities prices could materially and adversely affect Varex’s performance. Rising commodities prices will increase Varex’s costs and those of Varex’s medical OEM customers, which could in turn result in reduced demand for Varex’s products. Further, Varex’s security product revenues from oil-producing countries, in which Varex has a significant customer base, have in the past suffered as a result of volatility in oil prices and remain sensitive to fluctuations in the future.

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The loss of a supplier or any inability to obtain supplies of important components could restrict Varex’s ability to manufacture products, cause delays in its ability to deliver products, or significantly increase its costs.

Varex obtains from a limited group of suppliers or from sole-source suppliers some of the components included in its products, such as wave guides for industrial linear accelerators, transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets, housings, glass frames, high-voltage cable, bearings and various other components. For example, Varex’s major supplier of its amorphous silicon-based thin film transistor arrays (flat panels) used in its digital image detectors is dpiX LLC. Although Varex holds a 40% ownership interest in dpiX, Varex does not have majority voting rights and does not have the power to direct the activities of dpiX. In addition, Varian is Varex’s sole source supplier for a key component in linear accelerators used in Varex’s security and inspection products subsystems, which are specially made for Varex. If current suppliers cease producing these components, there can be no assurance that the components will be available from other suppliers on reasonable terms or at all.

If Varex loses any of these limited- or sole-source suppliers, if their operations are substantially interrupted, or if any of them fail to meet performance or quality specifications or delivery deadlines, Varex may be required to obtain and qualify one or more replacement suppliers. Such an event (1) may then also require Varex to redesign or modify its products to incorporate new parts and/or further require Varex to obtain clearance, qualification, or certification of these products, including by the FDA, or obtain other applicable regulatory approvals in other countries, or (2) could significantly increase costs for the affected products and cause material delays in delivery of those and other related products. In addition, manufacturing capacity limitations of any of Varex’s suppliers or other inability of these suppliers to meet increasing demand or delivery deadlines could limit growth opportunities for the affected product lines and damage customer relationships. Shortage of, and greater demand for, components and subassemblies could also increase manufacturing costs if the supply/demand imbalance increases the price of the components and subassemblies. Any of these events could materially and adversely affect Varex’s business and financial results.

~~A shortage or change in source of, or increase in price of, raw materials could restrict Varex’s ability to manufacture products, cause delays, or significantly increase its cost of goods.~~

Varex relies on the supplies of certain raw materials such as tungsten, lead, iridium, and copper for security and inspection products and copper, lead, tungsten, rhenium, molybdenum zirconium, and various high grades of steel alloy for X-ray tubes. Worldwide demand, availability, and pricing of these raw materials have been volatile, and Varex expects that availability and pricing will continue to fluctuate in the future. If supplies are restricted or become unavailable or if prices increase, this could constrain Varex’s manufacturing of affected products, reduce its profit margins, or otherwise materially and adversely affect its business.

Varex is required to disclose (1) the presence in a company’s products of certain metals known as “conflict minerals,” which are metals mined from the Democratic Republic of the Congo and adjoining countries, and (2) procedures regarding a manufacturer’s efforts to identify the sourcing of those minerals from this region. Varex’s complex supply chain may inhibit Varex’s ability to sufficiently verify the origins of the relevant minerals used in its products through the due diligence procedures that it implements, which may harm Varex’s reputation. In addition, Varex may encounter challenges in satisfying customers who require that all of the components of Varex products are certified as conflict-free, which could place Varex at a competitive disadvantage if it is unable to do so. Moreover, complying with these rules requires investigative efforts, which has and will continue to cause Varex to incur associated costs and could materially and adversely affect the sourcing, supply, and pricing of materials used in Varex’s products or result in process or manufacturing modifications, all of which could materially and adversely affect its results of operations.

~~If Varex is not able to match its manufacturing capacity with demand for its products, its financial results may suffer.~~

Many of Varex’s products have a long production cycle, and Varex must anticipate demand for its products to ensure adequate manufacturing or testing capacity. If Varex is unable to anticipate demand, and its manufacturing or testing capacity does not keep pace with product demand, Varex will not be able to fulfill orders in a timely manner, which may negatively impact its financial results and overall business. Conversely, if demand for Varex’s products decreases, the fixed costs associated with excess manufacturing capacity may harm its financial results, including by decreasing gross margins and increasing research and development costs as a percentage of revenue.

~~Delivery schedules for Varex’s security, industrial, and inspection products tend to be unpredictable.~~

Varex designs, manufactures, sells, and services Linatron® X-ray accelerators, image-processing software, and image detection products for security and inspection, such as cargo screening at ports and borders and nondestructive examination for a variety of applications, as well as industrial applications. Varex generally sells security and inspection products to OEMs who

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incorporate its products into their inspection systems, which are then sold to customs and other government agencies, as well as to commercial organizations in the casting, power, aerospace, chemical, petro-chemical, and automotive industries. Varex believes growth in its security and inspection products will be driven by security cargo screening and border protection needs, as well as by the needs of customs agencies to verify shipments for assessing duties and taxes. This business is heavily influenced by domestic and international government policies on border and port security, political change, and government budgets. In addition, Varex believes growth in this product line may be driven in part by industrial customers engaged in 3-D printing, which, as a developing market, may be difficult to predict. Orders for Varex’s security and inspection products have been and may continue to be unpredictable, as governmental agencies may place large orders with Varex or its OEM customers in a short time period and then may not place any orders for a long time period thereafter. Because it is difficult to predict Varex’s OEM customer delivery, the actual timing of sales and revenue recognition varies significantly. The market for border protection systems has slowed significantly, and end customers, particularly in oil-based economies and war zones in which Varex has a significant customer base, are delaying system deployments or tenders and considering moving to alternative sources, resulting in a decline in the demand for security and inspection products.

The demand for Varex’s security and inspection products is heavily influenced by U.S. and foreign governmental policies on national and homeland security, border protection, and customs activities, which depend upon government budgets and appropriations that are subject to economic conditions, as well as political changes and oil prices. Varex has seen customers freeze or dramatically reduce purchases and capital project expenditures, delay projects, or act cautiously as governments around the world wrestle with spending priorities. As economic growth remains sluggish in various jurisdictions and appears to be deteriorating in others, and as concerns about levels of government employment and government debt continue, Varex expects that these effects will also continue. Bid awards in this business may be subject to challenge by third parties, as Varex has previously encountered with a large government project. These factors make this business more unpredictable and could cause volatility in Varex’s revenues and earnings.

Varex’s international manufacturing operations subject it to volatility and other risks, including high security risks, which could result in harm to its employees and contractors or substantial costs.

Varex conducts certain manufacturing operations internationally to reduce costs and streamline its manufacturing operations. There are administrative, legal, and governmental risks to operating internationally that could increase operating expenses or hamper the development of these operations. The risks from operating internationally that could increase Varex’s operating expenses and materially and adversely affect its operating results, financial condition, and ability to deliver its products and grow its business include, among others:

•~~difficulties in staffing and managing employee relations and foreign operations, particularly in attracting and retaining personnel qualified to design, sell, test, and support its products;~~

•~~fluctuations in currency exchange rates;~~

•~~difficulties in coordinating its operations globally and in maintaining uniform standards, controls, procedures, and policies across its operations;~~

•~~difficulties in enforcing contracts and protecting intellectual property;~~

•~~diversion of management attention;~~

•imposition of burdensome governmental regulations, including changing laws and regulations with respect to collection and maintenance of personally identifiable data;

•~~regional and country-specific political and~~the imposition by governments of additional taxes, tariffs, global economic ~~instability, as discussed in greater detail below;~~sanctions programs, or other restrictions on foreign trade; and

•~~inadequacy of the local infrastructure to support its operations.~~compliance with export laws and requirements.

~~Varex’s~~ Our international locations expose itus to higher security risks compared to ~~its~~our United States locations, which could result in both harm to ~~its~~our employees and contractors or substantial costs. Some of ~~its~~our services are performed in or adjacent to high-risk locations where the country or location and surrounding area is suffering from political, social, or economic turmoil, war or civil unrest, or has a high level of criminal or terrorist activity. In those locations where ~~Varex has~~we have employees or operations, ~~Varex~~we may incur substantial costs to maintain the safety of ~~its personnel. Despite these precautions, the safety of its~~our personnel, ~~in these locations~~and we may ~~continue to be at risk, and Varex may in the future~~ suffer the loss of employees and contractors, which could harm ~~its~~our business reputation and operating results.

We may be unable to complete future acquisitions or realize expected benefits from acquisitions of or investments in new businesses, products, or technologies, which could harm our business.

Our ability to identify and take advantage of attractive acquisitions or other business development opportunities is an important component in implementing our overall business strategy. Such transactions involve a number of risks, including the following:

•we may incur substantial costs, including advisory fees and diversion of management attention, in evaluating a potential transaction;

~~Varex’s~~•we may be unable to achieve the anticipated benefits from the transaction, including a return on our investment;

•we may have difficulty integrating organizations, products, technologies, or employees of an acquired business into our operations and may have difficulty retaining the key personnel of the acquired business;

•we may find that we need to restructure or divest acquired businesses or assets of the acquired business; and

•if we fail to achieve the anticipated growth from an acquisition, or if we decide to sell assets or a business, we may be required to recognize an impairment loss on the write-down of our assets and goodwill.

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Legal proceedings may materially and adversely affect our business, results of operations, or cash flows.

From time to time, we are a party to or otherwise involved in legal proceedings, claims, government inspections, audits or investigations, and other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. Such proceedings are often lengthy, subject to significant uncertainty and may be expensive, time consuming, and disruptive to our operations. For these and other reasons, we may choose to settle legal proceedings and claims, regardless of their actual merit. If a legal proceeding were ultimately resolved against us, we may be required to pay damages or fines, some of which may be in excess of our insurance coverage, or may require us to change our business practices, which could materially and adversely impact our business, results of operations, or cash flows.

Our subsidiary Varex Imaging Deutschland AG holds a 50% interest in VEC Imaging GmbH & Co. KG, (“VEC”) a joint venture formed to develop technology for use in X-ray imaging components. In August 2023, the partners to the VEC joint venture filed judicial proceedings in Germany against one another disputing the validity of shareholder resolutions passed in January 2023. Each party is seeking to have the other party’s managing director(s) removed and to exclude the other party from the joint venture. If either party is successful, the prevailing party would be required to purchase the non-prevailing party’s interest in the joint venture for an amount equal to 75% of the fair market value thereof, which amount is in dispute.

Product defects or misuse may result in material product or other liability or professional errors and omissions claims, litigation, investigation by regulatory authorities, or product recalls.

Our business exposes us to potential product and other liability claims that are inherent in the manufacture, sale, installation, servicing, and support of components that are used in medical devices and other devices that deliver radiation. Because our products, through incorporation into OEMs’ systems, are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation, the possibility for significant personal injury or loss of life exists. Furthermore, if our x-ray inspection systems fail to detect the presence of bombs, explosives, weapons, contraband, or other threats to personal safety, this may lead to personal injury, loss of life, and extensive property damage. We may also be subject to warranty and damage claims for property damage, personal injury, or economic loss related to or resulting from any errors or defects in our products or the installation, servicing, or support of our products. Any accident or mistreatment could subject us to legal costs, litigation, adverse publicity, and damage to our reputation, whether or not our products or services were a factor. We are currently a party to certain products liability litigation which, if adversely determined, could have an adverse material impact on our financial results. If a product we design or manufacture were defective, we may be required to correct or recall the product and notify regulatory authorities.

We may choose to settle product liability claims against us regardless of their actual merit. A product liability action determined against us could result in adverse publicity or significant damages, including the possibility of punitive damages, and our combined financial position, results of operations, or cash flows could be materially and adversely affected.

We maintain limited product liability insurance coverage. Our product liability insurance policies are expensive and have high deductible amounts and self-insured retentions. Our insurance coverage may prove to be inadequate, and future policies may not be available on acceptable terms or in sufficient amounts, if at all. If a material claim is not insured or is in excess of our insurance coverage, we could have to pay substantial damages, which could have a material and adverse effect on our financial position and/or results of operations.

Risks Relating to the Manufacture of our Products

Supply chain disruptions, including the loss of a supplier, and any inability to obtain raw materials or supplies of important components due to inflation have impacted our ability to manufacture products, have caused delays in our ability to deliver products, and have increased our costs and may continue to do so.

Inflation and supply chain disruptions have had, are currently having, and could continue to have, an impact on our ability to manufacture certain products. Inflation has the potential to increase our overall cost structure, and sustained inflation 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.

Material shortages and delays due to inflation and other market constraints have caused, and could in the future cause, us to temporarily stop production of certain products or miss opportunities to pursue additional sales of some products. We require certain raw materials, such as copper, nickel, silver, gold, lead, tungsten, iridium, rhenium, molybdenum, rhodium, niobium, zirconium, beryllium, and various high grades of steel alloy for X-ray tubes and industrial products. Worldwide demand, availability, and pricing of these raw materials have been volatile. If we are unable to obtain the materials necessary to make certain products without unreasonable delay, those customers may seek alternative suppliers or decide to in-source certain products or if we must pay more for certain materials, it could reduce our profit margin or otherwise have a material adverse effect on our business and financial results. Further, our competitors with greater financial resources may be better able to restructure their manufacturing and supply chains in response to geopolitical and economic trends and thereby have a competitive advantage over us.

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We obtain some of the components included in our products from a limited group of suppliers or from sole-source suppliers, such as transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets, housings, glass frames, high-voltage cable, bearings, and various other components. If current suppliers cease producing these or other components, fail to provide products on our delivery timelines, or become insufficiently solvent to continue operations, there can be no assurance that the components will be available from other suppliers on reasonable terms or at all, and this could materially and adversely affect our business and financial results.

Furthermore, we may be required to obtain and qualify one or more replacement suppliers or to manufacture the components internally. Such an event (1) may then also require us to redesign or modify our products to incorporate new parts and/or further require us to obtain clearance, qualification, or certification of these products, including by the FDA, or obtain other applicable regulatory approvals in other countries, (2) could significantly increase costs for the affected products, (3) cause material delays in delivery of affected and other related products, or (4) could prevent us from meeting our delivery obligations to our customers.

If we are not able to match our manufacturing capacity with demand for our products, our financial results may suffer.

Many of our products have a long production cycle, and we must anticipate demand for our products to ensure adequate manufacturing and testing capacity. If we are unable to anticipate demand, and our manufacturing or testing capacity does not keep pace with product demand, we will not be able to fulfill orders in a timely manner, which may negatively impact our financial results and overall business. Conversely, if demand for our products decreases, the fixed costs associated with excess manufacturing capacity may harm our financial results, including by decreasing gross margins and increasing research and development costs as a percentage of revenue.

Delivery schedules for our security, industrial, and inspection products tend to be unpredictable.

The demand for our security and inspection products is heavily influenced by United States and foreign governmental policies on national and homeland security, border protection, and customs activities, which depend upon government budgets and appropriations that are subject to economic conditions, as well as political changes and oil prices. As economic growth remains sluggish in various jurisdictions and appears to be deteriorating in others, and as concerns about levels of government employment and government debt continue, this could cause volatility in our revenues and earnings.

Our operations are vulnerable to interruption or loss due to natural or other disasters, the effects of climate change, power loss, strikes, and other events beyond ~~its~~our control.

~~Varex conducts~~ We conduct some of ~~its~~our activities, including manufacturing, research and development, administration, and data processing at facilities located in areas that have in the past experienced or may in the future experience natural disasters. ~~Varex’s insurance coverage for such disasters may not be adequate or continue to be available at commercially-reasonable terms, or at all.~~ A

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major disaster (such as a major fire, hurricane, earthquake, flood, tsunami, volcanic eruption, or terrorist attack) or a climate change-related event affecting ~~Varex’s~~our facilities, or those of ~~its~~our suppliers, could significantly disrupt ~~its~~our operations and delay or prevent product manufacture and shipment during the time required to repair, rebuild, or replace ~~its~~our or ~~its~~our suppliers’ damaged manufacturing facilities. These delays could be lengthy and costly. If any of ~~Varex’s~~our customers’ facilities are adversely affected by such a disaster or event, shipments of ~~its~~our products could be delayed. Additionally, customers may delay purchases of ~~Varex’s~~our products until ~~its~~our or their operations return to normal. For example, following the earthquake and tsunami disasters in Japan in 2011, the operations of Canon Medical Systems, our largest customer, were impacted, and, as a consequence, orders to and product shipment from our business were delayed for several months. Even if ~~Varex's~~our suppliers or customers are able to quickly respond to such a disaster or event, the ongoing effects ~~of the disaster~~ could create some uncertainty in the operations of its business. In addition, Varex’s facilities may be subject to a shortage of available electrical power and other energy supplies. Any shortages may increase its costs for power and energy supplies or could result in blackouts, which could disrupt the operations of its affected facilities and harm its business. Further, Varex’s products are typically shipped from a limited number of ports, and any disaster, strike, or other event blocking shipment from these ports could delay or prevent shipments and harm itsour business. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, or an outbreak of epidemic diseases have in the past had, and could in the future have, a negative effect on ~~Varex’s~~our business operations, those of ~~its~~our suppliers and customers, and the ability to travel, resulting in adverse consequences on ~~its~~our revenues and financial performance.

Risks Relating to our Intellectual Property and Information Systems

~~Varex’s~~Our competitive position would be harmed if ~~it is~~we are not able to maintain ~~its~~or defend our intellectual property rights, and protecting ~~Varex’s~~our intellectual property and defending against infringement claims can be costly.

~~Varex files~~ We file applications as appropriate for patents covering new products and manufacturing processes. ~~Varex~~We cannot be sure, however, that patents will be issued from any of ~~Varex’s~~our pending or future patent ~~applications. Varex also cannot be sure~~applications or that ~~its~~our current patents, the claims allowed under ~~its~~our current patents, or patents for technologies licensed to ~~Varex~~us will be sufficiently broad to protect ~~its~~our technology position against competitors. ~~Issued patents owned by, or licensed~~We also jointly develop intellectual property with third parties and seek to ~~Varex may be challenged, invalidated, or circumvented, or the~~protect our rights ~~granted under the patents may not provide Varex with competitive advantages. Asserting Varex’s patent rights against others in litigation or~~to such intellectual property through licenses and other ~~legal proceedings is costly and diverts managerial resources. For example, during fiscal year 2019, Varex initiated litigation asserting claims~~contractual arrangements.

Table of patent infringement against a third party. Varex intends to prosecute its claims vigorously, and Varex has experienced, and will continue to experience, increased legal expenses related to this litigation that could adversely affect its financial results. An adverse finding in this or similar patent infringement litigation could adversely impact Varex’s competitive position. In addition, Varex may not be able to detect patent infringement by others or may lose its competitive position in the market before Varex is able to do so.Contents

~~Varex~~ We also ~~relies~~rely on a combination of copyright, trade secret, and other laws, and contractual restrictions on disclosure, copying and transferring title (including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants, and other third parties), to protect ~~its~~our proprietary, and other confidential rights. ~~These protections may prove to be inadequate, since agreements may still be breached, and Varex may not have adequate remedies for a breach. Varex’s~~Our trade secrets may become known to or be independently developed by others, including as a result of misappropriation by unauthorized access to ~~Varex’s~~our technology ~~systems. If Varex’s proprietary or confidential information is misappropriated, its~~systems, and our business and financial results could be materially and adversely impacted. ~~Varex has~~We have trademarks, both registered and unregistered, that are maintained and enforced to provide customer recognition for ~~its~~our products in the marketplace, but unauthorized parties may still use them. ~~Varex~~We also ~~licenses~~license certain patented or proprietary technologies from others. In some cases, products with substantial revenues may depend on these license rights. If ~~Varex~~we were to lose the rights to license these technologies, or ~~its~~our costs to license these technologies were to materially increase, ~~its~~our business would suffer. As Varex expands its manufacturing capabilities outside of the United States, more of Varex’s intellectual property may be held in jurisdictions that do not have robust intellectual property protections, which may make it harder for Varex to adequately protect its Intellectual Property.

~~Third parties may claim that Varex is infringing upon their intellectual property, and Varex could suffer significant litigation or licensing expenses or be prevented from selling its products.~~

There is a substantial amount of litigation over patent and other intellectual property rights in the industries in which ~~Varex competes. Varex’s~~we compete. Our competitors, like companies in many high technology businesses, continually review other companies’ activities for possible conflicts with their own intellectual property rights. In addition, non-practicing entities may review ~~Varex’s~~our activities for conflicts with their patent rights. Determining whether a product infringes on a party’s intellectual property rights involves complex legal and factual issues, and the outcome of this type of litigation is often uncertain. Parties may claim that Varex is infringing upon their intellectual property rights. Varex may not be aware of intellectual property rights of others that relate to its products, services, or technologies. From time to time, ~~Varex has~~we have received notices from parties asserting infringement, and ~~Varex has~~we have been subject to

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lawsuits alleging infringement of patent or other intellectual property rights. In addition, from time to time we have, and in the future may, enter into agreements that require us to indemnify our customers for intellectual property infringement, which agreements could subject us to liability. One of our subsidiary's customers has been named as a defendant in a lawsuit alleging that the customer’s system (which incorporates our subsidiary’s products) infringes upon the plaintiff’s patent. Under the contract with the customer, our subsidiary has an obligation to indemnify the customer for damages resulting from that lawsuit, which if determined adversely could have a negative impact of our results of operations. Legal disputes relating to intellectual property have occurred, are occurring, and may occur in the future. Any dispute regarding patents or other intellectual property, including with respect to breaches of licensing agreements or other contractual arrangements, could be costly and time consuming and could divert ~~Varex’s~~our management and key personnel from ~~its~~our business operations. ~~Varex~~We may not prevail in a dispute. ~~Varex does~~We do not maintain insurance for intellectual property infringement, so costs of defense, whether or not ~~Varex is~~we are successful in defending an infringement claim, will be borne by ~~Varex~~us and could be significant. If ~~Varex is~~we are unsuccessful in defending or appealing an infringement claim ~~Varex~~or claims alleging other contractual breaches, we may be subject to significant damages, and ~~its~~our combined financial position, results of operations, or cash flows could be materially and adversely affected. ~~Varex~~We may also be subject to injunctions against development and sale of ~~its~~our products, the effect of which could be to materially reduce ~~its~~our revenues. ~~Furthermore, a third party claiming infringement~~

As we expand our manufacturing capabilities outside of the United States, more of our intellectual property may be held in jurisdictions that do not ~~be willing~~have robust intellectual property protections, which may make it harder for us to license its rights to Varex, and even if a third-party rights holder is willing to do so, the amounts Varex might be required to pay under the associated royalty or license agreement could be significant. Varex could decide to alter its business strategy or voluntarily cease the allegedly infringing actions rather than face litigation or pay a royalty, which could materially and adversely impact its business and results of operations.

adequately protect our intellectual property.

Disruption of critical information systems or material breaches in the security of ~~Varex’s~~our systems may materially and adversely affect ~~its~~our business and customer relations.

Information technology (including technology from ~~third party~~third-party providers) helps ~~Varex~~us operate efficiently, interface with and support ~~its~~our customers, maintain financial accuracy and efficiency, and produce ~~its~~our financial statements. In the ordinary course of ~~its~~our business, ~~Varex collects, processes~~we collect, process, and ~~stores~~store sensitive data, including intellectual property, proprietary business information, and ~~that~~information of customers, suppliers, and business partners, third parties accessing ~~its~~our website, patient data, and personally identifiable information of customers and employees, in ~~Varex’s~~our data centers and on ~~its~~our networks, as well as ~~third party~~in third-party off-site ~~infrastructure.~~data centers. Despite security measures, there is an increasing threat of information security attacks, including from computer viruses or other malicious codes, unauthorized access attempts, and cyber-attacks that pose risks to companies, including ~~Varex.~~us. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently, have become increasingly sophisticated, and generally are not recognized until launched against a target, ~~Varex~~we may be unable to anticipate these techniques or to implement adequate preventative measures, which could result in data leaks or otherwise compromise our confidential or proprietary information and materially disrupt our operations. If Varex does not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, Varex could be subject to, among other things, transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property through a security breach or misappropriation of intellectual property. Such security breaches could expose ~~Varex~~us to a risk of loss of information and intellectual property, litigation, and possible liability to employees, customers, shareholders, and/or regulatory authorities. If ~~Varex’s~~our data management systems do not effectively collect, secure, store, process, and report relevant data for the operation of ~~its~~our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, ~~Varex’s~~our ability to effectively plan, forecast, and execute ~~its~~our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect ~~Varex’s~~our financial condition, results of operations, cash flows, and the timeliness with which ~~Varex reports its~~we report our operating results internally and externally.

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~~Varex uses~~ We use certain cloud-based software. A security breach, whether of ~~Varex’s~~our products, of ~~Varex’s~~our customers’ network security and systems, or of third-party hosting services could disrupt access to ~~Varex’s~~our customers’ stored information and could lead to the loss of, damage to, or public disclosure of ~~Varex’s~~our customers’ stored information, including patient health information. Such an event could have serious negative consequences, including possible patient injury, regulatory action, fines, penalties and damages, reduced demand for ~~Varex’s~~our solutions, an unwillingness of ~~its~~our customers to use ~~its~~our solutions, harm to ~~its~~our reputation and brand, and time-consuming and expensive litigation, any of which could have a material and adverse effect on ~~Varex’s~~our financial results.

Risks Relating to Our Legal and Regulatory Environment

Changes in import/export regulatory regimes, tariffs, and ~~tariffs~~national policies could continue to negatively impact our business.

~~Tariffs and changes in international trade agreements or trade-related laws and regulations may have an indirect adverse impact on our business.~~ As a component manufacturer, our products are integrated into the systems and products of our OEM customers. If the United States, China or other countries levy tariffs, import restrictions, duties or other additional taxes or restrictions on our customer’s products, the demand for such products, and our components included in such products, could decrease, which could have a material adverse effect on our business. Uncertainty over tariffs and trade wars could also cause our customers to delay or cancel orders for our products.

In ~~recent years,~~the past, the United States has imposed tariffs on items imported from China and other countries that are incorporated into our products. Tariffs on these items ~~imported by us from China and other countries~~ have increased our costs and ~~has increased~~ prices and lowered gross margins on some of our ~~products. These tariffs have had~~products, thereby having a direct adverse impact on our business and results of ~~operations, and future tariffs could have a more significant impact on our business.~~operations. China has also imposed retaliatory tariffs that impact a number of ~~Varex~~

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our products, including ~~U.S.~~United States origin X-ray tubes, heat exchange units, and certain flat panel detectors. ~~The~~These tariffs ~~levied by China~~ have increased our customers’ costs for products imported into China, which has caused us to make price concessions on some products and has caused some customers to stop purchasing ~~products from us. We expect that tariffs will continue to have a negative effect on~~ our ~~business and results of operations, including the possibility of continued price concessions or loss of business.~~products.

Tariffs could limit our ability to compete for increased market share in China, which could cause our long-term prospects in China to suffer. The imposition of additional tariffs by the United States could result in the adoption of additional tariffs by China and other countries, as well as further retaliatory actions by any affected country, which could negatively impact the global market for imaging equipment and could have a significant adverse effect on our business.

Both the governments of the United States and China have granted tariff exclusions that temporarily eliminate duties payable for specific commodities, providing partial relief from such tariffs, but they must be solicited and approved on a shipment-by-shipment basis. There is no guarantee that such exclusions will be granted or extended by either government, and the United States tariff exclusions are set to expire on December 31, 2023, unless extended.

In addition to tariffs, China’s stated policy of reducing its dependence on foreign manufacturers and technology companies may result in reduced demand for our products in China, which could have a material adverse impact on our business, results of operations and financial position. There are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, results of operations and financial position.

The Chinese government recently initiated investigations into corruption in its healthcare industry. This has had a broad-based impact on the healthcare industry in China and slowed sales of healthcare products there. As a result, our sales in China have also slowed. We expect the investigations to continue into fiscal year 2024, and this could continue to adversely impact revenues in our China business.

Increasing tensions between China and Taiwan may cause the United States and/or China to impose higher tariffs, commence trade wars, move more quickly to reduce their dependence on each other’s goods, or enact boycotts against each other’s goods, and this could cause significant disruptions in the markets and industries we serve, and in our supply chain, decrease demand from customers for the ultimate products using our solutions, and materially harm our business, financial condition and results of operations.

In response to Russia's ongoing aggression against Ukraine, as substantially enabled by Belarus, the United States Department of Commerce strengthened its existing sanctions under the Export Administration Regulations against Russia and Belarus. The enhanced sanctions would require Bureau of Industry and Security export licenses in order to export our products, including for medical, health and safety, or humanitarian purposes, to Russia and Belarus. Applications for the export of products to Russia or Belarus will be reviewed under a policy of denial and reviewed on a case-by-case basis. If licenses for the export of our product are denied, it could adversely affect our business and results of operations.

A change in the percentage of our total earnings from international sales or additional changes in tax laws could increase our effective tax rate.

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Earnings from our international subsidiaries are generally taxed at rates that differ from United States rates. A change in the percentage of our total earnings from our international subsidiaries, a change in the mix of particular tax jurisdictions between our international subsidiaries, or a change in currency exchange rates could cause our effective tax rate to increase. Furthermore, while United States tax reform imposed a current tax on cumulative undistributed earnings, these earnings could also become subject to incremental foreign withholding or United States state taxes should they actually be remitted to the United States, in which case our financial results could be materially and adversely affected.

Statutory changes included in proposed United States legislation, if passed, including interpretive guidance, could have a material impact on income tax expense, the effective tax rate, or the value of deferred tax assets and liabilities. Changes in the valuation of our deferred tax assets or liabilities, additional changes in tax laws or rates, changes in the interpretation of tax laws in other jurisdictions, or other changes beyond our control could materially and adversely affect our financial position and results of operations.

We have entities in certain jurisdictions with cumulative net operating losses for which no income tax benefit can be recorded due to full valuation allowance positions. There could be additional future losses in these and other jurisdictions that would negatively impact our effective tax rate.

Compliance with foreign laws and regulations applicable to the marketing, ~~manufacture,~~manufacturing, and distribution of ~~Varex’s~~our products may be costly, and failure to comply may result in unfavorable legal proceedings, in significant penalties and other harm to ~~Varex’s~~our business.

Regulatory requirements affecting Varex’s operations and sales outside the United States vary from country to country, often differing significantly from those in the United States. In general, outsideOutside the United States, some of ~~Varex’s~~our products are regulated as medical devices by foreign governmental agencies similar to the FDA.

For ~~Varex~~us to market ~~its~~our products internationally, ~~Varex~~we must obtain clearances or approvals for products and product ~~modifications. These processes (including, for example, in the EU, the European Economic Area (“EEA”), Switzerland, Brazil, Australia, China, Japan and Canada)~~modifications, which can be time consuming, expensive, uncertain, and ~~uncertain,~~ which can delay ~~Varex’s~~our ability to market ~~products in those countries.~~products. Delays in the receipt of or failure to receive regulatory approvals, the inclusion of significant limitations on the indicated uses of a product, the loss of previously obtained approvals or failure to comply with existing or future regulatory requirements could restrict or prevent ~~Varex~~us from doing business in a country or subject ~~Varex~~us to a variety of enforcement actions and civil or criminal penalties, which would materially and ~~materially and~~ adversely affect ~~its~~our business. In addition, compliance with changing regulatory schemes may add additional complexity, cost, and delays in marketing, or selling ~~Varex’s~~our products.

Within the ~~EU/EEA, Varex~~European Union ("EU") and the European Economic Area ("EEA"), we must obtain, and in turn affix, a CE mark certification, ~~which is a European marking of conformity~~ that indicates that a product meets the essential requirements of the ~~Medical Device Directive. Compliance with the~~EU’s Medical Device Directive ~~is done through a self-certification process that is then verified by an independent certification body called a “Notified Body,” which is an organization empowered by~~(“MDD”) and the ~~legislature to conduct this verification. Once the CE mark is affixed, the Notified Body will regularly audit Varex to ensure that it remains in compliance with the applicable European laws and~~EU Medical Device ~~Directive.~~Regulations. By affixing the CE mark to ~~its~~our product, ~~Varex is~~we are certifying that ~~its~~our products comply with the laws and regulations required by the EU/EEA countries, thereby allowing the free movement of ~~its~~our products within these countries and others that accept CE mark standards. If ~~Varex~~we cannot support ~~its~~our performance claims and demonstrate compliance with the applicable European laws and the ~~Medical Device Directive, Varex~~MDD, we would lose ~~its~~our right to affix the CE mark to ~~its~~our products, which would prevent ~~Varex~~us from selling ~~its~~our products within the EU/EEA/Switzerland territory and in other countries that recognize the CE mark. In April 2017, the European Commission adopted two new regulations on medical devices. These new regulations impose stricter requirements for placing medical devices in the EU market, as well as for Notified Bodies. These new regulations have resulted in the limited availability of recognized Notified Bodies, which could delay our ability to obtaining CE marks. Varex may be subject to risks associated with additional testing, modification, certification, or amendment of its existing market authorizations, or Varex may be required to modify products already installed at its customers’ facilities to comply with the official interpretations of these revised regulations.

~~Varex is~~We are also subject to international laws and regulations of general applicability relating to matters such as environmental protection, safe working conditions, and manufacturing practices, as well as others. These are often comparable to, if not more stringent than, the equivalent regulations in the United States. Sales overseas are also affected by regulation of matters such as product standards, packaging, labeling, environmental and product recycling requirements, import and export restrictions, tariffs, duties, and taxes.

In addition, ~~Varex is~~we are required to timely file various reports with international regulatory authorities similar to the reports ~~it is~~we are required to timely file with ~~U.S.~~United States regulatory authorities, including reports required by international adverse event reporting regulations. If these reports are not timely filed, regulators may impose sanctions, including temporarily suspending ~~Varex’s~~our market authorizations or CE mark, and sales of ~~its~~our products may suffer.

~~Further, as Varex enters~~As we enter new businesses or ~~pursues~~pursue new business opportunities internationally, or as regulatory schemes change, ~~Varex~~we may become subject to additional laws, rules, and ~~regulations. Becoming familiar with~~regulations, and ~~implementing the infrastructure necessary to comply with these laws, rules, and regulations is~~compliance can be costly. ~~Additionally, in some countries, Varex relies or may rely in the future on foreign distributors and agents to assist in complying with foreign regulatory requirements, and Varex cannot~~

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~~be sure that they will always do so.~~ The failure ~~of Varex~~by us or ~~its~~our agents to comply with these laws, rules, and regulations could delay the introduction of new products, cause reputational harm, or result in investigations, fines, injunctions, civil penalties, criminal prosecution, or an inability to sell ~~Varex’s~~our products in or to import ~~its~~our products into certain countries, which could materially and adversely affect ~~Varex’s~~our business.

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Compliance with ~~U.S.~~United States laws and regulations applicable to the marketing, ~~manufacture,~~manufacturing, and distribution of ~~Varex’s~~our products may be costly, and failure or delays in obtaining regulatory clearances or approvals, or failure to comply with applicable laws and regulations could ~~prevent Varex from distributing its products, require Varex to recall its products, or result in significant penalties or other~~ harm ~~to Varex’s~~our business.

~~Some~~If we or any of Varex’s products and those of OEMs that incorporate Varex’s products are subject to extensive and rigorous government regulation in the United States. Compliance with these laws and regulations is expensive and time-consuming, and failureour suppliers, distributors, agents, or customers fail to comply with ~~these laws~~FDA, Federal Trade Commission, or other applicable United States regulatory requirements or are perceived to have failed to comply with regulations, we may face:

•adverse publicity affecting both us and ~~regulations could materially~~our customers;

•increased pressures from competitors;

•investigations by governmental authorities;

•fines, injunctions, civil penalties, and ~~adversely affect Varex’s business.~~criminal prosecution;

•partial suspension or total shutdown of production facilities or the imposition of operating restrictions;

•increased difficulty in obtaining required clearances or approvals or losses of clearances or approvals already granted;

•seizures or recalls of our products or those of our customers;

•delays in purchasing decisions by customers or cancellation of existing orders;

•the inability to sell our products; and

•difficulty in obtaining product liability or operating insurance at a reasonable cost, or at all.

Generally, ~~Varex’s~~our manufacturing operations for medical devices, and those of ~~its~~our third-party manufacturers, are required to comply with the ~~Quality System Regulations (“QSR”)~~QSR of the FDA, as well as other federal and state regulations for medical devices and radiation-emitting products. The FDA makes announced and unannounced periodic and on-going inspections of medical device manufacturers to determine compliance with QSR and, in connection with these inspections, issues reports known as Form FDA 483 reports when the FDA believes the manufacturer has failed to comply with applicable regulations and/or procedures. If observations from the FDA issued on Form FDA 483 reports are not addressed and/or corrective action is not taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a warning letter and/or proceed directly to other forms of enforcement action. Similarly, if a warning letter were issued, prompt corrective action to come into compliance would be required. Failure to respond in a timely manner to ~~Form FDA 483 observations,~~ a warning letter or any other notice of noncompliance with applicable regulations and/or procedures and to promptly come into compliance could result in the FDA bringing an enforcement action, which could include the total shutdown of ~~Varex’s~~our production facilities, denial of importation rights to the United States for products manufactured in overseas locations, adverse publicity, and criminal and civil fines. The expense and costs of any corrective actions that ~~Varex~~we may take, which may include product recalls, correction and removal of products from customer sites, ~~and/~~or changes to ~~its~~our product manufacturing and quality systems, could materially and adversely impact ~~Varex’s~~our financial results and may also divert management resources, attention, and time. Additionally, if a warning letter were issued, customers could delay purchasing decisions or cancel orders, and ~~Varex~~we could face increased pressure from ~~its~~our competitors, who could use the warning letter against ~~Varex~~us in competitive sales situations, either of which could materially and adversely affect ~~Varex’s~~our reputation, business, and stock price.

~~In addition, Varex~~Our OEM customers are responsible for obtaining 510(k) pre-market notification clearance on their systems that integrate our products. A substantial majority of our products are “Class I” devices that do not require 510(k) clearance, but we do produce software that is classified as a Class II device subject to 510(k) clearance. Unless an exception applies, we may be required by FDA regulations to obtain a 510(k) pre-market notification clearance in connection with the manufacture of a new medical device or a new indication for use of, or other significant change in, an existing currently marketed medical device before we can market or sell those products in the United States or in connection with modifications or enhancements to a product that could significantly affect its safety or effectiveness, or that would constitute a major change in the intended use of the device, technology, materials, labeling, packaging, or manufacturing process. We cannot ensure that the FDA will agree with our decisions not to seek additional approvals or clearances for particular modifications to our products or that we will be successful in obtaining new 510(k) clearances for modifications. Obtaining clearances or approvals is time consuming, expensive, and uncertain. Furthermore, even if we are granted regulatory clearances or approvals, they may include significant limitations on the indicated uses of the product, which may limit the market for the product. If we are unable to obtain required FDA clearance or approval for a product or are unduly delayed in doing so, or the uses of that product were limited, our business could suffer.

We are required to timely file various reports with the FDA, including reports required by the medical device reporting regulations (“MDRs”), that require ~~Varex~~we report to regulatory authorities if ~~its~~our devices may have caused or contributed to a death or serious injury, or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur. If ~~Varex initiates~~we initiate a correction or removal of a device to reduce a risk to health posed by the device, ~~Varex~~we would be required to submit a publicly-available correction and removal report to the FDA and, in many cases, similar reports to other regulatory agencies. This report could be classified by the FDA as a device recall, which could lead to increased scrutiny by the FDA, other international regulatory agencies, and ~~Varex’s~~our customers regarding the quality and safety of ~~Varex’s~~our devices. If these MDRs or correction and removal reports are not filed on a timely basis, regulators may impose sanctions, sales of ~~Varex’s~~our products may suffer, and ~~Varex~~we may be subject to product liability or regulatory enforcement actions, all of which could harm ~~its~~our business.

Government regulation may also cause significant delays or ~~even~~ prevent the marketing and full commercialization of future products or services that ~~Varex~~we may develop and/or may impose costly requirements on ~~Varex’s~~our business. ~~Further, as Varex enters~~As we enter new businesses or ~~pursues~~pursue new business opportunities, ~~Varex~~we will become subject to additional laws, rules, and regulations, including FDA and foreign rules and ~~regulations. Becoming familiar with~~regulations and ~~implementing the infrastructure necessary to comply with these laws, rules, and regulations is costly and time consuming. In addition, failure~~compliance can be costly. Failure to comply with these laws, rules and regulations could delay the introduction of new products and could materially and adversely affect ~~Varex’s~~our business.

If Varex or any of its suppliers, distributors, agents, or customers fail to comply with FDA, Federal Trade Commission, or other applicable U.S. regulatory requirements or are perceived to have failed to comply with regulations, Varex may face:

•~~adverse publicity affecting both Varex and its customers;~~

•~~increased pressures from competitors;~~

•~~investigations by governmental authorities;~~

•~~fines, injunctions, civil penalties, and criminal prosecution;~~

•~~partial suspension or total shutdown of production facilities or the imposition of operating restrictions;~~

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•~~increased difficulty in obtaining required clearances or approvals or losses of clearances or approvals already granted;~~

•~~seizures or recalls of Varex products or those of its customers;~~

•~~delays in purchasing decisions by customers or cancellation of existing orders;~~

•~~the inability to sell Varex products; and~~

•~~difficulty in obtaining product liability or operating insurance at a reasonable cost, or at all.~~

~~Varex is~~ We are also subject to federal and state laws and regulations of general applicability relating to matters such as environmental protection, safe working conditions, manufacturing practices, and other matters. Insurance coverage is not commercially available for violations of law, including the fines, penalties, or investigatory costs that ~~Varex~~we may incur as the consequence of regulatory violations. Consequently, ~~Varex does~~we do not have insurance that would cover this type of liability.

~~Varex sells~~We sell certain X-ray tube products as replacements which are subject to medical device certification and product registration laws and regulations, which vary by country and are subject to change, and ~~Varex~~we may be unable to receive registration approval or renewal of existing ~~registrations if it fails to meet regulatory approval requirements or if the approval process becomes commercially infeasible or impractical.~~

registrations.

~~Varex markets~~We market and ~~distributes~~distribute certain X-ray tubes through distributors and third-party/multi-vendor service organizations that are used as equivalent replacements for specific OEM tubes. ~~Varex is~~We are subject to medical device certification and product registration laws, which vary by country and are subject to periodic reviews and changes by regulatory authorities in those countries. For example, to sell X-ray tubes for replacement applications in China, product registrations must be approved by the new National Medical Products Administration (“NMPA”). Varex must comply with the requirements of the NMPA, and Varex may not be able to receive registration approval or renewal of existing registrations if it fails to meet regulatory approval requirements or if the process of gaining approval becomes commercially infeasible or impractical. Certain of these local laws and regulations have the effect of serving as a barrier to trade and can be difficult to navigate predictably.

In addition, certain countries in which ~~Varex~~our products are sold require products to undergo re-registration if the product is altered in any significant way, and it may be determined that the separation of Varex from Varian, including Varex’s new name, will require these products to be re-registered as Varex products, even if they are physically unchanged.way.

These registration processes can be costly and time consuming, and customers may decide to purchase products from ~~Varex’s~~our competitors that do not have to be involved in a re-registration process. In addition, ~~Varex’s~~our inability to receive or renew product registrations may prevent ~~Varex~~us from marketing and/or distributing those particular products for replacement applications in the specific country.

Existing and future healthcare reforms ~~including the Affordable Care Act~~ and changes to reimbursement rates, may indirectly have a material adverse effect on ~~Varex’s~~our business and results of operations.

Sales of ~~Varex’s~~our products to OEMs in the medical sector indirectly depend on whether adequate reimbursement is available for ~~its~~our customers’ products from a variety of sources, such as government healthcare insurance programs, including U.S. Medicare and Medicaid programs, foreign government programs, private insurance plans, health maintenance organizations, and preferred provider organizations. Without adequate reimbursement, the demand for ~~Varex’s~~our customers’ products, and therefore indirectly ~~Varex’s~~our products, may be ~~limited.~~limited, which could harm our business, results of operations, financial condition, and prospects.

Healthcare reform proposals and medical cost containment measures in the United States and in many foreign countries could limit the use of both ~~Varex’s~~ours and ~~its~~our customers’ products, reduce reimbursement available for such use, further tax the sale or use of ~~Varex’s~~our products, and further increase the administrative and financial burden of compliance. These reforms and measures, including the uncertainty in the medical community regarding their nature and effect, could have a material and adverse effect on Varex’s and its customers’ purchasing decisions regarding its products and treatments and could harm Varex’s business, results of operations, financial condition, and prospects. Varex cannot predict the specific healthcare programs and regulations that will be ultimately implemented by local, regional, and national governments globally. However, anyAny changes that lower reimbursements for ~~Varex’s~~us or ~~its~~our customers’ products and/or procedures using these products, including, for example, existing reimbursement incentives to convert from analog to digital X-ray systems, or changes that reduce medical procedure volumes or increase cost containment pressures on ~~Varex~~us or others in the healthcare sector could materially and adversely affect ~~Varex’s~~our business and results of operations.

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~~Varex is~~We are subject to federal, state, and foreign laws governing ~~its~~our business practices which, if violated, could result in substantial penalties. Additionally, challenges to or investigations into ~~Varex’s~~our practices could cause adverse publicity and be costly to respond to and thus could harm ~~its~~our business.

Anti-corruption laws and regulations. ~~Varex is~~We are subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, as well as similar laws in foreign countries, such as the U.K. Bribery Act and the Law On the Fundamentals of Health Protection in the Russian Federation. In general, there is a worldwide trend to strengthen anti-corruption laws and their enforcement, and the healthcare industry and medical equipment manufacturers have been particular targets of these investigation and enforcement efforts.Act. Any violation of these laws by ~~Varex~~us or ~~its~~our agents or distributors could create substantial liability for ~~Varex,~~us, subject ~~its~~our officers and directors to personal liability, and cause a loss of reputation in the market. ~~Varex operates~~We operate in many countries, including India and China, where the public sector is perceived as being corrupt. ~~Varex’s~~Our strategic business plans include expanding ~~its~~our business in regions and countries that are rated as higher risk for corruption activity by Transparency International e.V., an international non-profit that publishes an annual corruption perception ~~index.~~index, which could subject us and our officers and directors to increased scrutiny and increased liability from our business operations. Becoming familiar with and implementing the infrastructure necessary to comply with laws, rules, and regulations applicable to new business activities and mitigating and protecting against corruption risks could be costly. Failure by ~~Varex~~us or ~~its~~our agents or distributors to comply with these laws, rules, and regulations could delay ~~its~~our expansion into high-growth markets and could materially and adversely affect ~~its~~our business. Varex will likely do more business, directly and potentially indirectly, in countries where the public sector is perceived to be corrupt. Increased business in higher-risk countries could subject Varex and its officers and directors to increased scrutiny and increased liability from its business operations.

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Competition and trade compliance laws. ~~Varex is~~We are subject to various competition and trade compliance laws in the jurisdictions where ~~it operates.~~we operate throughout the world. Regulatory authorities in those jurisdictions may have the power to subject ~~Varex~~us to sanctions and impose changes or conditions in the way ~~Varex conducts its~~we conduct our business. An increasing number of jurisdictions provide private rights of action for competitors or consumers to assert claims of anti-competitive conduct and seek damages. Increased government scrutiny of ~~Varex’s~~our actions or enforcement or private rights of action could materially and adversely affect ~~its~~our business or damage ~~its~~our reputation. ~~Varex~~We may be required to conduct internal investigations or face audits or investigations by one or more domestic or foreign government agencies, which could be costly and time consuming and could divert ~~its~~our management and key personnel from ~~its~~our business operations. An adverse outcome under any such investigation or audit could subject ~~Varex~~us to fines ~~and/or or~~and criminal or other penalties, which could materially and adversely affect ~~Varex’s~~our business and financial results. Furthermore, competition laws may prohibit or increase the cost of future acquisitions that ~~Varex~~we may desire to undertake.

Laws and ethical rules governing interactions with healthcare providers. ~~Varex does not generally sell its products directly to healthcare providers, but~~We may occasionally sell ~~its~~our products to healthcare providers through ~~distributors.~~distributors or otherwise engage healthcare providers to provide services. The U.S. Medicare and Medicaid “anti-kickback” laws, and similar state laws, prohibit payments or other remuneration that is intended to induce hospitals, physicians, or others either to refer patients or to purchase, lease, or order, or to arrange for or recommend the purchase, lease, or order of healthcare products or services for which payment may be made under federal and state healthcare programs, such as Medicare and Medicaid. These laws affect ~~Varex’s~~our sales, marketing, and other promotional activities by limiting the kinds of financial arrangements ~~Varex~~we may have with hospitals, physicians, or other potential purchasers of ~~its~~our products. They particularly impact how ~~Varex structures its~~we structure our sales offerings, including discount practices, customer support, education and training programs, physician consulting, research grants, and other fee-for-service arrangements. These laws are broadly written, and it is often difficult to determine precisely how these laws will be applied to specific circumstances.

Federal and state “false claims” laws generally prohibit knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other government payors that are false or fraudulent, or for items or services that were not provided as claimed. Although ~~Varex does~~we do not submit claims directly to payors, manufacturers can be, and have been, held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by providing inaccurate billing or coding information to customers or through certain other activities, including promoting products for uses not approved or cleared by the FDA, which is called off-label promotion. Violating “anti-kickback” and “false claims” laws can result in civil and criminal penalties, which can be substantial, as well as potential mandatory or discretionary exclusion from healthcare programs for noncompliance. Even an unsuccessful challenge or investigation into ~~Varex’s~~our practices could cause adverse publicity and be costly to defend and thus could harm ~~its~~our business and results of operations. Additionally, several recently-enacted state and federal laws, including laws in Massachusetts and Vermont, and the federal Physician Payment Sunshine Act, now require, among other things, extensive tracking and maintenance of databases regarding the disclosure of equity ownership and payments to physicians, healthcare providers, and hospitals. These laws may require ~~Varex~~us to implement the necessary and costly infrastructure to track and report certain payments to healthcare providers. Failure to comply with these ~~new~~ tracking and reporting laws could subject ~~Varex~~us to significant civil monetary penalties.

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~~Varex is~~Other Laws. We are subject to ~~similar~~other laws in foreign countries where ~~it conducts~~we conduct business. For example, within the EU, the control of unlawful marketing activities is a matter of national law in each of the member states. The member states of the EU closely monitor perceived unlawful marketing activity by companies. ~~Varex~~We could face civil, criminal, and administrative sanctions if any member state determines that ~~Varex has~~we have breached ~~its~~our obligations under such state’s national laws. Industry associations also closely monitor the activities of member companies. If these organizations or authorities name ~~Varex~~us as having breached ~~its~~our obligations under their regulations, rules, or standards, ~~its~~our reputation would suffer, and ~~its~~our business and financial condition could be materially and adversely affected.

Certain of ~~Varex’s~~our products are subject to regulations relating to use of radioactive material, compliance with which may be costly, and a failure to comply ~~therewith~~with these regulations may materially and adversely affect ~~Varex’s~~our business.

As a manufacturer and seller of medical devices and devices emitting radiation or utilizing radioactive by-product material, ~~Varex~~we and some of ~~its~~our suppliers and distributors are subject to extensive regulation by United States governmental authorities, such as the FDA, the Nuclear Regulatory Commission (“NRC”), and state and local regulatory agencies, which is intended to ensure the devices are safe and effective and comply with laws governing products which emit, produce, or control radiation. These regulations govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale, ~~and~~ marketing, and disposal of ~~Varex’s~~our products. ~~Varex is~~We are also subject to international laws and regulations that apply to manufacturers of radiation-emitting devices and products utilizing radioactive materials. These are often comparable to, if not more stringent than, the equivalent regulations in the United States.

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Our industrial and medical devices utilizing radioactive material are subject to NRC clearance and approval requirements, and the manufacture and sale of these products are subject to extensive federal and state regulation that varies from state to state and among regions. ~~Varex’s~~Our manufacture, distribution, installation, service, and removal of industrial devices utilizing radioactive material or emitting radiation also requires ~~Varex~~us to obtain a number of licenses and certifications for these devices and materials. Service of these products must also be performed in accordance with a specific radioactive materials licenses. Obtaining licenses and certifications may be time consuming, expensive, and uncertain.

The handling and disposal of radioactive materials resulting from the manufacture, use, or disposal of ~~Varex’s~~our products may impose significant costs and requirements. Disposal sites for the lawful disposal of materials generated by the manufacture, use, or decommissioning of ~~Varex’s~~our products may no longer accept these substances in the future or may accept them on unfavorable terms.

~~If Varex is unable to obtain required FDA clearances or approvals for a product or is unduly delayed in doing so, or the uses of that product were limited, Varex’s business could suffer.~~

Typically, Varex’s OEM customers are responsible for obtaining 510(k) pre-market notification clearance on their systems that integrate Varex products. A substantial majority of Varex’s products are “Class I” devices that do not require 510(k) clearance, but Varex does produce software that is classified as a Class II device subject to 510(k) clearance. Unless an exception applies, Varex may be required by FDA regulations to obtain a 510(k) pre-market notification clearance in connection with the manufacture of a new medical device or a new indication for use of, or other significant change in, an existing currently marketed medical device before it can market or sell those products in the United States. Modifications or enhancements to a product that could significantly affect its safety or effectiveness, or that would constitute a major change in the intended use of the device, technology, materials, labeling, packaging, or manufacturing process also require a new 510(k) clearance. Although manufacturers make the initial determination whether a change to a cleared device requires a new 510(k) clearance, Varex cannot ensure that the FDA will agree with its decisions not to seek additional approvals or clearances for particular modifications to its products or that Varex will be successful in obtaining new 510(k) clearances for modifications. Obtaining clearances or approvals is time consuming, expensive, and uncertain. Varex may not be able to obtain the necessary clearances or approvals or may be unduly delayed in doing so, which could harm its business. Furthermore, even if Varex is granted regulatory clearances or approvals, they may include significant limitations on the indicated uses of the product, which may limit the market for the product. If Varex is unable to obtain required FDA clearance or approval for a product or is unduly delayed in doing so, or the uses of that product were limited, Varex’s business could suffer.

~~Unfavorable results of legal proceedings could materially and adversely affect Varex’s financial results.~~

From time to time, Varex is a party to or otherwise involved in legal proceedings, claims, government inspections, audits or investigations, and other legal matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise. Legal proceedings are often lengthy, taking place over a period of years with interim motions or judgments subject to multiple levels of review (such as appeals or rehearings) before the outcome is final. Litigation and other legal proceedings, claims, government inspections, audits and investigations are subject to significant uncertainty and may be expensive, time consuming, and

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~~disruptive to Varex’s operations. For these and other reasons, Varex may choose to settle legal proceedings and claims, regardless of their actual merit.~~

If a legal proceeding were ultimately resolved against Varex, it could result in significant compensatory damages, and, in certain circumstances, punitive damages, disgorgement of revenue or profits, remedial corporate measures, or injunctive relief imposed on Varex. If Varex’s existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a result of such legal proceeding were to restrain its ability to market one or more of its material products or services, its combined financial position, results of operations, or cash flows could be materially and adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result in adverse publicity and damage to Varex’s reputation, which could materially and adversely impact its business.

~~New accounting pronouncements or changes in interpretation or application 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 subject to environmental laws around the world. These~~Environmental 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 can incur significant environmental costs and liabilities, some recurring and others not recurring. Although it follows procedures intended to comply with existing environmental laws, Varex, likeLike other businesses, we 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.

Pursuant to the Separation and Distribution Agreement we entered into with Varian when we spun off from Varian, we are obligated to indemnify Varian for 20% of the cleanup liabilities related to prior corporate restructuring activities undertaken while we were a division of Varian. This includes facilities sold as part of Varian’s electron devices business in 1995 and thin film systems business in 1997. The U.S. Environmental Protection Agency (“EPA”) or third parties have named Varian as a potentially responsible party under the amended Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), at sites to which Varian or the facilities of the businesses sold in 1995 and 1997 were alleged to have shipped waste for recycling or disposal (the “CERCLA sites”). We anticipate that we will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these CERCLA sites (after adjusting for any insurance proceeds or tax benefits received by Varian). We assess this indemnification obligation quarterly with Varian and make accruals accordingly. These accruals have historically been small, but can sometimes fluctuate significantly from period to period. For example, during the second quarter of fiscal year 2023, Varian informed us of an adjustment to their estimate of their liability, which resulted in an increase in our liability of approximately $2.9 million, net of expected insurance proceeds.

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 to being a public company place significant demands on Varex’s management, administrative, and operational resources, including accounting and information technology resources.Environmental, Social, Governance Risks

~~As a public company, Varex~~Our business is subject to ~~the~~evolving Environmental, Social, and Governance (“ESG”) requirements and stakeholder expectations that could expose us to numerous risks.

Regulators, customers, investors, and other stakeholders are increasingly focusing on ESG issues and related disclosures. Changing ESG requirements and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations. We may also communicate certain ESG initiatives and goals in our SEC filings or in other public disclosures. If our ESG-related data, processes, and reporting ~~requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), and is required~~are incomplete or inaccurate, or if we fail to ~~prepare its financial statements according~~achieve progress with respect 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~~our ESG goals on a timely ~~manner~~basis, or ~~to otherwise comply with applicable law~~at all, our reputation, business, financial performance, and growth 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 Nasdaqadversely affected.

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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 In addition, our customers have ~~negatively impacted Varex.~~

~~Varex must, among other things, establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex~~adopted, and may continue to adopt, procurement policies that require us to comply with social and environmental provisions. An increasing number of investors have adopted, and may continue to adopt, ESG policies for their portfolio companies, and various voluntary sustainability initiatives and organizations have promulgated different social and environmental and sustainability guidelines. These practices, policies, provisions, and initiatives are under active development, subject to change, can be ~~revised over time~~unpredictable and conflicting, and may prove difficult and expensive for us to ~~adapt to changes in Varex’s~~comply with and could negatively affect our reputation, business, or ~~changes~~financial condition.

If we are unable to retain, attract, expand, integrate, and train our management team and other key personnel, we may not be able to maintain or expand our business.

Our future success depends on our ability to retain, attract, expand, integrate, and train our management team and other key personnel, such as qualified engineering, service, sales, marketing, manufacturing, and other staff. We compete for key personnel with other medical equipment and software manufacturers and technology companies, as well as universities and research institutions. We have observed an overall tightening and increasingly competitive labor market over the past years, which has resulted in ~~applicable accounting rules. As described~~increased wages offered by other employers and voluntary attrition of employees in the ~~following risk factor, Varex has identified material weaknesses~~industry, making it more difficult to recruit, hire, and retain talent. Because competition is intense, particularly in its internal control over financial reporting. Varex cannot assure that its internal control over financial reporting will be effective in the future or that additional material weaknesses will not be discovered with respectUtah, where unemployment rates are relatively low, compensation-related costs have increased and could continue to ~~a prior period~~increase, significantly. Additionally, our United States-based employees, including our senior management team, work for ~~which it had previously believed that internal controls were effective.~~

~~Matters impacting Varex’s internal controls may cause Varex to be unable to report its financial information~~us on ~~a timely~~an at-will basis, or may cause Varex to restate previously-issued financial information, thereby subjecting Varex to adverse regulatory consequences, including sanctions or investigations by the SEC or in respect of violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in Varex and ~~the reliability of its 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 any such employees will remain with us. Replacing key employees may take an extended period of time, and to the ~~remedial measures being implemented by Varex's management will~~extent we hire employees from competitors, we also may be ~~successful. In addition, because of the COVID-19 pandemic, a larger number of Varex’s employees~~subject to allegations that they have been improperly solicited or divulged proprietary or other confidential information. Freezing new positions or terminating existing ones could hinder our ability to execute our strategic plan and achieve growth targets, resulting in long-term sacrifices for short-term gains. Further, potential employee turnover resulting from work from home policy changes, limited growth opportunities and competitive market conditions could lead to knowledge loss and decreased productivity. If we are ~~working remotely, which~~unable to retain or hire and train qualified personnel, we may ~~make it harder to remediate existing material weaknesses and might make it harder~~not be able to maintain ~~proper internal controls over financial reporting. If Varex is unable~~or expand our business. Similarly, if we fail to ~~remediate the material weaknesses, or is otherwise unable~~adequately invest in leadership training and career development resources this could limit employee growth, lead to ~~maintain~~shortages of skilled personnel, hinder effective ~~internal control over financial reporting or disclosure controls~~management and ~~procedures, Varex's ability to record, process~~decision making, 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.

hamper overall organizational success.

Risks Relating to Our Indebtedness

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

As of October 2, 2020, Varex’s total combined indebtedness was approximately $511.3 million. The borrowings under Varex’s 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 due 2027 (the “Senior Secured Notes”) bear interest at a fixed rate of 7.875%.

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

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

•~~limiting Varex’s ability to borrow additional funds as needed or increasing the costs of any such 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 cash requirements in the future are greater than expected, its cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and Varex may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to refinance Varex’s debt. For example, holders of the Convertible Notes will have the right to require Varex 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 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 to deliver solely shares of common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), Varex will be required to make cash payments for the Convertible Notes being converted. However, Varex may not have enough available cash or be able to obtain financing at the time Varex is 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, 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 significant debt obligations that could adversely affect its business, profitability and ability to meet its 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.

As of September 29, 2023, our total combined indebtedness was approximately $448.0 million of principal, including our 4.00% Convertible Senior Unsecured Notes due 2025 (the "Convertible Notes") and our 7.875% Senior Secured Notes due 2027 (the “Senior Secured Notes”). For more information regarding our borrowings, see Note 9, Borrowings of the Notes to Consolidated Financial Statements of this report.

Our ~~ABL Facility~~$100 million revolving credit facility (the “Asset-Based Loan,” or "ABL Facility") and the indenture governing our Senior Secured Notes impose significant ~~operating~~operational and financial restrictions on ~~us.~~

~~These restrictions limit~~us that include, but are not limited to 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;

•limited in our ability to borrow additional funds as needed or increasing the cost of such borrowing;

•challenged in satisfying our obligations, including our debt obligations;

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•vulnerable 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;

•required 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;

•at a disadvantage compared to competitors that may have proportionately less debt; or

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

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~~provision, and 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.

If our cash requirements in the future are greater than expected, our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to refinance our debt. Any future refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants which could further restrict our business operations. Additionally, the indentures relating to our notes limit the use of the proceeds from any disposition of our assets. As a result, the indentures may prevent us from using the proceeds from such dispositions to satisfy our debt service obligations.

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~~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,~~Facility; and 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.fluctuations. 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 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~~in the ~~COVID-19 outbreak,~~past have led and in the future 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 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 may not be able to make those payments or borrow sufficient funds from alternative sources to make those payments. Even if Varex 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 will limit the use of the proceeds from any disposition of our assets. As a result, the Indenture may prevent us from using the proceeds from such dispositions to satisfy our debt service obligations.

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~~ 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~~ which 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~~Notes and could adversely affect the value of ~~Varex~~our common stock.

~~Risks Relating to Our Common Stock~~

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

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

~~Varex’s quarterly and annual operating results, including its 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 and its competitors;~~

•~~change in its or its 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 revenues represented by its 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 revenues represented by its 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 effective tax rate, which may or may not be known to Varex 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~~Risks Relating to ~~its organizational structure, which may result in restructuring or other charges;~~

•~~disruptions in its operations, including its 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.~~

Because many of Varex’s 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 gross margins fall below the expectation of securities analysts and investors, the trading price of Varex common stock may decline.

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

The conversion of the Convertible Notes may dilute the ownership interests of Varex’s stockholders. On conversion of the Convertible Notes, Varex has 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 to settle our conversion obligation in shares of common stock or a combination of cash and shares of common stock, any sales of Varex common stock issuable on such conversion could adversely affect prevailing market prices of Varex’s 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 common stock, any of which could depress the market price of Varex’s common stock.

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~~ If we elect to settle our conversion obligation in ~~Varex’s Amended~~shares of common stock or a combination of cash and ~~Restated Certificate~~shares of ~~Incorporation, its Amended and Restated Bylaws, its Indenture, and~~common stock, any sales of ~~Delaware law, may prevent or delay an acquisition~~our common stock issuable on such conversion could adversely affect prevailing market prices of ~~Varex, which could decrease the trading price of Varex’s~~our common stock.

Varex’s Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain, and Delaware law contains, 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 board of directors rather than to attempt a hostile takeover. These provisions include, among others:

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

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

•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 did not elect to be exempt from Section 203~~the existence 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 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 board of directors determines is not in the best interests of Varex and Varex’s stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

~~Furthermore, certain provisions in Varex’s Indenture governing~~ the Convertible Notes may ~~make it more difficult or expensive for a third party to acquire Varex. For example,~~encourage short selling by market participants because the ~~Indenture requires Varex, 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 Convertible Notes in connection with a make-whole fundamental change. A takeover of Varex 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 Indenture also prohibits Varex from engaging in a merger or acquisition unless, among other things, the surviving entity assumes the obligations under the Convertible Notes and Varex’s Indenture. These and other provisions in Varex’s Indenture could deter or prevent a third party from acquiring Varex even when the acquisition may be favorable to holders of the Convertible Notes could be used to satisfy short positions, or ~~Varex’s stockholders.~~anticipated conversion of the Convertible Notes into shares of our common stock, any of which could depress the market price of our common stock.

Risks Relating to Our Spin-Off

Liabilities related to ~~Varex’s~~our operations when ~~it was~~we were part of Varian, or liabilities associated with ~~its~~the 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~~This 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 financially responsible for ~~liabilities allocable to Varex before the spin-off and for~~ information contained in ~~the Varex~~our registration statement that describes ~~the~~Varex, our separation ~~Varex, and~~from Varian, the transactions contemplated by the Separation and Distribution ~~Agreement.~~Agreement, and liabilities that were allocable to Varex before the spin-off. We may be subject to substantial liabilities if itwe were required to indemnify Varian or if Varian iswere 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.

General Risks

Failure to maintain effective internal controls and procedures could negatively impact us.

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 our business or changes in applicable accounting rules. We cannot assure that our internal control over financial reporting will be effective in the future or that material weaknesses will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If our internal controls and procedures are not effective, our financial statements may not accurately reflect the results of 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 us and the reliability of our financial statements, which could affect our stock price.

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 3429 other facilities throughout North America, Europe, and Asia ~~(located in 8 states and 17 foreign countries)~~ that comprise over ~~2 million~~800,000 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.

We believe our current facilities are well-maintained and adequate to meet our current and reasonably anticipated future needs. We believe we will be able to renew leases, as needed, on acceptable terms or that we will be able to find suitable alternatives.

Item 3. Legal Proceedings

We are subject to various claims, complaints and legal actions in the normal course of business from time to time. WeThe resolution of such claims, complaints and legal actions is subject to significant uncertainty and may be expensive, time consuming, and disruptive to our operations. At the present time, we do not believe we have any ~~currently~~current or 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 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~~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,~~8, 2023, there were ~~1,576~~approximately 1,310 holders of record of Varex common stock. This number does not include beneficial owners holding shares in "nominee" or "street" name.

This graph shows the total return on VREX common stock ~~since listing on NASDAQ on January 20, 2017,~~for the five years ended September 29, 2023, 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, 2017~~September 29, 2018 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. 835

Item 6. [Reserved]

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~~Item 6. Selected Financial Data~~

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.~~

~~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)

~~Table of Contents~~

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

~~Table of Contents~~

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 imaging components including X-ray tubes, ~~digital~~flat panel and photon counting detectors and accessories, 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~~demand from 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 Item 1 "Business".

Impact of ~~COVID-19~~General Economic Environment

While there was some improvement in the general economic environment during the year, we remain cautious as many factors remain dynamic and unpredictable. The unprecedented nature of the COVID-19 pandemic and its impact on the global economy has created a disruption to our business that includes increased uncertainty in demand for certain products for medical and industrial applications, as well as increased variability in ouruncertain economic environment, supply chain and logistic challenges, and geopolitical tensions have contributed to, and may continue to contribute to, inflation, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor and materials, exchange rate volatility, and other similar effects.

During 2023, we experienced some supply chain, manufacturing, ~~productivity. The economic downturn triggered by COVID-19 has led~~and logistics challenges. Currently, we anticipate such challenges to ~~significantly lower demand from our customers~~have less of an impact in fiscal year 2024. Shortages of certain materials have caused, and may continue to cause, delays in ~~equipment installations. In conjunction with this reduced forecast and uncertainty beyond the forecast horizon, we evaluated~~manufacturing products for our product offering and decided to discontinue certain low margin, low demand products. 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.~~customers. In some cases, ~~certain healthcare facilities~~raw material shortages and delivery delays from our suppliers have ~~been closed~~caused operational 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.customer order fulfillment challenges. 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 inlate 2023 our Medical business was negatively impacted by the ~~treatment of respiratory diseases (such as COVID-19).~~

While healthcare systems and economies around the world have begun to reopen, 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. While we believe that the fundamentals driving long-term demand in both our medical 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

~~Table of Contents~~

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 precautionaryChina government initiated anti-corruption measures that we, other businesses and governments are taking. Supply chain logistics have also become more challenging 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 pandemic~~healthcare industry. We expect these actions to continue into ~~the beginning of calendar~~fiscal year ~~2021. While we have implemented safeguards~~2024, which could impact revenues in our China business.

For additional information on risks related to supply chain and procedures and taken other measures to counter the impact of the COVID-19 pandemic, the full extent to which the COVID-19 pandemic has 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 on a comparison of 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,~~logistics challenges, cost increases, changes in ~~facts~~U.S. 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,worldwide 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 valueconditions, geopolitical tensions 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 ofrisks that could impact 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.~~

~~Table of Contents~~

~~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.

~~Table of Contents~~

~~Industrial~~

In 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.

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.see Item 1A "Risk Factors".

Fiscal Year

Our fiscal year is the 52- or 53-week period ending on the Friday nearest September 30. Fiscal year ~~2020 was the 53-week period that ended October 2, 2020, fiscal year 2019~~2023 was the 52-week period that ended September ~~27, 2019, and~~29, 2023, fiscal year ~~2018~~2022 was the 52-week period that ended September ~~28, 2018. Set forth below is a discussion of our results of operations for~~30, 2022, and fiscal ~~years 2020, 2019 and 2018.~~year 2021 was the 52-week period that ended October 1, 2021.

~~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, filed December 20, 2019, includes~~ For a discussion and analysis of our year-over-year changes, financial condition, and results of operations for the fiscal years ended September ~~27, 2019~~30, 2022 and October 1, 2021 refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended September 30, 2022, filed with the SEC on November 18, 2022. Our year-over-year changes, financial condition, and results of operations for the fiscal years ended September 29, 2023 and September ~~28, 2018 in Item 7~~30, 2022 are set forth below.

Comparison of ~~Part II therein.~~Results of Operations for Fiscal Years 2023 and 2022

Revenues, net


(In millions)	(In millions)	2020			% Change	2019			% Change	2018			(In millions)	2023			% Change	2022			% Change	2021
Medical	Medical	$	584.5		(2)%	$	596.8		(1)%	$	602.0		Medical	$	673.3		—%	$	674.7		5%	$	643.8
Industrial	Industrial	153.8			(16)%	183.8			7%	171.4			Industrial	220.1			19%	184.7			6%	174.3
Total revenues, net	Total revenues, net	$	738.3		(5)%	$	780.6		1%	$	773.4		Total revenues, net	$	893.4		4%	$	859.4		5%	$	818.1
Medical as a percentage of total revenues	Medical as a percentage of total revenues	79		%		76		%		78		%	Medical as a percentage of total revenues	75.4		%		78.5		%		78.7		%
Industrial as a percentage of total revenues	Industrial as a percentage of total revenues	21		%		24		%		22		%	Industrial as a percentage of total revenues	24.6		%		21.5		%		21.3		%


Delaware									81-3434516
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification ~~Number)~~No.)

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	32

Item 1.	Business	32
Item 1A.	Risk Factors	1413
Item 1B.	Unresolved Staff Comments	3727
Item 2.	Properties	3727
Item 3.	Legal Proceedings	3828
Item 4.	Mine Safety Disclosures	3828

Part II.		3929

Item 5.	~~Marketing~~Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3929
Item 6.	~~Selected Financial Data~~[Reserved]	4029
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4230
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	5337
Item 8.	Financial Statements and Supplementary Data	5438
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	5438
Item 9A.	Controls and Procedures	5438
Item 9B.	Other Information	5640
Item 9C.	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections	40

Part III.		5740

Item 10.	Directors, Executive Officers and Corporate Governance	5740
Item 11.	Executive Compensation	5740
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5740
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5841
Item 14.	Principal Accountant Fees and Services	5841

Part IV.		5942

Item 15.	~~Exhibits~~Exhibit and Financial Statement Schedules	5942
Item 16.	Form 10-K Summary	6144
	Signatures	6245


(In millions)	2023			% Change	2022			% Change	2021
Medical	$	205.5		(2)%	$	210.5		4%	$	203.2
Industrial	84.8			16%	73.0			7%	68.3
Total gross profit	$	290.3		2%	$	283.5		4%	$	271.5
Medical gross margin	30.5		%		31.2		%		31.6		%
Industrial gross margin	38.5		%		39.5		%		39.2		%
Total gross margin	32.5		%		33.0		%		33.2		%


(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 29, 2023		September 30, 2022		$ Change		% Change
Cash and cash equivalents	Cash and cash equivalents	$	100.6	$	29.9	$	70.7	236.5	%	Cash and cash equivalents	$	152.6	$	89.4	$	63.2	70.7	%
Certificates of deposit not included in cash and cash equivalents										Certificates of deposit not included in cash and cash equivalents	1.0		7.2		(6.2)		(86.1)	%
Marketable debt securities not included in cash and cash equivalents										Marketable debt securities not included in cash and cash equivalents	41.3		16.7		24.6		147.3	%
Total										Total	$	194.9	$	113.3	$	81.6	72.0	%


(In millions, except for percentages)	September 29, 2023		September 30, 2022		$ Change		% Change
Current maturities of long-term debt

Current portion of other debt	$	1.5	$	2.1	$	(0.6)	(28.6)	%



Non-current maturities of long-term debt:


Convertible Senior Unsecured Notes	$	200.0	$	200.0	$	—	—	%
Senior Secured Notes	243.0		243.0		—		—	%
Other debt	3.5		4.6		(1.1)		(23.9)	%
Total non-current maturities of long-term debt:	$	446.5	$	447.6	$	(1.1)	(0.2)	%

Unamortized issuance costs and debt discounts
Unamortized discount - Convertible Notes(1)	$	—	$	(28.7)	$	28.7	(100.0)	%
Unamortized issuance costs - Convertible Notes(1)	(2.5)		(3.1)		0.6		(19.4)	%
Debt issuance costs - Senior Secured Notes	(2.9)		(3.5)		0.6		(17.1)	%
Total	$	(5.4)	$	(35.3)	$	29.9	(84.7)	%
Total debt outstanding, net	$	442.6	$	414.4	$	28.2	6.8	%


		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 2024		Fiscal Years 2025-2026		Fiscal Years 2027-2028		Beyond
Operating lease obligations		$	34.1	$	7.1	$	10.8	$	6.8	$	9.4
Lease obligations												Lease obligations	$	38.0	$	5.7	$	10.1	$	7.5	$	14.7
Principal payments on borrowings	Principal payments on borrowings	511.3		2.5		5.0		202.9		300.9		Principal payments on borrowings	448.0		1.5		202.8		243.7		—
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	2.5		0.5		1.0		1.0		—
Supplier equipment acquisition		10.4		6.3		4.1		—		—
Development and share purchase commitments												Development and share purchase commitments	2.0		2.0		—		—		—
Non-cancellable supplier purchase obligations												Non-cancellable supplier purchase obligations	7.3		4.3		3.0		—		—
Total	Total	$	562.8	$	19.6	$	21.0	$	210.8	$	311.4	Total	$	501.1	$	17.3	$	216.9	$	252.2	$	14.7


Market Risk Category	Hypothetical Change	Estimated Impact (In millions)		Impact Category
Foreign Currency - Revenue	10% decrease in foreign exchange rates	$	18.2	Earnings
Interest Rate - Marketable Securities	100 basis point decrease in interest rate of underlying investments	1.6		Earnings
Commodity Price	10% increase in commodity prices	$	3.6	Earnings


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))
Equity compensation plans approved by security holders	3,677	$	29.23	5,328
Equity compensation plans not approved by security holders	—	—		—
Total	3,677	$	29.23	5,328


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~~16, 2023	By:	/s/ Shubham Maheshwari
			Shubham Maheshwari
			Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)


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


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~~).

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~~).

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~~).

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~~).


10.410.2						Intellectual Property Matters Agreement, dated as of January 27, 2017, by and between Varian and Company (incorporated by reference to Exhibit 10.4 to t he the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

10.510.3						Trademark License Agreement, dated as of January 27, 2017, by and between Varian and Company (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed January 30, ~~2017~~)2017).

10.610.4†						Varex Imaging Corporation 2017 Omnibus Stock Plan (incorporated by reference to Exhibit 99.1 to the Company’s Form S-8, filed January 27, ~~2017~~)2017).

10.710.5†						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).

10.810.6†						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).

10.910.7†						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).

10.1010.8†						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*†~~10.9†						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)).

10.1210.10†						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).

10.1310.11†						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).

10.1410.12†						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).

10.1510.13†						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.

10.1610.14†						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).

10.1710.15†						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~~10.16*						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).

10.1910.17						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).

10.2010.18						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).

10.2110.19						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).

10.2210.20						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).


10.2310.21						~~Share Purchase Agreement~~LIBOR Transition Amendment, dated as of March ~~21, 2019 between~~9, 2022, among Varex Imaging Corporation, Varex Imaging ~~Investments, B.V.~~West, LLC, Varex Imaging Deutschland AG, the other Loan Parties, the Lenders, Issuing Banks 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~~).Swing Line Lender, and BANK OF AMERICA, N.A., as administrative agent and collateral agent.

10.2410.22†						Transition and Release Agreement, dated ~~February 11, 2020~~January 10, 2023, by and between ~~Clarence Verhoef~~Brian Giambattista and Varex Imaging Corporation (incorporated by reference to Exhibit 10.1 to the ~~Company's Quarterly~~Company’s Current Report on Form ~~10-Q~~8-K filed ~~on May 13, 2020).~~

~~10.25†~~						~~Offer~~ ~~Letter dated June 8, 2020 by Varex Imaging Corporation to Shubham Maheshwari~~January 10, 2023).

21.1						List of Subsidiaries as of ~~November 3, 2020~~September 29, 2023

23.1						Consent of Deloitte & Touche 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.


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



Consolidated Statements of ~~(Loss)~~ ~~Earnings~~Operations for the fiscal years ended 2023, 2022 and 2021						F-~~2020,~~ 3

~~2019~~Consolidated Statements of Comprehensive Income for the fiscal years ended 2023, 2022 and ~~2018~~ 2021						F-4

Consolidated ~~Statements~~Balance Sheets as of ~~Comprehensive~~ ~~(Loss)~~ ~~Earnings for~~ the end of fiscal years ~~ended~~ ~~2020,~~ ~~2019~~2023 and ~~2018~~ 2022						F-5

Consolidated ~~Balance Sheets as~~Statements of Stockholders' Equity for the en ~~d of~~ fiscal yyears 2023, 2022 and 2021 ~~ears 20~~20 a ~~nd 201~~9						F-6

Consolidated Statements of Cash Flows for the fiscal years ended ~~2020,~~ ~~2019~~2023, 2022 and ~~2018~~						F-8

~~Consolidated Statements of~~ S ~~tockholders'~~ ~~Equity for the fiscal years~~ ~~2020,~~ ~~2019~~ ~~and~~ ~~2018~~ 2021						F-7

Notes to ~~the~~ Consolidated Financial Statements						F-98


(In millions, except share amounts)	September 29, 2023		September 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	152.6	$	89.4
Accounts receivable, net of allowance for credit losses of $0.6 million and $0.6 million at September 29, 2023 and September 30, 2022, respectively	163.6		173.3
Inventories, net	277.5		303.2
Prepaid expenses and other current assets	64.6		44.0
Total current assets	658.3		609.9
Property, plant and equipment, net	143.6		141.3
Goodwill	288.5		284.5
Intangible assets, net	22.4		33.6
Investments in privately-held companies	29.0		46.4
Deferred tax assets	41.3		2.3
Operating lease assets	29.0		23.2
Other assets	37.5		43.2
Total assets	$	1,249.6	$	1,184.4
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	64.7	$	78.2
Accrued liabilities and other current liabilities	82.6		81.4
Current operating lease liabilities	3.8		4.0
Current maturities of long-term debt	1.5		2.1
Deferred revenues	10.2		7.4
Total current liabilities	162.8		173.1
Long-term debt, net	441.1		412.3
Deferred tax liabilities	—		0.5
Operating lease liabilities	23.1		18.0
Other long-term liabilities	41.6		33.8
Total liabilities	668.6		637.7
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.01 par value: 20,000,000 shares authorized, none issued	—		—
Common stock, $0.01 par value: 150,000,000 shares authorized
Shares issued and outstanding: 40,529,573 and 40,085,126 at September 29, 2023 and September 30, 2022, respectively	0.4		0.4

Additional paid-in capital	450.4		469.1
Accumulated other comprehensive (loss) income	(1.2)		0.1
Retained earnings	118.1		63.8
Total Varex stockholders' equity	567.7		533.4
Noncontrolling interests	13.3		13.3
Total stockholders' equity	581.0		546.7
Total liabilities and stockholders' equity	$	1,249.6	$	1,184.4


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Varex Equity		Noncontrolling Interests		Total Stockholders' Equity
(In millions)	Shares	Amount
October 2, 2020	39.1	$	0.4	$	434.4	$	0.8	$	16.1	$	451.7	$	14.1	$	465.8
Net income	—	—		—		—		17.4		17.4		0.5		17.9
Common stock issued upon vesting of restricted shares	0.2	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(1.5)		—		—		(1.5)		—		(1.5)
Common stock issued under employee stock purchase plan	0.2	—		2.8		—		—		2.8		—		2.8
Share-based compensation	—	—		13.9		—		—		13.9		—		13.9
Unrealized loss on defined benefit obligations, net of tax	—	—		—		(0.1)		—		(0.1)		—		(0.1)
Foreign currency translation adjustments	—	—		—		(0.7)		—		(0.7)		—		(0.7)
Other	—	—		(0.2)		—		—		(0.2)		(1.4)		(1.6)
October 1, 2021	39.4	$	0.4	$	449.4	$	—	$	33.5	$	483.3	$	13.2	$	496.5
Net income	—	—		—		—		30.3		30.3		0.5		30.8
Exercise of stock options	0.1	—		3.8		—		—		3.8		—		3.8
Common stock issued upon vesting of restricted shares	0.4	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(2.8)		—		—		(2.8)		—		(2.8)
Common stock issued under employee stock purchase plan	0.3	—		4.9		—		—		4.9		—		4.9
Share-based compensation	—	—		14.0		—		—		14.0		—		14.0
Unrealized loss on forward contracts	—	—		—		(0.6)		—		(0.6)		—		(0.6)
Unrealized loss on change in fair value of available-for-sale securities	—	—		—		(0.1)		—		(0.1)		—		(0.1)
Unrealized gain on defined benefit obligations, net of tax	—	—		—		1.4		—		1.4		—		1.4
Foreign currency translation adjustments	—	—		—		(0.6)		—		(0.6)		—		(0.6)
Other	—	—		(0.2)		—		—		(0.2)		(0.4)		(0.6)
September 30, 2022	40.1	$	0.4	$	469.1	$	0.1	$	63.8	$	533.4	$	13.3	$	546.7
Net income	—	—		—		—		48.2		48.2		0.5		48.7
Cumulative effect of accounting change	—	—		(34.6)		—		6.1		(28.5)		—		(28.5)
Exercise of stock options	—	—		0.2		—		—		0.2		—		0.2
Common stock issued upon vesting of restricted shares	0.2	—		—		—		—		—		—		—
Shares withheld on vesting of restricted stock	(0.1)	—		(1.4)		—		—		(1.4)		—		(1.4)
Common stock issued under employee stock purchase plan	0.3	—		3.9		—		—		3.9		—		3.9
Share-based compensation	—	—		13.5		—		—		13.5		—		13.5
Realized gain on forward contracts	—	—		—		0.1		—		0.1		—		0.1
Unrealized gain on change in fair value of available-for-sale securities	—	—		—		0.1		—		0.1		—		0.1
Unrealized loss on defined benefit obligations, net of tax	—	—		—		(1.0)		—		(1.0)		—		(1.0)


Foreign currency translation adjustments	—	—		—		(0.5)		—		(0.5)		—		(0.5)
Other	—	—		(0.3)		—		—		(0.3)		(0.5)		(0.8)
September 29, 2023	40.5	$	0.4	$	450.4	$	(1.2)	$	118.1	$	567.7	$	13.3	$	581.0


	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 29, 2023				Twelve Months Ended September 30, 2022
(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	$	89.4	$	152.6	$	144.6	$	89.4
Restricted cash	Restricted cash	1.4		1.5		1.5		1.4		Restricted cash	1.2		1.4		1.5		1.2
Cash and cash equivalents and restricted cash as reported per statement of cash flows		$	31.3	$	102.1	$	53.4	$	31.3
Total as presented in the Consolidated Statements of Cash Flows										Total as presented in the Consolidated Statements of Cash Flows	$	90.6	$	154.0	$	146.1	$	90.6


		Fiscal Years					Fiscal Years Ended
(In millions)	(In millions)	2020		2019		(In millions)	September 29, 2023		September 30, 2022
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	$	7.9	$	8.5
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	12.7		11.3
Product warranty expenditures						Product warranty expenditures	(12.9)		(11.9)
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	$	7.7	$	7.9



(In millions)	Balance Sheet Location	September 29, 2023		September 30, 2022
Assets
Operating lease right-of-use assets	Operating lease assets	$	29.0	$	23.2
Finance lease right-of-use assets	Property, plant and equipment, net	0.3		0.3
Liabilities
Operating lease liabilities (current)	Current operating lease liabilities	3.8		4.0
Finance lease liabilities (current)	Accrued liabilities and other current liabilities	0.1		0.2
Operating lease liabilities (non-current)	Operating lease liabilities	23.1		18.0
Finance lease liabilities (non-current)	Other long-term liabilities	$	0.2	$	0.1


	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 29, 2023		September 30, 2022
Operating lease weighted average remaining lease term (in years)	7.8		6.4
Operating lease weighted average discount rate	7.9	%	5.6	%
Finance lease weighted average remaining lease term (in years)	3.6		2.0
Finance lease weighted average discount rate	4.7	%	3.6	%


~~(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)~~	~~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~~